Securities Exchange Act of 1934 -- Form 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report :
June 24, 1998
- ----------------------------------------------------------------------
CBL & ASSOCIATES PROPERTIES, INC.
- ----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-12494 62-1545718
- ----------------- ------------------ ---------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Indentification Number)
incorporation)
One Park Place, 6148 Lee Highway, Chattanooga, Tennessee 37421
- ----------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code:
(423) 855-0001
- ----------------------------------------------------------------------
<PAGE>
CBL & ASSOCIATES PROPERTIES, INC.
ITEM 2 ACQUISITION OF ASSETS
On June 23, 1998, CBL & Associates Properties, Inc. (the "Registrant"),
through its Operating Partnership, entered into a Contribution and Exchange
Agreement (the "Contribution and Exchange Agreement") with Nashland
Associates, unaffiliated party ("Transferor"), pursuant to which
Transferor contributed two malls, two associated shopping centers and
one community center (the "Properties") to the Operating Partnership in
exchange for the Operating Partnership Units, the agreement of the
Operating Partnership to take title to the Properties subject to certain
existing indebtedness, and the agreement of the Operating Partnership to
refinance such existing indebtedness. The Properties are located in
Nashville, Tennessee and represent in the aggregate approximately 2.5
million square feet of Gross Leasable Area ("GLA"). An affiliate of
J.W. O'Connor & Co. Incorporated is the managing general partner of
Transferor.
The following table contains certain information concerning each of
the Properties:
Mall Store Mall Store
Center Type GLA Space Occupancy(1)
- ------------------ ----------------- --------- --------- ------------
Hickory Hollow Mall 1,095,946 425,757 83%
Rivergate Mall 1,073,970 390,324 85%
The Courtyard at
Hickory Hollow Associated Center 76,460 76,460 100%
Rivergate Village Associated Center 166,366 166,366 96%
Lions Head Village Community Center 93,290 93,290 86%
--------- ---------
Totals 2,506,032 1,152,197 87%(2)
- -------------------
(1) Tenants in occupancy and paying rent on December 31, 1997.
(2) Weighted average occupancy, based on square footage.
The aggregate transaction value was approximately $247.4 million
<before closing costs, deferred maintenance and closing adjustments).
Concurrently with the execution of the Contribution and Exchange Agreement,
the Registrant obtained a financing commitment from Merrill Lynch Mortgage
Capital Inc. and CIGNA Investments Inc. for the refinancing of the
Properties' existing indebtedness with new ten-year, fixed rate loans on
four of the Properties with an aggregate principal amount of approximately
$182.7 million (the "Financing Commitments"). The balance of the required
financing under the Contribution and Exchange Agreement will be provided
from the Registrant's existing lines of credit and cash on hand.
Material factors considered by the Registrant in assessing the
Properties include historical net operating income, the competitive
advantage and dominance in the Nashville, Tennessee real estate markets,
occupancy and rental rates,
2
<PAGE>
the prospects for new leasing and the ability to raise occupancy and rental
rates. The Registrant also considered the capital expenditures necessary to
maintain the Properties in class A condition, the capitalization rates for
comparable real estate and the ability to reduce expenses through self
management of the Properties. The registrant after reasonable inquiry is
not aware of any material factors relating the Properties other than those
discussed above that would cause the reported financial information not to
be necessarily indicative of future operating results.
The description contained herein of the acquisition transaction
described above does not purport to be complete and is qualified in its
entirety by reference to the Contribution and Exchange Agreement which is
filed as an exhibit hereto.
ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Report of Independent Public Accountants F-1
Statements of the excess of revenues over
specific operating expenses for the year
ended December 31, 1997 and for the three
months ended March 31, 1998 (unaudited) F-2
Notes to Financial Statements F-3
B) PRO FORMA FINANCIAL INFORMATION OF REGISTRANT
Pro forma consolidated statement of
operations for the year ended
December 31, 1997(unaudited) F-5
Pro forma consolidated statement of
operations for the three months ended
March 31, 1998 (unaudited) F-7
Pro forma consolidated balance sheet as of
March 31, 1998 (unaudited) F-9
C) EXHIBITS
Contribution and Exchange Agreement dated June 23,
1998 between Nashland Associates L.P., a Tennessee
limited partnership (Transferor) and CBL &
Associates Limited Partnership, a Delaware limited
partnership (Transferee)
Consent of Arthur Andersen LLP
3
<PAGE>
A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of CBL & Associates Properties, Inc.:
We have audited the accompanying combined statement of excess of
revenues over specific operating expenses for Hickory Hollow Mall,
Rivergate Mall, Village at Rivergate, Courtyard at Hickory Hollow and
Lions Head Village (collectively the "Properties") for the year ended
December 31, 1997. This financial statement is the responsibility of
the management of the Properties. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the combined statement of
excess of revenues over specific operating expenses is free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the combined statement
of excess of revenues over specific operating expenses. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
As described on Note 2, this combined financial statement excludes certain
expenses that would not be comparable with those resulting from the
operations of the Properties after acquisition by CBL and Associates
Properties, Inc. The accompanying combined financial statement was
prepared for the purpose of complying with the rules and regulations of
the Securities and Exchange Commission (for inclusion in the Form 8-K of
CBL & Associates Properties, Inc.) and is not intended to be a complete
presentation of the Properties' revenues and expenses.
In our opinion, the combined statement referred to above presents fairly,
in all material respects, the excess of revenues over specific operating
expenses of Hickory Hollow Mall, Rivergate Mall, Village at Rivergate,
Courtyard at Hickory Hollow and Lions Head Village for the year ended
December 31, 1997, in conformity with generally accepted accounting
principles.
Arthur Andersen, LLP
New York, New York
June 23, 1998
F-1
<PAGE>
PROPERTIES TO BE ACQUIRED BY CBL & ASSOCIATES PROPERTIES, INC.
COMBINED STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES (Note 2)
FOR THE YEAR ENDED DECEMBER 31, 1997
AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 (UNAUDITED)
Three
Year Ended Months Ended
December 31, March 31,
1997 1998
------------ ------------
(UNAUDITED)
REVENUES:
Rental revenues $15,889,454 $4,020,000
Percentage rent 419,227 136,000
Specialty leasing 1,447,866 333,000
Tenant reimbursements 9,968,959 2,407,000
------------ ----------
Total revenues 27,725,506 6,896,000
------------ ----------
SPECIFIC OPERATING EXPENSES:
Property operating 4,288,729 1,242,000
Maintenance & repairs 1,826,421 593,000
Real estate taxes 3,286,758 895,000
Management fees 899,512 223,000
Other expense 25,560
------------ ----------
Total Specific Operating Expenses 10,326,980 2,953,000
------------ ----------
EXCESS OF REVENUES OVER SPECIFIC
OPERATING EXPENSES $ 17,398,526 $ 3,943,000
============ ===========
The accompanying notes are an integral part of these statements.
F-2
<PAGE>
PROPERTIES TO BE ACQUIRED BY CBL & ASSOCIATES PROPERTIES, INC.
NOTES TO COMBINED STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
DECEMBER 31, 1997
1. DESCRIPTION OF PROPERTIES AND SIGNIFICANT ACCOUNTING POLICIES
Description of Properties
Hickory Hollow Mall and Rivergate Mall, regional shopping centers,
and Village at Rivergate, Courtyard at Hickory Hollow and Lions Head
Village, community shopping centers, (collectively the "Properties")
are located in the Nashville, Tennessee metropolitan area. The
Properties are owned by Nashland Associates.
The following is a breakdown of the total square feet and the occupancy
percentage for each property as of December 31, 1997:
Total Square Occupancy
Feet Percentage
------------ --------
Hickory Hollow Mall 425,757 83%
Rivergate Mall 390,324 85
Village at Rivergate 166,366 96
Courtyard at Hickory Hollow 76,460 100
Lions Head Village 93,290 86
Revenue Recognition
Minimum rents are recognized on a straight-line basis over the terms
of the related leases. Tenant recoveries and other rents which are
provided for in leases are recognized as income when earned and their
amounts can be reasonably estimated.
Minimum rents recognized on a straight-line basis less than the
contractual amounts due in 1997 amounted to $79,646.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
F-3
<PAGE>
2. BASIS OF ACCOUNTING
The accompanying statement of excess of revenues over specific operating
expenses is presented on the accrual basis. This statement has been
prepared in accordance with the applicable rules and regulations of
the Securities and Exchange Commission for real estate properties
acquired. Accordingly, the statement excludes certain historical
expenses not comparable to the operations of the Properties after
acquisition such as depreciation and interest on mortgage debt.
3. LEASES
Minimum future rental revenue from noncancelable leases in effect at
December 31, 1997, is as follows:
For the year ending December 31:
1998 $14,840,628
1999 13,721,791
2000 12,866,826
2001 6,327,005
2002 10,867,579
Thereafter 36,265,758
-----------
Total $94,889,587
===========
Future minimum rentals do not include amounts for renewal periods
or recoveries of certain operating costs which may be received from
tenants.
F-4
<PAGE>
B. PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The unaudited pro forma consolidated statements of operations are
presented as if the acquisition of the Properties had taken place as
of the beginning of each period presented. In management's opinion,
all adjustments necessary to present fairly the effects of the
acquisition have been made.
The unaudited pro forma consolidated statements of operations are
not necessarily indicative of what the actual results of operations
of the Registrant would have been assuming the Registrant had acquired
the Properties as of the beginning of each period presented, nor do
they purport to represent the results of operations for future
periods.
CBL & ASSOCIATES PROPERTIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(Unaudited And Amounts In Thousands, Except Per Share Amounts)
<TABLE>
<S> <C> <C> <C> <C>
CBL The Pro Forma Pro Forma
Historical Properties Adjustments Consolidated
----------- ---------- ----------- ------------
REVENUES:
Rentals:
Minimum $ 36,053 $ 4,020 $ - $ 40,073
Percentage 1,675 136 - 1,811
Other 433 333 - 766
Tenant reimbursements 15,451 2,407 - 17,858
Management, development
and leasing fees 696 - - 696
Interest and other 748 0 - 748
----------- ---------- ----------- -----------
Total revenues 55,056 6,896 - 61,952
----------- ---------- ----------- -----------
EXPENSES:
Property operating 8,844 1,242 - 10,086
Depreciation and amortization 9,155 - 1,296(A) 10,451
Real estate taxes 4,962 895 - 5,857
Maintenance and repairs 3,000 593 - 3,593
General and administrative 3,001 - - 3,001
Interest 13,775 - 3,876(B) 17,651
Other 6 - - 6
----------- ---------- ----------- -----------
Total expenses(D) 42,743 2,730 5,172 50,645
----------- ---------- ----------- -----------
Income from operations 12,313 4,166 (5,172) 11,307
F-5
<PAGE>
Gain on sales of real estate
assets 1,931 - - 1,931
Equity in earnings of
unconsolidated affiliates 737 - - 737
Minority interest in earnings:
Operating partnership (4,173) - 302(C) (3,871)
Shopping center properties (209) - - (209)
----------- ---------- ----------- -----------
Net income $ 10,599 $4,166 $ (4,870) $ 9,895
=========== ========== =========== ===========
BASIC PER SHARE DATA:
Net income $ 0.44 $ 0.41
=========== ===========
Weighted average shares
outstanding 24,070 24,070
=========== ===========
DILUTED PER SHARE DATA:
Net income $ 0.44 $ 0.41
=========== ===========
Weighted average and dilutive
potential shares outstanding 24,304 24,304
=========== ===========
</TABLE>
(A) Reflects depreciation expense on the Properties computed
on the straight-line method over the estimated useful life
of 40 years.
(B) Reflects interest expense associated with the $182,700
mortgage note payable and the $44,700 of borrowings under
the Company's line of credit agreement, at 6.86% and LIBOR
plus 1.0% (6.66%), respectively, in connection with the
acquisition of the Properties.
(C) Reflects the minority interests' share of the income from
operations of the Properties and the change in minority
interest due to the issuance of Operating Partnership units
and the pro forma adjustments.
(D) Management fees are eliminated in the pro forma presentation.
F-6
<PAGE>
CBL & ASSOCIATES PROPERTIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited And Amounts In Thousands, Except Per Share Amounts)
<TABLE>
<S> <C> <C> <C> <C>
CBL The Pro Forma Pro Forma
Historical Properties Adjustments Consolidated
----------- ----------- ----------- ------------
REVENUES:
Rentals:
Minimum $115,640 $15,889 $ - $131,529
Percentage 3,660 419 - 4,079
Other 1,949 1,448 - 3,397
Tenant reimbursements 51,302 9,969 - 61,271
Management, development
and leasing fees 2,378 - - 2,378
Interest and other 2,675 - - 2,675
----------- ----------- ----------- ------------
Total revenues 177,604 27,725 - 205,329
----------- ----------- ----------- ------------
EXPENSES:
Property operating 30,585 4,314 - 34,899
Depreciation and amortization 32,308 - 5,182(A) 37,490
Real estate taxes 14,859 3,287 - 18,146
Maintenance and repairs 10,239 1,826 - 12,065
General and administrative 9,049 - - 9,049
Interest 37,830 - 15,537(B) 53,367
Other 330 - - 330
----------- ----------- ----------- ------------
Total expenses (D) 135,200 9,427 20,719 165,346
----------- ----------- ----------- ------------
Income from operations 42,404 18,298 (20,719) 39,983
Gain on sales of real estate
assets 6,040 - - 6,040
Equity in earnings of
unconsolidated affiliates 1,916 - - 1,916
Minority interest in earnings:
Operating partnership (13,819) - 726(C) (13,093)
Shopping center properties (508) - - (508)
----------- ----------- ----------- ------------
Income before extraordinary item 36,033 18,298 (19,993) 34,338
Extraordinary loss on
extinguishment of debt (1,092) - - (1,092)
----------- ----------- ----------- ------------
F-7
<PAGE>
Net income $ 34,941 $18,298 $(19,993) $33,246
=========== =========== =========== ============
BASIC PER SHARE DATA:
Income before extraordinary item $ 1.50 $ 1.43
Net income $ 1.45 $ 1.38
=========== ============
Weighted average shares
outstanding 24,054 24,054
=========== ============
DILUTED PER SHARE DATA:
Income before extraordinary item $ 1.49 $ 1.42
Net income $ 1.45 $ 1.38
=========== ============
Weighted average and dilutive
potential shares outstanding 24,151 24,151
=========== ============
</TABLE>
(A) Reflects depreciation expense on the Properties computed
on the straight-line method over the estimated useful life
of 40 years.
(B) Reflects interest expense associated with the $182,700
mortgage note payable and the $44,700 of borrowings under
the Company's line of credit agreement, at 6.86% and LIBOR
plus 1.0% (6.72%), respectively, in connection with the
acquisition of the Properties.
(C) Reflects the minority interests' share of the income from
operations of the Properties and the change in minority
interest due to the issuance of Operating Partnership
units and the pro forma adjustments.
(D) Management fees are eliminated in the pro forma presentation.
F-8
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
The unaudited pro forma consolidated balance sheet is presented as if
the acquisition of the Properties had occurred as of March 31, 1998.
The unaudited pro forma consolidated balance sheet is not necessarily
indicative of what the actual financial position would have been at
March 31, 1998, nor does it purport to represent the future financial
position of the Company.
CBL & ASSOCIATES PROPERTIES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(Unaudited And Dollars In Thousands, Except Per Share Amounts)
<TABLE>
<S> <C> <C> <C>
Pro Forma
CBL Acquisition Company
Historical Adjustments Pro Forma
---------- ----------- ----------
ASSETS: (A)
Real Estate Assets:
Land $ 193,853 $ 41,420 $ 235,273
Buildings and improvements 1,210,328 205,980 1,416,308
---------- ---------- ----------
1,404,181 247,400 1,651,581
Less: Accumulated depreciation (154,510) - (154,510)
---------- ---------- ----------
1,249,671 247,400 1,497,071
---------- ---------- ----------
Developments in progress 57,092 - 57,092
---------- ---------- ----------
Net investment in real estate assets 1,306,763 247,400 1,554,163
Cash and cash equivalents 9,008 - 9,008
Receivables:
Tenant, net of allowance for doubtful
accounts of $788 14,380 425 14,805
Other 1,161 - 1,161
Mortgage notes receivable 12,032 - 12,032
Other assets 9,061 - 9,061
---------- ----------- ----------
$1,352,405 $247,825 $1,600,230
========== =========== ==========
F-9
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY:
Mortgage and other notes payable $849,845 $227,400 $1,077,245
Accounts payable and accrued
liabilities 25,397 425 25,822
---------- ----------- ----------
Total liabilities 875,242 227,825 1,103,067
---------- ----------- ----------
Commitments and contingencies - - -
Distributions and losses in excess
of investment in unconsolidated
affiliates 7,321 - 7,321
---------- ----------- ----------
Minority interest 128,123 20,000 148,123
---------- ----------- ----------
Shareholders' equity:
Preferred stock, $0.01 par value,
5,000,000 shares authorized,
none issued - - -
Common stock, $0.01 par value,
95,000,000 shares authorized,
24,074,732 shares issued and
outstanding at March 31, 1998 241 - 241
Excess stock, $0.01 par value,
100,000,000 shares authorized,
none issued - - -
Additional paid-in capital 359,796 - 359,796
Accumulated deficit (17,834) - (17,834)
Deferred compensation (484) - (484)
---------- ----------- ----------
Total shareholders' equity 341,719 - 341,719
---------- ----------- ----------
$1,352,405 $247,825 $1,600,230
========== =========== ==========
</TABLE>
(A) Reflects the acquisition of the Properties through the
issuance of a $182,700 mortgage note payable, borrowings
of $44,700 under the Company's line of credit agreement,
issuance of $20 million of Operating Partnership units
and the assumption of certain assets and liabilities.
F-10
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CBL & ASSOCIATES PROPERTIES, INC.
/s/ John N. Foy
-----------------------------
John N. Foy
Executive Vice President,
Chief Financial Officer and
Secretary
(Authorized Officer of the
Registrant,
Principal Financial Officer and
Principal Accounting Officer)
Date: June 25, 1998
<PAGE>
EXHIBITS INDEX
Exhibit:
2.1 Contribution and Exchange Agreement dated June 23, 1998
between Nashland Associates L.P., a Tennessee limited
partnership (Transferor) and CBL & Associates Limited
Partnership, a Delaware limited partnership (Transferee)
2.3 Consent of Arthur Andersen LLP
NASHLAND ASSOCIATES,
Transferor,
and
CBL & ASSOCIATES LIMITED PARTNERSHIP,
Transferee
______________________
CONTRIBUTION AND EXCHANGE AGREEMENT
______________________
June 23, 1998
Premises
Hickory Hollow Mall
The Courtyard at Hickory Hollow
Rivergate Mall
The Village at Rivergate
Lion's Head Village
Nashville, Tennessee
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
Agreement To Contribute the Centers
SECTION 2.01. Contribution of Village at Rivergate
and Lion's Head Village. . . . . . .14
SECTION 2.02. Contribution of Hickory Hollow Mall,
Courtyard at Hickory Hollow and
Rivergate Mall . . . . . . . . . . .14
SECTION 2.03. Tax Treatment. . . . . . . . . . . . .15
ARTICLE III
Agreed Value; Existing Debt
SECTION 3.01. Agreed Value. . . . . . . . . . . . . 16
SECTION 3.02. Escrow Provisions . . . . . . . . . . 17
SECTION 3.03. Terms Regarding Existing Debt . . . . 19
SECTION 3.04. Allocation of Agreed Value. . . . . . 21
SECTION 3.05. Agreements Regarding the Partnership. 22
SECTION 3.06. Certain Tax Matters . . . . . . . . . .24
SECTION 3.07. No Sale of Assets . . . . . . . . . . .27
SECTION 3.08. Registration Rights Agreement . . . . .28
SECTION 3.09. Certain Permitted Transferee Actions. .28
SECTION 3.10. Accredited Investor Status. . . . . . .31
ARTICLE IV
Permitted Encumbrances
SECTION 4.01. Definition. . . . . . . . . . . . . . 31
SECTION 4.02. Title Insurance . . . . . . . . . . . 33
(i)
<PAGE>
ARTICLE V
The Closing
SECTION 5.01. Closing Date. . . . . . . . . . . . . .33
SECTION 5.02. Actions at Closing. . . . . . . . . . .35
ARTICLE VI
Apportionments
SECTION 6.01. Rents . . . . . . . . . . . . . . . . .35
SECTION 6.02. Leasing Costs . . . . . . . . . . . . .40
SECTION 6.03. Additional Items. . . . . . . . . . . .41
SECTION 6.04. Partnership Distributions . . . . . . .43
SECTION 6.05. Adjustment Statement. . . . . . . . . .43
SECTION 6.06. Survival. . . . . . . . . . . . . . . .44
ARTICLE VII
Documents To Be Delivered at the Closing
SECTION 7.01. Transferor's Deliveries . . . . . . . .44
SECTION 7.02. Transferee's Deliveries . . . . . . . .49
SECTION 7.03. Access to Records . . . . . . . . . . .50
ARTICLE VIII
Centers Conveyed As Is; Representations and
Warranties of Transferor
SECTION 8.01. No Implied Representations. . . . . . .51
SECTION 8.02. "As-Is" Transaction . . . . . . . . . .51
SECTION 8.03. Representations and Warranties
of Transferor . . . . . . . . . . . .53
SECTION 8.04. No Independent Investigation. . . . . .60
SECTION 8.05. Effect of Estoppels . . . . . . . . . .60
SECTION 8.06. Survival of Transferor's Warranties, etc.61
(ii)
<PAGE>
ARTICLE IX
Representations and Warranties of Transferee
SECTION 9.01. Transferee's Representations
and Warranties. . . . . . . . . . . .62
SECTION 9.02. Remaking of Warranties; Survival. . . .65
ARTICLE X
Conditions to Closing; Risk of Loss5
SECTION 10.01. Conditions to the Obligation of 5
Transferor To Close Title5. . . . . .65
SECTION 10.02. Conditions to the Obligation of
Transferee To Close Title . . . . . .66
SECTION 10.03. Risk of Loss. . . . . . . . . . . . .67
SECTION 10.04. Exclusion of Strip Centers. . . . . .69
ARTICLE XI
Operation of the Centers Until Closing
SECTION 11.01. Standard of Operation. . . . . . . . .71
SECTION 11.02. Notice Requirements. . . . . . . . . .71
SECTION 11.03. Transferor's Rights and Covenants. . .71
SECTION 11.04. Noncomplying New Leases. . . . . . . .72
SECTION 11.05. Survival . . . . . . . . . . . . . . .73
ARTICLE XII
Title to Centers
SECTION 12.01. Title Defects. . . . . . . . . . . . .73
SECTION 12.02. Waiver by Transferee . . . . . . . . .74
SECTION 12.03. Affirmative Insurance. . . . . . . . .74
SECTION 12.04. Deeds Full Performance . . . . . . . .74
(iii)
<PAGE>
ARTICLE XIII
Brokers, etc.
SECTION 13.01. Transferor's Representation. . . . . .75
SECTION 13.02. Transferee's Representation. . . . . .75
SECTION 13.03. Survival . . . . . . . . . . . . . . .75
ARTICLE XIV
Default; Remedies
SECTION 14.01. Transferee's Default . . . . . . . . .76
SECTION 14.02. Transferor's Default . . . . . . . . .76
SECTION 14.03. Limitation on Post-Closing Liability
of Transferor and Transferee . . . .77
SECTION 14.04. Liability of Partners and Affiliates of
Transferor and Transferee. . . . . .78
SECTION 14.05. Escrow Fund. . . . . . . . . . . . . .78
SECTION 14.06. General Provisions Regarding Survival.81
SECTION 14.07. Indemnification by Transferor. . . . .82
SECTION 14.08. Indemnification by Transferee. . . . .83
SECTION 14.09. Prevailing Party's Attorneys' Fees . .84
SECTION 14.10. Survival . . . . . . . . . . . . . . .84
ARTICLE XV
Estoppels
SECTION 15.01. Required Estoppels . . . . . . . . . .84
SECTION 15.02. Transferor's Estoppels . . . . . . . 85
SECTION 15.03. Variance Between Estoppels and Forms
Annexed as Exhibits. . . . . . . . .86
SECTION 15.04. All Estoppels To Be Delivered. . . . 86
ARTICLE XVI
Miscellaneous
SECTION 16.01. Notices. . . . . . . . . . . . . . . .86
SECTION 16.02. Further Assurances . . . . . . . . . 87
SECTION 16.03. Captions . . . . . . . . . . . . . . 88
(iv)
<PAGE>
SECTION 16.04. Governing Law; Construction. . . . . .88
SECTION 16.05. Entire Agreement; No Third Party
Beneficiary, etc. . . . . . . 88
SECTION 16.06. Waivers; Extensions. . . . . . . . . 89
SECTION 16.07. Pronouns . . . . . . . . . . . . . . 89
SECTION 16.08. Transaction Expenses; Fees and
Disbursements of Counsel, etc. . .89
SECTION 16.09. Assignment . . . . . . . . . . . . . 90
SECTION 16.10. Counterparts . . . . . . . . . . . . 91
SECTION 16.11. No Recording . . . . . . . . . . . . 91
SECTION 16.12. Rivergate Land Swap . . . . . . . . .91
SECTION 16.13. Publicity. . . . . . . . . . . . . . .91
SECTION 16.14. Waiver of Rights to Jury Trial . . . .92
SECTION 16.15. Accounting Certificates. . . . . . . .92
SECTION 16.16. Agreements of General Partner and Parent.92
(v)
<PAGE>
Schedule of Exhibits
Schedule 1 List of Documents Comprising the Existing Debt
Schedule 8.03(k) Environmental Reports and Environmental
Matters
Schedule 8.03(o) Material Personal Property
Exhibit A-1 Description of Land - Hickory Hollow Mall
Exhibit A-2 Description of Land - Courtyard at Hickory
Hollow
Exhibit A-3 Description of Land - Rivergate Mall
Exhibit A-4 Description of Land - Village at Rivergate
Exhibit A-5 Description of Land - Lion's Head Village
Exhibit B List of Documents Comprising the Leases
Exhibit C List of Documents Comprising the Operating
Agreements
Exhibit D List of Documents Comprising the Other
Agreements
Exhibit E List of Documents Comprising the
Management Agreements and the Leasing
Agreements
Exhibit F Rent Roll
Exhibit G Permitted Encumbrances
Exhibit H Form of Joint and Several Guarantee
Exhibit I Default Notices Relating to Leases,
Operating Agreements and Other Agreements
Exhibit J Schedule of Violations
Exhibit K Schedule of Pending Litigation
Exhibit L Form of Registration Rights Agreement
Exhibit M Form of Assignment of Operating Agreements
Exhibit N Form of Assignment of Space Leases and
Security Deposits
Exhibit O Form of Assignment of Other Agreements
Exhibit P Form of General Assignment
Exhibit Q Schedule of Delinquencies
Exhibit R Approved New Leases and Certain Leasing
Costs Payable by Transferor
Exhibit S Description of Certain Financial
Statements
Exhibit T Form of Anchor and Adjoining Owner
Estoppel Letter
Exhibit U Form of Tenant Estoppel Letter
Exhibit V Form of Transferor's Estoppel Letter
Exhibit W Form of Letter of Credit
Exhibit X Form of Deed
(vi)
<PAGE>
Exhibit Y Form of Bill of Sale
Exhibit Z Form of FIRPTA Certificate
Exhibit AA Form of Legal Opinion of Transferor's
Counsel
Exhibit BB Form of Legal Opinion of Transferee's
Counsel
Exhibit CC Real Estate Tax Bills and Notices of
Special Assessments
Exhibit DD Public Announcements of Parent
Exhibit EE Form of Owner's Affidavit
Exhibit FF Calculation of Adjusted Tax Basis
(vii)
<PAGE>
THIS CONTRIBUTION AND EXCHANGE AGREEMENT (this
"Agreement") is dated the 23rd day of June 1998,
and is by and between NASHLAND ASSOCIATES, a
Tennessee general partnership ("Transferor"), as
Transferor, CBL & ASSOCIATES LIMITED PARTNERSHIP, a
Delaware limited partnership ("Transferee" or the
"Partnership"), as Transferee.
W I T N E S S E T H :
WHEREAS, Transferor is the owner (other than the
portions thereof owned by Anchors (which term and other
capitalized terms used but not defined in these recitals have
the meanings assigned thereto in Article I of this
Agreement)) of (i) Hickory Hollow Mall, a regional shopping
center (ii) Courtyard at Hickory Hollow, a community shopping
center (iii) Rivergate Mall, a regional shopping center
(iv) Village at Rivergate, a community shopping center, and
(v) Lion's Head Village, a community shopping center, all of
which are located in the Nashville, Tennessee metropolitan
area, each of which is more particularly described in and is
the subject of this Agreement; and
WHEREAS, Transferor desires to contribute Village
at Rivergate and Lion's Head Village to Transferee, and in
exchange for such contribution Transferee will issue the A
Units to Transferor, subject to and upon all of the terms,
covenants and conditions of this Agreement; and
WHEREAS, Transferor desires to contribute Hickory
Hollow Mall, Courtyard at Hickory Hollow and Rivergate Mall
to Transferee (each subject to the Existing Debt), and in
exchange for such contribution Transferee will issue the B
Units to Transferor and repay the Existing Debt, subject to
and upon all of the terms, covenants and conditions of this
Agreement;
(1)
<PAGE>
NOW, THEREFORE, in consideration of the premises
and the mutual undertakings in this Agreement, the parties
hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. The following terms
shall have the following meanings for the purposes of this
Agreement.
"Accredited Investor" shall have the meaning set
forth in Section 3.10.
"Adjoining Owners" shall mean (i) Dayton-Hudson
Corporation dba Target Stores with respect to Village at
Rivergate and (ii) with respect to each Mall, all owners of
stores on sites at the Mall which are owned or ground leased
by such owners, which stores are operated in conjunction with
the Center pursuant to an Operating Agreement and have an
entrance or entrances that open into the enclosed, air-
conditioned common area of the Mall.
"Adjoining Properties" shall mean, with respect to
each Center, the land and/or the improvements thereon of
Adjoining Owners which are not part of but are operated in
conjunction with such Center under the terms of an Operating
Agreement.
"Adjustment Point" shall have the meaning set forth
in Article VI.
"Agreed Value" shall mean (i) $247,412,000 minus
(ii) all recording fees and charges payable by Transferee
under clause (iii) of Section 16.08(b) (without duplication
for any amounts deducted pursuant to Section 3.01), minus
(iii) all amounts paid to Broker and counsel for Transferor
pursuant to clauses (viii) and (ix) of Section 16.08(b) and
minus (iv) 50% of all amounts paid by Transferee under
clauses (iv) and (xi) of Section 16.08(b), all subject to
further adjustment as provided in the first paragraph of
Article VI, in Section 6.02 and as otherwise expressly
provided herein.
(2)
<PAGE>
"Agreement" shall mean this Contribution and
Exchange Agreement, as amended or modified from time to time
hereafter in accordance with the terms hereof.
"Amended Partnership Agreement" shall mean the
Second Amendment and Restated Agreement of Limited
Partnership of the Partnership in substantially the form of
the draft dated June 10, 1998, provided by Transferee to
Transferor, with such modifications thereto as do not,
individually or in the aggregate, adversely affect
Transferor.
"Anchor" shall mean (i) any Tenant of any of the
Malls leasing an aggregate amount of space in such Mall in
excess of 50,000 square feet of gross leasable area with an
entrance or entrances that open into the enclosed, air-
conditioned common area of the Mall or (ii) any Adjoining
Owner owning or leasing a site at any Mall on which is
erected a store in excess of 50,000 square feet of gross
leasable area.
"Appurtenances" shall mean, with respect to each
Center and the applicable Land, all right, title and
interest, if any, of Transferor in and to the following:
(i) all land lying in the bed of any street, highway, road or
avenue, open or proposed, public or private, in front of or
adjoining the Land, to the center line thereof; (ii) all
rights of way, highways, public places, easements,
appendages, appurtenances, sidewalks, alleys, strips and
gores of land adjoining or appurtenant to the Land which are
now or hereafter used in connection with the Center;
(iii) all awards to be made in lieu of any of the foregoing,
or for damages to the Land by reason of the change of grade
of any street, highway, road or avenue; and (iv) all
easements, rights and privileges benefiting the applicable
Land, including those under the applicable Operating
Agreement or Agreements.
"A Units" shall have the meaning set forth in
Section 2.01.
"B Units" shall have the meaning set forth in
Section 2.02.
"Broker" shall have the meaning set forth in
Section 13.01.
(3)
<PAGE>
"Business Day" shall mean any day other than a
Saturday, a Sunday or a day on which national banking
institutions in New York City are authorized or required to
close.
"Centers" shall mean Hickory Hollow Mall, Courtyard
at Hickory Hollow, Rivergate Mall, Village at Rivergate and
Lion's Head Village.
"CIGNA" shall mean the Connecticut General Life
Insurance Company, a Connecticut corporation, and its
successors and assigns.
"Closing" shall mean the closing of the
contribution of the Centers by Transferor to Transferee
provided for in Article V.
"Closing Date" shall have the meaning set forth in
Section 5.01.
"Code" shall mean the Internal Revenue Code of
1986, as amended.
"Common Stock" shall mean the common stock, par
value $.01 per share, of Parent.
"Courtyard at Hickory Hollow" shall mean, with
respect to the premises described in Exhibit A-2 hereto,
collectively, the Land, the Improvements, the Personal
Property, the Intangible Personal Property, the Leases, the
Operating Agreements and the Other Agreements.
"Deed" shall have the meaning set forth in
Section 7.01(a).
"Deficiency Amount" shall mean, with respect to any
matter that results in a failure of Transferee's conditions
to close set forth in Section 10.02 and that relates
exclusively to one or more Strip Centers, the lesser of
(i) the cost to cure such matter (if such matter is
susceptible to cure by the payment of money) or (ii) if such
matter can otherwise be resolved by the payment of a readily
quantifiable sum of money, such amount as determined in
accordance with Section 10.04(c).
"Deposit" shall have the meaning set forth in
Section 3.01(b).
(4)
<PAGE>
"Deposited Cash" shall have the meaning set forth
in Section 14.05.
"Deposited Units" shall have the meaning set forth
in Section 14.05.
"Designated Properties" shall have the meaning set
forth in Section 3.06.
"Environmental Requirements" shall mean all
applicable statues, laws, ordinances, rules, and regulations
of all Governmental Authorities relating to the environment
or the impact of the environment on human health and safety.
"Escrow Agent" shall have the meaning set forth in
Section 3.02(a).
"Escrow Fund" shall have the meaning set forth in
Section 14.05.
"Escrow Income" shall have the meaning set forth in
Section 14.05.
"Excepted Items" shall mean, with respect to each
Center: (i) all items of personal property owned by the
Managing Agent, Tenants, subtenants, independent contractors,
business invitees, utilities or Adjoining Owners; (ii) all
items of personal property not owned but leased by Transferor
(it being understood that at the Closing such leases are to
be assigned by Transferor pursuant to the terms of this
Agreement); (iii) all cash on hand, checks, money orders,
prepaid postage in postage meters and, subject to Article VI,
accounts receivable and (iv) all software, operating manuals,
marketing materials and other similar items proprietary to
any Managing Agent (provided that Transferee shall be
furnished with hard copies of all operating data contained
therein).
"Excluded Center" shall have the meaning set forth
in Section 10.04.
"Existing Debt" shall mean (i) the portion of the
indebtedness of Transferor held by the State Street Bank and
Trust Company, as trustee for the Telephone Real Estate
Equity Trust evidenced or secured by the documents listed on
Part A of Schedule 1 which is allocable to the Properties,
which allocable portion on the Closing Date shall consist of
approximately $112,878,000 (including principal and
(5)
<PAGE>
contingent interest based on the proceeds of the transactions
contemplated hereby), together with all other interest,
prepayment premiums, fees and other amounts related thereto
but exclusive of amounts referred to in clause (ii) of this
definition, the precise amount of which allocable portion
shall be as set forth in the Payoff Letter to be provided by
the holder of such indebtedness and (ii) the indebtedness of
Transferor held by Connecticut General Life Insurance Company
in the aggregate principal amount of approximately
$109,034,000 evidenced or secured by the documents listed on
Part B of Schedule 1, together with all principal, interest,
prepayment premiums, fees and other amounts related thereto.
"Family Member" shall mean a spouse, a child
(natural or adopted), a spouse of any such child, a
grandchild, a sister, a brother, a parent, a lineal
descendant of any of the foregoing or a trust for the benefit
of any of the foregoing, but if any such Person is less than
21 years of age at the time of any proposed transfer, then
such transfer may only be made to a trustee of a valid trust
for the benefit of such Person, which trust shall not
terminate prior to the beneficiary of such trust (or
beneficiaries if there is more than one) attaining the age of
21.
"General Partner" shall mean CBL Holdings I, Inc.,
a Delaware corporation.
"Governmental Authorities" shall mean all agencies,
bureaus, departments and officials of federal, state, county,
municipal and local governments and public authorities.
"Guarantee" shall mean the guarantee of O'Connor
Realty Investors II L.P. and either Hexalon Real Estate, Inc.
or Rodamco North America BV (at Transferor's election) in
substantially the form of Exhibit H hereto.
"Hazardous Substance" shall mean (i) any "hazardous
substance" as defined in Section 101(14) of the Comprehensive
Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, (ii) asbestos and/or asbestos
containing materials in friable form and (iii) petroleum,
including crude oil or any fraction thereof.
"Hickory Hollow Mall" shall mean, with respect to
the premises described in Exhibit A-1 hereto, collectively,
the Land, the Improvements, the Personal Property, the
(6)
<PAGE>
Intangible Personal Property, the Leases, the Operating
Agreements and the Other Agreements.
"Impositions" shall mean, with respect to each
Center, all real estate and personal property taxes, general
and special assessments, water and sewer charges, license
fees and other fees and charges assessed or imposed by
Governmental Authorities upon the applicable Property,
Intangible Personal Property and/or Personal Property.
"Improvements" shall mean, with respect to each
Center, all buildings, facilities, structures and
improvements now located or hereafter erected on the Land,
and all fixtures constituting a part thereof, other than
those owned by Adjoining Owners.
"Income" shall have the meaning set forth in
Section 3.02(a).
"Indemnified Transferee Persons" shall have the
meaning set forth in Section 14.07.
"Indemnified Transferor Persons" shall have the
meaning set forth in Section 14.08.
"Insurance Requirements" shall mean (i) the
requirements of the issuer of any insurance policy with
respect to any Center or any portion thereof and (ii) the
rules, regulations, orders and other requirements of any
board of fire underwriters or fire insurance rating
organization or any other body performing the same or similar
functions, which are in effect at the time in question and
which are applicable to any Center or any portion thereof;
provided, however, that a violation of any items referred to
in clause (i) above shall not be deemed to exist unless an
insurance carrier for such Center shall require the
remediation of any matter pursuant to any such requirement,
rule, regulation or order as a condition to the continuation
or renewal of its coverage on the same economic terms and
conditions.
"Intangible Personal Property" shall mean, with
respect to each Center, all right, title and interest of
Transferor in and to all telephone numbers listed after the
name of the Center, all names, trade names, designations,
logos, service marks, licenses and permits and the
appurtenant goodwill, used in connection with operation of
the Center (other than the names or variations thereof of
(7)
<PAGE>
Transferor, The O'Connor Group, the Managing Agent, Adjoining
Owners and Tenants), agreements to operate for specific
periods, radius restriction agreements and similar agreements
made by Tenants and Adjoining Owners, whether in their Leases
or Operating Agreements or in separate agreements, and all
similar items of intangible personal property owned by
Transferor and utilized solely in connection with the
operation of the Center (excluding Excepted Items).
"knowledge" or "notice" when used in respect of
Transferor shall mean, without independent investigation
other than inquiry of the Managing Agents, the actual
knowledge of or written notice received by any of Jeremiah W.
O'Connor, Jr., Glenn J. Rufrano, Jeffrey E. Pertz or
Richard L. Taylor.
"Land" shall mean the following: (i) with respect
to Hickory Hollow Mall, all those certain lots, pieces or
parcels of land situate, lying and being in the County of
Davidson, State of Tennessee, more particularly described in
Exhibit A-1 annexed hereto and made a part hereof, together
with the Appurtenances, (ii) with respect to Courtyard at
Hickory Hollow, all those certain lots, pieces or parcels of
land situate, lying and being in the County of Davidson,
State of Tennessee, more particularly described in
Exhibit A-2 annexed hereto and made a part hereof, together
with the Appurtenances, (iii) with respect to Rivergate Mall,
all those certain lots, pieces or parcels of land situate,
lying and being in the County of Davidson, State of
Tennessee, more particularly described in Exhibit A-3 annexed
hereto and made a part hereof, together with the
Appurtenances, (iv) with respect to Village at Rivergate, all
those certain lots, pieces or parcels of land situate, lying
and being in the County of Davidson, State of Tennessee more
particularly described in Exhibit A-4 annexed hereto and made
a part hereof, together with the Appurtenances, (v) and with
respect to Lion's Head Village, all those certain lots,
pieces or parcels of land situate, lying and being in the
County of Davidson, State of Tennessee, more particularly
described in Exhibit A-5 annexed hereto and made a part
hereof, together with the Appurtenances.
"Leases" shall mean, with respect to each Center,
all leases, licenses, concessions and other forms of
agreement, written or oral, however denominated, wherein
Transferor (as a party named therein or the successor
thereto) grants to any party or parties, other than the
Managing Agent, the right of use or occupancy of any portion
(8)
<PAGE>
of the Center, and all renewals, modifications, amendments,
guaranties and other agreements affecting the same, but
expressly excluding the applicable Operating Agreements and
Other Agreements.
"Leasing Agreement" shall mean, with respect to
each Strip Center, the agreement, as amended, for the leasing
of such Center, the document(s) comprising which are listed
in Exhibit E.
"Leasing Agent" shall mean, with respect to each
Strip Center, the leasing agent at the time under the Leasing
Agreement for such Strip Center.
"Leasing Costs" shall have the meaning set forth in
Section 6.02.
"Legal Requirements" shall mean, with respect to
each Center, Insurance Requirements, Environmental
Requirements and all statutes, laws, ordinances, rules,
regulations, executive orders and requirements of all
Governmental Authorities which are applicable to such Center
or any part thereof or the use or manner of use thereof, or
to the owners, Tenants or occupants thereof in connection
with such ownership, occupancy or use.
"Letter of Credit" shall mean an irrevocable letter
of credit in the stated amount of $3,500,000, expiring on
September 15, 1998, issued by First Tennessee Bank and
otherwise in substantially the form set forth in Exhibit W.
"Lion's Head Village" shall mean, with respect to
the premises described in Exhibit A-5 hereto, collectively,
the Land, the Improvements, the Personal Property, the
Intangible Personal Property, the Leases, the Operating
Agreements and the Other Agreements.
"Losses" shall mean, with respect to any obligation
to indemnify any Person, any and all claims, actions, suits,
demands, losses, damages, liabilities, obligations,
judgments, settlements, awards, penalties, costs or expenses
incurred by such Person, including reasonable attorneys' fees
and expenses.
"Make Whole Amount" shall have the meaning set
forth in Section 3.09.
(9)
<PAGE>
"Malls" shall mean Hickory Hollow Mall and
Rivergate Mall.
"Management Agreement" shall mean, with respect to
each Center, the agreement, as amended, for the management
(and, with respect to the Malls, leasing) of the Center, the
document(s) comprising which are listed in Exhibit E.
"Managing Agent" shall mean, with respect to each
Center, the manager at the time under the Management
Agreement for such Center.
"Material Adverse Effect" shall mean a material
adverse effect (i) on the condition (financial or otherwise),
business, liabilities, properties, assets, or results of
operations of Parent and its subsidiaries (including the
Partnership), taken as a whole or (ii) on the ability of
Transferee or Parent to perform their respective obligations
under or to consummate the transactions contemplated by this
Agreement.
"New Lease Notice" shall have the meaning set forth
in Section 11.04.
"Non-Mall Properties" shall have the meaning set
forth in Section 3.06.
"Operating Agreements" shall mean, with respect to
each Center, all agreements and/or ground or operating
leases, as amended or supplemented, by and between Transferor
or its predecessor in title to the Center and the Adjoining
Owners.
"Other Agreements" shall mean, with respect to each
Center, all contracts, agreements and documents pertaining to
the Center to which Transferor or its predecessor in interest
is a party and by which Transferor is bound, other than the
Operating Agreements, the Management Agreements, the Leasing
Agreements, the Leases and the documents listed on
Schedule 1, including all service contracts, construction
contracts, leases of personal property and utility
agreements, together with all amendments, supplements and
modifications thereto.
"Other Charges" shall mean all items which are
included in Rents other than fixed, minimum, percentage and
overage rents.
(10)
<PAGE>
"Parent" shall mean CBL & Associates Properties,
Inc., a Delaware corporation.
"Partnership" shall have the meaning set forth in
the caption of this Agreement.
"Partnership Agreement" shall mean the Amended and
Restated Agreement of Limited Partnership of the Partnership
dated November 3, 1993, as amended by Modification No. One
dated March 31, 1997 and Modification No. Two dated February
19, 1998, provided that from and after the time, if any, that
the Amended Partnership Agreement shall be executed and
delivered and become effective, "Partnership Agreement" shall
mean the Amended Partnership Agreement.
"Payoff Letters" shall have the meaning set forth
in Section 3.03.
"Permitted Encumbrances" shall have the meaning set
forth in Section 4.01.
"Permitted Investments" shall mean investments in
(i) United States government securities or securities of
agencies of the United States government which are guaranteed
by the United States government and having a maturity of one
year or less, (ii) certificates of deposit, banker's
acceptances and time deposits and money market deposit
accounts issued or offered by commercial banks having a
combined capital and surplus in excess of $1 billion
organized under the laws of the United States or any
political subdivision thereof and having a maturity of one
year or less, (iii) commercial or finance company paper of
companies organized under the laws of any state of the
United States or any political subdivision thereof having a
rating assigned to such commercial paper of one of the two
highest unsecured debt ratings by Standard & Poor's
Corporation or Moody's Investors Service, Inc. and having a
maturity of one year or less, (iv) repurchase obligations
with respect to any security described in clause (i) above
entered into with a depository or trust company, and (v) such
other investments as the Transferee and Transferor may agree
upon in writing.
"Permitted Transferee" shall have the meaning set
forth in Section 3.05(b).
(11)
<PAGE>
"Person" shall mean an individual, a corporation, a
limited liability company, a partnership, an association, a
trust or any other entity or organization.
"Personal Property" shall mean, with respect to
each Center, all apparatus, machinery, devices,
appurtenances, equipment, furniture, furnishings, seasonal
decorations and other items of personal property (other than
Intangible Personal Property and the Excepted Items) owned by
Transferor and located at and used in connection with the
ownership, operation or maintenance of the Center.
"Property" shall mean, with respect to each Center,
the Land and the Improvements.
"Recording Office" shall mean the appropriate
office or offices in the State of Tennessee for the recording
or filing of the documents to be delivered at Closing which
are to be recorded or filed therein in order to give notice
of the conveyance of the Centers to third parties.
"Registration Rights Agreement" shall mean the
Registration Rights Agreement between Parent and Transferor
to be executed as of the Closing Date and in substantially
the form of Exhibit L.
"Rent Roll" shall mean, with respect to each
Center, the rent roll with respect to such Center attached
hereto as Exhibit F.
"Rents" shall mean all fixed, minimum, additional,
percentage, overage and escalation rents, common area and/or
mall maintenance charges, advertising and promotional
charges, insurance charges, rubbish removal charges,
sprinkler charges, shoppers aid charges, water charges,
utility charges, HVAC charges and other amounts payable by
Tenants under the Leases or payable by Adjoining Owners under
the Operating Agreements.
"Required Estoppel Letters" shall have the meaning
set forth in Section 15.01.
"Rivergate Mall" shall mean, with respect to the
premises described in Exhibit A-3 hereto, collectively, the
Land, the Improvements, the Personal Property, the Intangible
Personal Property, the Leases, the Operating Agreements and
the Other Agreements.
(12)
<PAGE>
"SEC" has the meaning set forth in Section 9.01(i).
"SEC Documents" has the meaning set forth in
Section 9.01(i).
"Section 3.09 Notice" shall have the meaning set
forth in Section 3.09.
"Strip Centers" shall mean Courtyard at Hickory
Hollow, Village at Rivergate and Lion's Head Village.
"Successor Designated Property" shall have the
meaning set forth in Section 3.06.
"Ten Day Period" shall have the meaning set forth
in Section 10.01.
"Tenants" shall mean the tenants, licensees,
concessionaires or other users or occupants under Leases.
"Termination Date" shall mean the first anniversary
of the Closing Date.
"Title Company" shall mean Lawyers Title Insurance
Corporation.
"Transferee" shall have the meaning set forth in
the caption of this Agreement.
"Transferee's Environmental Reports" means the
following materials prepared as part of Transferee's
investigation of the Centers: (i) Phase I Environmental Site
Assessment for Hickory Mall prepared by Cristerium Engineers
dated June 5, 1998; (ii) Phase I Environmental Site
Assessment for Courtyard at Hickory Hollow prepared by
Criterium Engineers dated June 5, 1998; (iii) Phase I
Environmental Site Assessment for Rivergate Mall prepared by
Criterium Engineers dated June 5, 1998; (iv) Phase I
Environmental Site Assessment for Village at Rivergate
prepared by Criterium Engineers dated June 5, 1998; (v) Phase
I Environmental Site Assessment for Lion's Head Village
prepared by Criterium Engineers dated June 5, 1998; (vi) a
letter dated June 5, 1998 from Criterium Engineers to
Development Options, Inc.; and (vii) a letter dated June 11,
1998 from Criterium Engineers to Development Options, Inc.
"Transferor" shall have the meaning set forth in
the caption of this Agreement.
(13)
<PAGE>
"Transferor's Accountants" shall mean Arthur
Andersen LLP or such other comparable, nationally prominent
independent certified accountants selected by J.W. O'Connor &
Co. Incorporated.
"Transferor's Copy" or "Transferor's Copies" shall
mean Transferor's executed counterpart of the instrument in
question or, if an executed counterpart is not in
Transferor's or the Managing Agent's possession or control,
such conformed or photostatic copies as may be in
Transferor's or the Managing Agent's possession or control.
"Transferor's Estoppel Letter" shall have the
meaning set forth in Section 15.02.
"Uncapped Provisions" shall mean the provisions of
Section 2.03; Section 3.03(b); Section 3.04; Section 3.05(b);
any agreement, information, certificate or documentation
entered into or provided pursuant to Section 3.05(b); Section
3.05(d); any expense reimbursement arrangements entered into
pursuant to Section 3.06(a) or 3.06(c); Section 3.09(a); the
last sentence of Section 3.09(b); Section 3.09(d);
Section 3.10; any agreement(s) or questionnaires delivered
pursuant to Section 3.10; and Section 14.05(d), in each case
as such provisions relate to Transferor, Permitted
Transferees or any other Unit Holder.
"Unit" shall mean one unit of limited partnership
interest in Transferee.
"Unit Holder" shall mean Transferor and any
Permitted Transferee to whom Units are transferred or issued
in accordance with Sections 3.05(b) or 3.10 or in accordance
with the terms and conditions of the Partnership Agreement.
"Unit Value" shall mean, with respect to a Unit, as
of a particular date, an amount equal to the average of the
closing sale prices for a share of the Common Stock on the
New York Stock Exchange, as reported in The Wall Street
Journal, Northeastern edition, for each of the 10 consecutive
trading days ending with the complete trading day immediately
prior to such date.
"Village at Rivergate" shall mean, with respect to
the premises described in Exhibit A-4 hereto, collectively,
the Land, the Improvements, the Personal Property, the
Intangible Personal Property, the Leases, the Operating
Agreements and the Other Agreements.
(14)
<PAGE>
"Violations" shall mean, with respect to each
Center, violations of Legal Requirements with respect to the
Center.
SECTION 1.02. Terms Generally. Definitions in
this Agreement apply equally to both the singular and plural
forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein
to Articles, Sections, Exhibits and Schedules shall be deemed
to be references to Articles and Sections of, and Exhibits
and Schedules to, this Agreement unless the context shall
otherwise require. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase
"without limitation". The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular article,
section, paragraph or subdivision.
ARTICLE II
Agreement To Contribute the Centers
SECTION 2.01 Contribution of Village at Rivergate
and Lion's Head Village. Upon and subject to the terms and
conditions of this Agreement, Transferor agrees to contribute
fee simple title to the Properties comprising Lion's Head
Village and Village at Rivergate and good and valid title in
the remainder of such Centers to Transferee and Transferee
agrees to accept fee simple title to such Properties and good
and valid title to the remainder of such Centers from
Transferor, subject only to the Permitted Encumbrances and in
exchange therefore Transferee shall issue Units to Transferor
(or its permitted designees) (the "A Units") as provided in
Article III.
SECTION 2.02. Contribution of Hickory Hollow Mall,
Courtyard at Hickory Hollow and Rivergate Mall. Upon and
subject to the terms and conditions of this Agreement,
Transferor agrees to contribute fee simple title to the
Properties comprising Hickory Hollow Mall, Courtyard at
Hickory Hollow and Rivergate Mall and good and valid title in
the remainder of such Centers to Transferee and Transferee
agrees to accept fee simple title to such Properties and good
and valid title to the remainder of such Centers from
Transferor, subject only to the Permitted Encumbrances and
the Existing Debt and in exchange therefore Transferee shall
(15)
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issue Units (the "B Units") to Transferor (or its permitted
designees) as provided in Article III.
SECTION 2.03 Tax Treatment. (a) For Federal
income tax purposes, the transactions contemplated by this
Article II shall be treated by Transferor and Transferee as
separate tax-free capital contributions pursuant to
Section 721 of the Code and Transferor and Transferee agree
that the Units received from each of the foregoing
transactions shall have different characteristics for Federal
income tax purposes. Based on the assumption that the Unit
Holders other than HRE Nashland, Inc. have at least
$76,000,000 of so-called "Section 704(c) minimum gain" as
reflected in Treasury Regulation Section 1.752-3(a)(2), such
Unit Holders shall be allocated all the liabilities required
to be allocated to the Unit Holders pursuant to
Section 3.06(a). Transferor and Transferee agree to file all
tax reports, returns, claims and other statements (and to
cause their respective affiliates to file all their tax
reports, returns, claims and other statements) on a basis
consistent with the foregoing treatment (and the treatment
contemplated by Section 3.06) and shall not make any
inconsistent written statement or take any inconsistent
position on any returns, on any refund claim, during the
course of any Internal Revenue Service or other tax audit,
for any financial or regulatory purpose, or in any litigation
or investigation or otherwise, unless in the good faith view
of counsel for the party in question (after consultation with
the other party) there is no reasonable basis to maintain
such position as a result of a change in applicable law after
the date hereof. The provisions of this Article II shall
survive the Closing.
(b) Transferee does not guarantee or represent
that the Federal income tax consequences of the transactions
contemplated by this Agreement will be as intended by the
parties and shall not be liable to the Unit Holders if the
tax consequences differ from such expectations unless such
difference results from Transferee's breach of this
Agreement.
(16)
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ARTICLE III
Agreed Value; Existing Debt
SECTION 3.01. Agreed Value. (a) In consideration
for the contribution by Transferor of the Centers as provided
in Article II, at the Closing Transferee agrees to (i) accept
title to Village at Rivergate subject only to the Permitted
Encumbrances, (ii) accept title to Lion's Head Village
subject only to the Permitted Encumbrances, (iii) accept
title to Hickory Hollow Mall, Courtyard at Hickory Hollow and
Rivergate Mall subject only to the Permitted Encumbrances and
the Existing Debt, (iv) issue to Transferor (or to any
Permitted Transferee which meets the requirements of
Section 3.10) a number of Units having an aggregate Unit
Value equal to the Agreed Value minus the amount to be paid
by Transferee to prepay the Existing Debt pursuant to
Section 5.02 (and to pay all interest, prepayment premiums,
fees and other amounts related thereto) and (v) prepay the
Existing Debt as provided in Section 5.02. Notwithstanding
anything to the contrary contained herein, in no event will
Transferee be required to issue Units with an aggregate Unit
Value as of the Closing Date in excess of $19 million or less
than $15 million (which $19 million and $15 million amounts
shall be increased by the aggregate Unit Value of the Units,
if any, to be issued pursuant to Section 3.03(b)); provided,
however, that such $19 million and $15 million amounts (as so
increased) are each subject to adjustment by the amount of
any adjustment to the Agreed Value made in accordance with
Article VI. No fractional Units shall be issued to
Transferor pursuant to this Section 3.01; in lieu thereof on
the Closing Date Transferee shall pay Transferor cash. At
least three Business Days prior to the Closing Transferor
will deliver to Transferee its good faith estimate of the
number of Units to be issued at the Closing based upon its
estimate of the Agreed Value as of the Closing after giving
effect to the adjustments thereto specified in this
Agreement.
(b) In order to secure its obligations under this
Agreement, within two Business Days after this Agreement has
been executed and delivered by Transferor and Transferee,
Transferee, at its option, shall either (i) deposit in an
account designated by Escrow Agent the sum of $3,500,000 in
immediately available funds or (ii) deliver to Escrow Agent
the Letter of Credit. The funds or Letter of Credit so
deposited or delivered (the "Deposit") shall be subject to
the provisions of Section 3.02.
(17)
<PAGE>
SECTION 3.02. Escrow Provisions. (a) The Title
Company (referred to in this Section and sometimes in other
sections hereof as "Escrow Agent") shall hold the Deposit in
escrow until the Closing or such other time as is specified
herein, and shall pay over or apply the Deposit in accordance
with the terms of this Section 3.02. If at any time the
Deposit is not represented by the Letter of Credit, the
Deposit shall be held in an interest-bearing bank account at
The Chase Manhattan Bank, N.A., or in such other investments
as may be agreed to in writing by Transferor and Transferee.
All interest or other income, if any, earned on the Deposit
(the "Income") shall be paid to or applied for the benefit of
Transferee unless the Deposit is to be paid to Transferor as
provided in Section 14.01 or 16.11, in which case the Income
shall be paid to Transferor. The party that receives the
Income or the benefit thereof shall be responsible for paying
any income taxes thereon. The tax identification numbers of
the parties hereto shall be furnished to Escrow Agent upon
request.
(b) Any disposition of the Deposit (and the
Income, if any,) shall be effected as follows:
(i) If the Closing occurs, the Deposit shall be
returned to Transferee if it is represented by the
Letter of Credit and otherwise the Deposit (and the
Income, if any) shall be paid to the order of
Transferee.
(ii) If this Agreement is terminated pursuant to
Section 14.01 or 16.11, then, (i) if the Deposit is
represented by the Letter of Credit, Escrow Agent shall
as promptly as practicable draw under the Letter of
Credit for the full amount available thereunder and as
promptly as practicable pay the proceeds of such drawing
to the order of Transferor as liquidated damages or (ii)
if the Deposit is not represented by the Letter of
Credit, Escrow Agent shall as promptly as practicable
pay the Deposit (and the Income, if any) to the order of
Transferor as liquidated damages.
(iii) If the Closing does not occur for any reason
other than termination pursuant to Section 14.01 or
16.11, the Deposit shall be returned to Transferee if it
is represented by the Letter of Credit and otherwise the
Deposit (and the Income, if any) shall be paid to the
order of Transferee.
(18)
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(c) Escrow Agent shall not be required to make any
disposition of the Deposit or the Income, if any, unless
(i) Escrow Agent is directed to do so in writing by
Transferor and Transferee or (ii) Escrow Agent is directed to
do so in writing by the party which claims to be entitled to
receive the Deposit and the Income, if any, and the other
party does not object to such disposition within 10 days
after receipt by such party of notice thereof from Escrow
Agent or (iii) Escrow Agent is directed to do so by a final
order or judgment of a court as hereinafter provided;
provided, however, that if the Deposit is represented by the
Letter of Credit, unless Transferee shall have theretofore
furnished an extension of such Letter of Credit or such
Letter of Credit shall provide for automatic renewal of the
term thereof, Escrow Agent shall draw under the Letter of
Credit for the full amount available thereunder no sooner
than 10 days and no later than five days prior to the expiry
thereof and hold the proceeds of such drawing as the Deposit
in accordance with this Section 3.02. The notice given by
Escrow Agent pursuant to clause (ii) above shall state in
capital letters that failure of the addressee to object to
the disposition of the Deposit described in such notice
within 10 days after receipt by such party of such notice
shall constitute a waiver of the addressee's right to contest
or object to such disposition. In the event that any dispute
shall arise with respect to the entitlement of either party
to the Deposit (and the Income, if any) as set forth in this
Section 3.02, Escrow Agent shall continue to hold the Deposit
and any Income until otherwise directed by written
instruction from Transferor and Transferee or a final order
or judgment of a court of competent jurisdiction entered in
an action or proceeding to which Escrow Agent is a party. In
addition, in the event of any such dispute, Escrow Agent
shall have the right at any time to commence an action in
interpleader and to deposit the Deposit (and the Income, if
any) with the clerk of a court of appropriate jurisdiction in
the State of New York. Upon the commencement of such action
and the making of such deposit, Escrow Agent shall be
released and discharged from and of all further obligations
and responsibilities hereunder.
(d) The parties hereto acknowledge that Escrow
Agent is acting solely as a stakeholder at their request and
for their convenience, that with respect to the Deposit and
the Income, if any, Escrow Agent shall not be deemed to be
the agent of any of the parties hereto and that Escrow Agent
shall not be liable to either of the parties hereto for any
act or omission on its part unless taken or suffered in bad
(19)
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faith, in willful disregard of this Agreement or involving
gross negligence on the part of Escrow Agent. Escrow Agent
may act upon any instrument or other writing and upon
signatures believed by it in good faith to be genuine,
without any duty of independent verification, so long as
Escrow Agent is not grossly negligent in doing so. Escrow
Agent shall not be bound by any modification of this
Agreement unless the same is in writing and signed by the
parties hereto and a counterpart thereof is delivered to
Escrow Agent and, if Escrow Agent's duties, rights or
liabilities hereunder are affected, unless Escrow Agent shall
have given its prior consent thereto in writing. Escrow
Agent shall not be required or obligated to determine any
questions of law or fact. The parties hereto shall jointly
and severally indemnify and hold harmless Escrow Agent from
and against all costs, claims and expenses, including
reasonable attorneys' fees and litigation costs, incurred by
Escrow Agent in connection with the performance of its duties
under this Section 3.02 (including in an interpleader action
or other litigation regarding the disposition of the Deposit
(and the Income, if any)), except with respect to acts or
omissions taken or suffered by Escrow Agent in bad faith, in
wilful disregard of this Agreement or involving gross
negligence on the part of Escrow Agent.
(e) Escrow Agent shall have no liability for the
selection of any particular account or investment made by the
parties hereto, for fluctuations in the value of said account
or investment, for the amount of Income earned on said
account or investment or for any loss incurred in connection
therewith.
(f) Escrow Agent has acknowledged its agreement to
hold the Deposit and the Income, if any, and the Escrow Fund
in accordance with this Section 3.02 and Section 14.05 and to
perform its other obligations expressly set forth in this
Agreement by executing this Agreement, and Escrow Agent has
executed this Agreement solely for such purpose.
(g) References in succeeding provisions of this
Agreement to the Deposit shall be deemed to be references
both to the Deposit and the Income, if any.
SECTION 3.03. Terms Regarding Existing Debt.
(a) At the Closing, subject to the terms and conditions
hereof, (i) Village at Rivergate will be contributed to
Transferee subject only to the Permitted Encumbrances,
(ii) Lion's Head Village will be contributed to Transferee
(20)
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subject only to the Permitted Encumbrances, (iii) Hickory
Hollow Mall, Courtyard at Hickory Hollow and Rivergate Mall
will be contributed to Transferee subject only to the
Permitted Encumbrances and the Existing Debt, (iv) the
Existing Debt will be prepaid in accordance with Section 5.02
immediately upon the contribution of Hickory Hollow Mall,
Courtyard at Hickory Hollow and Rivergate Mall to Transferee
and (v) concurrently therewith Hickory Hollow Mall, Courtyard
at Hickory Hollow and Rivergate Mall will be encumbered by at
least $150,000,000 principal amount of nonrecourse mortgage
debt within the meaning of Treasury Regulation 1.752(a) all
as provided in Section 5.02. At least three Business Days
prior to the Closing Transferor will deliver to Transferee
payoff letters (the "Payoff Letters") from each lender
holding any Existing Debt setting forth all amounts that
would be due to such lender assuming the Existing Debt held
by such lender is prepaid in full on the Closing Date. The
Payoff Letter from each lender (or other documentation
obtained by Transferor from such lenders, the form of which
shall have been delivered to Transferee at least three
Business Days prior to the Closing Date) shall contain such
lender's express acknowledgment and agreement that Transferee
shall not have any liability or obligation (contingent or
otherwise) or be subject to any claim or cause of action
relating to the Existing Debt or arising under any document
evidencing, securing or relating to such Existing Debt
following payment of the amounts set forth in such Payoff
Letter; provided, however, that such acknowledgment and
agreement shall not be required from a holder of Existing
Debt who refuses to provide it if the Guarantee shall contain
an indemnity (in the form contemplated by Exhibit H annexed
hereto) from the guarantors thereunder whereby such
guarantors, jointly and severally, agree to indemnify, defend
and protect Transferee and hold Transferee harmless from and
against any and all Losses that Transferee may suffer or
incur as a result of any such lender asserting any claims
against Transferee under the terms of the documents
evidencing, securing or otherwise relating to the Existing
Debt held by such lender or otherwise in connection with such
Existing Debt.
(b) Transferor has informed Transferee that CIGNA
is holding an asbestos abatement escrow account in the
approximate amount of $650,000 and a real estate tax escrow
account in the approximate amount of $1,750,000, each of
which was established by Transferor, as collateral for the
Existing Debt held by CIGNA and that Transferor has requested
CIGNA to agree to arrangements that would permit the amounts
(21)
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in such escrow accounts to be applied at Closing to reduce
such Existing Debt. Transferor and Transferee agree that if
CIGNA is unwilling to make such arrangements, (i) the
Existing Debt to be paid off by Transferee will not be
reduced by any amounts in such escrow accounts, (ii) at the
Closing, Transferor will assign to Transferee all its right,
title and interest in such escrow accounts, (iii) Transferor
shall cause (and Transferee, at Transferor's request, shall,
without expense to it, reasonably cooperate in causing) such
escrow accounts to be liquidated promptly (and in any event
within 30 days) after the Closing and in connection therewith
shall cause Transferee to receive, as assignee of
Transferor's rights in such escrow accounts, the amount held
in such escrow accounts and (iv) promptly after receipt of
any amount from such escrow accounts, Transferee shall be
obligated to issue to Transferor (or to any Permitted
Transferee which meets the requirements of Section 3.10) a
number of Units having an aggregate Unit Value as of the
Closing Date equal to such amount so received (and the number
of Units so issued shall take into account a proration of any
regular quarterly distribution with respect to such Units,
such proration to be made as of the Closing Date in
accordance with the provisions of Section 6.04, in the same
manner as the Units issued on the Closing Date)) provided
that no fractional Units shall be issued and in lieu thereof
Transferee shall pay Transferor cash), subject only to
Transferor's (or any such Permitted Transferee's) execution
of a written agreement to become a limited partner of
Transferee and to be bound by all of the terms and conditions
of the Partnership Agreement and in compliance with the other
provisions of Section 3.10 and (v) any Units issued pursuant
to the foregoing clause (iv) shall be subject to the same
rights and restrictions (including those of the Registration
Rights Agreement) applicable to the Units issued at the
Closing.
SECTION 3.04. Allocation of Agreed Value. The
Agreed Value shall be allocated among the Centers as follows:
(a) The portion of the Agreed Value attributable
to Hickory Hollow Mall is 51.11% thereof;
(b) The portion of the Agreed Value attributable
to Courtyard at Hickory Hollow is 2.38% thereof;
(c) The portion of the Agreed Value attributable
to Rivergate Mall is 41.06% thereof;
(22)
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(d) The portion of the Agreed Value attributable
to Village at Rivergate is 2.12% thereof;
(e) The portion of the Agreed Value attributable
to Lion's Head Village is 3.33% thereof.
Transferor and Transferee agree to file all tax reports,
returns, claims and other statements (and to cause their
respective affiliates to file all their tax reports, returns,
claims and other statements) on a basis consistent with such
allocation and shall not make any inconsistent written
statement or take any inconsistent position on any returns,
on any refund claim, during the course of any Internal
Revenue Service or other tax audit, for any financial or
regulatory purpose, or in any litigation or investigation or
otherwise, unless in the good faith view of counsel for the
party in question (after consultation with the other party)
there is no reasonable basis to maintain such position as a
result of a change in applicable law after the date hereof.
The provisions of this Section 3.04 shall survive the
Closing.
SECTION 3.05. Agreements Regarding the
Partnership. (a) Transferor agrees at the Closing to become
a limited partner of the Partnership and to be bound by all
of the terms and conditions of the Partnership Agreement, and
Transferee agrees to admit Transferor as a limited partner of
the Partnership as of the Closing Date.
(b) By execution of this Agreement in its capacity
as the general partner of the Partnership, the General
Partner hereby grants all consents and approvals required
from it pursuant to the Partnership Agreement in order to
permit any Unit Holder, upon written notice to the
Partnership, to transfer all or a portion of the Units issued
pursuant hereto to any Permitted Transferee and to have such
Permitted Transferee admitted as a limited partner of the
Partnership upon such Permitted Transferee's written
agreement to become a limited partner of the Partnership and
to be bound by all of the terms and conditions of the
Partnership Agreement; provided, however, that (i) the Units
issued pursuant hereto may not be transferred if, following
such transfer, there are more than 20 record owners of the
Units issued pursuant hereto, (ii) a Permitted Transferee
shall not be entitled to be admitted as a limited partner of
the Partnership unless such Permitted Transferee shall
provide such information and documentation as may be
reasonably requested by Transferee to confirm that such
(23)
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Permitted Transferee is an Accredited Investor, provided that
Transferee agrees that the information and agreement required
by Section 3.10 shall be sufficient for purposes hereof with
respect to any Permitted Transferee identified in
Section 3.10, provided the substance of the underlying facts
supports the conclusion that such Transferee is an Accredited
Investor and (iii) any transfer shall be subject to the
restrictions in Section 9.3 of the Amended Partnership
Agreement (other than clause (ii) thereof). "Permitted
Transferee" shall mean (i) any Person which owns or holds a
direct or indirect interest in Transferor and, in the case of
any such Person who is an individual, such individual's
Family Members or trusts created for their benefit, (ii) any
entity controlled by or under common control with an entity
referred to in clause (i) and (iii) any bona fide pledgee of
Units issued pursuant hereto after a default on an obligation
secured by the pledge or to a bona fide purchaser for value
following such default. In the notice to Transferee, the
Unit Holder desiring to effect any such transfer shall
certify that the person to whom the Units are to be
transferred is a Permitted Transferee. In addition to the
transfer rights granted pursuant to this Section 3.05(b), any
Unit Holder shall also be permitted to transfer the Units
issued pursuant hereto in accordance with the terms and
conditions of the Partnership Agreement.
(c) Transferee and General Partner agree (i) not
to amend or modify the Partnership Agreement prior to the
Closing Date in a manner that would adversely affect
Transferor or any Permitted Transferee (it being expressly
agreed that amendments providing for the issuance by
Transferee of preferred partnership interests having
substantially the same economic terms as shares of preferred
stock issued by Parent shall be permitted) and (ii) to
deliver to Transferor at least five Business Days prior to
the Closing certified copies of any amendments to the
Partnership Agreement effected prior to the Closing Date,
except that the foregoing shall not be deemed to prohibit the
execution and delivery of the Amended Partnership Agreement.
If the Amended Partnership Agreement shall be executed and
delivered prior to the Closing, Transferee shall promptly
deliver a certified copy thereof as so executed to Transferor
but in any event prior to the Closing. If the Amended
Partnership Agreement shall not have been executed and
delivered prior to the Closing, Transferor agrees to grant or
caused to be granted at the Closing an irrevocable proxy to
Parent, in form and substance reasonably satisfactory to
Parent, authorizing Parent to vote the Units issued pursuant
(24)
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to this Agreement in favor of the approval of the Amended
Partnership Agreement.
(d) Without limiting any other rights granted
hereunder or under any documents delivered pursuant hereto,
Transferor (and its permitted designees and transferees who
become holders of any of the Units issued pursuant to this
Agreement) shall be entitled to the Rights (as defined in the
Amended Partnership Agreement); provided, however, that
(i) from and after any distribution in kind of the Units
issued pursuant hereto to Transferor's partners, the
restrictions set forth in Section 4 of Exhibit D to the
Amended Partnership Agreement shall not apply to any Unit
Holder other than HRE Nashland, Inc. and its affiliates,
except that Section 4(a) of Exhibit D to the Amended
Partnership Agreement, as it applies to HRE Nashland, Inc.
and its affiliates, shall be deemed to refer to "two (2)
Exchange Notices" rather than "one (1) Exchange Notice", (ii)
in any case where the Exchange Consideration (as defined in
the Amended Partnership Agreement) is cash in an amount less
than or equal to $750,000 the closing date for the payment
thereof shall be within 30 days after the receipt by Parent
of the related Exchange Notice (as defined in the Amended
Partnership Agreement) (and the provisions of clause (B),
including the proviso thereto, of Section 6 of Exhibit D to
the Amended Partnership Agreement shall not apply), (iii) in
any case where the Exchange Consideration is cash in an
amount greater than $750,000 the second reference to "sixty
(60)" in the proviso to clause (B) of Section 6 of Exhibit D
to the Amended Partnership Agreement shall be deemed changed
to "thirty (30)" and (iv) the provisions of Section 7 of
Exhibit D to the Amended Partnership Agreement shall not be
given effect with respect to any exercise of the Rights in
respect of such Units.
(e) The provisions of this Section 3.05 shall
survive the Closing.
SECTION 3.06. Certain Tax Matters. (a) Except to
the extent repayment of any such debt is required under the
applicable loan documents as a result of a casualty or
condemnation, for a period of 15 years after the Closing
Date, the Transferee shall cause the assets it acquires
pursuant to this Agreement (the "Designated Properties") or
any Successor Designated Properties to be subject to one or
more nonrecourse liabilities within the meaning of Treasury
Regulation 1.752-1(a)(2) (as in effect as of the date
hereof) aggregating at least $150,000,000 so as to cause at
(25)
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least $76,000,000 of such debt to be allocable to the Unit
Holders pursuant to Regulation 1.752-3(a)(2) (as in effect
as of the date hereof) (based on the assumption that the
initial tax basis of the Centers (other than Lion's Head
Village and Village at Rivergate) is equal to the amount
certified by Transferor to Transferee within 60 days after
the Closing Date, but in no event exceeding $74,000,000);
provided, however, that neither Lion's Head Village nor
Village at Rivergate (nor any of their Successor Designated
Properties nor any other assets of Transferee) (the "Non-Mall
Properties") shall be encumbered by any of the indebtedness
required to be maintained pursuant to this Section 3.06(a).
For the avoidance of doubt, the parties agree that the
proviso in the preceding sentence shall not prohibit
Transferee from encumbering or otherwise allowing the Non-
Mall Properties to serve as collateral for indebtedness also
secured by the other Designated Properties, so long as at
least $150,000,000 principal amount of such indebtedness is
properly allocable solely to such other Designated Properties
for purposes of Treasury Regulation Section 1.752-3(a)(2) as
in effect on the date hereof and the other requirements of
the first sentence of this Section 3.06 are satisfied.
Between the date hereof and the Closing Date Transferor will
cooperate with such reasonable requests of the proposed
lender of the indebtedness required to be maintained pursuant
to this Section 3.06(a) (or any other indebtedness that
Transferee desires to incur in connection with the
transactions contemplated by this Agreement) as Transferee
may make; provided, however, that such cooperation shall not
require Transferor to incur any expense or liability (except
for reasonable expenses as to which Transferee agrees to
reimburse and indemnify Transferor) or to materially
interrupt Transferor's business, alter any right or benefit
of Transferor hereunder or cause any adverse tax consequence
to Transferor (or any of its direct or indirect partners).
If any change in the Code, the Treasury Regulations,
administrative or judicial authority interpreting the Code or
such regulations or other applicable law causes the amount of
nonrecourse debt that is allocable to the applicable Unit
Holders for Federal income tax purposes to be less than
$76,000,000 (or otherwise causes any such Unit Holder to
recognize gain because of a decrease (or deemed decrease) of
debt that is allocable to such Unit Holder), then Transferee
shall cooperate with any reasonable requests of Transferor to
alleviate such result; provided, however, that such efforts
shall not require Transferee to incur any expense or
liability (except for reasonable expenses as to which
Transferor agrees to reimburse and indemnify Transferee
(26)
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therefor) or to materially interrupt Transferee's business,
alter any right or benefit of Transferor hereunder or cause
any adverse tax consequence to Transferee (or any of its
direct or indirect partners), other than a reduction in
liability share.
(b) Within 75 days after the end of each taxable
year, the General Partner shall cause to be submitted to
Transferor and each other Unit Holder a good faith estimate
of (i) the amount of Partnership liabilities allocable to
each such Unit Holder under Section 752 of the Code as of the
end of such fiscal year, (ii) such Unit Holder's tax basis in
its Units as of the end of such taxable year and (iii) the
effect of anticipated Partnership liability reductions and
other events expected to occur over the course of the
succeeding taxable year that would have a material effect on
such Unit Holder's tax basis in its Units. If such estimate
indicates that such Unit Holder may recognize gain for
Federal income tax purposes during such succeeding taxable
year under Section 731 of the Code as a consequence of such
liability reductions or other events, (if or an unanticipated
transaction is proposed that would have such effect), then
the General Partner shall use commercially reasonable efforts
to identify, and make available to such Unit Holder,
opportunities for such Unit Holder to provide so-called
"bottom-up" guarantees of Partnership liabilities or to take
other actions so as to minimize or avoid such gain
recognition in a commercially reasonable manner. "Successor
Designated Property" means a property acquired by the
Partnership upon the disposition of a Designated Property in
a Section 1031 like-kind exchange or any other non-
recognition transaction under the Code, in either case
without violating Section 3.06(a) or 3.07(a).
(c) For purposes of Section 704(c) of the Code,
Transferee shall elect to allocate items of income, gain,
loss and deduction relating to each of the Designated
Properties as determined for Federal income tax purposes in
accordance with the so-called "traditional method with
curative allocations" described in Treasury Regulation
1.704-3(c), subject to the conditions that (i) any such
curative allocations shall be made solely with any gain
attributable to the sale or other disposition of such
Designated Property (to the extent such gain would not be
required to be allocated to the Unit Holders pursuant to the
so-called "traditional method" described in Treasury
Regulation 1.704-3(b)) and (ii) any such curative
allocations shall be made based upon the "built-in gain" (as
(27)
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defined in Treasury Regulation 1.704-3(a)(3)(ii)) with
respect to the Designated Property, determined as if the
initial "book" value of the Designated Property for
Section 704(b) purposes were reduced by the Section 704(b)
"book" depreciation using the straight line method over a
fifty year period (which the parties agree more closely
reflects the economic useful life of each Designated Property
as compared to the remaining tax depreciation period for such
Designated Property). The foregoing principles also shall
apply to any Successor Designated Property. Transferee will
file all Federal income tax returns reflecting the
methodology set forth above unless it receives an opinion of
nationally recognized tax counsel (after consultation with
Transferor) that, as a result of a change of law, there is no
reasonable basis for such a filing. If the IRS contends upon
audit that such methodology is invalid (a "Proposed
Disallowance"), the Transferee will contest such Proposed
Disallowance in good faith, unless it receives an opinion of
nationally recognized tax counsel (after consultation with
Transferor) that there is no reasonable basis for such a
contest; provided, however, that Transferee shall not be
required to incur any material expense in connection with any
such contest unless one or more Unit Holders have made
arrangements reasonably satisfactory to Transferee to
reimburse Transferee for such expense. If Transferee
complies with the requirements of this Section 3.06(c), the
amount of nonrecourse debt allocable to the Unit Holders for
purposes of Section 3.06(a) shall be determined by assuming
the validity of the methodology set forth above. The
foregoing principles also shall apply to any Successor
Designated Property.
(d) Without limiting any other rights granted
hereunder or under any documents delivered pursuant hereto,
Transferor (and its permitted designees and transferees who
become holders of any of the Units issued pursuant to this
Agreement) shall be entitled to the Rights (as defined in the
Partnership Agreement).
(e) The parties hereto agree that as between
Transferor and Transferee, Transferor shall be entitled to
deduct any interest accruing on the Existing Debt on or
before the Closing Date (including all contingent interest
with respect to the Existing Debt).
(f) The provisions of this Section 3.06 (and the
tax-related provisions of Article II) shall survive the
Closing.
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(g) Transferor shall make an election under
Section 754 of the Code before the Closing Date and provide
to Transferee at the Closing evidence thereof reasonably
satisfactory to Transferee.
SECTION 3.07. No Sale of Assets. (a) At no time
during the 15-year period following the Closing Date may the
Transferee voluntarily sell, transfer or otherwise dispose of
any Designated Properties or Successor Designated Properties
directly or indirectly, in a single transaction or a series
of related transactions, if the result would be that any Unit
Holder would recognize gain for Federal income tax purposes.
The foregoing limitation shall not be interpreted as
restricting (i) a sale pursuant to a deed in lieu of
condemnation or a deed in lieu of foreclosure given by the
Transferee under the genuine threat of imminent condemnation
or foreclosure, (ii) a sale pursuant to a bona fide
foreclosure proceeding (or exercise of a power of sale),
(iii) a condemnation of substantially all of a Designated
Property or a Successor Designated Property or (iv) the
substantial destruction of substantially all of a Designated
Property or a Successor Designated Property as a result of
fire or other casualty if Transferee elects in good faith not
to restore such Designated Property or Successor Designated
Property.
(b) Transferee shall not transfer any Designated
Property to any Person, including a subsidiary partnership of
Transferee, if the basis of the transferee in such Designated
Property for Federal income tax purposes is determined in
whole or in part by Transferee's basis unless either (i)
Transferee receives a Successor Designated Property in return
or (ii) such transfer does not violate Section 3.06(a) or
3.07(a) and such transferee of the Designated Property agrees
in writing to be bound by the terms of Section 3.06 and this
Section 3.07, which agreement shall be for the express
benefit of the Unit Holders (and, where applicable, their
direct and indirect partners) and copies of which shall be
delivered to each Unit Holder. In the case of any such
transfer, Transferee shall not be released from any liability
or obligations under Section 3.06 or this Section 3.07.
(c) The provisions of this Section 3.07 shall
survive the Closing.
SECTION 3.08. Registration Rights Agreement. Not
later than the Closing Date, Transferee shall cause Parent to
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enter into and deliver to Transferor the Registration Rights
Agreement.
SECTION 3.09. Certain Permitted Transferee
Actions. (a) In the event that Transferee proposes to take
any action that otherwise would be prohibited by
Section 3.06(a), 3.07(a) or 3.07(b), then, notwithstanding
such provision, Transferee may take such action if Transferee
has satisfied each of the following requirements:
(i) Transferee shall have delivered to Transferor and each of
the other Unit Holders written notice of its proposal to take
such action at least 30 days prior to taking such action,
which notice shall describe in reasonable detail the proposed
action and set forth, an estimate by the independent
accounting firm of Transferee, certified to the Unit Holders,
of the amount and character of taxable income that would be
recognized by such Unit Holders as a result of such action,
(ii) within 10 days after taking such action Transferee shall
give written notice (a "Section 3.09 Notice") to the Unit
Holders to such effect and shall make a cash payment to each
Unit Holder equal to such Unit Holder's respective Make Whole
Amount (as defined below), and (iii) Transferee shall cause
Parent to pay to each Unit Holder that delivers a
Section 3.09 Exercise Notice (as defined below) the purchase
price payable to such Unit Holder pursuant to Section 3.09(d)
in consideration of the assignment by such Unit Holder of the
Units that were the subject of such Section 3.09 Notice to
such Persons as Transferee shall designate. If Transferee
shall fail to give a Section 3.09 Notice to any Unit Holder
when required under the preceding sentence, Transferee will
pay on demand all interest and penalties related to any tax
imposed on such Unit Holder with respect to the action that
gave rise to such Section 3.09 Notice that accrue until 30
days after such notice is given.
(b) The term "Make Whole Amount" shall mean an
amount intended to compensate a Unit Holder (or, where
applicable, its direct or indirect partners), on a present-
value, after-tax basis, for the acceleration of tax liability
that would be caused to such Unit Holder by an action
described in Section 3.09(a), which amount shall be computed
by the Transferor's Accountants and certified to Transferee
in accordance with the following principles: (i) it shall be
assumed that the cost of such acceleration of tax liability
shall be the excess of (x) the tax liability estimated to be
incurred by such Unit Holder (or, where applicable, its
direct or indirect partners) as a result of such action over
(y) the present value of the aggregate tax liability that
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would have been incurred by such Unit Holder (or, where
applicable, its direct or indirect partners) had such
liability been triggered on the fifteenth anniversary of the
Closing Date, (ii) subject to any specific knowledge of
Transferor's Accountants to the contrary, the tax liabilities
of the Unit Holder (or, where applicable, its direct or
indirect partners) shall be estimated on the assumption that
such Unit Holder (or, where applicable, each such direct or
indirect partner) is an individual that (x) has no other
source of income or loss and (y) is taxable at the maximum
marginal combined Federal, state and local tax rate in effect
at the time of such action for such Unit Holder based on its
residence according to Transferor's records (such rate to be
determined separately for each relevant type of income that
would be triggered by such action), (iii) the present-value
amount described in clause (i)(y) above shall be made as of
the expected date of such action using a discount rate of
10%, (iv) the adjusted tax basis of the Centers, as of
December 31, 1997, is as set forth in Exhibit FF and, as of
the Closing will be the amounts to be provided to Transferee
within 60 days after the Closing Date and (v) the amount
determined in accordance with the preceding principles shall
be grossed-up as required (using the assumptions set forth in
clause (ii) above and treating such payment as ordinary
income rather than capital gain) so that such Unit Holder
(or, where applicable, its direct or indirect partners) will
receive the appropriate amount on an after-tax basis. The
Transferor shall use reasonable efforts to assist the
Transferor's Accountants in computing the Make Whole Amount,
including providing any pertinent information reasonably
available to it regarding the tax positions of each of the
Unit Holders.
(c) Within 90 days after the end of the taxable
year of Transferee during which any action described in
Section 3.09(a) occurs by reason of the application of this
Section 3.09, Transferee shall deliver a certificate to each
Unit Holder setting forth the final calculation by its
independent accounting firm of the amount and character of
the taxable income that such action caused such Unit Holder
to recognize and an appropriate payment shall promptly be
made by Transferee to each Unit Holder or by each Unit Holder
to Transferee, as required, so as to reflect such final
information and any relevant change in tax law subsequent to
the initial determination of the Make Whole Amount. The
amount of any such payment shall be determined by the
Transferor's Accountants and certified to Transferee.
(31)
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(d) If Transferee delivers (or is required to
deliver) a Section 3.09 Notice, each Unit Holder may deliver
to Parent during the 60 day period following its receipt of
the Section 3.09 Notice a written notice (a "Section 3.09
Exercise Notice") pursuant to which such Unit Holder elects
to sell all or a portion of its Units to Parent (or Parent's
designee) (the "Offered Units"). The effectiveness of any
Section 3.09 Exercise Notice shall be conditioned upon the
actual occurrence of the event giving rise to a Make Whole
Payment. The purchase price payable by Parent to each
exercising Unit Holder shall be equal to the Common Stock
Amount (as defined in the Amended Partnership Agreement) with
respect to the Offered Units multiplied by the Current Per
Share Market Price (as defined in the Amended Partnership
Agreement) of such exercising Unit Holder's Offered Units as
of the date on which the Section 3.09 Exercise Notice was
delivered to Parent and shall be paid by cashier's check or
wire transfer in immediately available funds at the closing
of the acquisition of Offered Units. Such purchase price for
an exercising Unit Holder's Offered Units shall be determined
in the manner provided in the Amended Partnership Agreement
to the extent it is not inconsistent with this Section 3.09.
The closing of the acquisition of Offered Units, unless
otherwise mutually agreed, shall be held at the principal
offices of Parent not later than 10 days after the date
Parent receives the Section 3.09 Exercise Notice. At the
closing of the purchase and sale of Offered Units, payment of
the purchase price shall be accompanied by proper instruments
of transfer and assignment in accordance with the provisions
of Section 8 of Exhibit O ("Rights Terms") of the Partnership
Agreement as in effect on the date hereof (or the comparable
provisions of the Amended Partnership Agreement).
(e) All reasonable fees and expenses of the
Transferor's Accountants incurred in connection with any
determinations pursuant to this Section 3.09 shall be paid
promptly by Transferee.
(f) Payment of the Make Whole Amount (together
with such other amounts as may be required to be paid under
the express terms of this Section 3.09 and such other amounts
as may be payable to Transferor pursuant to Section 14.09 to
the extent related to any enforcement of its rights under
this Section 3.09) in accordance with this Section 3.09 shall
be the exclusive remedy of Transferor and the Unit Holders
for a breach by Transferee of Section 3.06(a), 3.07(a) or
3.07(b).
(32)
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SECTION 3.10. Accredited Investor Status. No
later than five Business Days prior to the Closing,
Transferor shall deliver to Transferee a completed
questionnaire (in a form reasonably acceptable to Transferee)
providing information solely for the purpose of confirming
the status of Transferor as an "accredited investor (as
defined in Regulation "D" of the Securities Act of 1933, as
amended) (an "Accredited Investor"), and an agreement, in
form and substance reasonably satisfactory to Transferee, by
Transferor in favor of Transferee and Parent whereby
Transferor (i) acknowledges having received and reviewed the
Partnership Agreement, the Registration Rights Agreement, the
Parent's then most recent 10-K report, 10-Q report, annual
report, proxy statement and the public announcements
described in Exhibit DD and (ii) agrees to indemnify, defend
and hold harmless Transferee and Parent from and against all
loss, liability, damages, costs and expenses (including
reasonable counsel fees, disbursements and other expenses)
incurred by Transferee or Parent as a result of, or arising
from, any false, incorrect or inaccurate statement contained
in the questionnaire provided by Transferror. At least five
Business Days prior to the Closing, Transferor may direct
that all or part of the Units to be issued at Closing (other
than those to be deposited in the Escrow Fund) shall be
issued to one or more of the following Permitted Transferees:
O'Connor Realty Investors II, L.P., HRE Nashland, Inc., J.W.
O'Connor & Co. Incorporated, O'Connor Associates L.P.,
Nashput Associates L.P. (which is wholly owned by the two
preceding entities), Metropolitan Life Insurance Company and
B.C.O.P. Associates L.P.; provided, however, that not later
than five Business Days prior to the Closing each such
Permitted Transferee which is to receive Units shall provide
the same information and agreement required from Transferor
under this Section 3.10; provided further, however, that if
the Amended Partnership Agreement shall not have been
executed and delivered prior to the Closing, each such
Permitted Transferee shall deliver to Transferee at the
Closing the proxy contemplated by Section 3.05(c).
(33)
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ARTICLE IV
Permitted Encumbrances
SECTION 4.01. Definition. As used in this
Agreement, "Permitted Encumbrances" shall mean the collective
reference to the following matters with respect to any
Center:
(a) the matters set forth in Exhibit G annexed
hereto and made a part hereof with respect to such Center;
(b) liens for Impositions which are not due and
payable as of the Closing Date and which are apportioned in
accordance with Article VI;
(c) liens for Impositions which are paid directly
by Tenants in occupancy on the Closing Date or Adjoining
Owners to the entity imposing same;
(d) the state of facts shown on the following
surveys (and on updates of such surveys to be provided to
Transferee within two weeks after the date hereof, provided
that any additional matter shown on any such updated survey
shall be a Permitted Encumbrance only if it does not
materially and adversely affect the value or utility of the
Center that is the subject of such survey):
(i) A.L.T.A./A.C.S.M. Land Title Survey of Hickory Hollow
Mall (Bell Road and Hickory Hollow Parkway) dated March 17,
1994, last revised on December 4, 1997,
(ii) A.L.T.A./A.C.S.M. Land Title Survey of Lion's Head
Village (White Bridge Pike) dated February 11, 1992, last
revised on December 4, 1997, (iii) As-Built Survey of
Rivergate Mall (Gallatin Pike and Two Mile Pike) dated
February 17, 1992, last revised on December 19, 1997, and
(iv) A.L.T.A./A.C.S.M. Land Title Survey of Gallatin Pike at
Conference Drive dated December 12, 1997, each prepared by
Wendell H. Talley, Sr. (Registered Land Surveyor of Tennessee
- #785) of Barge, Waggoner, Sumner and Cannon.
(e) (i) all the Leases in effect on the date of
this Agreement, any extensions or renewals of the Leases
pursuant to options contained therein, extensions, renewals
or amendments of the Leases or additional or substituted
Leases made between the date hereof and the Closing Date in
each case only if the same have been exercised, entered into
or executed in accordance with the provisions of
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Section 11.03 and/or Section 11.04, as applicable, or if the
landlord's consent or agreement is not required.
(f) mechanics' liens against (i) any Tenants in
occupancy under Leases which are in full force and effect on
the Closing Date and which obligate the Tenants thereunder to
remove and discharge such liens at their expense, or (ii) any
Adjoining Owner;
(g) all the Operating Agreements in effect on the
date of this Agreement, as the same may be modified,
terminated or additional Operating Agreements entered into,
in any such case, in compliance with the provisions of
Article XI;
(h) all the Other Agreements in effect on the date
of this Agreement, as the same may be modified, terminated,
renewed or additional Other Agreements entered into, in any
such case, in compliance with the provisions of Article XI;
and
(i) all other matters affecting title to the
applicable Center which are hereafter approved in writing by
Transferee or waived by Transferee as provided in Article XII.
SECTION 4.02. Title Insurance. Transferee shall
be responsible, at its expense, for obtaining title insurance
in respect of the Centers as provided in Section 10.02(d).
ARTICLE V
The Closing
SECTION 5.01. Closing Date. The Closing shall be
held at 10:00 a.m. on June 30, 1998 (as the same may be
adjourned or advanced pursuant to the terms of this
Agreement, the "Closing Date"), at the offices of Cravath,
Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York,
New York 10019. Time shall be of the essence with respect to
the Closing Date, subject to the following: (i) Transferor
shall have the right to adjourn the Closing Date one or more
times for an aggregate of not more than 60 days (which shall
run concurrently with any adjournments effected by Transferor
pursuant to clause (ii) or (iv) below) to cure exceptions to
title, obtain estoppel letters or satisfy other closing
conditions; (ii) Transferor shall have the right to adjourn
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the Closing Date one or more times for an aggregate of not
more than 30 days in order to facilitate the prepayment of
any mortgage indebtedness encumbering any of the Centers to
the extent such prepayment is required hereunder;
(iii) Transferee shall have the right to adjourn the Closing
Date one or more times for an aggregate of not more than
15 days (which shall run concurrently with any adjournments
effected by Transferee pursuant to clause (iv) below) to
satisfy closing conditions or arrange for mortgage financing
for the Centers in order to meet Transferee's obligations
under Section 3.06; and (iv) such other extensions as are
expressly provided for in this Agreement. If Transferee or
Transferor elects to adjourn the Closing Date pursuant to
this Section 5.01, it shall do so on notice to the other
party given on or before the Closing Date, as the same may
have been previously adjourned.
SECTION 5.02. Actions at Closing. At the Closing
the following transactions will be consummated in the order
set forth below; provided, however, that none of such
transactions will be consummated on the Closing Date unless
all such transactions are consummated:
(a) Transferor will contribute Village at Rivergate
to Transferee, subject only to the Permitted Encumbrances;
(b) Transferor will contribute Lion's Head Village
to Transferee, subject only to the Permitted Encumbrances;
(c) Transferee will issue to Transferor the A Units
in accordance with Section 2.01;
(d) Transferor will contribute Hickory Hollow Mall,
Courtyard at Hickory Hollow and Rivergate Mall to Transferee,
subject only to the Permitted Encumbrances and the Existing
Debt;
(e) Transferee will issue to Transferor the B Units
in accordance with Section 2.02;
(f) Transferee will pay off the Existing Debt on
the Closing Date (including all principal, interest,
prepayment fees and other amounts) as set forth in the Payoff
Letters including, in accordance with the Payoff Letter
delivered by the holder of the Existing Debt described in
clause (i) of the definition thereof, depositing into the
Escrow Fund $2,500,000 of the funds that would otherwise be
paid directly to such holder;
(36)
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(g) Transferor will establish the Escrow Fund in
accordance with Section 14.05;
(h) Transferee will encumber Hickory Hollow Mall,
Courtyard at Hickory Hollow and Rivergate Mall with
nonrecourse mortgage debt in an amount sufficient to satisfy
Transferee's obligations under Section 3.06; and
(i) the parties will deliver and accept the
documents and instruments and take all other action required
of them pursuant to this Agreement.
ARTICLE VI
Apportionments
At the Closing (except where a later date is
specifically provided for in this Article), the parties
hereto shall adjust, on an accrual basis, the items set forth
below as of 11:59 p.m. on the day preceding the Closing Date
(the "Adjustment Point"), and the net amount thereof shall be
borne by Transferor or Transferee, as applicable, through a
decrease or increase in the Agreed Value as of the Closing
Date.
SECTION 6.01. Rents. Rents shall be apportioned
as and when collected. Any Rents collected by Transferee
(which, for purposes of this Section 6.01, shall include
Rents collected by any property manager or other agent acting
for Transferee) subsequent to the Closing (whether due and
payable prior to or subsequent to the Adjustment Point) shall
be adjusted as of the Adjustment Point, and any portion
thereof properly allocable to periods prior to the Adjustment
Point, net of costs of collection properly allocable thereto,
if any, shall be paid by Transferee to Transferor promptly
after the collection thereof by Transferee, but subject to
the further provisions of this Section 6.01 in the case of
Rents due prior to the Adjustment Point. If prior to the
Closing Transferor shall have collected, or if subsequent to
the Closing Transferor shall collect, any Rents (which, for
the purposes of this Section 6.01, shall include Rents
collected by any Managing Agent or other agent acting for
Transferor) which are properly allocable in whole or in part
to periods subsequent to the Adjustment Point, the portion
thereof so allocable to periods subsequent to the Adjustment
Point, net of costs of collection properly allocable thereto,
if any, shall be credited to Transferee by Transferor at the
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Closing or, if collected after the Closing, promptly remitted
by Transferor to Transferee. As used in this Section 6.01
the term "costs of collection" shall mean and include
reasonable attorneys' fees and other costs incurred by
Transferee or Transferor in collecting any Rents, but shall
not include the regular fees payable to any property manager
for the Centers, the payroll costs of any of Transferor's or
Transferee's employees or any other internal costs or
overhead of Transferor or Transferee.
(a) One week prior to the Closing Transferor shall
deliver to Transferee (i) a list of all Tenants and Adjoining
Owners which are delinquent in payment of Rents as at the
Adjustment Point, which list shall set forth the amount of
each such delinquency, the period to which each such
delinquency relates and the nature of the amount due
itemizing separately, as applicable, fixed monthly rent, tax
reimbursements, common area maintenance, electric charges,
charges for tenant services, charges for overtime services,
percentage rent and other charges, if any, and (ii) a list of
each Tenant and Adjoining Owner which paid percentage or
overage rent based on sales or gross income during the fiscal
year in which the Closing Date occurs and the amount so paid
by each such Tenant or Adjoining Owner through the Adjustment
Point. All amounts collected by Transferee from each
delinquent Tenant or Adjoining Owner within 30 days after the
Closing, net of costs of collection, if any, shall be deemed
to be in payment of Rents (or the specific components of
Rents) for the month in which the Closing occurs, next in
payment of Rents (or the specific components of Rents) then
due on account of any month after the month in which the
Closing occurs and finally in payment of delinquent Rents (or
the specific components of Rents) which are in arrears as of
the first day of the month in which the Closing occurs, as
set forth on such list. All amounts collected by Transferee
from each delinquent Tenant or Adjoining Owner more than
30 days after the Closing, net of costs of collection, if
any, shall be deemed to be in payment of Rents (or the
specific components of Rents) then due on account of each
month after the month in which the Closing occurs, next in
payment of Rents (or the specific components of Rents) due
for the month in which the Closing occurs and finally in
payment of delinquent Rents (or the specific components of
Rents) which are in arrears as of the first day of the month
in which the Closing occurs, as set forth on the aforesaid
list. Any amounts collected by Transferee from each
delinquent Tenant or Adjoining Owner which, in accordance
with the preceding two sentences, are allocable to the month
(38)
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in which the Closing occurs (as adjusted as of the Adjustment
Point) or any prior month, net of costs of collection
properly allocable thereto, if any, shall be paid promptly by
Transferee to Transferor.
(b) Transferee shall use commercially reasonable
efforts to bill and collect any delinquencies set forth on
the list delivered by Transferor pursuant to Section 6.01(a)
for a period of 18 months after the Closing and the amount
thereof, as, when and to the extent collected by Transferee,
shall, if due to Transferor pursuant to the provisions of
Section 6.01(a), be paid by Transferee to Transferor, net of
costs of collection, if any, properly allocable thereto,
promptly after the collection thereof by Transferee. In no
event shall Transferee be obligated to institute any actions
or proceedings or to seek the eviction of any Tenant or
Adjoining Owner in order to collect any such delinquencies.
(c) Following the Closing and upon Transferor's
written request, Transferee shall submit or cause to be
submitted to Transferor, within 30 days after the end of each
calendar quarter up to and including the calendar quarter
ending on December 31, 1999, but only so long as any
delinquencies shall be owed to Transferor, a statement which
sets forth all collections made by Transferee from the
Tenants and Adjoining Owners which owe such delinquencies
through the end of such calendar quarter. Transferor shall
have the right from time to time following the Closing until
90 days after receipt by Transferor of the last quarterly
statement required hereunder, at Transferor's expense, to
examine and audit so much of the books and records of
Transferee as relate to such delinquencies in order to verify
the collections reported by Transferee in such quarterly
statements.
(d) Nothing contained in this Section 6.01 shall
be deemed to prohibit Transferor, at its own expense and
after giving Transferee notice thereof, from instituting any
actions or proceedings in its own name against any Tenant or
Adjoining Owner after the Closing in order to collect the
amount of any delinquencies due in whole or in part to
Transferor from such Tenant or Adjoining Owner; provided,
however, that in no event shall (i) Transferor be entitled in
any such action or proceeding to seek to evict any Tenant or
Adjoining Owner or to recover possession of its space or
(ii) Transferor be entitled to initiate any involuntary
bankruptcy or similar proceeding against any Tenant or
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Adjoining Owner. Transferee agrees not to waive or settle
any delinquency owed in whole or in part to Transferor
without the prior written consent of Transferor, which
consent may be granted or withheld in Transferor's sole
discretion.
(e) With respect to that portion of the Rents
which constitute percentage or overage rents, or other
amounts payable by Tenants or Adjoining Owners based upon the
sales or gross receipts of such entities, the following shall
apply: (i) at the Closing and/or, in the case of percentage
or overage rents which are in arrears or are payable in other
than monthly installments, subsequent to the Closing,
percentage or overage rents shall be apportioned as provided
in the other paragraphs of this Section 6.01 in the case of
Rents generally; and (ii) following the end of the fiscal
year or lease year, as appropriate, on account of which such
percentage or overage rents are payable by each Tenant or
Adjoining Owner and receipt by Transferee of any final
payment on account thereof due from such Tenant or Adjoining
Owner (including any amount due as a result of an audit
conducted by Transferor or Transferee), Transferee shall pay
to Transferor, net of costs of collection and audit, if any,
the excess, if any, of (A) the amount of percentage or
overage rents paid by such Tenant or Adjoining Owner on
account of such entire fiscal year or lease year, as
appropriate, multiplied by a fraction, the numerator of which
is the number of months (including any fraction of a month
expressed as a fraction) of such fiscal year or lease year,
as appropriate, which occurred prior to the Adjustment Point
and the denominator of which is 12 or such lesser number of
months (including any fraction of a month expressed as a
fraction) as may have elapsed in such fiscal year or lease
year, as appropriate, prior to the expiration of the Lease or
Operating Agreement in question over (B) all amounts
theretofore received by Transferor on account of the
percentage or overage rents in question for such fiscal year
or lease year, as appropriate. If in any case the amount
provided for in (B) above exceeds the amount provided for in
(A) above, Transferor shall pay the amount of such excess to
Transferee upon demand. If on the Closing Date Transferor
shall be conducting any audits of payments of percentage or
overage rents previously made by Tenants or Adjoining Owners
for fiscal years or lease years, as appropriate, prior to the
ones in effect on the Closing Date, Transferor shall so
notify Transferee in writing on the Closing Date and
Transferor shall have the right to continue all such audits
(40)
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until completion thereof and to collect and retain any
amounts payable to Transferor hereunder by reason thereof.
In addition, Transferor shall have the right to initiate any
such audit within one year subsequent to the Closing to the
extent permitted under the applicable Leases or Operating
Agreements.
(f) With respect to that portion of Rents which
are payable on an annual, semiannual or other nonmonthly
basis, Transferee shall use commercially reasonable efforts
to bill and collect for a period of 18 months after the
Closing all such payments which become due after the Closing,
which payments, to the extent allocable to periods prior to
the Adjustment Point, shall be paid by Transferee to
Transferor promptly after receipt thereof, subject to costs
of collection, if any, properly allocable thereto. With
respect to that portion of Rents that are attributable to
payments of expenses such as common area/mall maintenance
changes, merchants' or other association charges or
advertising and promotional charges, such Rents shall be
apportioned based on which party paid or will pay the
correlating expenses for the relevant period. With respect
to that portion of Rents which are billed on an index-based
formula or on an estimated basis during the fiscal or other
period for which paid, at the end of such fiscal or other
period Transferee shall determine whether the items in
question have been overbilled or underbilled. If there has
been an overbilling and an overbilled amount has been
received, Transferor shall, promptly after request by
Transferee, pay to Transferee the portion of such overbilled
amount which is properly allocable to the period prior to the
Adjustment Point, and promptly thereafter Transferee shall
reimburse the entire overbilled amount to the Tenants and/or
Adjoining Owners which paid the same. If there has been an
underbilling, the additional amount shall be billed by
Transferee to the Tenants and Adjoining Owners, as
applicable, and any amount received by Transferee, net of
costs of collection, if any, to the extent properly allocable
to periods prior to the Adjustment Point shall promptly be
paid by Transferee to Transferor.
(g) Notwithstanding anything to the contrary set
forth in this Section 6.01, Transferor shall be entitled to
receive, and Transferee shall pay to Transferor promptly
after receipt thereof, net of costs of collection, if any,
properly allocable thereto, (i) all amounts payable by
Tenants and Adjoining Owners on account of Impositions which,
pursuant to the terms of Section 6.03(a), it is Transferor's
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obligation to pay and discharge (to the extent Transferor
either paid such amounts or Transferee received a credit
therefor pursuant to this Article), which amounts shall be
apportioned between Transferor and Transferee in the same
manner as the Impositions to which they relate and (ii) all
amounts payable by Tenants and Adjoining Owners on account of
utilities which, pursuant to the terms of Sections 6.03(b)
and/or 6.03(c), it is Transferor's obligation to pay and
discharge (to the extent Transferor either paid such amounts
or Transferee received a credit therefor pursuant to this
Article), which amounts shall be apportioned between
Transferor and Transferee in the same manner as the utilities
to which they relate. Notwithstanding anything to the
contrary set forth in this Section 6.01, Transferee shall be
entitled to receive, and Transferor shall pay to Transferee
promptly after receipt thereof, net of costs of collection,
if any, properly allocable thereto, (i) all amounts payable
by Tenants and Adjoining Owners on account of Impositions
which, pursuant to the terms of Section 6.03(a), it is
Transferee's obligation to pay and discharge (to the extent
Transferee either paid such amounts or Transferor received a
credit therefor pursuant to this Article), which amounts
shall be apportioned between Transferor and Transferee in the
same manner as the Impositions to which they relate and
(ii) all amounts payable by Tenants and Adjoining Owners on
account of utilities which, pursuant to the terms of
Sections 6.03(b) and/or 6.03(c), it is Transferee's
obligation to pay and discharge (to the extent Transferee
either paid such amounts or Transferor received a credit
therefor pursuant to this Article), which amounts shall be
apportioned between Transferor and Transferee in the same
manner as the utilities to which they relate.
(h) Any advance rental deposits or payments held
by Transferor on the Closing Date and applicable to periods
of time subsequent to the Adjustment Point, and any security
deposits held by Transferor on the Closing Date, together
with interest thereon, if any, which, under the terms of the
applicable Leases, is payable to the Tenants thereunder,
shall be paid or credited to Transferee at the Closing.
SECTION 6.02. Leasing Costs. (a) Transferor
shall pay and indemnify Transferee in respect of all leasing
commissions, costs of tenant alterations and improvements
performed or to be performed for Tenants at the expense of
the landlord thereof (or allowances payable by the landlord
in lieu thereof), moving and other allowances and
inducements, if any, and fees and disbursements of
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architects, engineers and attorneys (collectively "Leasing
Costs") in respect of (i) all Leases and Lease amendments
which were fully executed and delivered on or prior to the
date hereof and (ii) all proposed leases and lease amendments
identified on Exhibit R that are executed and delivered after
the date hereof and prior to the Closing Date; provided,
however, that Transferee, rather than Transferor, shall be
responsible for all Leasing Costs in respect of any lease
renewal or extension which occurs pursuant to the exercise
after the date hereof of any Tenant's renewal or extension
option under any Lease which was fully executed and delivered
on or prior to the date hereof, provided such renewal or
extension did not require Transferor's consent. At the
Closing, Transferor shall deliver an itemized statement, in
form and substance reasonably satisfactory to Transferee,
certifying (i) all Leasing Costs paid by Transferor pursuant
to this Section 6.02(a) after the date hereof and on or prior
to the Closing Date, (ii) the remaining unpaid Leasing Costs
for which Transferor is responsible under this
Section 6.02(a) and (iii) attaching such documentation as may
be reasonably required by the Title Company to enable the
Title Company to issue the title insurance policy
contemplated by Section 10.02(d) without any exception
related to such Leasing Costs and attaching documentation
reasonably sufficient to demonstrate the payment of such
Leasing Costs. The aggregate unpaid amount of Leasing Costs
so certified shall be deducted from and reduce the Agreed
Value at Closing, and Transferor shall have no further
liability under this Section 6.02(a) following the Closing
other than for any inaccuracy in the aforesaid itemized
statement or documentation.
(b) If the Closing shall occur, Transferee shall
and hereby does assume and agree to pay and indemnify
Transferor in respect of (i) all Leasing Costs payable by
Transferee pursuant to Section 6.02(a), (ii) all Leasing
Costs payable in respect of any Leases or Lease amendments
which are fully executed and delivered in accordance with
Section 11.03 or 11.04 after the date hereof, except for
Leasing Costs that are Transferor's responsibility under
Section 6.02(a)(ii) and (iii) all Leasing Costs payable in
respect of any Leases or Lease amendments which are fully
executed and delivered after the Closing Date. If any
Leasing Costs shall be paid by Transferor prior to the
Closing, which, in accordance with this Section 6.02(b), it
is Transferee's obligation to pay, Transferee shall reimburse
Transferor for the documented amount thereof at the Closing.
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SECTION 6.03. Additional Items. At the Closing,
the following additional items shall be apportioned between
the parties hereto as of the Adjustment Point, with
Transferor to be obligated for or entitled to amounts
apportioned to the period through the Adjustment Point and
Transferee to be obligated for or entitled to amounts
apportioned to the period following the Adjustment Point:
(a) Impositions in respect of the Centers. Such
Impositions shall be apportioned on the basis of the fiscal
year for which the same are imposed, whether or not yet due
and payable as of the Closing Date. If an Imposition is not
due and payable until after the Closing Date and the assessed
valuation or the tax rate or any other factor upon which the
amount of the Imposition will be based has not been fixed at
the Closing Date, then the parties shall at the Closing
apportion such Imposition based on the most recently
available assessed valuation and tax rate, and shall make a
final adjustment of such item within 30 days following the
date on which the actual assessed valuation and tax rate
becomes known. In the case of special assessments payable in
installments specified in Exhibit CC hereto, the installment
for the fiscal year in which the Closing Date occurs shall be
apportioned as at the Adjustment Point and Transferee shall
be responsible for paying all subsequent installments
thereof. If any Tenant in occupancy at the Closing Date or
Adjoining Owner is obligated to pay any Impositions directly
to the applicable taxing authority, such Impositions shall
not be apportioned. Any refund obtained by either Transferor
or Transferee of real estate taxes for which an apportionment
is made pursuant to this Section 6.03(a), net of the costs of
obtaining such refund and the amount thereof payable to
Tenants and Adjoining Owners, shall be apportioned as of the
Adjustment Point. Transferee shall have the right to control
and/or settle all tax protest proceedings. Notwithstanding
the foregoing, no settlement with respect to the tax fiscal
year in which the Adjustment Point occurs shall be made
without the prior written approval Transferor, such approval
not to be unreasonably withheld or delayed. Any refunds of
Impositions resulting from any such tax protest proceeding
shall be paid to Transferee. Transferee shall pay any
portion of any such refund due to Tenants and/or Adjoining
Owners to such Tenants or Adjoining Owners and shall
apportion any balance of any such refund (net of the costs of
obtaining such refund) between Transferor and Transferee in
the same manner as the Impositions to which such refund
relates and pay any remaining portion thereof relating to the
period prior to the Adjustment Date to Transferor, in each
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case promptly after such refund is received. Transferor will
reasonably cooperate with Transferee in transferring control
of any such tax protest proceeding to Transferee; provided,
however, that such cooperation shall not require Transferor
to incur any expense or liability (except for reasonable
expenses as to which Transferee agrees to reimburse and
indemnify Transferor) or to materially interrupt Transferor's
business, alter any right or benefit of Transferor hereunder
or cause any adverse tax consequence to Transferor (or any of
its direct or indirect partners).
(b) Water and sewer charges, if any, payable by
Transferor on the basis of the period or periods for which
the same are payable. If there are water meters at any of
the Centers, Transferor shall furnish readings to a date not
more than 30 days prior to the Closing Date, and the unfixed
meter charges and the unfixed sewer charges, if any, based
thereon for the intervening time shall be apportioned on the
basis of such last readings. Any water and sewer charges
payable by Tenants in occupancy on the Closing Date or
Adjoining Owners directly to the entity or entities
furnishing such services shall not be apportioned.
(c) Utilities and fuel payable by Transferor,
including electricity and gas. Transferor shall endeavor to
have the meters for such utilities read the day on which the
Adjustment Point occurs and will pay the bills rendered to it
on the basis of such readings. If Transferor does not obtain
such a meter reading with respect to any such utility, the
adjustment therefor shall be made on the basis of the most
recently issued bills therefor which are based on meter
readings not earlier than 30 days prior to the Adjustment
Point. Transferor shall assign to Transferee at Closing all
of Transferor's right, title and interest in and to any cash
security deposits (to the extent such deposits are
assignable) held by any utility companies (with interest
thereon, if any, in the amount accrued on such security
deposits), and shall receive a credit in the full amount of
such deposits. To the extent such deposits are not
assignable, Transferee will make its own arrangements by the
Closing Date to replace any such deposits and Transferor will
be entitled to withdraw such deposits as of the Closing Date.
Transferee will make its own arrangements for any security
bonds required by any utility companies by the Closing Date
and will not receive a credit therefor, and Transferor will
be entitled to cancel any bonds previously furnished. If
fuel oil, propane or other fuel is used at any of the
Centers, Transferor shall deliver to Transferee at the
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Closing statements of the suppliers of such fuel dated within
three days of the Adjustment Point setting forth the quantity
of fuel on hand and the cost paid by Transferor therefor, and
Transferee shall pay to Transferor at the Closing the cost of
such fuel (including taxes thereon, if any) as shown on such
statements. Charges for any utilities payable by Tenants in
occupancy on the Closing Date and Adjoining Owners directly
to the utility companies furnishing the same shall not be
apportioned.
(d) Charges payable by Transferor and the cost of
performing Transferor's obligations under the Operating
Agreements and the Other Agreements.
(e) Ancillary income receivable by Transferor in
connection with the licensing of the name of any of the
Centers to third parties, the furnishing of utilities from
any of such Centers to third parties, the leasing of kiosks,
antennae, baby strollers and other items and the like.
(f) Contributions payable by Transferor to
merchants' and other associations, and to promotional
activities at the Centers.
(g) Any other items of income or expense of the
Centers, or any of them, which, in accordance with generally
accepted business practices, should be apportioned between
Transferor and Transferee as of the Adjustment Point.
SECTION 6.04. Partnership Distributions. Regular
quarterly distributions paid in respect of the Units issued
pursuant to this Agreement for the fiscal quarter in which
such Units were issued shall be apportioned as of the
Adjustment Point, with Transferee to be entitled to the
portion thereof apportioned to the portion of such fiscal
quarter through the Adjustment Point and Transferor to be
entitled to the portion thereof apportioned to the portion of
such fiscal quarter following the Adjustment Point.
Notwithstanding anything to the contrary contained in the
Partnership Agreement, Transferee shall pay to Transferor
only the portion of such distribution to which Transferor is
entitled pursuant to this Section 6.04.
SECTION 6.05. Adjustment Statement. Transferor
will deliver to Transferee at least one week prior to the
Closing a copy of a proposed adjustment statement showing all
adjustments to be made at the Closing. The parties shall
then endeavor to agree upon such statement or any
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modification thereof so that it or such modification can be
executed by them at the Closing. To the extent that there is
an error or omission in any of the adjustments made pursuant
to such statement and the same is discovered following the
Closing, the parties agree to rectify the same as promptly as
possible following such discovery. Any such corrective
adjustment made in favor of Transferor shall be effected by
the issuance of additional Units with an aggregate Unit Value
as of the date of such adjustment equal to the amount of such
adjustment, and any such corrective adjustment made in favor
of Transferee shall be effected by application of the Escrow
Fund pursuant to Section 14.05. No fractional Units shall be
issued to Transferor pursuant to this Section 6.05; in lieu
thereof Transferee shall pay Transferor cash.
SECTION 6.06. Survival. The provisions of this
Article VI shall survive the Closing.
ARTICLE VII
Documents To Be Delivered at the Closing
SECTION 7.01. Transferor's Deliveries. At or
prior to the Closing, Transferor will deliver or cause to be
delivered to Transferee each of the instruments and documents
listed in this Section 7.01, executed, acknowledged and dated
as of the Closing Date where appropriate by Transferor and/or
the other party or parties thereto, but none of such
instruments and documents shall be deemed delivered or any
other action taken until all Closing deliveries and actions
are complete:
(a) A special or limited warranty deed (each, a
"Deed") with respect to each Property, each in the form
annexed hereto as Exhibit X, conveying such Property from
Transferor to Transferee, subject only to Permitted
Encumbrances.
(b) An updated Rent Roll, in the form of the Rent
Roll annexed hereto as Exhibit F pursuant to
Section 8.01(d)(iv), dated within 15 days of the Closing
Date, and certified by Transferor as being true, correct and
complete.
(c) Bills of sale (one for each Center)
transferring the Personal Property and Intangible Personal
Property to Transferee, each in the form annexed hereto as
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Exhibit Y, which bills of sale shall contain no warranties,
express or implied, by Transferor except that Transferor owns
the Personal Property and the Intangible Personal Property
transferred thereby, free and clear of all liens or
encumbrances except for Permitted Encumbrances; provided,
however, that, upon request therefor by Transferee,
Transferor shall execute separate assignments in form
reasonably acceptable to Transferee relating to the
Intangible Personal Property.
(d) Assignments (one or more for each Center) by
Transferor to Transferee, each in the form annexed hereto as
Exhibit M, of all of Transferor's right, title and interest
in, to and under the Operating Agreements.
(e) Assignments (one for each Center) by
Transferor to Transferee, each in the form annexed hereto as
Exhibit N, of all of Transferor's right, title and interest
in, to and under all the Leases, and in and to all security
deposits and any interest thereon which, under the terms of
the applicable Leases, is payable to the Tenants thereunder.
(f) Assignments (one or more for each Center) by
Transferor to Transferee, each in the form annexed hereto as
Exhibit O, of all of Transferor's right, title and interest
in, to and under all Other Agreements, to the extent the same
are assignable.
(g) "General Assignments" (one for each Center) by
Transferor to Transferee, each in the form annexed hereto as
Exhibit P, of all of Transferor's right, title and interest
in and to the following, if any (in each case to the extent
the same are assignable): (i) all warranties and guaranties
of manufacturers, suppliers and contractors, (ii) all permits
of Governmental Authorities, and licenses and approvals of
private utilities and others, required for or necessary to
the operation and maintenance of each Center, (iii) all cash
security deposits held by any utility with respect to any
Center (plus the interest accrued thereon, if any), (iv) all
names, trade names, trademarks, service marks and logos (and
all good will associated therewith) by which the Centers or
any part thereof may be known or which may be used in
connection therewith, together with all registrations, if
any, for the same and other intangible property relating
thereto, and all telephone numbers and listings employed in
connection with the Centers, (v) all site plans, surveys,
plans or specifications and floor plans relating to the
Centers, (vi) all traffic pattern and similar studies, all
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architectural and engineering plans (whether "as built" or
design), including any such plans relating to any proposed
expansion or renovation, and any feasibility or marketing
studies prepared by third parties for Transferor or any
affiliate of Transferor, (vii) all catalogues, booklets,
manuals, files, logs, records, correspondence, tenant lists,
tenant prospect lists, tenant histories, tenant files,
brochures and materials, advertisements and other similar
intangible property directly relating to each Center or any
part thereof and (viii) all agreements to operate for
specific periods, radius restriction agreements and similar
agreements made by Tenants or Adjoining Owners operating at
or in connection with the Centers.
(h) The original executed estoppel letters
provided for in Article XV.
(i) An executed counterpart of the Registration
Rights Agreement.
(j) Transferor's Copies of the Operating
Agreements.
(k) Transferor's Copies of the Leases.
(l) Transferor's Copies of the Other Agreements.
(m) Original executed copies of agreements between
Transferor and each Managing Agent and each Leasing Agent
terminating its respective Management Agreement or Leasing
Agreement as of the Closing Date (which agreements shall
provide that Transferee shall have no liability with respect
to any employees of any Managing Agent or Leasing Agent and
shall otherwise be reasonably acceptable to Transferee), and
evidence reasonably satisfactory to Transferee of termination
of all other agreements encumbering any Center other than the
Leases, the Operating Agreements and the Other Agreements.
(n) Notices to Tenants, and notices to Adjoining
Owners, notifying each of the conveyance of the applicable
Center to Transferee as of the Closing Date and directing the
Tenants to pay future rentals to the person or entity
designated by Transferee, each in a form reasonably
satisfactory to Transferee and executed by Transferor.
(o) A schedule which shows all Leases terminated
and/or amended and all new Leases entered into between the
date of this Agreement and the Closing Date, together with
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Transferor's Copy of each such new Lease or amendment to an
existing Lease.
(p) The list provided for in Section 6.01(a).
(q) A schedule which shows all Other Agreements
and Operating Agreements terminated and/or amended and all
new Other Agreements and Operating Agreements entered into
between the date of this Agreement and the Closing Date,
together with Transferor's Copy of each such new Other
Agreement and Operating Agreement or amendment to an existing
Other Agreement or Operating Agreement.
(r) The certificate of Transferor provided for in
Section 8.06(b), if Transferor elects to deliver such
certificate to Transferee.
(s) An affidavit that Transferor is not a "foreign
person" within the meaning of Section 1445 of the Code in the
form of Exhibit Z annexed hereto.
(t) Counterparts of the adjustment statement
provided for in Section 6.05 showing all adjustments in
respect of the Agreed Value to be made at the Closing.
(u) All sales tax, transfer tax and other tax
returns, if any, which Transferor is required by law to
execute and deliver, either individually or together with
Transferee, to any Governmental Authority as a result of the
transactions contemplated by this Agreement.
(v) All records and files which are in the
possession or control of Transferor or any of the Managing
Agents relating to the operation and maintenance of the
Centers, including to the extent in the possession of such
parties, (i) current tax bills, current water, sewer, utility
and fuel bills, payroll records, billing records for Tenants
and Adjoining Owners, (ii) engineering, repair and
maintenance records and the like which affect or relate to
the Centers, (iii) plans, drawings, blue prints and
specifications for each of the Centers, all warranties and
guaranties of manufacturers, suppliers and contractors in
effect on the Closing Date, (iv) certificates of occupancy
and other licenses and permits, (v) all of the items of
property covered by the documents specified in
Sections 7.01(c) and 7.01(g) and (vi) keys to all locks in
the Centers. Delivery of such materials shall be effectuated
pursuant to arrangements made by the Managing Agent for each
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Center and the property manager or managers retained by
Transferee to operate the Centers.
(w) Both (i) an owner's affidavit in the form
annexed hereto as Exhibit EE and (ii) such evidence or
documents as may reasonably be required by the Title Company
evidencing the power and authority of Transferor and the due
authority of, and execution and delivery by, any person or
persons who are executing any of the documents required
hereunder in connection with the contribution of the Centers.
(x) An opinion dated as of the Closing Date of
counsel to Transferor substantially in the form of
Exhibit AA.
(y) A certificate of Transferor certifying to
Transferee that the representations and warranties of
Transferor set forth herein are true and correct in all
material respects as of the Closing Date as if made on such
date subject, however, to the provisions of Section 8.05,
facts disclosed on the schedules to this Agreement that are
delivered by Transferor to Transferee at the Closing pursuant
to Section 7.01 and any certificate delivered by Transferor
to Transferee pursuant to Section 8.06(b).
(z) All vehicle titles assigned to Transferee,
duly endorsed by Transferor or the Managing Agent, as
required.
(aa) The Payoff Letters (and, if applicable, the
separate documentation referred to in Section 3.03 confirming
that Transferee shall have no liability in respect of the
Existing Debt).
(bb) A written acknowledgment by Broker that all
amounts due to it in respect of the transactions contemplated
by this Agreement have been paid in full.
(cc) A schedule listing all audits of payments of
percentage or overage rents in progress on the Closing Date,
if applicable.
(dd) A joint and several guarantee by O'Connor
Realty Investors II L.P. and either Hexalon Real Estate,
Inc., or Rodamco North America BV (at Transferor's election)
substantially in the form of Exhibit H, and evidence
reasonably satisfactory to Transferee of the authority of
such entities to execute, deliver and perform the Guarantee,
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including an opinion or opinions of counsel reasonably
acceptable to Transferee and in a form corresponding to that
set forth in Exhibit AA (provided that if Rodamco North
America BV is a guarantor, such opinion shall also include an
opinion that Rodamco North America BV is subject to the
jurisdiction of New York state or federal courts and that any
judgment in favor of Transferee awarded by a New York state
or federal court in connection with the Guaranty would be
recognized as valid and fully enforceable against Rodamco
North America BV in its jurisdiction of formation).
Transferee agrees that Cravath, Swaine & Moore and Arnall,
Golden & Gregory are acceptable counsel for such purposes
with respect to O'Connor Realty Investors II L.P. and Hexalon
Real Estate, Inc.
(ee) If the Amended Partnership Agreement has not
been adopted prior to the Closing Date, the irrevocable proxy
contemplated by Section 3.05(c) and, if applicable,
Section 3.10.
(ff) Each Person to whom Units are to be issued in
accordance with Section 3.10 shall have executed and
delivered its written agreement to become a limited partner
of the Partnership and to be bound by all of the terms and
conditions of the Partnership Agreement.
(gg) All other instruments and documents, if any,
to be executed, acknowledged by Transferor, and/or delivered
by Transferor, and all other amounts to be paid by Transferor
pursuant to any of the other provisions of this Agreement.
SECTION 7.02. Transferee's Deliveries. At the
Closing, Transferee shall issue the number of Units specified
in Section 3.01(a)(iii) to Transferor (or to Permitted
Transferees designated by Transferor) and shall admit
Transferor (or such Permitted Transferees) as a limited
partner (or limited partners) of Transferee. At or prior to
the Closing, Transferee will deliver or cause to be delivered
to Transferor or the other parties indicated below each of
the payments, documents and instruments listed in this
Section 7.02, such instruments and documents to be executed
and acknowledged where appropriate, but none of such
instruments and documents shall be deemed delivered or any
other action taken until all Closing deliveries and actions
are complete:
(a) A certificate of Transferee certifying to
Transferor that the representations and warranties of
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Transferee set forth herein are true and correct in all
material respects as of the Closing Date as if made on such
date; provided, however, that if any of the representations
and warranties set forth in Sections 9.01(h) or (k) shall not
be true and correct in all material respects as of the
Closing Date (but were true and correct in all material
respects on the date of this Agreement), Transferee shall not
be deemed to be in default hereunder (and Transferee may
include an exception for such matter in the foregoing
certificate) if prior to Closing (i) Transferee gives
Transferor notice of such matter and (ii) Transferee makes a
public announcement of such matter. If Transferee provides
any such notice, Transferor shall have the right to adjourn
the Closing Date to the extent necessary to cause the Closing
Date to be at least 15 full trading days following the public
announcement referred to in the foregoing clause (ii).
(b) All sales tax, transfer tax and other tax
returns, if any, certificates of value and similar documents
which Transferee is required by law to execute and deliver,
either individually or together with Transferor, to any
Governmental Authority as a result of the contribution.
(c) Counterparts of each of the instruments and
documents listed in Sections 7.01(d), 7.01(e), 7.01(f) and
7.01(t).
(d) An opinion dated as of the Closing Date of
counsel to Transferee substantially in the form of
Exhibit BB.
(e) Good standing certificates from the Secretary
of State of the State of Delaware for Transferee, General
Partner and Parent, each dated within 15 days of the Closing
Date.
(f) A certificate indicating a good faith estimate
of the amount of Partnership liabilities expected to be
allocated to the Transferor pursuant to Section 752 of the
Code, as of both the Closing Date and as of the end of the
fiscal year in which the Closing takes place.
(g) The agreements of Parent and General Partner
referred to in Section 16.16.
(h) All other payments, instruments and documents,
if any, to be executed, acknowledged and/or delivered by
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Transferee pursuant to any of the other provisions of this
Agreement.
SECTION 7.03. Access to Records. Transferee
agrees for a period of seven years following the Closing Date
to retain and make available to Transferor for inspection and
copying, at Transferor's expense, on reasonable advance
notice at reasonable times at the place in the continental
United States where Transferee then maintains its records in
respect of the Centers, all documents and records concerning
the Centers delivered by Transferor to Transferee in
connection with the Closing. If Transferee desires to
destroy any such records prior to the expiration of such
seven-year period, Transferee shall first notify Transferor
and permit Transferor to take delivery of the records in
question; and if Transferor fails to do so within 90 days
after such notice from Transferee, Transferee shall then be
free to destroy the same. The provisions of this
Section 7.03 shall survive the Closing.
ARTICLE VIII
Centers Conveyed As Is; Representations and
Warranties of Transferor
SECTION 8.01. No Implied Representations.
Transferee acknowledges that except as expressly set forth in
this Agreement and in the documents and instruments delivered
by Transferor at the Closing, neither Transferor nor any
agent or representative or purported agent or representative
of Transferor has made, and Transferor is not liable for or
bound in any manner by, any express or implied warranties,
guaranties, promises, statements, inducements,
representations or information (including any information set
forth in offering materials heretofore furnished to
Transferee) pertaining to the Centers or any part thereof,
the physical condition thereof, environmental matters,
income, expenses or operation thereof or of the Personal
Property or Intangible Personal Property, the uses which can
be lawfully made of the same under applicable zoning or other
laws or any other matter or thing with respect thereto,
including any existing or prospective Leases, Operating
Agreements or Other Agreements or obligations which may arise
hereunder after the Closing Date. Without limiting the
foregoing, Transferee acknowledges and agrees that, except as
expressly set forth in this Agreement and in the documents
and instruments delivered by Transferor at the Closing,
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Transferor is not liable for or bound by (and Transferee has
not relied upon) any verbal or written statements,
representations, real estate brokers' "set-ups" or offering
materials or any other information respecting any or all of
the Centers furnished by Transferor or any broker, employee,
agent, consultant or other person representing or purportedly
representing Transferor. Nothing contained in this
Section 8.01 shall be deemed to impair, limit or otherwise
affect Transferee's rights under this Agreement in respect of
the representations, warranties and covenants of Transferor
set forth in this Agreement and the other provisions hereof
binding upon Transferor. The provisions of this Section 8.01
shall survive the Closing.
SECTION 8.02. "As-Is" Transaction. Transferee
represents that it has inspected the Centers, the physical
and environmental condition and the uses thereof to its
satisfaction, that it has independently investigated,
analyzed and appraised the value and profitability thereof,
that it has independently investigated, analyzed and
appraised all Legal Requirements applicable to the ownership,
use or development of the Centers and the right to maintain
or operate the Centers or to have space therein used and
occupied by Tenants and Adjoining Owners, the
creditworthiness of Tenants and Adjoining Owners and the
presence of Hazardous Substances, if any, in or on the
Centers, that it has received copies of and/or has reviewed
the Leases, the Operating Agreements, the Other Agreements
and all other documents referred to herein in effect on the
date hereof and entered into after the date hereof in
accordance with this Agreement, that it is thoroughly
acquainted with all of the foregoing and that Transferee, in
acquiring the Centers, will rely upon its own investigations,
analyses, studies and appraisals and not upon any information
provided to Transferee by or on behalf of Transferor with
respect thereto (except in each case to the extent covered by
any warranties or representations of Transferor set forth in
this Agreement, in any Transferor's Estoppel Letters or in
any other document or instrument delivered by Transferor in
connection with the Closing). Subject to Article XII,
Transferee agrees to accept the Centers "as is" and in their
condition as at the date hereof, reasonable wear and tear
between the date hereof and the Closing Date excepted, and
Transferee shall assume the risk that adverse matters,
including but not limited to, construction defects and
adverse physical and environmental conditions may not have
been revealed by Transferee's investigations; and Transferee,
upon closing, shall be deemed to have waived, relinquished
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and released Transferor from and against any and all claims,
demands, causes of action, losses, damages, liabilities,
costs and expenses (including attorneys' fees and court
costs) of any and every kind or character, known or unknown,
which Transferee might have asserted or alleged against
Transferor by reason of or arising out of any latent or
patent construction defects or physical conditions,
violations of Legal Requirements (including zoning and
environmental laws) and any and all other acts, omissions,
events, circumstances or matters with respect to the Centers,
subject, however, to Transferee's rights and remedies
provided for in this Agreement in the event of the breach of
any of Transferor's warranties, representations or covenants
contained herein, in any Transferor's Estoppel Letter or in
any other document or instrument delivered by Transferor in
connection with the Closing, and subject to the next to last
sentence of this Section 8.02. Nothing contained in this
Section 8.02 shall be deemed to impair, limit or otherwise
affect Transferee's rights under this Agreement in respect of
the representations, warranties and covenants of Transferor
set forth in this Agreement, including the Transferor's
indemnity set forth in Section 14.07, and the other
provisions hereof binding on Transferor. The provisions of
this Section 8.02 shall survive the Closing.
SECTION 8.03. Representations and Warranties of
Transferor. Transferor hereby represents and warrants to
Transferee as follows:
(a) Transferor is a general partnership organized
and validly existing under the laws of the State of
Tennessee. Transferor has full power and authority to enter
into this Agreement, to conduct the business of owning and
operating the Centers and to perform its obligations
hereunder in accordance with the terms hereof. The
execution, delivery and performance by Transferor of this
Agreement and the documents to be executed by Transferor
pursuant hereto have been duly and validly authorized by all
necessary parties and no proceeding on the part of Transferor
is necessary in order to permit it to consummate the
transaction contemplated hereby. This Agreement constitutes
the legal, valid and binding obligation of Transferor,
enforceable against Transferor in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent conveyance or other
similar laws affecting the rights of creditors generally and
to general principles of equity. No bankruptcy, insolvency,
reorganization, liquidation, arrangement or moratorium
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proceeding or allegation of fraudulent conveyance is now
pending or, to Transferor's knowledge, threatened against
Transferor.
(b) Transferor is not a "foreign person" as
defined in Section 1445 of the Code.
(c) Execution by Transferor of this Agreement and
all documents provided for herein to be executed by
Transferor, and performance by Transferor of the provisions
hereof and thereof, will not (i) result in the creation of or
claim of any lien, charge, or encumbrance upon any Center (or
any portion thereof) or violate or result in any breach of,
or constitute a default under, any law, regulation, rule,
order or judgment of any Governmental Authority to which
Transferor is subject, or any permit, agreement, indenture,
mortgage, deed of trust, bank loan, credit agreement or other
instrument to which Transferor is a party or by which
Transferor is bound, where such breach or default might
adversely affect Transferor's ability to perform its
obligations hereunder or under such other documents or
(ii) require any registration, approval or consent of, or
payment of any premium, fee or penalty (other than amounts
which shall be paid by Transferor at or prior to the Closing)
to any Governmental Authority or any other Person.
(d) With respect to the Leases:
(i) (A) Exhibit B annexed hereto is a true,
correct and complete list of all Leases in effect on the
date of this Agreement on a Center-by-Center basis (and
all documents comprising such Leases, provided that
without affecting Transferee's right to refuse to
consummate the Closing under this Agreement as a result
thereof, Transferor shall not be deemed to be in breach
of this representation and warranty solely because
Exhibit B fails to list one or more amendments to
a Lease if (1) the cumulative effect thereof does not
materially modify the Lease in question, does not have a
material adverse effect on the interest of the landlord
thereunder and does not have a material adverse effect
on the value of the related Center and (2) Transferor
did not have knowledge of the existence of such
amendments on the date of this Agreement) and
(B) Transferor has made true, correct and complete
originals or copies of all Leases in effect as of the
date of this Agreement available to Transferee for its
review. No Tenant, Adjoining Owner or other person or
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entity has any option to purchase all or any portion of
any Center or a right of first refusal in respect of the
sale of all or any portion of any Center to a third
party and no Tenant, Adjoining Owner or other person or
entity has the right to purchase all or any portion of
any Center.
(ii) Exhibit Q annexed hereto is a true, correct
and complete list of Tenants and Adjoining Owners that
are delinquent in the payment of Rents as of the date of
such Exhibit, which Exhibit sets forth the information
specified in clause (i) of Section 6.01(a).
(iii) Except as set forth in Exhibit I annexed
hereto, Transferor has received no written notice from
any Tenant under a Lease which is still outstanding and
otherwise has no knowledge (A) that Transferor has
defaulted in performing any of its material obligations
under such Lease or (B) that such Tenant is entitled to
any reduction in, refund of or counterclaim or offset
against, or is otherwise disputing, any Rents paid,
payable or to become payable by such Tenant thereunder
or is entitled to cancel or terminate such Lease or to
be released of any of its material obligations
thereunder. With the exception of written notices given
with respect to certain of the delinquencies in the
payment of Rents specified in Exhibit Q, since the date
six months prior to the date of this Agreement,
Transferor has not given written notice to any Tenant
which is still outstanding that such Tenant is in
default under its Lease, except as set forth in
Exhibit I.
(iv) The Rent Rolls attached hereto as Exhibit F
are true, correct and complete in all material respects
as of the dates thereof.
(v) All leasing commissions in respect of the
current terms of the Leases currently in effect have
been paid in full by Transferor.
(e) With respect to the Operating Agreements:
(i) (A) Exhibit C annexed hereto is a true, correct
and complete list of all Operating Agreements in effect
on the date of this Agreement on a Center-by-Center
basis (and all documents comprising such Operating
Agreements, provided that without affecting Transferee's
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right to refuse to consummate the Closing under this
Agreement as a result thereof, Transferor shall not be
deemed to be in breach of this representation and
warranty solely because Exhibit C fails to list one or
more amendments to an Operating Agreement if (1) the
cumulative effect thereof does not materially modify the
Operating Agreement in question, does not have a
material adverse effect on the Transferor's interest
thereunder and does not have a material adverse effect
on the value of the related Center and (2) Transferor
did not have knowledge of the existence of such
amendments on the date of this Agreement), and
(B) Transferor has made true, correct and complete
originals or copies of all Operating Agreements in
effect as of the date of this Agreement available to
Transferee for its review.
(ii) Except as set forth in Exhibit I, Transferor
has received no written notice from any party to an
Operating Agreement which is still outstanding and
otherwise has no knowledge (A) that Transferor has
defaulted in performing any of its obligations under
such Operating Agreement or (B) that such party is
entitled to any reduction in, refund of or counterclaim
or offset against, or is otherwise disputing, any Rents
paid, payable or to become payable thereunder by such
party or is entitled to cancel or terminate such
Operating Agreement or to be released of any of its
material obligations thereunder. With the exception of
written notices given with respect to certain of the
delinquencies in the payment of Rents specified in
Exhibit Q, since the date six months prior to the date
of this Agreement Transferor has not given written
notice to any of the other parties to the Operating
Agreements which is still outstanding that any such
party is in default thereunder except as set forth in
Exhibit I.
(f) With respect to the Other Agreements:
(i) (A) Exhibit D annexed hereto is a true, correct
and complete list of all material Other Agreements in
effect on the date of this Agreement on a Center-by-
Center basis (and all documents comprising such Other
Agreements, provided that without affecting Transferee's
right to refuse to consummate the Closing under this
Agreement as a result thereof, Transferor shall not be
deemed to be in breach of this representation and
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warranty solely because Exhibit D fails to list one or
more amendments to an Other Agreement if (1) the
cumulative effect thereof does not materially modify the
Other Agreement in question, does not have a material
adverse effect on the interest of the Transferor
thereunder and does not have a material adverse effect
on the value of the related Center and (2) Transferor
did not have knowledge of the existence of such
amendments on the date of this Agreement) and
(B) Transferor has made true, correct and complete
originals or copies of all material Other Agreements in
effect as of the date of this Agreement (except for
Other Agreements that consist of agreements to provide
services and that can be terminated on 30 days notice
without penalty) available to Transferee for its review.
(ii) Except as set forth on Exhibit I,
(A) Transferor has not given or received written notice
from any party to any Other Agreement which is still
outstanding that Transferor or any such party has
defaulted in performing any of its obligations under
such Other Agreement and (B) Transferor otherwise has no
knowledge that Transferor has defaulted in performing
any of its obligations under such Other Agreement.
(g) Except as set forth in Exhibit J, in
Schedule 8.03(k) and Transferee's Environmental Reports, as
of the date of this Agreement, Transferor has not received
any written notice of any Violation with respect to any
Center from any Governmental Authority except for those which
have heretofore been complied with and which are not the
subject of any ongoing or threatened claim, proceeding or
order. Transferor has not received any written notice which
is still outstanding (i) from any Governmental Authority of
any failure by Transferor to obtain any certificate, permit,
license or approval with respect to any Center, or any
intended revocation, modification or cancelation of any of
the same or any violation of any restriction, condition,
covenant or agreement contained in any easement, restrictive
covenant or any similar instrument or agreement which
constitutes a Permitted Encumbrance.
(h) No condemnation, eminent domain, zoning, land
use, environmental or similar proceeding in which Transferor
has been served with process or of which Transferor has
otherwise received written notice is pending with respect to
all or any part of the Centers, and Transferor has no
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knowledge that any such proceeding is threatened or
contemplated.
(i) There are no pending litigations or other
proceedings against Transferor relating to any of the Centers
in respect of which Transferor has been served with process
or otherwise received written notice except for (i) claims
for personal injury, property damage or worker's compensation
for which the insurance carrier has been notified on a timely
basis and for which claim such carrier has not denied
coverage and (ii) other litigations or proceedings shown on
Exhibit K annexed hereto. Transferor has no knowledge of any
threatened litigation or proceedings against Transferor
relating to any of the Centers except litigation of the
nature described in clause (i) above.
(j) True, correct and complete copies of the
financial statements described on Exhibit S annexed hereto
have previously been delivered to Transferee and such
financial statements fairly and accurately present the
assets, liabilities, financial position, results of
operations and changes in financial position of the subjects
thereof as of the dates thereof or for the periods referred
to therein.
(k) Schedule 8.03(k) annexed hereto lists all
environmental reports (and amendments and modifications
thereto) dated after January 1, 1993, within Transferor's or
any Managing Agent's possession or control with respect to
any Center. Transferor has made true, correct and complete
copies of such environmental reports (and all amendments and
modifications thereto) available to Transferee. Except as
disclosed on (i) Schedule 8.03(k), (ii) the reports listed on
Schedule 8.03(k) or (iii) Transferee's Environmental Reports,
Transferor has received no written notice from any Person
(including Governmental Authorities), and otherwise has no
knowledge of, the storage, use, treatment, disposal or
release of any Hazardous Substances on, in or under any
Property or Adjoining Property except to the extent conducted
in the ordinary course of business as a shopping center, in
compliance with Environmental Requirements and not likely to
lead to liability under any Environmental Requirements,
including any requirement to investigate or clean up any
Hazardous Substances under any Environmental Requirements.
(l) Transferor has no employees or agreements with
any employees. All persons who regularly perform services at
any Center are employees of the Managing Agent or other
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independent contractors and no such employees are subject to
a collective bargaining agreement.
(m) Exhibit CC annexed hereto contains true and
complete copies of the current real estate tax bills with
respect to each Center. Transferor has not received any
written notice of any proposed increase in the assessed
valuation of any Center or of any proposed public improvement
assessments. Except as disclosed on Exhibit CC, there are no
tax abatements or exemptions affecting any Center and there
are currently no pending real estate tax protest proceedings
with respect to the Centers.
(n) To Transferor's knowledge, there is no real
property other than (i) Hickory Hollow Mall that comprises or
otherwise relates to the regional shopping center commonly
known as "Hickory Hollow Mall" located in the Nashville,
Tennessee metropolitan area, (ii) Courtyard at Hickory Hollow
that comprises or otherwise relates to the community shopping
center commonly known as "Courtyard at Hickory Hollow"
located in the Nashville, Tennessee metropolitan area, (iii)
Rivergate Mall that comprises or otherwise relates to the
regional shopping center commonly known as "Rivergate Mall"
located in the Nashville, Tennessee metropolitan area, (iv)
Village at Rivergate that comprises or otherwise relates to
the community shopping center commonly known as "Village at
Rivergate" located in the Nashville, Tennessee metropolitan
area and (v) Lion's Head Village that comprises or otherwise
relates to the community shopping center commonly known as
"Lion's Head Village" located in the Nashville, Tennessee
metropolitan area.
(o) Schedule 8.03(o) sets forth the material items
of Personal Property included in the contribution
contemplated by this Agreement, which Schedule separately
identifies any leased Personal Property, the leases for which
are listed in Exhibit D.
(p) Exhibit R lists all Leasing Costs that are
payable by the landlord under Leases in effect on the date
hereof.
(q) There are no agreements for the management of
the Centers or for the leasing of space in the Centers to
which Transferor is a party other than the Management
Agreements and the Leasing Agreements.
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(r) Transferor has obtained the agreement of the
holder of the Existing Debt referred to in clause (i) of the
definition thereof to (i) the allocation of such Existing
Debt contemplated by the definition of Existing Debt and as
contemplated by Section 3.03, (ii) the payoff of the Existing
Debt in accordance with Section 5.02 and (iii) the release at
the Closing of the Centers from the liens securing such
Existing Debt. The Existing Debt referred to in clause (ii)
of the definition thereof is prepayable (subject to the
payment of applicable prepayment premiums and accrued and
unpaid interest) as contemplated by this Agreement on
60 days' prior written notice from the borrower thereunder.
As of the Closing Date and before giving effect to any
adjustments to the Agreed Value made in accordance with
Article VI, the Existing Debt in the aggregate will not
exceed the Agreed Value and will not be less than the Agreed
Value minus $19 million (which amount shall be increased by
the aggregate Unit Value of the Units, if any, to be issued
pursuant to Section 3.03(b)); provided, however, that such
$19 million amount (as so increased) is subject to adjustment
by the amount of any adjustment to the Agreed Value made in
accordance with Article VI.
(s) Transferor acknowledges that it understands
that the Units to be issued pursuant hereto will not be
registered under the Securities Act of 1933, as amended, in
reliance upon the exemption afforded by Section 4(2) thereof
for transactions by an issuer not involving any public
offering, and will not be registered or qualified under any
applicable state securities laws. Transferor represents that
(i) it is acquiring such Units for investment only and
without any view toward distribution thereof, and, except for
distributions to its partners in accordance with this
Agreement or as otherwise approved by the Partnership it will
not sell or otherwise dispose of such Units except in
compliance with the registration requirements or exemption
provisions of any applicable state securities laws and in
accordance with the terms applicable to such securities in
the Partnership Agreement, (ii) its economic circumstances
are such that it is able to bear all risks of the investment
in the Units for an indefinite period of time, including the
risk of a complete loss of its investment in the Units,
(iii) it has knowledge and experience in financial and
business matters sufficient to evaluate the risks of
investment in the Units, and (iv) it has consulted with its
own counsel and tax advisor, to the extent deemed necessary
by it, as to all legal and taxation matters covered by this
Agreement and has not relied upon the Transferee for any
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explanation of the application of the various United States
or state securities laws or tax laws with regard to its
acquisition of the Units. Transferor further acknowledges
and represents that it has made its own independent
investigation of Parent and the business conducted by Parent.
Such investigation shall not affect Transferor's right to
rely on the representations and warranties of Transferee
contained in this Agreement.
(t) Transferor reasonably believes that the
insurance maintained by it with respect to the Centers
represents coverage that is prudent and similar to coverage
normally maintained by institutional investors on properties
similar to the Centers.
SECTION 8.04. No Independent Investigation. All
representations and warranties made herein by Transferor
which are expressly qualified herein as being based on
Transferor's knowledge are made, and are hereby acknowledged
by the Transferee to be made, without independent
investigation regarding the facts contained therein other
than inquiry of the Managing Agents (but in no event will
knowledge of the Managing Agents be imputed to Transferor),
and are otherwise limited as provided in the definition of
"knowledge" or "notice". Transferor agrees that promptly
after the execution of this Agreement by the parties it will
make such inquiry of the Managing Agents.
SECTION 8.05. Effect of Estoppels. To the extent
that prior to the Closing a Tenant or an Adjoining Owner
provides to Transferee an estoppel letter addressed to
Transferee (or addressed to the Transferor but containing a
statement to the effect that any transferee of the
Transferor's interest in the applicable Center may rely
thereon) and delivered in response to a request made pursuant
to this Agreement which sets forth information with respect
to any item as to which Transferor has made a representation
or warranty, then Transferor's representation and warranty in
respect of such information shall thereafter be null and void
and of no further force or effect, such representation and
warranty shall not be deemed to have been remade as of the
Closing to such extent and Transferee shall rely solely on
the information set forth in such estoppel letter. Nothing
contained in this Section 8.05 shall affect or negate
Transferee's right to refuse to proceed with the Closing as
provided in Section 10.02(c).
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SECTION 8.06. Survival of Transferor's Warranties,
etc. (a) All of Transferor's representations and warranties
contained in this Article VIII, as remade as of the Closing
as provided in Section 8.06(b) and subject to any
modifications thereof made in any certificate delivered
pursuant to said Section, and all certifications,
representations and warranties made by Transferor in any
Transferor's Estoppel Letter delivered by Transferor to
Transferee in accordance with Section 15.02 shall survive the
Closing.
(b) All of Transferor's representations and
warranties set forth in this Article VIII shall be deemed to
have been remade on and as of the Closing Date, subject,
however, to the provisions of Section 8.05 and facts
disclosed on the schedules to this Agreement which are to be
delivered by Transferor to Transferee at the Closing pursuant
to Sections 7.01(o) and 7.01(q) to the extent such facts do
not disclose a default by Transferor under Article XI;
provided, however, that if (i) any matter or event shall have
occurred between the date hereof and the date of the Closing
which does not result from any intentional act or omission of
Transferor, that is not permitted under any provisions of
this Agreement and which makes any such warranty or
representation untrue in any material respect as of the
Closing Date or (ii) Transferor discovers that any warranty
or representation was inaccurate in any material respect as
of the date hereof and Transferor had no knowledge thereof on
the date hereof, Transferor shall have the right to deliver a
certificate to Transferee at or prior to the Closing which
discloses such matter, event or inaccuracy, and if Transferor
does so, Transferor shall not be liable to Transferee
following the Closing for the breach of the warranty or
representation in question which results from the occurrence
of such matter, thing or inaccuracy, but, notwithstanding the
provisions of clauses (i) or (ii) of this sentence, in no
event shall Transferee be obligated to close hereunder unless
the conditions precedent to Transferee's obligation to close
set forth in this Agreement (including in Section 10.02(a))
shall have been fulfilled.
(c) Notwithstanding anything to the contrary set
forth in this Article VIII or elsewhere in this Agreement, if
(i) Transferee has knowledge on the date hereof that any of
Transferor's warranties or representations set forth in this
Article VIII is untrue in any respect, then the breach by
Transferor of the warranties and representations as to which
Transferee shall have such knowledge shall be deemed waived
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by Transferee and Transferor shall not be deemed in default
hereunder and shall have no liability to Transferee or its
successors or assigns in respect thereof and (ii) if after
the date hereof and prior to the Closing Transferee obtains
knowledge that any of Transferor's warranties or
representations set forth in this Article VIII, or any of
Transferor's warranties or representations made in any
documents delivered by Transferor in connection with the
Closing (including any Transferor's Estoppel Letters), is
untrue in any respect, and Transferor shall not have had
knowledge of such breach when such warranties or
representations were made, Transferor shall not be liable to
Transferee following the Closing for the breach of such
warranties or representations, but, notwithstanding the
provisions of clause (ii) of this sentence, in no event shall
Transferee be obligated to close hereunder unless the
conditions precedent to Transferee's obligation to close set
forth in this Agreement (including in Section 10.02(a)) shall
have been fulfilled. For the purposes of this
Section 8.06(c), Transferee shall be deemed to have or to
have obtained knowledge of any such matter or thing only if
such matter or thing (i) is expressly described in any Lease,
Operating Agreement or Other Agreement delivered to and/or
made available for review by Transferee, (ii) was
specifically identified in any written studies or reports
furnished to Transferee by any third party consultants
retained by it, (iii) was expressly disclosed in any estoppel
letters delivered to Transferee pursuant to Article XV or
(iv) was otherwise known to Stephen Lebovitz, Keith Honnold,
Mary Ann Okrasinski or Jay Wiseman.
ARTICLE IX
Representations and Warranties of Transferee
SECTION 9.01. Transferee's Representations and
Warranties. Transferee represents and warrants to Transferor
as follows:
(a) Transferee is a limited partnership duly
organized, validly existing and in good standing under the
laws of the State of Delaware. Each of Parent and General
Partner is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(b) Transferee has full power and authority to
enter into this Agreement, and Transferee has full power to
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perform its obligations hereunder in accordance with the
terms hereof. The execution, delivery and performance of
this Agreement by Transferee and the documents to be executed
by Transferee, Parent and General Partner pursuant hereto
have been duly and validly authorized by all necessary
parties and no other proceedings on the part of Transferee,
Parent or General Partner are necessary in order to permit
them to consummate the transaction contemplated hereby. This
Agreement constitutes the legal, valid and binding obligation
of Transferee, enforceable against Transferee in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar
laws affecting the rights of creditors generally and to
general principles of equity. No bankruptcy, insolvency,
reorganization, arrangement or moratorium proceeding, or
allegation of fraudulent conveyance, is now pending or, to
Transferee's knowledge, threatened against Transferee, Parent
or General Partner.
(c) Execution by Transferee of this Agreement and
all documents provided for herein to be executed by
Transferee, Parent or General Partner, and performance by
Transferee, Parent and General Partner of the provisions
hereof and thereof, (i) will not violate or result in any
breach of, or constitute a default under, any law,
regulation, order or judgment of any Governmental Authority
to which Transferee, Parent or General Partner is subject or
by which any of Transferee's, Parent's or General Partner's
property or assets is bound or affected, or the Partnership
Agreement or any other agreement, indenture, mortgage, deed
of trust, bank loan, credit agreement or any other instrument
to which Transferee, Parent or General Partner is a party or
by which Transferee, Parent or General Partner is bound,
where such breach or default might adversely affect
Transferee's, Parent's or General Partner's ability to
perform their respective obligations hereunder or under such
other documents or (ii) require the approval or consent of
any Governmental Authority.
(d) Transferee is not utilizing the assets of any
employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended)
for or in connection with its acquisition of the Centers, or
any of them.
(e) When issued in accordance with this Agreement,
the Units shall be duly and validly issued, fully paid and
nonassessable and free from any liens or encumbrances or
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rights of others, other than any liens, encumbrances or
rights created by Transferor and/or any liens, encumbrances
or rights pursuant to the Partnership Agreement.
(f) Transferee has provided a true, correct and
complete copy of the Partnership Agreement to Transferor.
(g) Neither the issuance, sale or delivery of the
Units to be issued pursuant to this Agreement nor, upon the
conversion thereof, the issuance or delivery of the Common
Stock is subject to any preemptive right of stockholders of
Parent arising under law or the certificate of incorporation
or by-laws of Parent, to any contractual right of first
refusal or other right in favor of any Person.
(h) There is no action, suit, proceeding or
investigation pending or currently threatened against
Transferee, Parent or General Partner that questions the
right of Transferee, Parent or General Partner to consummate
the transactions contemplated by this Agreement, or that
might, either individually or in the aggregate, have a
Material Adverse Effect, or result in any change in the
current equity ownership of Parent, nor is Transferee, Parent
or General Partner aware that there is any basis for the
foregoing.
(i) All forms, reports, statements and other
documents (the "SEC Documents") filed by Parent with the
Securities and Exchange Commission (the "SEC") were prepared
in all material respects in accordance with the requirements
of applicable law and did not at the time they were filed
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements therein, in light
of the circumstances under which they were made, not
misleading.
(j) Parent elected to be taxable as a real estate
investment trust for federal income tax purposes beginning in
1993, its first year of existence.
(k) Except as disclosed in the SEC Documents
filed and publicly available prior to the date of this
Agreement, in the public announcements by Parent and/or its
affiliates described in Exhibit DD or as set forth in or
contemplated by this Agreement, since December 31, 1997,
there has not been any material adverse change or any
development involving a prospective material adverse change,
(68)
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in the business, properties, business prospects, condition
(financial or otherwise) or results of operations of Parent
or any of its subsidiaries, arising for any reason
whatsoever.
(l) As of the date of this Agreement, Transferee's
Environmental Reports are all the environmental reports
(including amendments and modifications) prepared by or on
behalf of Transferee in connection with the transactions
contemplated by this Agreement.
SECTION 9.02. Remaking of Warranties; Survival.
All of Transferee's representations and warranties set forth
in this Article IX shall be deemed to have been remade on and
as of the Closing Date, subject to Section 7.02(a). Such
representations and warranties, as remade, shall survive the
Closing.
ARTICLE X
Conditions to Closing; Risk of Loss
SECTION 10.01. Conditions to the Obligation of
Transferor To Close Title. The obligation of Transferor to
consummate the Closing under this Agreement is expressly
conditioned upon the fulfillment by and as of the Closing
Date of each of the conditions listed below, provided that
Transferor, at its election, may waive all or any of such
conditions and if the Closing occurs Transferor shall be
deemed to have waived all unsatisfied conditions (but without
releasing Transferee from any liability under its
representations, warranties and covenants in this Agreement
that survive the Closing).
(a) Transferee shall have issued Units to the
extent required pursuant to Section 5.02 and shall have paid
all other amounts required to be paid by it hereunder.
(b) All representations and warranties of
Transferee set forth in Article IX shall be true and correct
in all material respects on and as of the Closing Date as if
made on and as of such date; provided, however, that if any
of the representations and warranties set forth in Sections
9.01(h) or (k) shall not be true and correct in all material
respects as of the Closing Date (but were true and correct in
all material respects on the date of this Agreement),
Transferee shall not be deemed to have failed to satisfy such
(69)
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condition as a result thereof if prior to Closing (i)
Transferee gives Transferor notice of such matter and (ii)
Transferee makes a public announcement of such matter.
(c) Transferee shall have executed and/or
delivered or caused to be delivered at the Closing all
documents and executed counterparts of documents and
instruments required by this Agreement to be executed and/or
delivered by Transferee and shall have taken all other
actions and fulfilled all other covenants and conditions
required of Transferee under this Agreement.
(d) For the 10 trading day period during which the
Unit Value as of the Closing Date (as such Closing Date may
be adjourned pursuant to Section 5.01) shall have been
determined (the "Ten Day Period"), neither Parent nor any of
its subsidiaries shall have (A) declared, set aside or paid
any dividends on, or made any other distributions in respect
of, any of its capital stock, other than dividends and
distributions by a direct or indirect wholly owned subsidiary
of Parent to its Parent and other than regular quarterly
dividends and distributions by Parent or Transferee made in
the ordinary course of business, (B) split, combined or
reclassified any of its capital stock or issued any other
securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (C) purchased, redeemed or
otherwise acquired any shares of capital stock of Parent or
any of its subsidiaries or any other securities thereof or
any rights, warrants or options to acquire any such shares or
other securities. Nothing in the foregoing shall be deemed
to prohibit (i) the issuance, and payment of dividends with
respect to, preferred capital stock or interest by Parent or
Transferee or (ii) the acquisition by Parent or Transferee of
Units.
SECTION 10.02. Conditions to the Obligation of
Transferee To Close Title. The obligation of Transferee to
consummate the Closing under this Agreement is conditioned
upon the fulfillment by and as of the Closing Date of each of
the conditions listed below, provided that Transferee, at its
election, may waive all or any of such conditions and if the
Closing occurs Transferee shall be deemed to have waived all
unsatisfied conditions (but without releasing Transferee from
any liability under its representations, warranties and
covenants in this Agreement that survive the Closing).
(a) All representations and warranties of
Transferor set forth in Article VIII shall be true and
(70)
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correct in all material respects on and as of the Closing
Date as if made on and as of such date (without reference to
any modifications thereof contained in any certificate
delivered by Transferor to Transferee pursuant to
Section 8.06(b) or made in accordance with Section 8.05),
subject, however, to changes resulting from the operation of
the Centers between the date hereof and the Closing Date in
accordance with the provisions of Article XI.
(b) Transferor shall have executed and/or
delivered or caused to be delivered at Closing all of the
documents and executed counterparts of documents and
instruments required by this Agreement to be executed and/or
delivered by Transferor and shall have taken all other
actions and fulfilled all other covenants and conditions
required of Transferor under this Agreement.
(c) All other conditions to Transferee's
obligation to close title set forth in this Agreement,
including the conditions set forth in Sections 15.01, 15.02
and 15.03, shall be satisfied (and Transferee shall not have
terminated this Agreement pursuant to any such provisions).
(d) The Title Company or, if the Title Company
shall be unwilling, First American Title Insurance Company
shall commit, in writing, to issue to Transferee an ALTA 1992
form of owner's policy of title insurance with respect to
each Center, dated as of the Closing Date and insuring
Transferee's fee simple title to each Center in an amount
equal to the portion of the Agreed Value allocated to such
Center pursuant to Section 3.04, free of any exceptions other
than for Permitted Encumbrances and the indebtedness required
or permitted to be incurred in accordance with Section 3.06,
together with a "land same as survey" endorsement , a
"Restrictions, Easements and Minerals - Improved Land"
endorsement (issued in a form equivalent to First American
Title Insurance Company Form 31.1) also known as a
"comprehensive" endorsement (provided that Transferor will
not be required to deliver any indemnity, affidavit or
undertaking in connection with such endorsement (other than
an affidavit in the form of Exhibit EE), and if such
endorsement cannot be obtained by Transferee as a result of
the failure to obtain such an indemnity, affidavit or
undertaking (other than an affidavit in the form of
Exhibit EE) or as a result of any matter disclosed on the
surveys described in Section 4.01(d), it shall not be a
condition to Transferee's obligations hereunder that such
endorsement be obtained) and an endorsement insuring access
(71)
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from the applicable Center to public rights of way adjacent
to such Center as shown on the applicable survey and, to the
extent applicable, a contiguity endorsement.
(e) During the Ten Day Period, neither Transferor
nor any affiliate thereof shall sell any Common Stock.
SECTION 10.03. Risk of Loss. (a) If prior to the
Closing any Center shall suffer any damage by fire or other
casualty, the cost to repair which exceeds $2,500,000, or if
any proceeding shall be instituted for the taking in
condemnation or by eminent domain of any material portion of
any Center, Transferee shall have the right to terminate this
Agreement by giving written notice to Transferor within
30 days after Transferee is first advised by Transferor in
writing of such damage or taking. Transferor agrees to give
Transferee prompt notice of the occurrence of any damage or
taking affecting any Center. If this Agreement is so
terminated by Transferee, the Escrow Agent shall return the
Deposit to Transferee in the manner set forth in Section 3.02
(and in such circumstances Transferor shall join with
Transferee in a written instruction to Escrow Agent to do so)
and neither party shall have any further obligations or
liabilities hereunder, or otherwise with respect to the
subject matter hereof, except as otherwise expressly provided
herein to the contrary.
(b) Notwithstanding the foregoing, if all or any
portion of a Center shall be damaged by fire or other
casualty or taken in whole or in part in condemnation or by
eminent domain, and if as a result of such damage or taking
Transferee shall be entitled to be relieved of its
obligations under this Agreement pursuant to Section 10.03(a)
above, Transferee shall have the right, by giving written
notice to Transferor within 30 days after receipt by
Transferee from Transferor of written notice of such damage
or taking, to elect nevertheless to accept the Centers. If
Transferee makes such election (which election shall be
deemed to have been made by Transferee if it for any reason
fails to give Transferor notice of its election to terminate
this Agreement within the 30-day period provided for in
Section 10.03(a)) or if the damage or taking shall not be of
sufficient magnitude to entitle Transferee to terminate this
Agreement pursuant to Section 10.03(a), this Agreement and
the obligations of Transferor and Transferee hereunder shall
remain in full force and effect except that (i) Transferee
shall accept the Centers notwithstanding such damage or
taking and shall pay the full Agreed Value therefor, (ii) at
(72)
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the Closing (x) Transferor shall assign to Transferee all of
its right, title and interest in and to all insurance
proceeds (including business interruption or rent insurance
proceeds) payable by reason of such damage or all awards
payable by reason of such taking, and, in the case of
insurance proceeds, shall credit against the Agreed Value the
amount of any deductible or co-payment amount under
Transferor's insurance policies and (y) Transferor shall
assign and pay over to Transferee the amount of such proceeds
or award, if any, received by Transferor prior to the date of
the Closing, and (iii) Transferor shall not settle or
compromise any claim for such proceeds or award without the
prior consent of Transferee, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the
foregoing, Transferor shall be entitled to receive or retain
(i) out of such casualty insurance proceeds or award, any
amounts expended by Transferor (x) to settle the claim for
such proceeds or award and (y) to restore or protect the
Centers, provided that if the amount of such proceeds or
award is or will be greater than $250,000, Transferee shall
have given its prior written consent thereto, which consent
shall not be unreasonably withheld and (ii) in the case of
rental or business interruption proceeds allocable to periods
prior to the Adjustment Point (apportioned based upon the
principles set forth in Article VI with respect to Rents),
loss of rents by reason of the fire or other casualty
suffered by Transferor prior to the Closing, which
entitlement shall survive the Closing. At the time of any
assignment of insurance proceeds in accordance with this
Section, Transferor shall notify Transferee of any disputes
between Transferor and the insurance carrier related to the
claim giving rise to such proceeds. Transferor will
reasonably cooperate with Transferee in attempting to collect
such proceeds from the insurance carrier at Transferee's
expense. The provisions of this Section 10.03(b) shall
survive the Closing.
SECTION 10.04. Exclusion of Strip Centers.
(a) If on the Closing Date the conditions of Transferee to
close set forth in Section 10.02 are not fulfilled (or waived
in writing by Transferee) and (i) such failure is
attributable solely to a matter or matters relating to one or
more Strip Centers for which there is a Deficiency Amount and
(ii) such Deficiency Amount (in aggregate) is equal to or
greater than $3,000,000, then Transferor shall have the
option, but not the obligation, to exclude one or more of
such Strip Centers from the transactions contemplated by this
Agreement so as to cause the Deficiency Amount to be less
(73)
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than $3,000,000 (any Strip Center excluded from the
transactions contemplated by this Agreement pursuant to this
Section 10.04, an "Excluded Center") and the provisions of
Section 10.04(e) shall apply with respect to such Excluded
Center.
(b) If on the Closing Date the conditions of
Transferee to close set forth in Section 10.02 are not
fulfilled (or waived in writing by Transferee) (after giving
effect to any exclusions of Excluded Centers pursuant to
Section 10.04(a)) and (i) such failure is attributable solely
to a matter or matters relating to one or more Strip Centers
for which there is a Deficiency Amount and (ii) such
Deficiency Amount (in aggregate but after giving effect to
any exclusion of Excluded Centers pursuant to
Section 10.04(a)) is less than $3,000,000, then within five
days after the date on which the Deficiency Amount is
determined Transferor shall take one or more of the following
actions with respect to the matters giving rise to such
Deficiency Amount so as to cause the Deficiency Amount to be
reduced to zero on the Closing Date: (i) reduce the Agreed
Value by the Deficiency Amount relating to any such matter
(in which event Transferee shall be deemed to have waived
such matter) or (ii) exclude the Strip Center or Strip
Centers affected by such matter from the transactions
contemplated by this Agreement (in which event such Strip
Center or Strip Centers shall be Excluded Centers and the
provisions of Section 10.04(e) shall apply with respect
thereto) or (iii) cure any such matter prior to Closing. If
Transferor shall not have made the election required pursuant
to this Section 10.04(b) within five days after the date on
which the Deficiency Amount is determined Transferor shall be
deemed to have elected the action described in clause (i) of
the preceding sentence.
(c) If on the Closing Date the conditions of
Transferee to close set forth in Section 10.02 are not
fulfilled (or waived in writing by Transferee) and such
failure relates to one or more Strip Centers, then, unless
the Deficiency Amount is of the type described in clause
(i) of the definition thereof, at the written request of
Transferee or Transferor, both parties will promptly commence
good faith negotiations with a view to establishing whether
such failure can be resolved by the payment of a readily
quantifiable sum of money. If Transferee and Transferor have
not agreed upon such determination within 10 days after the
written request of either party pursuant to the preceding
sentence, then such determination, including the sum of money
(74)
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required to resolve such failure, shall be determined by an
arbitration proceeding held in New York City before a single
arbitrator selected under the mutual-elimination procedures
set forth in Section 13 of the Commercial Arbitration Rules
of the American Arbitration Association, with the New York
City office of such association providing the list of
arbitrator candidates and otherwise controlling the
arbitration process. Transferor and Transferee shall use
their best efforts to cause such arbitration process to be
concluded within 20 days after the expiration of such 10 day
period.
(d) If the provisions of this Section 10.04
require that the Deficiency Amount be established, the
Closing shall be adjourned until the date two Business Days
after the determination of the Deficiency Amount but in no
event for more than 30 days.
(e) In the event any Strip Centers are excluded
pursuant to this Section 10.04 (i) except as expressly
provided herein, no party to this Agreement shall have any
further rights or obligations with respect to any Excluded
Center, (ii) the Agreed Value shall be reduced by the
aggregate amount allocated to any Excluded Center pursuant to
Section 3.04, (iii) the $250,000 liability threshold set
forth in Section 14.03(a), the $5,000,000 maximum aggregate
liability cap set forth in Section 14.03(b) and the amounts
of cash and Units required to be deposited in the Escrow Fund
shall each be reduced in the same proportion as the Agreed
Value, (iv) this Agreement shall be deemed amended to
eliminate any Excluded Centers from the provisions hereof and
shall otherwise remain in full force and effect, (v) the
conveyance of all the Centers other than any Excluded Centers
shall close on the Closing Date in accordance with the terms
of this Agreement and (vi) Transferor shall have no liability
to Transferee of any kind or nature whatsoever by reason of
Transferor's failure to contribute the Excluded Center or
Centers to Transferee. The parties hereto agree that, except
as set forth in this Section 10.04 or otherwise agreed by the
parties, if the Closing is to occur, it must be in respect of
all five Centers, and Transferee shall not have the right to
acquire, and Transferor shall not have the right to require
Transferee to acquire, fewer than all of the Centers.
(75)
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ARTICLE XI
Operation of the Centers Until Closing
SECTION 11.01. Standard of Operation. Transferor
agrees to operate and maintain the Centers, or cause the
Centers to be operated and maintained, between the date of
this Agreement and the Closing Date in the ordinary course of
business and consistent with past procedures and practices
heretofore followed in connection with such operation and
maintenance, except as otherwise specifically provided in
this Agreement; provided, however, that nothing contained in
this Section 11.01 or elsewhere in this Agreement shall
require Transferor to make or undertake any capital
improvements, repairs or replacements at any Center between
the date hereof and the Closing Date.
SECTION 11.02. Notice Requirements. Transferor
will promptly notify Transferee of any of the following
matters which occur between the date of this Agreement and
the Closing Date: (i) notices of default received or given
by Transferor with respect to any Lease, any Operating
Agreement or any material Other Agreement, (ii) litigation
commenced by Transferor, or litigation of which Transferor
has received notice commenced or threatened against
Transferor, with respect to any Center (other than litigation
arising in the ordinary course of business of operating a
shopping center covered by insurance as to which the insurer
has been notified on a timely basis and has not disclaimed
liability), (iii) notices of condemnation proceedings
commenced or directed against all or any portion of any
Center received by Transferor, (v) material casualty losses
to the Improvements of any Center and (vi) notices of any
written claims or Violations received by Transferor.
SECTION 11.03. Transferor's Rights and Covenants.
Between the date hereof and the Closing Date, (i) Transferor
shall maintain all insurance currently maintained by
Transferor on each Center in full force and effect,
(ii) Transferor shall have the right, upon prior written
notice to Transferee, to take such action as is appropriate
and consistent with its prior practices to collect Rents or
damages in lieu of Rents under any Lease which shall be in
default, whether or not such default existed prior to the
date of this Agreement, (iii) Transferor shall not, without
the prior written consent of Transferee, which consent shall
not be unreasonably withheld, (A) amend, modify, terminate or
consent to the assignment of any of the Operating Agreements
(76)
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or material Other Agreements or enter into any new Operating
Agreement or material Other Agreement, (B) enter into any new
Lease (except in accordance with Section 11.04 and except for
proposed leases set forth on Exhibit R on substantially the
terms described in such Exhibit and pursuant to documentation
reasonably satisfactory to Transferee), (C) amend or modify
any Lease or consent to the assignment of any Lease (except
for proposed amendments or modifications set forth on
Exhibit R pursuant to documentation reasonably satisfactory
to Transferee) or (D) terminate any Lease, (iv) Transferor
shall not intentionally cause any lien or other encumbrances
to attach to or affect any Center, other then the lien for
taxes not yet due and payable or any liens which Transferor
is contesting in good faith (provided that all liens are
released of record by Closing), (v) Transferor shall not make
any material alterations to any Center, (vi) Transferee and
its duly authorized representatives, agents and consultants
shall have the right, during normal business hours and upon
reasonable notice, to examine Transferor's books, records,
documents and other materials relating to the Centers and to
inspect and visit the Centers and (vii) Transferor will
promptly notify Transferee of any amendments to Leases,
Operating Agreements and Other Agreements of which Transferor
first acquires knowledge after the date hereof.
SECTION 11.04. Noncomplying New Leases. If
between the date hereof and the Closing Date, Transferor
desires to enter into any new Lease of space in a Center
which requires Transferee's consent hereunder, Transferor
shall give Transferee notice (the "New Lease Notice") which
(A) sets forth with respect to such proposed new Lease
(i) the name of the prospective Tenant, (ii) the term of the
Lease, (iii) the Rents payable under the Lease, (iv) the
location and size of the premises, (v) the permitted uses
under the Lease, (vi) the expenses associated with the
consummation of the Lease, including leasing commissions,
tenant improvement costs, tenant allowances and the like, and
(vii) any concessions or free Rent being granted, and which
sets forth on its face the substance of the last sentence of
this Section 11.04 and (B) which is accompanied by the
applicable lease documentation. No such Lease shall be
entered into by Transferor without the prior written consent
of Transferee, which consent shall not be unreasonably
withheld. If Transferee does not respond to any New Lease
Notice within five Business Days after its receipt thereof,
Transferee shall be conclusively deemed to have approved the
new Lease which is the subject of such New Lease Notice and
Transferor shall have the right to enter into such new Lease.
(77)
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SECTION 11.05. Survival. The provisions of this
Article XI shall survive the Closing.
ARTICLE XII
Title to Centers
SECTION 12.01. Title Defects. If, on the Closing
Date, Transferor shall be unable to convey to Transferee
title to the Centers subject to and in accordance with the
provisions of this Agreement, Transferor shall be entitled,
but shall not be obligated, to adjourn the Closing for one or
more periods not to exceed 60 days in the aggregate
(concurrent with any other adjournments taken by Transferor
hereunder) for the purpose of causing title to be placed in
the condition called for by this Agreement. If on the
Closing Date, as the same may be adjourned as above provided,
Transferor shall be unable to convey title to the Centers in
accordance with the terms of this Agreement, Transferee may
terminate this Agreement by notice to Transferor delivered on
or prior to the Closing Date, as the same may have been
extended, in which event this Agreement shall be terminated
and of no further effect and neither party shall have any
obligations of any nature to the other hereunder or by reason
hereof, except as to those obligations hereunder that are
specifically stated to survive such termination, and the
Deposit shall be returned to Transferee by Escrow Agent (and
in such circumstances Transferor shall join with Transferee
in a written instruction to Escrow Agent to return or pay, as
the case may be, the Deposit to Transferee in the manner set
forth in Section 3.02). Transferor shall be under no
obligation to take any steps or to institute or prosecute any
action or proceedings, or expend any sums of money, to remove
from title to any Center any defect, encumbrance or objection
to title; provided, however, that Transferor shall be
responsible for discharging or, subject to Section 12.03,
causing the Title Company affirmatively to insure over any
liens, encumbrances, mortgages or deeds of trust which do not
constitute Permitted Encumbrances, which secure indebtedness
and/or which can be discharged solely by the payment of a sum
of money and which arise on account of obligations undertaken
or actions performed by Transferor. Except for Transferor's
failure to discharge or, subject to Section 12.03, cause the
Title Company affirmatively to insure over such liens or
encumbrances as aforesaid, Transferor shall not be deemed in
default of this Agreement, and Transferee shall not be
entitled to damages of any kind, if Transferor shall be
(78)
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unable to convey title to the Centers in the condition called
for by this Agreement, nor shall Transferee in such
circumstances be entitled to specific performance of this
Agreement; provided, however, that the foregoing provisions
of this sentence shall not apply in respect of any exception
to title which is created as a result of the intentional act
or omission of Transferor between the date hereof and the
Closing Date and is not permitted under the terms of
Article XI. In no event shall Transferor be obligated to
discharge any mechanic's or similar lien created by a Tenant
in occupancy or an Adjoining Owner to the extent the same
shall constitute a Permitted Encumbrance, but Transferor
shall, prior to Closing, use commercially reasonable efforts
to cause such Tenant or Adjoining Owner to do so.
SECTION 12.02. Waiver by Transferee. Transferee,
at its election, may at the Closing accept such title as
Transferor can convey, without reduction of the Agreed Value
or any credit or allowance on account thereof or any claim
against Transferor by reason thereof.
SECTION 12.03. Affirmative Insurance. With
Transferee's consent, which consent shall not be unreasonably
withheld, Transferor shall have the right (but not an
obligation) to cause the Title Company affirmatively to
insure over defects in title which do not constitute
Permitted Encumbrances and which are not otherwise covered by
Section 12.01; provided, however, that Transferee's consent
shall not be required for insurance in form and substance
reasonably satisfactory to Transferee over (i) any mechanics'
liens securing, in the aggregate, obligations of less than
$1 million, (ii) any item apportioned under Article VI (other
than Impositions) or (iii) other matters (other than liens
securing the Existing Debt) customarily "insured over" by
reputable title insurers.
SECTION 12.04. Deeds Full Performance. The
acceptance of the Deeds and other closing documents by
Transferee from Transferor shall be deemed full performance
on the part of Transferor of all of its obligations under
this Agreement, except as to any such obligation which is
specifically stated in this Agreement to survive the Closing
or is expressly contained in documents delivered at Closing.
(79)
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ARTICLE XIII
Brokers, etc.
SECTION 13.01. Transferor's Representation.
Transferor represents and warrants to Transferee that
Transferor dealt with no broker, finder or like agent who
might claim a commission or fee in connection with the
transaction contemplated in this Agreement or on account of
introducing the parties, the preparation or submission of
brochures, the negotiation or execution of this Agreement or
the closing of the transaction contemplated herein other than
Merrill Lynch & Co. ("Broker"). The fees and expenses of
Broker, as certified by Transferor at least two Business Days
prior to the Closing, shall be paid by Transferee at the
Closing in accordance with Section 16.08. Transferor agrees
to indemnify and hold harmless Transferee and its successors
and assigns from and against any and all claims, losses,
liabilities and expenses, including reasonable attorneys'
fees, disbursements and charges, arising out of any claim or
demand for commissions or other compensation for bringing
about this transaction by any broker, finder or similar agent
or party, including Broker, who claims to have dealt with
Transferor or any affiliate thereof in connection with this
transaction.
SECTION 13.02. Transferee's Representation.
Transferee represents and warrants to Transferor that neither
Transferee, nor any affiliate thereof, has dealt with any
broker, finder or like agent who might claim a commission or
fee in connection with the transaction contemplated in this
Agreement or on account of introducing the parties, the
preparation or submission of brochures, the negotiation or
execution of this Agreement or the closing of the transaction
contemplated herein, other than Broker. Transferee agrees to
indemnify and hold harmless Transferor and its successors and
assigns from and against any and all claims, losses,
liabilities and expenses, including reasonable attorneys'
fees, disbursements and charges, arising out of any claim or
demand for commissions or other compensation for bringing
about this transaction by any broker, finder or similar agent
or party other than Broker who claim to have dealt with
Transferee or any affiliate thereof in connection with this
transaction.
SECTION 13.03. Survival. The provisions of this
Article XIII shall survive the Closing or any termination of
this Agreement.
(80)
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ARTICLE XIV
Default; Remedies
SECTION 14.01. Transferee's Default. If at the
Closing Date the conditions to the obligation of Transferor
to close as set forth in Section 10.01 have not been
fulfilled solely as a result of the default of Transferee
hereunder, and the Closing does not occur as a result
thereof, then Transferor shall be entitled as its sole and
exclusive remedy to terminate this Agreement and receive the
Deposit from the Escrow Agent as liquidated damages for
Transferee's default (and in such circumstances Transferee
shall join with Transferor in a written instruction to Escrow
Agent to pay the Deposit to Transferor in the manner set
forth in Section 3.02). Transferee and Transferor agree that
(i) the Deposit is a reasonable estimate of and bears a
reasonable relationship to the damages that would be suffered
and costs incurred by Transferor as a result of having
withdrawn the property from sale and the failure of closing
to occur due to a default by Transferee under this Agreement
which damages and costs are incapable of an exact
determination and (ii) Transferee seeks to limit its
liability under this Agreement to the amount of the Deposit
in the event this agreement is terminated and the transaction
contemplated by this Agreement does not close due to a
default by Transferee hereunder.
SECTION 14.02. Transferor's Default. Subject to
the provisions of Sections 8.06(b) and 8.06(c) and
Sections 12.01 and 10.04, if at the Closing Date the
conditions to the obligation of Transferee to close as set
forth in Section 10.02 have not been fulfilled solely as a
result of the default of Transferor hereunder, and the
Closing shall not occur as a result thereof, then Transferee
shall be entitled to pursue, at its election, one of the
following as its sole and exclusive remedy: (i) terminate
this Agreement and have the Deposit returned to it by the
Escrow Agent (and in such circumstances Transferor shall join
with Transferee in a written instruction to Escrow Agent to
pay or deliver, as the case may be, the Deposit to Transferee
in the manner set forth in Section 3.02), (ii) seek specific
performance of Transferor's obligations under this Agreement,
(iii) in the case of the prior sale or mortgaging of any
Center to any Person in breach of this Agreement, seek
damages (excluding consequential damages) but only if
Transferee has theretofore brought on action seeking specific
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performance of Transferor's obligations under this Agreement
within six months after such prior sale or mortgaging or (iv)
in the event that the Closing shall not occur solely as the
result of a breach of Transferor's representation and
warranty set forth in Section 8.03(r), seek damages
(excluding consequential damages) for such breach. Except as
provided in the preceding clauses (iii) and (iv) Transferee
hereby waives any right to sue Transferor for damages
(including consequential damages) for any default by
Transferor hereunder, but if the Closing occurs (including as
a result of an action for specific performance), subject to
the provisions of Section 8.05 and Sections 8.06(b) and
8.06(c) such waiver shall not apply to damages to which
Transferee may be entitled hereunder by reason of any breach
by Transferor of any of its warranties, representations,
covenants or agreements hereunder which survive the Closing.
SECTION 14.03. Limitation on Post-Closing
Liability of Transferor and Transferee. (a) Notwithstanding
any provision to the contrary contained in this Agreement or
in any other document (other than the Registration Rights
Agreement and the Partnership Agreement) delivered by
Transferor in connection with the Closing (including any
Transferor's Estoppel Letter), Transferor shall have no
liability to Transferee following the Closing for breach of
any warranty and representation set forth in Article VIII or
in such document, or for breach by Transferor of any of its
agreements set forth in Article XI or under the Transferor's
indemnity set forth in Section 14.07 as it relates to any
such breach unless and except to the extent that the damages
due to Transferee by reason of all such breaches exceed
$250,000, and in no event shall Transferor be liable to
Transferee for consequential damages in respect of any such
breach.
(b) Notwithstanding any provision to the contrary
contained in this Agreement or any other document (other than
the Registration Rights Agreement, the Uncapped Provisions
and the Partnership Agreement) delivered by Transferor in
connection with the Closing (including any Transferor's
Estoppel Letter), the maximum aggregate liability of
Transferor to Transferee, Parent or General Partner following
the Closing based on or arising under this Agreement and all
such other documents (including any liability for any breach
of any warranty, representation, covenant or indemnity
contained herein or therein) shall be limited to $5,000,000
and in no event shall Transferor be liable to Transferee for
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consequential damages.
(c) Notwithstanding any provision to the contrary
contained in this Agreement or any other document delivered
by Transferee in connection with the Closing (other than the
Registration Rights Agreement and the Partnership Agreement),
the maximum aggregate liability of Transferee to Transferor
following the Closing based on or arising under this
Agreement and all such other documents (excluding all claims
based on Sections 2.03, 3.03, 3.04, 3.05, 3.06, 3.07, 3.09,
14.08(b) (as it relates to a breach of Sections 3.03, 3.05,
3.06, 3.07 or 3.09), 14.08(c), 14.08(d) and 14.09 (as it
relates to enforcement of any of the foregoing Sections) of
this Agreement but including any liability for any breach of
any warranty, representation, other covenant or other
indemnity contained herein or therein) shall be limited to
$20,000,000 and in no event shall Transferee be liable to
Transferor for consequential damages.
SECTION 14.04. Liability of Partners and
Affiliates of Transferor and Transferee.
(a) Notwithstanding any provision to the contrary contained
in this Agreement or any other document (other than the
Registration Rights Agreement, the Uncapped Provisions and
the Partnership Agreement) delivered by Transferor in
connection with the Closing (including any Transferor's
Estoppel Letter), the liability of Transferor hereunder and
thereunder shall, subject to Section 14.03, be limited to
Transferor's assets and none of its partners or affiliates
shall have any liability for the obligations of Transferor
hereunder or thereunder.
(b) Notwithstanding any provision to the contrary
contained in this Agreement or any other document delivered
by Transferee in connection with the Closing (other than the
Registration Rights Agreement and the Partnership Agreement),
the liability of Transferee hereunder and thereunder shall,
subject to Section 14.03, be limited to Transferee's assets
and none of its partners or affiliates (other than affiliates
which take title to any Centers pursuant to Section 16.09)
(other than Parent, in the case of the Registration Rights
Agreement and the Partnership Agreement) shall have any
liability for the obligations of Transferee hereunder or
thereunder.
SECTION 14.05. Escrow Fund. (a) At the Closing,
Transferor shall cause to be deposited with the Escrow Agent
(in addition to the $2,500,000 of cash deposited pursuant to
Section 5.02(f) (the "Deposited Cash")) and cause the Units
with an aggregate value of $2,500,000 to be assigned to
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Escrow Agent pursuant to documentation reasonably
satisfactory to Transferee (the "Deposited Units")
(collectively, the "Escrow Fund"), based upon the Unit Value
on the Closing Date. The Escrow Fund shall be held by the
Escrow Agent in a segregated account and the cash portion
thereof shall be invested only in Permitted Investments.
Permitted Investments shall be liquidated by Escrow Agent at
such times and in such amounts as may be required to permit
Escrow Agent to make any payment from the Escrow Fund
required by this Section 14.05 on the date so required.
(b) All interest, dividends or other income earned
on the Escrow Fund (the "Escrow Income") shall not constitute
part of the Escrow Fund and shall in all events be paid to
Transferor promptly upon receipt by the Escrow Agent without
any further authorization from or notice to Transferor or
Transferee (and without regard to whether a dispute may be
pending with respect to all or any part of the Escrow Fund).
Escrow Agent shall not make any payments from the Escrow Fund
(including pursuant to Section 14.05(e)) unless (i) Escrow
Agent is directed to do so in writing by Transferor and
Transferee or (ii) Escrow Agent is directed to do so in
writing by the party which claims to be entitled to receive a
payment from the Escrow Fund and the other party does not
object to such payment within 10 days after notice thereof
from Escrow Agent stating the amount and purpose of such
payment or (iii) Escrow Agent is directed to do so by a final
order or judgment of a court as hereinafter provided. The
notice given by Escrow Agent pursuant to clause (ii) above
shall state in capital letters that failure of the addressee
to object to a requested payment from the Escrow Fund
described in such notice within 10 days after the giving
thereof shall constitute a waiver of the addressee's right to
contest or object to such disposition. In the event that any
dispute shall arise with respect to the entitlement of either
party to all or any portion of the Escrow Fund, Escrow Agent
shall continue to hold the Escrow Fund until otherwise
directed by written instruction from Transferor and
Transferee or a final order or judgment of a court of
competent jurisdiction entered in an action or proceeding to
which Escrow Agent is a party. In addition, in the event of
any such dispute, Escrow Agent shall have the right at any
time to commence an action in interpleader and to deposit the
Escrow Fund with the clerk of a court of appropriate
jurisdiction in the State of New York. Upon the commencement
of such action and the making of such deposit, Escrow Agent
shall be released and discharged from and of all further
obligations and responsibilities hereunder.
(84)
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(c) Any payment to Transferee from the Escrow Fund
shall be made in a combination of cash and Units (by
assignment by Escrow Agent to Transferee or its designees of
such Units pursuant to documentation reasonably satisfactory
to Transferee) so that the ratio of (i) the cash paid and
(ii) the aggregate Unit Value of such Units paid as of the
date of payment shall be in the ratio of 50:50; provided,
however, that if such ratio would result in payment of a
fractional Unit the number of Units to be paid shall be
rounded to the nearest whole number and a corresponding
offsetting adjustment shall be made to the cash portion of
the payment. In no event will (A) the aggregate payments to
Transferee of cash and Units (valued at the respective Unit
Values as of the applicable payment dates) under this
Section 14.05 exceed $5,000,000 or (B) the aggregate amount
(in cash and Units) available to Transferee under this
Article XIV for Transferor's post-Closing obligations be less
than $5,000,000.
(d) In the event that the Escrow Agent is required
to make a payment to Transferee from the Escrow Fund and the
number of Units in the Escrow Fund is less than the number of
Units required to be paid to Transferee in accordance with
the provisions of Section 14.05(c) and/or (g), Transferor
shall promptly deposit with Escrow Agent for the account of
Transferee an amount of cash equal to such shortfall,
whereupon Escrow Agent shall pay such cash to Transferee.
Pursuant to the Guarantee delivered pursuant to Section 7.01,
the guarantors thereunder will jointly and severally
guarantee Transferor's obligations under this
Section 14.05(d). No payment made by or on behalf of
Transferor pursuant to this Section 14.05(d) shall be counted
as a liability of Transferor for purposes of Section 14.03.
(e) On the Termination Date the Escrow Agent
promptly shall return all remaining Deposited Cash and
Deposited Units to Transferor; provided, however, that if
prior to the Termination Date Transferee shall have provided
notice to Escrow Agent and Transferor setting forth in
reasonable detail the facts, circumstances and amount of any
claim that Transferee asserts is entitled to the benefit of
the Escrow Fund, the terms of this Section 14.05 shall be
extended until the final resolution of such claim and such
Deposited Cash and Deposited Units shall be retained in the
Escrow Fund; provided further, however that the amount of
Deposited Cash and Deposited Units remaining in the Escrow
Fund at such time in excess of the amount of the alleged
claim shall be returned to Transferor.
(85)
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(f) At any time and from time to time prior to the
Termination Date Transferor may direct the Escrow Agent to
release to Transferor some or all the Units deposited by such
Transferor and still held in the Escrow Fund against delivery
to the Escrow Agent of cash for each Unit to be released
equal to the Unit Value as of the Closing Date. In such
event, Transferor's rights and obligations with respect to
such cash and any income therefrom shall correspond to its
rights and obligations with respect to the Units so released.
(g) Notwithstanding any other provision to the
contrary contained in this Agreement or under any document
delivered by Transferor in connection with the Closing
(including any Transferor's Estoppel Letter), Transferee
agrees that after the Closing its sole remedy hereunder or
thereunder shall be to seek recourse against the Escrow Fund
pursuant to this Section 14.05 and Transferor agrees that the
Escrow Fund will be available therefor in respect of any
amounts payable to Transferee after the Closing in accordance
with this Agreement, except that this Section 14.05(g) shall
not apply with respect to the Registration Rights Agreement,
the Uncapped Provisions and the Partnership Agreement.
(h) The provisions of Sections 3.02(d) and 3.02(e)
shall apply with respect to the Escrow Fund and the rights
and obligations of Escrow Agent under this Section 14.05.
SECTION 14.06. General Provisions Regarding
Survival. (a) Except as otherwise expressly provided in
this Agreement, none of the provisions contained in this
Agreement shall survive the Closing or any termination of
this Agreement.
(b) Where this Agreement expressly provides that
any representation or warranty of Transferee contained in
this Agreement or any other document (other than the
Registration Rights Agreement or the Partnership Agreement)
delivered by Transferee in connection with the Closing shall
survive the Closing or any termination of this Agreement,
such representation or warranty shall, subject to the
applicable statute of limitations, survive the Closing or any
termination of this Agreement for a period of three years
after the date of the Closing or such termination. Where
this Agreement expressly provides that any covenant or other
obligation of Transferee contained in this Agreement or any
other documents (other than the Registration Rights Agreement
or the Partnership Agreement) delivered by Transferee in
connection with the Closing shall survive the Closing or any
(86)
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termination of this Agreement, such covenant or obligation
shall, subject to the applicable statute of limitations,
survive the Closing or any termination of this Agreement
without limitation as to time.
(c) Where this Agreement expressly provides that
any representation, warranty, covenant or obligation of
Transferor contained in this Agreement or any other document
(other than the Registration Rights Agreement, the Uncapped
Provisions and the Partnership Agreement) delivered by
Transferor in connection with the Closing (including any
Transferor's Estoppel Letters) shall survive the Closing or
any termination of this Agreement, such representation,
warranty, covenant or obligation shall survive the Closing or
any termination of this Agreement for a period of one year
after the date of the Closing or such termination; provided,
however, that Transferor's liability for any breach of any
such representations, warranties, covenants and obligations
shall not expire as to any breach or alleged breach thereof
if prior to the one year anniversary of the Closing Date or
such termination Transferee shall have either commenced
litigation in respect of such breach or alleged breach or
provided notice to Transferor setting forth in reasonable
detail the facts and circumstances of such breach or alleged
breach and, if such notice is given, the Transferee
subsequently commences litigation with respect to the matter
included in such notice within six months after such notice
is given.
SECTION 14.07. Indemnification by Transferor.
Subject to Sections 8.05, 8.06(c), 14.03, 14.04, 14.05 and
14.06(c), from and after the Closing, Transferor shall
indemnify, defend and hold harmless Transferee and its
shareholders, directors, officers, members, partners,
employees, representatives and agents, and their respective
successors and assigns (collectively, the "Indemnified
Transferee Persons") from and against any Losses incurred or
suffered by any Indemnified Transferee Person that results
from, relates to or arises out of: (a) the breach or
inaccuracy of any representation or warranty made by
Transferor in this Agreement or any other document (other
than the Registration Rights Agreement) delivered by
Transferor in connection with the Closing (including any
Transferor Estoppel Letters); (b) the breach or non-
fulfillment by Transferor of any of the covenants or
agreements of Transferor under this Agreement or any other
document (other than the Registration Rights Agreement or the
Partnership Agreement (or an agreement to be bound thereby))
(87)
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delivered by Transferor in connection with the Closing
(including any Transferor Estoppel Letter); (c) claims made
by any Tenant or Anchor under the Leases, any Adjoining Owner
under the Operating Agreements or by any party under those
Other Agreements assigned to Transferee that relate to any
actions or events first occurring, or obligations first
accruing, prior to the Closing Date; provided, however, that
Transferor's obligations under this clause (c) shall not
apply to any claims which (i)(y) if true would not constitute
a breach of any representation or warranty of Transferor in
this Agreement and (z) allege or are based on the failure of
the landlord thereunder, if applicable, to keep the Centers,
the fixtures, systems and facilities contained in the Centers
or the common areas related to the Centers in good repair or
to make required repairs or improvements thereto, it being
understood that Transferor shall not be obligated to make any
such repairs or improvements except for those which it has
expressly agreed to make herein, (ii) are based on any matter
which is identified in this Agreement (including the exhibits
hereto) as an exception or qualification to any
representation or warranty of Transferor set forth herein, or
in any Transferor's Estoppel Letter or any estoppel letter or
certificate delivered to Transferee at or prior to the
Closing pursuant to this Agreement by any Tenant, Anchor or
other occupant under a Lease or any Adjoining Owner under an
Operating Agreement, (iii) are based on any matter
constituting a breach of such representations and warranties
that is deemed waived pursuant to the terms of this Agreement
or (iv) are based on a liability which was taken into account
as a Closing adjustment pursuant to Article VI; provided
further, however, that notwithstanding anything to the
contrary in the foregoing clauses (i), (ii) and (iii),
Transferor's indemnity set forth in this Section 14.07 shall
apply to claims by Carmike Cinemas, Inc. under its Lease of
space at Rivergate Mall to the extent such claims relate to
the allocation of real estate taxes to exterior common area
maintenance expenses for 1996, 1997 and the portion of 1998
prior to the Adjustment Point; and (d) claims by third
parties (including holders of Existing Debt) that are based
on any act or omission of the Transferor relating to the
Centers occurring at any time prior to the Closing Date.
SECTION 14.08. Indemnification by Transferee.
Subject to Section 14.03, 14.04 and 14.06, from and after the
Closing Transferee and Parent, jointly and severally, shall
indemnify, defend and hold harmless Transferor and its
shareholders, directors, officers, members, partners
employees and agents, and their respective successors and
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assigns (collectively the "Indemnified Transferor Persons")
from and against any Losses incurred or suffered by any
Indemnified Transferor Person that results from, relates to
or arises out of: (a) the breach or inaccuracy of any
representation or warranty made by Transferee in this
Agreement or any other document (other than the Registration
Rights Agreement and the Partnership Agreement) delivered by
Transferee in connection with the Closing; (b) the breach or
non-fulfillment by Transferee of any of the covenants or
agreements of Transferee under this Agreement or any other
document (other than the Registration Rights Agreement and
the Partnership Agreement) delivered by Transferee in
connection with the Closing; (c) claims made by any Tenant or
Anchor under the Leases, any Adjoining Owner under the
Operating Agreements or by any party under those Other
Agreements assigned to Transferee that relate to any actions
or events first occurring, or obligations first accruing, on
or after the Closing Date and all such claims excluded from
clause (c) of the indemnity of Transferor set forth in
Section 14.07 by the proviso to that clause;(d) claims by
third parties that are based on any act or omission of
Transferee relating to the Centers occurring at any time on
or after the Closing Date; (e) the breach by any subsidiary
of Transferee to whom Transferee makes an assignment pursuant
to Section 16.09 of any agreement or obligation contained in
any document executed by such subsidiary in connection with
the Closing; and (f) the breach by any transferee that
acquires a Designated Property pursuant to Section 3.07(b) of
any obligation of such transferee with respect to Sections
3.06 or 3.07.
SECTION 14.09. Prevailing Party's Attorneys' Fees.
In connection with any litigation, including appellate
proceedings, initiated by a party hereto against the other
party hereto and arising out of this Agreement or any
instrument or document executed pursuant hereto, the party
adjudicated to be the substantially prevailing party shall be
entitled to recover reasonable attorneys' fees and
disbursements from the other party.
SECTION 14.10. Survival. The provisions of this
Article XIV shall survive the Closing or any termination of
this Agreement.
(89)
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ARTICLE XV
Estoppels
SECTION 15.01. Required Estoppels. Transferee's
obligation to consummate the Closing hereunder shall be
conditioned upon its receipt of the following estoppel
letters (the "Required Estoppel Letters"):
(a) Estoppel letters from all Anchors which are
parties to Operating Agreements (other than Dayton-Hudson
Corporation dba Target Stores with respect to Village at
Rivergate), such estoppel letters to be in substantially the
forms annexed hereto as Exhibit T; provided, however, that if
any Operating Agreement provides for the form or content of
an estoppel letter, Transferee shall, subject to
Section 15.03, accept an estoppel letter as called for
therein if Anchor refuses to execute one in the form annexed
hereto as Exhibit T after being requested to do so by
Transferor.
(b) Estoppel letters (i) from all Anchors which
are Tenants under Leases, if any, such estoppel letters to be
in substantially the forms annexed hereto as Exhibit T,
(ii) from all but three or fewer Tenants (excluding Anchors)
leasing more than 10,000 square feet of gross leasable area
under any Lease and (iii) from Tenants (other than Anchors
and other Tenants leasing more than 10,000 square feet of
gross leasable area in any Center) under Leases in effect as
of the date hereof providing for aggregate currently payable
minimum rents equal to 75% of the total currently payable
minimum rents payable under all Leases with such Tenants,
such estoppel letters to be in substantially the form annexed
hereto as Exhibit U; provided, however, that if any Lease
provides for the form or content of an estoppel letter,
Transferee shall, subject to Section 15.03, accept an
estoppel letter as called for therein if any Tenant refuses
to execute one in the form annexed hereto as Exhibit U after
being requested to do so by Transferor.
(c) Each Required Estoppel shall be dated no
earlier than 90 days prior to the Closing Date (but in any
event on or after May 29, 1998 and no later than three
Business Days prior to the Closing Date); provided, however,
that each Required Estoppel shall be dated such lesser period
(but not less than 60 days) prior to the Closing Date if
required by the lender of the indebtedness required pursuant
to Section 3.06(a), but only if Transferee has not adjourned
(90)
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the Closing Date pursuant to Section 5.01 to a date that
would cause such requirement of such lender to not be met.
SECTION 15.02. Transferor's Estoppels. Transferor
shall provide to Transferee estoppel letters signed by
Transferor in the applicable form annexed hereto as Exhibit V
(each, a "Transferor's Estoppel Letter") with respect to
(i) each Tenant (other than an Anchor) leasing more than
10,000 square feet of gross leasable area at any Center who
does not provide an estoppel letter pursuant to Section 15.01
and (ii) other Tenants (other than Anchors and Tenants
leasing more than 10,000 square feet of gross leasable area
at any Center) if and to the extent required to cause the
estoppel letters received from such Tenants pursuant to
clause (iii) of Section 15.01(b) together with the Transferor
Estoppel Letters delivered under this clause (ii) to
encompass Leases with aggregate currently payable minimum
rents equal to 95% of the total currently payable minimum
rents payable by all such Tenants under all Leases in effect
as of the date hereof. Statements made by Transferor in a
Transferor's Estoppel Letter shall constitute warranties and
representations by Transferor which shall survive the Closing
and shall otherwise be subject to the limitations set forth
in Section 8.06. A Transferor's Estoppel Letter shall be of
no further force or effect as of the date on which there is
delivered to Transferee an estoppel letter from the party in
respect of which such Transferor's Estoppel Letter was given,
but only to the extent that the estoppel letter executed by
such party confirms the statements made in such Transferor's
Estoppel Letter.
SECTION 15.03. Variance Between Estoppels and
Forms Annexed as Exhibits. It shall be a condition to
Transferee's's obligation to consummate the Closing under
this Agreement that all estoppel letters delivered pursuant
to Sections 15.01 and 15.02, taken together, do not disclose
(i) any material matters which are materially inconsistent
with any of the representations and warranties of Transferor
hereunder (without giving effect to the provisions of
Sections 8.05 or 8.06 (other than clause (i) of Section
8.06(c)), any references to Transferor's knowledge or any
references to the giving or receipt of notice referred to
therein) and/or (ii) material exceptions to the statements
set forth in the agreed forms of such estoppel letters (other
than exceptions expressly disclosed herein or otherwise known
to Transferee on the date hereof).
(91)
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SECTION 15.04. All Estoppels To Be Delivered.
Transferor agrees that notwithstanding the fact that the
Required Estoppel Letters encompass less than all the Anchors
and Tenants, Transferor will request all (i) parties to
Operating Agreements and (ii) Tenants who lease more than
1,000 square feet of gross leasable area at any Center to
execute estoppel letters in the form called for by
Section 15.01. Transferor will use reasonable efforts to
obtain the estoppel letters contemplated by this
Section 15.04; provided, however, that such efforts shall not
require Transferor to incur an expense or liability (other
than de minimis expenses). Transferor further agrees that
all estoppel received by it will be delivered to Transferee
promptly after receipt, whether or not such estoppel are
required in order to satisfy any of the requirements of this
Article XV and whether or not such estoppel are received
before or after the Closing. Subject to prior notice to and
approval by Transferor of any contacts with Anchors or
Tenants (such approval not to be unreasonably withheld),
Transferee may participate in the process of obtaining
estoppel letters but will not otherwise contact Adjoining
Owners or Tenants prior to the Closing Date. The provisions
of the preceding sentence shall survive the Closing.
ARTICLE XVI
Miscellaneous
SECTION 16.01. Notices. Except as otherwise
provided in this Agreement, all notices, demands, requests,
consents, approvals or other communications which are
required or permitted to be given under this Agreement or
which either party desires to give with respect to this
Agreement shall be in writing and shall be delivered by hand
or sent by telecopy (with the original sent by first-class
mail, postage prepaid), or sent postage prepaid, by
registered or certified mail, return receipt requested, or by
reputable overnight courier service addressed to the party to
be notified as follows (or to such other address as such
party shall have specified at least 10 days prior thereto by
like notice) and shall be deemed given when so delivered by
hand or telecopied, and if mailed, three Business Days after
(92)
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mailing (one (1) Business Day in case of overnight courier
service), as follows:
if to Transferor, to:
J. W. O'Connor & Co. Incorporated
399 Park Avenue - 25th Floor
New York, New York 10022
Attn: Glenn J. Rufrano
Telecopier: (212) 308-7880
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019-7415
Attn: Roger D. Turner, Esq.
Telecopier: (212) 474-3700
if to Transferee, to:
CBL & Associates Properties, Inc.
6148 Lee Highway, Suite 300
Chattanooga, TN 37421-2931
Attn: President
Telecopier: (423) 490-8390
with copies to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
Attn: Eugene A. Pinover
Telecopier: (212) 728-8111
and
CBL & Associates Properties, Inc.
6148 Lee Highway, Suite 300
Chattanooga, TN 37421-2931
Attn: Mary Ann Okrasinski
Telecopier: (423) 490-8390
SECTION 16.02. Further Assurances. Each of
Transferor and Transferee agrees, at any time and from time
to time after the Closing, to execute, acknowledge, where
appropriate, and deliver such further instruments and
(93)
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documents and to take such other action as the other party
may reasonably request in order to carry out the intent and
purposes of this Agreement, provided that such request is
made by notice given within one year after the Closing Date.
If required by the other party, the party making the request
will bear the reasonable cost involved. Neither party shall
be required to execute any instrument or document pursuant to
this Section 16.02 which would increase the liability or
obligations of such party over that provided for in this
Agreement and the instruments and documents executed by such
party pursuant hereto in any material respect. The
provisions of this Section 16.02 shall survive the Closing.
SECTION 16.03. Captions. The article and Section
titles or captions in this Agreement and the Table of
Contents and the Schedule of Exhibits prefixed hereto are for
convenience only and shall not be deemed to be part of this
Agreement.
SECTION 16.04. Governing Law; Construction. This
Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of New York applicable
to contracts negotiated, executed and to be performed wholly
within such State. Each party hereto acknowledges that it
was represented by counsel in connection with this Agreement
and the transactions contemplated herein, that it and its
counsel reviewed and participated in the preparation and
negotiation of this Agreement and the documents and
instruments to be delivered hereunder, and that any rule of
construction to the effect that ambiguities are to be
resolved against the drafting party shall not be employed in
the interpretation of this Agreement or the documents and
instruments to be delivered hereunder.
SECTION 16.05. Entire Agreement; No Third Party
Beneficiary, etc. This Agreement, including all Exhibits,
contains the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior
understandings, if any, with respect thereto. The parties
have made no representations with respect to the subject
matter of this Agreement and have given no warranties with
respect to the subject matter hereof except as expressly
provided herein and/or expressly provided in the documents
delivered at Closing. This Agreement may not be modified,
changed, supplemented or terminated, nor may any obligations
hereunder be waived, except by written instrument signed by
the party to be charged or by its agent duly authorized in
writing or as otherwise expressly permitted herein. The
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parties do not intend to confer any benefit hereunder on any
person, firm, corporation or other entity other than the
parties hereto and their permitted assigns. The provisions
of this Section 16.05 shall survive the Closing or any
termination of this Agreement.
SECTION 16.06. Waivers; Extensions. No waiver of
any breach of any agreement or provision herein contained
shall be deemed a waiver of any preceding or succeeding
breach thereof or of any other agreement or provision herein
contained. No extension of time for performance of any
obligations or acts shall be deemed an extension of the time
for performance of any other obligations or acts. The
provisions of this Section 16.06 shall survive the Closing or
any termination of this Agreement.
SECTION 16.07. Pronouns. All pronouns and any
variations thereof shall be deemed to refer to the masculine,
feminine or neuter, singular or plural, as the identity of
the parties may require.
SECTION 16.08. Transaction Expenses; Fees and
Disbursements of Counsel, etc. (a) Transferor shall pay all
recording fees and charges to remove exceptions to title
which do not constitute Permitted Encumbrances and/or the
cost of causing the Title Company to insure over any such
exceptions that Transferee has agreed in writing may be
insured over or that are insured over in accordance with
Section 12.01.
(b) Transferee shall pay (i) the cost of updating
the existing surveys of the Centers listed in
Section 4.01(d), (ii) the premiums for title insurance
ordered by it and all endorsements, extended coverage,
affirmative insurance (except as provided in
Section 16.08(a)) and all reinsurance or coinsurance costs in
connection therewith, (iii) all recording fees and charges
for documents required in connection with the prepayment of
the Existing Debt pursuant to Section 5.02, (iv) all transfer
taxes payable in connection with the Deeds and transfer of
title to each Center, (v) all mortgage recording taxes
payable in connection with the incurrence of the indebtedness
required to be incurred pursuant to Section 3.06, (vi) all
sales or similar taxes, if any, on the transfer of the
Personal Property and the Intangible Personal Property,
(vii) all other recording fees and charges not otherwise
covered under the foregoing provisions, (viii) the fees of
the Broker in connection with the transactions contemplated
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by this Agreement, as certified by Transferor at least two
Business Days prior to the Closing, (ix) the fees,
disbursements and charges of counsel to Transferor in
connection with the negotiation and preparation of this
Agreement and the Closing, as certified by Transferor at
least two Business Days prior to the Closing, (x) the fees,
disbursements and charges of counsel to Transferee in
connection with the negotiation and preparation of this
Agreement and the Closing and (xi) the fees and expenses of
any escrows with the Escrow Agent to the extent billed by the
Escrow Agent at least two Business Days prior to the Closing.
(c) Subject to Sections 16.08(a) and 16.08(b),
each party shall pay its own expenses in connection with the
transactions contemplated by this Agreement, including the
fees, disbursements and charges of its own counsel,
accountants, consultants, experts and other advisors in
connection with the negotiation and preparation of this
Agreement and the Closing.
(d) Transferee shall reimburse Transferor for up
to $10,000 of any amounts payable by Transferor to First
American Title Insurance Company for services rendered in
connection with transactions contemplated by this Agreement.
(e) Transferor and Transferee shall each pay 50%
of the fees and expenses of any escrows with the Escrow Agent
to the extent not billed by the Escrow Agent at least two
Business Days prior to the Closing.
(f) The provisions of this Section 16.08 shall
survive the Closing or any termination of this Agreement.
SECTION 16.09. Assignment. Transferee shall not,
without the prior written consent of Transferor, assign this
Agreement or its rights hereunder, in whole or in part, to
any other person or entity; provided, however, that
Transferee may without Transferor's consent elect to have any
of the Centers conveyed directly to any partnership, limited
liability company, corporation or other entity in which
substantially all the equity is owned directly or indirectly
by Transferee if such conveyance does not result in a breach
of any of the representations, warranties or covenants of
Transferee set forth in this Agreement (with appropriate
adjustments if such assignee is an entity other than a
Delaware limited partnership). In connection with any
conveyance permitted by this Section 16.09, Transferee may
assign its rights (but not its obligations) under this
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Agreement and the documents delivered in connection with this
Agreement to the transferee to the extent related to the
Center that is the subject of such conveyance; provided,
however, that no such assignment shall operate to increase
any liability or obligation of Transferor under this
Agreement or such documents. The conveyance of any Center to
a wholly owned subsidiary of Transferee in accordance with
this Section 16.09 (and any related assignment of
Transferee's rights under this Agreement in accordance with
this Section 16.09) shall not release Transferee from any of
its liabilities or obligations under this Agreement. This
Section 16.09 shall survive the Closing or any termination of
this Agreement.
SECTION 16.10. Counterparts. This Agreement may
be executed in counterparts, each of which (or any
combination of which, signed by all of the parties) shall be
deemed an original, but all of which, taken together, shall
constitute one and the same instrument.
SECTION 16.11. No Recording. The parties agree
that (i) neither this Agreement nor any memorandum or notice
hereof shall be recorded or filed in any public records. and
(ii) in no event shall Transferee be entitled to file a lis
pendens against the Centers. If Transferee violates the
terms of this Section 16.11, Transferor, in addition to any
other rights or remedies it may have, may immediately
terminate this Agreement by giving notice to Transferee of
its election so to do and, in the event of such termination,
Transferor shall be entitled to receive the Deposit from the
Escrow Agent as liquidated damages for Transferee's breach
(and in such circumstances Transferee shall join with
Transferor in a written instruction to Escrow Agent to pay or
return, as the case may be, the Deposit to Transferee in the
manner set forth in Section 3.02). The provisions of this
Section 16.11 shall survive the Closing or any termination of
this Agreement.
SECTION 16.12. Rivergate Land Swap. From the date
hereof Transferor will pursue a potential land swap with an
owner of land adjoining Rivergate Mall and in connection
therewith Transferee agrees that if the Closing occurs it
shall promptly reimburse Transferor for up to $25,000 for its
reasonable out-of-pocket expenses (including reasonable legal
fees and expenses) associated therewith incurred by
Transferor between the date hereof and the Closing Date. The
provisions of this Section 16.12 shall survive the Closing.
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SECTION 16.13. Publicity. Subject to disclosure
obligations required by law or determined by their counsel to
be required by law, none of Transferor, Transferee and their
respective affiliates shall issue any press release or,
except as otherwise provided in this Section 16.13.,
otherwise make public any information with respect to this
Agreement or the transactions contemplated hereby prior to
the Closing Date without the prior written consent of the
other party. Prior to the Closing, none of Transferor,
Transferee and their respective affiliates shall discuss or
disclose the existence or terms of this Agreement, the
identity of the parties hereto or any other information with
respect to the transactions contemplated hereby except (i) as
required by law, (ii) Transferor and its affiliates may
disclose such information to their direct and indirect equity
owners, employees, lenders, prospective lenders, investors,
prospective investors, advisors, attorneys, consultants and
other professionals if such disclosure is required to
implement the terms of this Agreement or is reasonably
necessary in connection with the business and affairs of
Transferor's direct or indirect equity owners, and (iii)
Transferee may disclose such other information with respect
to the transactions contemplated hereby as is reasonably
necessary to facilitate obtaining the indebtedness required
or permitted to be maintained pursuant to Section 3.06 or as
is reasonably necessary to facilitate the capital market
activities of General Partner; provided, however, that,
except as may be reflected in this Agreement (but not the
Exhibits to this Agreement) or as otherwise required by law,
in no event will Transferee be permitted to disclose
information concerning the direct or indirect ownership of
Transferor (other than that the managing general partner of
Transferor is an affiliate of J.W. O'Connor & Co.
Incorporated) or information concerning the economic terms of
the Leases or Operating Agreements (other than the percentage
of leasable area and rental revenue represented by expiring
Leases on a year-by-year basis) without Transferor's prior
written consent, which consent shall not be unreasonably
withheld. The provisions of this Section 6.13 shall survive
the Closing or any termination of this Agreement.
SECTION 16.14. Waiver of Rights to Jury Trial.
Transferor and Transferee waive any right to trial by jury of
any claim arising under or with respect to this Agreement,
whether now existing or hereafter arising. Transferor and
Transferee hereby agree that any such claim shall be decided
by a court trial without a jury and that any party hereto may
file an original counterpart or a copy of this Section 16.13
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with any court as written evidence of the consent of the
other party hereto to waiver of its right to trial by jury.
The provisions of this Section 16.13 shall survive the
Closing or any termination of this Agreement.
SECTION 16.15. Accounting Certificates. At least
one week prior to the Closing and from time to time during
the 80-day period following the Closing, Transferor shall
provide to Transferee, at Transferee's expense, such
certifications from Transferor's Accountants as Transferee
may reasonably require in order to meet Transferee's
financial reporting obligations under Federal securities
laws. This Section 16.15 shall survive the Closing.
SECTION 16.16. Agreements of General Partner and
Parent. To the extent there are any provisions in this
Agreement which include express agreements or undertakings
which purport to impose obligations or restrictions on Parent
or General or which require the consent or agreement of
Partner or General Partner to be effectuated, Transferee
shall cause Parent and General Partner to execute and deliver
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at Closing a written agreement, in form and substance
reasonably satisfactory to Transferor and Parent, agreeing to
be bound by such provisions.
IN WITNESS WHEREOF, the parties have duly executed
this Agreement as of the day and year first above written.
Transferor:
NASHLAND ASSOCIATES,
by O'CONNOR REALTY INVESTORS II
L.P., Managing General
Partner
by J.W. O'CONNOR & CO.
INCORPORATED, General
Partner
by /s/ Glenn Rufrano
--------------------------
Name: Glenn Rufrano
Title: President
by HRE NASHLAND, INC., General
Partner
by /s/ Dale R. Gileman
-------------------------
Name: Dale R. Gileman
Title: Vice President
Transferee:
CBL & ASSOCIATES LIMITED
PARTNERSHIP,
by CBL HOLDINGS I, INC., its
General Partner
by /s/ Stephen D. Lebovitz
_________________________
Name:___Stephen D. Lebovitz_
Title: __Executive Vice President
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The undersigned hereby executes this Agreement solely to
evidence its agreement to hold the Deposit and the Income,
if any, and the Escrow Fund in accordance with Sections 3.02
and 14.05 and to perform its other obligations expressly set
forth in this Agreement.
LAWYERS TITLE INSURANCE CORPORATION,
by /s/ Craig S Feder
_________________________________
Name: Craig S. Feder
Title: Counsel
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated June 23, 1998 on the statement of the excess of
revenues over specific operating expenses for Hickory Hollow Mall,
Rivergate Mall, Village at Rivergate, Courtyard at Hickory Hollow and
Lions Head Village for the year ended December 31, 1997 included in this
Form 8-K, into the Company's previously filed Registration Statement Form
S-3 (File No. 333-47041).
Arthur Andersen LLP
New York, New York
June 23, 1998
