Securities Exchange Act of 1934 -- Form 8-K
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of Report (date of earliest event reported):
September 11, 1998
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CBL & ASSOCIATES PROPERTIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-12494 62-1545718
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
One Park Place, 6148 Lee Highway, Chattanooga, Tennessee 37421
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(Address of principal executive offices)
Registrant's telephone number, including area code:
(423) 855-0001
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CBL & ASSOCIATES PROPERTIES, INC.
ITEM 2 ACQUISITION OF ASSETS
ACQUISITION OF TWO MALLS
On August 27, 1998, CBL & Associates Properties, Inc. (the
"Registrant"), through its Operating Partnership, entered into
Contribution and Exchange Agreements (the "Contribution and Exchange
Agreements") with Samuel's Associates, Inc., an unaffiliated party
("Transferor"), pursuant to which Transferor contributed two malls,
Meridian Mall in Lansing, Michigan and Janesville Mall in Janesville,
Wisconsin (the "Properties") to the Operating Partnership in exchange
for 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 total approximately 1.4
million square feet of Gross Leaseable Area ("GLA").
The following table contains certain information concerning each
of the Properties:
Mall Average Mall Store
Center GLA Sales per foot Occupancy(1)
Meridian Mall 766,960 $277 94%
Janesville Mall 614,658 290 83%
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(1) Tenants in occupancy and paying rent on Mayf 31, 1998.
The aggregate transaction value was approximately $138 million
(before closing costs, deferred maintenance and closing adjustments).
Concurrently with the execution of the Contribution and Exchange
Agreements, the Registrant obtained a loan from US Bank Corp. for the
refinancing of Meridian Mall's existing indebtedness with a two year
variable rate loan in the principal amount of $80 million. The
Registrant also issued a total of 2,118,299 Operating Partnership Units
valued at $25 per share for the Properties and assumed a $17.1 million
mortgage on Janesville Mall.
Material factors considered by the Registrant in assessing the
Properties include historical net operating income, occupancy and
rental rates, 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 to 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 Agreements which
are filed as an exhibit hereto.
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ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
The following financial statements have not been
completed as of the date of this report and will be
filed as an amendment to this report as soon as
practicable in accordance with Item 7 (a)(4) of Form 8-K.
Report of Independent Public Accountants on Janesville Mall
Statements of Excess Revenues over Specific Operating
Expenses for Janesville Mall for the Twelve Months Ended
December 31, 1997
Notes to Financial Statements for Janesville mall
Report of Independent Public Accountants on Meridian Mall
Statements of Excess Revenues over Specific Operating
Expenses for Meridian Mall for the Twelve Months Ended
December 31, 1997
Notes to Financial Statements for Meridian Mall
B) PRO FORMA FINANCIAL INFORMATION OF REGISTRANT
The following financial statements have not
been completed as of the date of this report
and will be filed as an amendment to this
report as soon as practicable in accordance
with Item 7 (a)(4) of Form 8-K.
Pro Forma Consolidated Statement Of Operations
For the Six Months Ended June 30, 1998.
(Unaudited)
Pro Forma Consolidated Balance Sheet as of
June 30, 1998. (Unaudited)
C) EXHIBITS
Contribution and Exchange Agreement dated August 27, 1998
between Janesville Properties Co. L.P. an Ohio Limited
Partnership (Contributor) and CBL & Associates Limited
Partnership, a Delaware limited partnership (Acquiror)
Contribution, Exchange and Sale Agreement dated August 27,
1998 between Meridian Mall Associates Limited LLC an Ohio
Limited Liability Company (Meridian) and CBL & Associates
Limited Partnership, a Delaware limited partnership
(Acquiror)
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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
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John N. Foy
Executive Vice President,
Chief Financial Officer and
Secretary
(Authorized Officer of the
Registrant,
Principal Financial Officer and
Principal Accounting Officer)
Date: September 11, 1998
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EXHIBITS INDEX
Exhibit:
2.1 Contribution and Exchange Agreement dated August 27, 1998
between Janesville Properties Co. Limited Partnership an Ohio
Limited Partnership (Contributor) and CBL & Associates Limited
Partnership, a Delaware limited partnership (Acquiror)
2.2 Contribution, Exchange and Sale Agreement dated August 27,
1998 between Meridian Mall Associates Limited LLC an Ohio
Limited Liability Company (Meridian) and CBL & Associates
Limited Partnership, a Delaware limited partnership
(Acquiror)
CONTRIBUTION AND EXCHANGE AGREEMENT
FOR
JANESVILLE MALL
DATED AUGUST_____, 1998
Page TABLE OF CONTENTS
Page
ARTICLE I - BASIC DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - CONTRIBUTION AND EXCHANGE . . . . . . . . . . . . . . . 8
Section 2. l Contribution . . . . . . . . . . . . . . . . . . 8
Section 2.2. Contribution Consideration . . . . . . . . . . . 8
Section 2.3. Assumed Indebtedness . . . . . . . . . . . . . . 9
Section 2.4. OP Units . . . . . . . . . . . . . . . . . . . . 9
Section 2.5. Informational Materials. . . . . . . . . . . . .10
Section 2.6. Registration Rights. . . . . . . . . . . . . . .11
ARTICLE III - ACQUIROR'S DUE DILIGENCE . . . . . . . . . . . . . . .11
Section 3.1 Acquiror's Review and Contributor's
Disclaimer. . . . . . . . . . . . . . . . . . . . . . . . . . .11
Section 3.2 Material Adverse Matters . . . . . . . . . . . .15
Section 3.3 Title Exceptions . . . . . . . . . . . . . . . .18
ARTICLE IV - CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . .20
Section 4. l Conditions . . . . . . . . . . . . . . . . . . .20
Section 4.2 Failure or Waiver of Conditions Precedent. . . .24
Section 4.3 . . . . . . . . . . . . . . . . . . . . . . . .24
ARTICLE V - COVENANTS WARRANTIES AND REPRESENTATIONS . . . . . . . .25
Section 5.1 Contributor's Warranties and Representations . .25
Section 5.2 Contributor's Covenants. . . . . . . . . . . . .31
Section 5.3 Acquiror's Warranties and Representations. . . .34
Section 5.4 Acquiror's Covenants . . . . . . . . . . . . . .37
Section 5.5 Survival/Limitations/Joinder . . . . . . . . . .41
ARTICLE VI - DEFAULT . . . . . . . . . . . . . . . . . . . . . . . .43
Section 6.1 Acquiror's Deposit and Default . . . . . . . . .43
Section 6.2 Contributor's Default. . . . . . . . . . . . . .44
ARTICLE VII - CLOSING. . . . . . . . . . . . . . . . . . . . . . . .45
Section 7.1 Escrow Arrangements. . . . . . . . . . . . . . .45
Section 7.2 Closing. . . . . . . . . . . . . . . . . . . . .49
Section 7.3 Prorations . . . . . . . . . . . . . . . . . . .50
Section 7.4 Other Closing Costs. . . . . . . . . . . . . . .56
Section 7.5 Further Documentation. . . . . . . . . . . . . .57
Section 7.6 Possession of the Properties . . . . . . . . . .57
Section 7.7 Escrow Instructions. . . . . . . . . . . . . . .57
ARTICLE VIII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . .57
Section 8.1 Damage or Destruction/Eminent Domain . . . . . .57
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Section 8.2 Fees and Commissions . . . . . . . . . . . . . .58
Section 8.3 Successors and Assigns . . . . . . . . . . . . .59
Section 8.4 Notices. . . . . . . . . . . . . . . . . . . . .59
Section 8.5 Arbitration of Disputes. . . . . . . . . . . . .61
Section 8.6 Acquiror and Contributor Representatives . . . .63
Section 8.7 Time is of the Essence . . . . . . . . . . . . .63
Section 8.8 Incorporation by Reference . . . . . . . . . . .63
Section 8.9 Attorneys Fees . . . . . . . . . . . . . . . . .63
Section 8.10 Construction . . . . . . . . . . . . . . . . . .63
Section 8.11 Governing Law. . . . . . . . . . . . . . . . . .63
Section 8.12 Operating Records. . . . . . . . . . . . . . . .63
Section 8.13 Confidentiality. . . . . . . . . . . . . . . . .63
Section 8.14 Counterparts . . . . . . . . . . . . . . . . . .64
Section 8.15 Entire Agreement . . . . . . . . . . . . . . . .64
Section 8.16 Access to Information. . . . . . . . . . . . . .64
Section 8.17 Waive of Jury Trial. . . . . . . . . . . . . . .65
Section 8.18 Binding Agreement. . . . . . . . . . . . . . . .65
Section 8.19 Code or Treasury Regulation References . . . . .65
Section 8.20 Third Party Beneficiaries. . . . . . . . . . . .65
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DRAFT 8/18/98
CONTRIBUTION AND EXCHANGE AGREEMENT
THIS CONTRIBUTION AND EXCHANGE AGREEMENT ("Agreement') is
made and entered into as of this ____ day of August, 1998, by
and among JANESVILLE PROPERTIES CO. LIMITED PARTNERSHIP, an Ohio
limited partnership ("Contributor"), and CBL & ASSOCIATES
LIMITED PARTNERSHIP, a Delaware limited partnership
("Acquiror").
RECITALS
A. Contributor is the owner of an enclosed mall regional
shopping center, known as "Janesville Mall", located in
Janesville, Wisconsin, as described on the Deed attached hereto
as EXHIBIT A (the "Property").
B. Subject to the terms and conditions set forth in this
Agreement, Acquiror desires to acquire the Property from
Contributor and Contributor desires to contribute the Property
to Acquiror, in exchange for OP Units (hereinafter defined) in
Acquiror.
AGREEMENT
NOW, THEREFORE, Acquiror and Contributor do hereby agree as
follows:
ARTICLE I
BASIC DEFINITIONS
"Accredited Investor" shall mean an "accredited investor"
as such term is defined in Regulation D promulgated under the
Securities Act (as hereinafter defined).
"Additional Exceptions" shall have the meaning set forth in
SECTION 3.3(A).
"Additional Title Exception Notice" shall have the meaning
set forth in SECTION 3.3(B).
"Adjustments" shall mean Contributor's Closing Costs, any
prorations described in SECTION 7.3 below and other adjustments
set forth in this Agreement.
"Adverse Matters" shall mean any material facts or
circumstances relating to the status of the Property
constituting inaccuracies in the Disclosure Materials or matters
discovered in the course of on-site inspections of the Property
(provided that any such matters which are reimbursable by tenants
pursuant to the terms of the Leases shall not be "Adverse
Matters" for
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purposes of this Agreement) that are identified by Acquiror
prior to the expiration of the Confirmation Period in
accordance with the provisions of this Agreement and that
diminish the fair market value of such Property; provided,
however, that in no event shall any of the following constitute
Adverse Matters: (i) any matters included or disclosed in the
Disclosure Materials set forth in the Disclosure Materials List &
Statement, (ii) economic, competitive, general or specific market
conditions, (iii) the Permitted Exceptions, (iv) methodologies of
or express assumptions in financial projections, calculations or
reports included within the Disclosure Materials set forth in the
Disclosure Materials List & Statement, or (v) any matters
otherwise known by Acquiror as of the date of this Agreement.
"Adverse Matters Amount" shall mean the amount, if any, of
any decrease in the fair market value of the Property caused by
any Adverse Matters relating to the Property, after netting
against such decrease the amount of any increase in the fair
market value of the Property resulting from the discovery prior
to the expiration of the Confirmation Period of any inaccuracies
in the rent roll contained in the Disclosure Materials.
"Assumed Indebtedness" shall mean the indebtedness which is
secured by mortgages and related encumbrances on, and loan
documents relating to, the Property as set forth on EXHIBIT B
hereof.
"Assumed Indebtedness Guarantors" shall mean all persons and
entities having any liability as a guarantor, indemnitor, surety
or the like under the Assumed Loan Documents and all persons and
entities having personal liability for all or any portion of the
Assumed Indebtedness, including, without limitation, any personal
liability for any so-called "carve outs" or exceptions to non-
recourse liability under any of the Assumed Loan Documents.
"Assumed Indebtedness Lender" shall mean the current
noteholder or lender of any of the Assumed Indebtedness.
"Assumed Loan Documents" shall mean all notes, mortgages,
assignments of rents and leases, security agreements and other
loan documents evidencing, securing or providing for the Assumed
Indebtedness as set forth on EXHIBIT B.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a federal holiday.
"CERCLA" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. section9601 et
seq., as amended.
"Close" or "Closing" shall have the meaning set forth in
SECTION 7.2.
"Closing Date" shall mean August 27, 1998, unless extended
pursuant to the provisions of SECTION 3.2 OR SECTION 4.1(C)
hereof; provided, however, that in the event that the Closing has
not occurred by August 31, 1998, Contributor may, at its sole
discretion,
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terminate this Agreement, by giving notice to Acquiror
within seven (7) days thereafter, as to which time shall
be of the essence, provided that Meridian and Sellers under each
of the Other Agreements shall have also terminated the Other
Agreements, in which event the Deposit shall be returned to
Acquiror and no party shall have any further obligations
hereunder.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Confidentiality Agreement" shall mean that certain
Confidentiality Agreement dated March 24, 1998, as clarified by
letter from Acquiror to Bill Frauenhofer of Salomon Smith Barney
dated March 25, 1998, executed by Acquiror for the benefit of
Contributor with respect to the Disclosure Materials and this
transaction.
"Confirmation Letter" shall mean the letter in the form of
EXHIBIT C, attached hereto and made a part hereof, to be
delivered by Acquiror to Contributor on or prior to the close of
the Confirmation Period pursuant to SECTION 3.2.
"Confirmation Period" shall mean the period commencing on
June 3, 1998, and ending at 5:00 p.m. Eastern Standard Time on
July 8, 1998; provided, however, that the Confirmation Period may
expire earlier, at Acquiror's election, upon delivery by Acquiror
to Contributor of the Confirmation Letter, in which event
Acquiror shall be deemed to have absolutely and conclusively
waived any further Confirmation Period.
"Contract Period" shall mean the period from the date of
this Agreement through and including the Closing Date.
"Contracts" shall mean all maintenance, service and other
operating contracts, equipment leases and other arrangements or
agreements to which the Contributor is a party, affecting the
ownership, repair, maintenance, management, leasing or operation
of the Property, but excluding all Leases.
"Contributor Related Parties" shall mean each of the Assumed
Indebtedness Guarantors and the respective direct and indirect
partners, members, managers, shareholders, officers, directors,
affiliates and agents of each of the Contributor and the Assumed
Indebtedness Guarantors, and the respective heirs, executors,
administrators, personal representatives, successors and assigns
of each of the foregoing.
"Contributor's Closing Costs" shall mean those closing costs
for which Contributor is responsible pursuant to SECTIONS 7.2 AND
7.3 hereof.
"Deed" shall mean a limited warranty deed in the form
attached hereto as EXHIBIT A, which will convey title to the
Property subject to the Permitted Exceptions. The Deed shall
recite that it is also subject to all other matters on record.
"Deposit" shall have the meaning set forth in SECTION 6.1.
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"Disclosure Materials" shall mean all those materials
relating to the Property that are generally described in Section
A of the Disclosure Materials List & Statement, all of which have
been made available to Acquiror in a so-called "data room"
containing files of information on the Property.
"Disclosure Materials List & Statement" shall mean the list
of Disclosure Materials and the statements relating to the
Property set forth on EXHIBIT D.
"Environmental Laws" shall mean all applicable federal,
state and local laws, rules, regulations, codes, policies and
ordinances, and binding determinations, orders, permits,
licenses, injunctions, writs, decrees or rulings of any
governmental or judicial authority, relative to or that govern
air quality, soil quality, water quality, wetlands, solid waste,
hazardous waste, hazardous or toxic substances, pollution or the
protection of public health, human health or the environment,
including, but not limited to, CERCLA, the Hazardous Material
Transportation Act (49 U.S.C. section 1801 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. section 1251 et seq.), the Safe
Drinking Water Act (42 U.S.C. section 201 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. section 6901 et seq.), the
Clean Air Act (42 U.S.C. section 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. section 2601 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. section 136 et seq.), and the
Occupational Safety and Health Act of 1970 (29 U.S.C. section 651 et
seq.), as each of these laws may have been amended, and any
analogous or related, federal, state or local statutes and the
regulations promulgated pursuant thereto whether currently in
existence or hereafter enacted.
"Equipment" shall mean all of the following items (if any)
to the extent owned or leased by the Contributor: all fixtures,
fittings, appliances, apparatus, equipment, supplies, machinery,
carpeting and other materials installed, located or stored on the
Property, and other personal property and any replacements
thereof, or additions thereto, actually or constructively
affixed, or attached to the Property, or placed upon, under or
used in any way in connection with the complete and comfortable
use, enjoyment, occupancy and/or operation of the Property,
including, without limitation, all parts of the plumbing,
heating, ventilating, air-conditioning, electrical and mechanical
systems of the Improvements; elevators; incinerators; trash
compactors; all equipment, materials and supplies used or usable
in connection with the maintenance, repair and cleaning of the
Property and the interior and exterior of all Improvements; all
racks or similar apparatus necessary for the placement and/or
retention of broadcasting antennae or other telecommunication
equipment and property on the roof of or otherwise within or
about the Improvements; all keys and master keys; all built-in
equipment; all heating, air-conditioning, freezing, lighting,
incinerating and power equipment; lampposts; all electrical
equipment, transformers, wiring, conduit, meters, fixtures aid
apparatus; engines; pipes; pumps; tanks; motors; hydraulic
equipment; conduits; lifting, cleaning, fire prevention, fire
extinguishing, smoke detection, refrigerating, ventilating and
communications apparatus; boilers, furnaces, oil burners or units
thereof and any firing and control apparatus used in connection
therewith; appliances; air-cooling and air-conditioning
apparatus; vacuum cleaning systems; storage systems; built-in or
attached shelving; shades; awnings; windows; attached cabinets;
partitions; ducts and compressors; rugs and carpets; draperies;
landscaping,
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sod, arbors, shrubs, plants, trees, planters and
planting beds or boxes; retaining walls and enclosures;
directories; mailboxes; signs; television or radio antennae;
together with all building materials and equipment now or
hereafter delivered to the Property and intended to be installed
therein, thereon or thereunder, including but not limited to,
lumber, plaster, cement, plumbing, fixtures, pipe, lath,
wallboard, cabinets, nails, sinks, toilets, furnaces, heaters,
brick, tile, water heaters, glass, doors, flooring, paint,
lighting fixtures, heating and ventilating appliances and
equipment, locks and lockets; together with all additions,
accessions, proceeds, products, replacements, renewals and
substitutions of and for all of the foregoing, including without
limitation those items listed on EXHIBIT E.
"Exchange" shall mean the transfer of the Property in
exchange for OP Units.
"Governmental Authorities" shall mean all agencies, bureaus,
departments and officials of federal, state, county, municipal
and local governments and public authorities.
"Gross Contribution Consideration" shall mean the total
consideration to be paid to Contributor by Acquiror prior to
Adjustments and other deductions set forth in SECTION 2.2.
"Hazardous Materials" shall mean any pollutant, contaminant,
substance or waste containing hazardous substances, as those
terms are defined or listed in CERCLA, and any other individual
or class of pollutants, contaminants, wastes or materials
defined, listed, designated, regulated, classified or identified
under any applicable Environmental Laws. This definition of
Hazardous Materials includes friable asbestos, petroleum or
petroleum-based products, radioactive materials, flammable
explosives and polychlorinated biphenyls.
"Improvements" shall mean any and all structures, buildings,
facilities, parking areas or other improvements situated on the
Real Property and owned by the Contributor, together with all
Equipment situated on the Real Property, to the extent that such
Equipment constitutes a fixture.
"In-Negotiation Leases" shall mean those leases or
modifications to existing Leases listed on EXHIBIT F.
"Intangible Property" shall mean the right, title and
interest (if any) of the Contributor in: (a) any and all
permits, entitlements, filings, building plans, specifications
and working drawings, certificates of occupancy, operating
permits, sign permits, development rights and approvals,
certificates, licenses, warranties (including, without limitation
the roof warranties listed on EXHIBIT G) and guarantees,
engineering, soils, pest control, survey, environmental,
appraisal, market and other reports relating to the Property,
(b) all trade names, service marks, designations and logos, and
the appurtenant goodwill, and all tenant lists, advertising
materials and telephone exchange numbers identified with the
Property, (c) all books, records, files and correspondence
relating to the Property, and (d) all other transferable
intangible property, miscellaneous rights, benefits or privileges
of any kind or character with respect to the Property, provided
that the Intangible Property shall not include claims, actions,
causes of
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actions, judgments, accounts receivable, cash, securities and cash
equivalents, or the name of the Contributor, but shall specifically
include the name "Janesville Mall" and any variations thereof.
"KeyBank" shall mean KeyBank National Association.
"KeyBank Loan" shall have the meaning set forth in
SECTION 2.2.
"Land" shall mean the real property described in the legal
description attached to the Deed.
"Lease List" shall mean the list of Leases set forth on
EXHIBIT H.
"Leases" shall mean all leases, rental agreements or other
agreements (including all renewals, amendments or modifications
thereto) which entitle any person to the occupancy or use of any
portion of the Real Property and all guarantees thereof.
"Legal Requirements" shall mean all statutes, laws,
ordinances, rules, regulations, executive orders and requirements
of all Governmental Authorities which are applicable to the
Property 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, including, without limitation,
Environmental Laws.
"Letter of Credit" shall mean an unconditional, irrevocable,
renewable and transferable demand letter of credit, the
beneficiary of which shall be Acquiror or Contributor as the case
may be, substantially in the form(s) set forth in EXHIBIT I.
"Materiality Threshold Amount" shall mean Five Hundred
Thousand Dollars ($500,000).
"Meridian Property" shall mean that certain shopping center
and outlots thereto located in the Township of Meridian, County
of Ingham and State of Michigan, which is owned by Meridian Mall
Associates Limited LLC, an Ohio limited liability company, and
other related entities being acquired by Acquiror.
"Meridian Transaction" shall mean the transaction in which
Acquiror shall acquire the Meridian Property and/or interests in
the entities which own the Meridian Property.
"Net Contribution Consideration" shall have the meaning set
forth in SECTION 2.2.
"OP Unit Recipients" shall mean all partners of the
Contributor, each of which shall receive OP Units at the Closing,
as set forth on EXHIBIT J attached hereto and made a part hereof,
and their respective heirs, personal representatives, successors
and assigns permitted in accordance with this Agreement and the
Partnership Agreement.
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"OP Units" shall mean Class A Common Units of Acquiror, to
be issued pursuant to the provisions of Section 4.4 of the
Partnership Agreement, which shall be entitled to the same rights
and privileges as Acquiror's currently outstanding Common Units
except as set forth in the Acknowledgment in the form attached
hereto as EXHIBIT K (the "Acknowledgment").
"Other Agreements" shall mean the Contribution, Exchange and
Sale Agreement dated of even date herewith concerning the
Meridian Property and the Purchase Agreements of even date
herewith concerning certain outlots to the Meridian Property.
"Partnership Agreement" shall mean the Second Amended and
Restated Agreement of Limited Partnership of Acquiror, dated
June 30, 1998, attached hereto as EXHIBIT M.
"Penney" shall mean J C Penney Company, Inc., a Delaware
corporation.
"Permitted Exceptions" shall mean the various matters
affecting title to the Properties that are approved or deemed
approved by Acquiror pursuant to SECTION 3.3(C).
"Personal Property" shall mean all Equipment, furniture,
furnishings, trade fixtures and other tangible personal property
directly or indirectly owned by Contributor, that is located at
and used in connection with the operation of the Real Property.
"Property" shall mean the shopping center property known as
"Janesville Mall", which is comprised of the Real Property,
Personal Property, Leases, Contracts and Intangible Property that
is a part thereof.
"Real Property" shall mean the Land, the Improvements and
all rights, privileges, easements, and appurtenances to the Land
or the Improvements, including, without limitation, (i) any air,
development, water, hydrocarbon or mineral rights held by the
Contributor, (ii) all licenses, easements, rights-of-way, claims,
rights or benefits, covenants, conditions and servitudes and
other appurtenances used or connected with the beneficial use or
enjoyment of the Land or the Improvements, (iii) all rights or
interests relating to any roads, alleys or parking areas adjacent
to or servicing the Land or the Improvements, and (iv) all
condemnation awards to be made in lieu of any of the foregoing,
or for damages to the Real Property by reason of the change of
grade of any street, highway or avenue.
"Realty" shall mean JCP Realty, Inc., a subsidiary of Penney
and a limited partner of Contributor.
"Registration Rights Agreement" shall mean EXHIBIT N hereof.
"REIT" shall mean CBL & Associates Properties, Inc., a
Delaware corporation.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
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"Stock" shall mean the common stock of the REIT.
"Subsidiary Partnership" shall mean any partnership in which
Acquiror has or may acquire in the future a direct or indirect
interest.
"Surviving Covenants" shall mean those covenants set forth
in Sections 3.1(c) and (d) and Section 8.2, as well as those
covenants which survive pursuant to their express provisions.
"Termination Trigger Amount" shall mean One Million Dollars
($1,000,000.00).
"Title Company" shall mean Lawyers Title Insurance Company.
"Title Report" shall mean the Lawyers Title Insurance
Company Case No.172968i1 dated August 6, 1998, issued with
respect to the Real Property for the benefit of Contributor and
Aquiror, as their interests may appear.
"Treasury Regulation" shall mean any regulation promulgated
by the United States Department of Treasury under the Code
"Unadjusted Stock Price" shall mean the weighted (by trading
volume) average daily closing price of the Stock on the New York
Stock Exchange during the fifteen (15) trading days prior to the
date which is five (5) days prior to the Closing Date.
"Violations" shall mean violations of Legal Requirements
with respect to the Property.
"Wisconsin Power Loan" shall mean the three percent (3%)
loan from Wisconsin Power & Light Co. to Contributor in the
original amount of Twenty Thousand Five Hundred Dollars ($20,500)
with interest at the rate of three percent (3%) payable in
seventy-two (72) monthly installments of the Three Hundred Two
Dollars ($302.00) each beginning August 1, 1998.
ARTICLE II
CONTRIBUTION AND EXCHANGE
Section 2. l Contribution. Contributor agrees to
contribute and convey to Acquiror, and Acquiror agrees to accept
and assume from Contributor, for the Net Contribution
Consideration and on the terms and conditions set forth in this
Agreement, fee simple title to the Real Property and good and
valid title to the remainder of the Property.
Section 2.2. Contribution Consideration. The Gross
Contribution Consideration shall be Thirty-Three Million Two
Hundred Twenty-Five Dollars ($33,225,000) and shall be paid to
Contributor less (a) Adjustments which reduce the Gross
Contribution Consideration;
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(b) the amount of the Assumed Indebtedness (including accrued
interest and all other sums due thereunder); (c) the amount of the
Wisconsin Power Loan (including accrued interest and all other sums
due thereunder); and (d) the amount of Contributor's unsecured
construction loan from KeyBank (including accrued interest and all
other sums due thereunder) (the "KeyBank Loan"), plus any Adjustments
which increase the Gross Contribution Consideration (i.e., the Net
Contribution Consideration). The Net Contribution Consideration
shall be paid entirely in OP Units having a value (determined
pursuant to the formula specified below) equal to the Net
Contribution Consideration. Provided that all conditions
precedent to Acquiror's obligations to Close as set forth in this
Agreement have been satisfied and fulfilled, or waived in writing
by Acquiror, the Net Contribution Consideration shall be paid to
Contributor at Closing pursuant to SECTION 7.2.
Section 2.3. Assumed Indebtedness. Subject to the terms
of this Agreement, Acquiror shall accept and assume as of the
Closing Date (i)all of the Assumed Indebtedness; and (ii) the
obligation to repay the principal balance and accrued interest of
the KeyBank Loan and the Wisconsin Power Loan, to the extent that
Acquiror receives a reduction in the Gross Contribution
Consideration on account thereof.
Section 2.4. OP Units.
(a) The Net Contribution Consideration shall be paid
by issuance of OP Units to Contributor (or to the OP Unit
Recipients on the direction of Contributor). Contributor
acknowledges that the OP Units are not certificated and
that, therefore, the issuance of the OP Units shall be
evidenced by the execution and delivery by Acquiror's
general partner of the Acknowledgment.
(b) The number of OP Units to be delivered in
satisfaction of payment of the Net Contribution
Consideration shall be the number obtained by dividing the
Net Contribution Consideration by the Unadjusted Stock
Price. Contributor and Acquiror hereby agree, conclusively
and unconditionally, that such determination as to the
number of OP Units comprising the Net Contribution
Consideration shall be made based upon the Unadjusted Stock
Price, regardless of the price per share of Stock (or any
other securities of the REIT) on the day of Closing, or at
any time before or after Closing. If such calculation would
result in a fractional number of OP Units to be delivered,
the Acquiror shall pay the fractional amount in cash so as
to provide for delivery of a round number of OP Units.
(c) Prior to the date hereof, Contributor has caused
each of its partners to deliver to Acquiror a completed
questionnaire ("Investor Questionnaire") providing
information concerning each OP Unit Recipient's status as an
Accredited Investor. On the basis of the information set
forth in the Investor Questionnaires, Acquiror agrees to
permit each partner of Contributor to become an OP Unit
Recipient and to be admitted as a limited partner in
Acquiror provided that this transaction Closes in accordance
with its terms and each such partner of Contributor executes
an Acknowledgment.
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(d) Contributor hereby covenants and agrees that it
shall deliver or shall cause each OP Unit Recipient to
deliver to Acquiror, or to any other party designated by
Acquiror, any documentation that may be required under the
Partnership Agreement or any charter document of the REIT,
and such other information and documentation as may
reasonably be requested by Acquiror, at such time as any OP
Units are exchanged for Stock. The preceding covenant shall
survive the Closing and shall not merge into any of the
conveyancing documentation delivered at Closing.
(e) The parties acknowledge that Contributor and
Acquiror intend to treat the Exchange as a tax-free
partnership contribution pursuant to Section 721 of the Code
(except to the extent resulting from the application of
Section 7.4(b) hereof). Acquiror shall cooperate in all
reasonable respects with Contributor to effectuate such
treatment of the Exchange; provided that so long as Acquiror
shall perform in accordance with the terms of this Agreement
and shall not be in breach of any representations,
warranties or covenants set forth herein, (i) Acquiror shall
have no liability whatsoever for any tax liability or
related expenses of Contributor or any OP Unit Recipient
except as expressly provided herein, and (ii) Acquiror shall
have no obligation to incur any cost, expense or liability,
except as expressly provided herein, unless Contributor has
agreed to reimburse and/or indemnify Acquiror to Acquiror's
reasonable satisfaction in connection therewith.
Section 2.5. Informational Materials. A true and
correct copy of the Partnership Agreement has been furnished by
Acquiror to Contributor. Contributor hereby covenants and agrees
that, prior to the Closing, it shall cause each OP Unit Recipient
to deliver to Acquiror an acknowledgment that the ownership of OP
Units by each OP Unit Recipient and its respective rights and
obligations as a limited partner of the Acquiror (including,
without limitation their right to transfer, encumber, pledge and
exchange OP Units) shall be subject to all of the express
limitations, terms, provisions and restrictions set forth in the
Partnership Agreement. In that regard, Contributor hereby
covenants and agrees that, at Closing, each of the OP Unit
Recipients shall execute any and all documentation reasonably
required by the Acquiror and the REIT to formally memorialize the
provisions of this Section 2.5. Contributor further acknowledges
that it has received and reviewed, prior to the date of this
Agreement, the REIT's Annual Report on Form 10-K and Annual
Report to Shareholders for the year ended December 31, 1997, the
REIT's Proxy Statement soliciting proxy materials in connection
with the REIT's 1997 annual meeting, the REIT's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1998 and all forms
8-K filed by the REIT with the SEC Subsequent to December 31,
1997 and all press releases of the REIT since that date and
Contributor agrees and covenants that each OP Unit Recipient
shall so acknowledge on or prior to the Closing Date. All of the
materials and information referred to in this SECTION 2.5 are
listed on EXHIBIT O hereto and shall be collectively referred to
as "Informational Materials."
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Section 2.6. Registration Rights. At Closing, Acquiror
shall cause the REIT to confer to each OP Unit Recipient the
benefits of the Registration Rights Agreement, a copy of which
has been delivered to Contributor and is attached hereto as
EXHIBIT N.
ARTICLE III
ACQUIROR'S DUE DILIGENCE
Section 3.1 Acquiror's Review and Contributor's
Disclaimer.
(a) Acquiror acknowledges that Contributor has
afforded Acquiror and Acquiror's agents and representatives
the opportunity to review all of the Disclosure Materials
prior to the date of this Agreement and will continue to
make them available hereafter. In addition to the
Disclosure Materials, and subject to subparagraph (b) below,
Contributor will make the Property available for inspection
by Acquiror and/or Acquirors representatives and agents and
such parties shall, at Acquiror's risk, be entitled to
conduct one or more property condition inspections and
environmental audits of the Property and in connection with
any of the foregoing to undertake such reasonable and
customary physical, environmental and other evaluations
and/or investigations and/or inspections of the Property as
Acquiror and/or its representatives or agents deems
appropriate.
Acquiror's rights hereunder shall, without limitation
specifically include the following:
(i) The Acquiror and/or Acquiror's
representatives and agents shall have the right,
subject to the rights of tenants under their respective
Leases, to evaluate and inspect the physical properties
and structures of all Improvements on the Property, the
geological character of the Property, the compliance of
the Property with all Legal Requirements, the status of
operations and title of the Property and matters of the
survey, availability of utilities, maintenance status
and other matters pertaining to the condition of the
Property collectively (the "Property Condition");
(ii) The Acquiror and its representatives and
agents shall have the right to conduct such interviews
with tenants and/or adjoining property owners as
Acquiror desires and Contributor shall facilitate the
same; and
(iii) The Acquiror and/or Acquiror's
representatives and agents shall have the right to
examine the environmental status, compliance, quality
and condition of the Property, including any and all
Improvements and the subsurface thereof, and all
adjacent and proximate properties (subject to the
rights of the owners and/or occupants of such adjacent
and proximate properties) (the "Environmental Status").
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Contributor shall also provide Acquiror with access to
the Property and all books, records, files and documents
pertaining to the Property in Contributor's or Contributor's
managing agent's possession or at Contributor's reasonable
disposal at all reasonable times.
(b) Acquiror's exercise of the rights of review and
confirmation set forth in subsection (a) above shall be
subject to the following limitations: (i) any entry onto the
Property by Acquiror, its agents or representatives, shall
be during normal business hours following reasonable prior
notice to Contributor and at Contributor's discretion,
accompanied by a representative of Contributor, (ii)
Acquiror shall not conduct any drilling, test borings or
other disturbance of the Property for review of soils,
compaction, environmental, structural or other conditions
without the prior written consent of the Contributor as to
the location and the time of such testing which, at
Contributor's discretion, shall be performed in the presence
of a representative of Contributor, (iii) any discussions or
interviews with any constituent partner, member, manager,
shareholder, officer or director of Contributor or any
tenants of the Property or their personnel, at Contributor's
discretion, shall be conducted in the presence of
Contributor or its representatives, (iv) any discussions or
interviews with employees at the Property shall, at
Contributor's election, be conducted in the presence of
Contributor or their representatives, (v) Acquiror shall
exercise reasonable diligence not to disturb the use or
occupancy or the conduct of business at the Property and
(vi) Acquiror shall indemnify, protect, defend and hold
Contributor and the Contributor Related Parties harmless
from and against any and all claims, demands, losses,
damages, liabilities, causes of action, liens, costs and
expenses, including, without limitation, reasonable
attorneys' fees and costs (to the extent permitted by law)
(but expressly excluding consequential or punitive damages)
related to or arising out of any entry or inspections
performed by Acquiror, its agents or representatives
pursuant to clause (ii) of this SECTION 3.1(B) or otherwise
in violation of the provisions of this SECTION 3.1(B), and
Acquiror, at Acquiror's sole cost and expense, shall
promptly restore the Property and any damage caused to the
Property by any such inspection; provided that except as
expressly set forth herein, Acquiror shall have no liability
to Contributor arising from (x) any physical condition of or
the presence or disturbance of any Hazardous Material at the
Property existing prior to Acquiror's (or its
representatives' or agents') entry, whether known or unknown
to Contributor, or (y) any acts or omissions of Contributor
or its employees, agents or contractors (including, without
limitation, any damage due to errors or omissions in
information provided to Acquiror or its employees, agents or
contractors relating to environmental matters. Contributor
shall at all times exercise reasonable diligence in
providing Acquiror with access or information that Acquiror
requests, but shall bear no liability if Contributor is not
able despite reasonable efforts to afford Acquiror such
access or information. If Contributor elects to be present
during the Acquiror's exercise of the rights of review and
confirmation as provided herein, the Contributor shall make
its representative available in a timely fashion so as not
to delay or interfere with Acquiror's schedule or activities
in
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exercising its rights of review and confirmation. The
provisions of this Section 3.1(b) shall survive the
termination of this transaction.
(c) Acquiror acknowledges (i) that Acquiror has
entered into this Agreement with the intention of making and
relying upon its own investigation of the physical,
environmental, economic and legal condition of the Property,
(ii) that, other than as specifically set forth in this
Agreement, Contributor or anyone acting or claiming to act
on behalf of Contributor, is not making and has not at any
time made any representation or warranty of any kind or
nature, either oral or written, directly or indirectly,
expressed, implied, statutory or otherwise, with respect to
the Property, including, without limitation, representations
or warranties as to habitability, merchantability, fitness
for a particular purpose, title (other than Contributor's
limited warranty of title set forth in the Deed), zoning,
tax consequences, latent or patent physical or environmental
condition, health or safety matters, utilities, operating
history or projections, valuation, projections, the
applicability of any laws, rules or regulations or
compliance therewith, or the truth, accuracy or completeness
of the Disclosure Materials, (iii) other than as
specifically set forth in this Agreement, Acquiror is not
relying upon and is not entitled to rely upon any
representations and/or warranties made by Contributor, (iv)
that the Disclosure Materials include certain soil,
environmental and physical reports prepared for Contributor
or Contributor's lenders by third parties as to which
reports Acquiror has no right of reliance except as
expressly provided in such reports, and Acquiror
acknowledges that Acquiror has conducted an independent
evaluation and Contributor or anyone acting or claiming to
act on behalf of Contributor, has made no representations or
warranties whatsoever as to accuracy, completeness or
adequacy of such reports and (v) that the Disclosure
Materials include certain economic projections that reflect
assumptions as to future market status and future Property
income and expense with respect to the Property which are
inherently uncertain and as to which Contributor or anyone
acting or claiming to act on behalf of Contributor, has not
made any representation, guaranty or warranty whatsoever.
Acquiror further acknowledges that Acquiror has not received
from Contributor any accounting, tax, legal, architectural,
engineering, property management or other advice with
respect to this transaction and that Acquiror is relying
solely upon the advice of its own accounting, tax, legal,
architectural, engineering, property management and other
advisors. Based upon Acquiror's familiarity with the
Property, Acquiror's due diligence relating to the Property
and Acquiror's experience and knowledge as to the market in
which the Property is situated and as to investment in and
operation of real estate in the nature of the Property and
commercial real estate in general, Acquiror shall purchase
the Property on the Closing Date in its "AS IS, WHERE IS AND
WITH ALL FAULTS" condition, without any representation or
warranty whatsoever except as expressly provided in this
Agreement, as aforesaid, and, except as expressly provided
in this Agreement, Acquiror fully assumes the risk that
adverse latent or patent physical, structural,
environmental, economic or legal conditions may not have
been revealed by Acquiror's investigations. Contributor and
Acquiror acknowledge that the Contribution Consideration to
be paid to Contributor for the Property has taken into
account that the
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Property is being sold subject to the provisions of this
SECTION 3.1. Except as set forth in Section 5.5, nothing
in this SECTION 3.1 shall be deemed to impair, limit or
otherwise affect Acquiror's rights under this
Agreement in respect of the representations, warranties
and covenants of Contributor set forth in this Agreement and
the other express provisions hereof binding on Contributor,
and except as set forth in Section 5.5, nothing contained in
this SECTION 3.1 shall be deemed to constitute a waiver by
Acquiror of its rights at law or in equity, if any, to seek
contribution or other recourse against Contributor in the
event of a claim asserted against Acquiror by a third party
with respect to liabilities arising from or relating to a
breach of any express representations, warranties or
covenants by Contributor hereunder to the extent that such
representation, warranty or covenant has not been terminated
pursuant to SECTION 5.5(A). Contributor and Acquiror agree
that the provisions of this SECTION 3.1 shall survive the
Closing Date and the filing for record of the Deed.
(d) Without limiting the generality of the provisions
of this SECTION 3.1, except as expressly provided in this
Agreement, Contributor makes no representations or
warranties as to the presence or absence of any Hazardous
Materials in, on, under or about the Properties. Except as
expressly provided in SECTIONS 5.1(B)(XVIII) AND (XXII) of
this Agreement, Acquiror specifically waives any private
right of action provided, and agrees (for itself or anyone
deriving rights by or through Acquiror) not to sue or join
Contributor in any suit, claim or cause of action under
CERCLA, any other Environmental Laws and/or any principles
of common law relating to environmental matters to recover
or be reimbursed for any liabilities, costs, fees, or
expenses from the Contributor, Contributor Related Parties,
or any predecessors in interest; provided, however, that in
no circumstances will Acquiror protect, defend, hold
harmless, reimburse or indemnify Contributor or any
Contributor Related Party in any way from claims brought
against Contributor or any Contributor Related Party by any
third parties in connection with the presence of any
Hazardous Materials or any violation of Environmental Laws
and/or common law relating to environmental matters existing
prior to the Closing Date. The agreements set forth in this
Section 3.1(d) shall survive the Closing Date and the filing
for record of the Deed.
(e) Subject solely to Section 7.3 and the
representations set forth in SECTION 5.1, except as may be
limited as set forth in SECTION 5.5, effective as of the
Closing Date, Acquiror, for itself and its agents, partners,
members, shareholders, officers, directors, managers,
affiliates, successors and assigns, hereby releases and
forever discharges Contributor and the Contributor Related
Parties from any and all rights, claims, actions, causes of
action, demands and liabilities at law or in equity, whether
known or unknown at the time of this Agreement
(collectively, "Claims"), which Acquiror has or may have in
the future, arising out of or related to the physical,
structural, environmental, economic or legal condition of
the Property, including, without limitation, all claims in
tort or contract and any claim for indemnification or
contribution arising under CERCLA or any other Environmental
Laws or any other federal, state or local statute, rule or
ordinance now or at any time hereafter in effect relating to
liability of property owners or operators for environmental
matters, but excluding (i) claims and liabilities specified
in SECTION 5.2, subject to the limitations of Section 5.5,
(ii) obligations of Contributor
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surviving Closing subject to the limitations in SECTION 5.5,
and (iii) claims arising as a result of gross negligence or
wilful wrongdoing on Contributor's part. Without limiting the
foregoing, on the Closing Date, Acquiror shall be deemed to have
waived, relinquished and released Contributor and all of the
Contributor Related Parties from any and all Claims and
other matters arising out of latent or patent defects or
physical conditions, violations of applicable laws and any
and all other acts, omissions, events, circumstances or
matters affecting the Property, subject, however, to
Acquiror's rights and remedies provided for in this
Agreement in the event of the breach of any of Contributor's
express warranties, representations or covenants contained
herein and subject to the next to last sentence of
SECTION 3.1(C) hereof.
Section 3.2 Material Adverse Matters.
(a) On or prior to the last day of the Confirmation
Period, Acquiror has delivered to Contributor the
Confirmation Letter, as attached as EXHIBIT C, confirming,
other than as specified in the Confirmation Letter,
Acquiror's satisfaction as to the absence of any Adverse
Matters Amount in excess of the Materiality Threshold
Amount. Acquiror's failure to deliver to Contributor, on or
prior to the last day of the Confirmation Period, an
executed Confirmation Letter shall be conclusively deemed as
Acquiror's confirmation of the absence of any Adverse
Matters Amount in excess of the Materiality Threshold
Amount. Other than for (i) breaches of Contributor's
representations, warranties and covenants as expressly set
forth in this Agreement that are discovered following the
close of the Confirmation Period, (ii) matters identified in
tenant or lender estoppel certificates which are
inconsistent with written disclosures or representations by
Contributor on or prior to the date hereof, or (iii) events
which occur following the Confirmation Period but prior to
Closing and which are not covered by insurance or
condemnation proceeds (which are governed by SECTION 8.1
hereof) (collectively, "Post Confirmation Period Material
Events"), Acquiror and Contributor shall have no rights or
obligations based upon, and Acquiror specifically waives any
rights or claims relating to, any Adverse Matters not
identified (in accordance with the terms of this Agreement)
in the Confirmation Letter for any reason whatsoever,
including, without limitation, (i) mandatory exclusion from
the Confirmation Letter because the Adverse Matters Amount
does not exceed the Materiality Threshold Amount, or
(ii) Acquiror's failure or inability for any reason (unless
such reason results from Contributor's deliberate and
malicious action or inaction) to identify such Adverse
Matters prior to the close of the Confirmation Period.
(b) If the Adverse Matters Amount exceeds the
Materiality Threshold Amount, the Confirmation Letter shall
set forth (i) the exact nature of any claimed Adverse
Matters that contributed to such excess and the manner in
which any such claimed Adverse Matters have an adverse
effect on the value of the Property and (ii) reasonably
detailed evidence of the existence of such Adverse Matters
and Acquiror's rationale for and calculation of the Adverse
Matters Amount.
(c) If the Adverse Matters Amount, as reflected in the
Confirmation Letter, is less than Termination Trigger Amount
but more than the Materiality Threshold Amount,
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the Contribution Consideration shall be reduced by the excess
of (i) the Adverse Matters Amount over (ii) the Materiality
Threshold Amount as reduced by the excess, if any, of the
Materiality Threshold Amount in the Meridian Transaction
over the Adverse Matters Amount in the Meridian Transaction.
For example, if the Adverse Matters Amount for the Property
is $750,000 (i.e. $250,000 above the Materiality Threshold
Amount for the Property), and the Adverse Matters Amount in
the Meridian Transaction is $400,000 (i.e. $100,000 below
the Materiality Threshold Amount for the Meridian
Transaction), the Gross Contribution Consideration for the
Property shall be reduced by $150,000 instead of $250,000.
In such event both parties shall be obligated to Close this
transaction on the Closing Date in accordance with the terms
of this Agreement, but Contributor shall have the right to
arbitrate the Adverse Matters Amount pursuant to the
arbitration provisions set forth in SECTION 8.5 below. In
the event that the Meridian Transaction does not close prior
to or substantially contemporaneously with the Closing
hereunder, the calculation of the reduction in the
Contribution Consideration pursuant to this Section 3.2(c)
shall be made without regard to the Adverse Matters Amount
in the Meridian Transaction; provided, however, that
promptly following the closing of the Meridian Transaction,
such reduction in the Contribution Consideration shall be
recalculated to take account of the excess, if any, of the
Materiality Threshold Amount in the Meridian Transaction
over the Adverse Matters Amount in the Meridian Transaction,
whereupon Contributor or Acquiror, as the case may be, shall
pay, in accordance with the terms of Section 7.3(g), to the
other party an amount equal to the adjustment that should
have been made in the Contribution Consideration. The
provisions of this Section 3.2(c) shall survive the Closing.
(d) If the Adverse Matters Amount, as reflected in the
Confirmation Letter, is greater than the Termination Trigger
Amount, then Acquiror shall elect in the Confirmation Letter
either (i) to Close this transaction on the basis of a
reduction of the Contribution Consideration by the
difference between the Termination Trigger Amount and the
Materiality Threshold Amount (but without any reduction in
the Contribution Consideration for the excess over the
Termination Trigger Amount), or (ii) to terminate this
Agreement (the "Termination Notice"). Upon receipt by
Contributor of the Confirmation Letter with a Termination
Notice, Contributor shall elect, within five (5) Business
Days thereafter, one of the following: (A) to agree to the
termination of this Agreement, in which event the Deposit
shall be returned to Acquiror; (B) to agree to Close this
transaction on the basis of a reduction in the Contribution
Consideration in the full amount of the excess of the
Adverse Matters Amount over the Materiality Threshold
Amount, in which event both parties shall be obligated to
Close this transaction on the Closing Date in accordance
with the terms of this Agreement, or (C) to elect to pursue
arbitration pursuant to SECTION 8.5 below, in which event,
either Contributor shall be obligated to Close the
transaction (in accordance with clause (B) of this sentence
but using the arbitrator's determination of the Adverse
Matters Amount as the basis for reducing the Contribution
Consideration) if the arbitrator(s) agree(s) with
Contributor's position regarding the Adverse Matters Amount,
or Contributor shall be permitted to terminate this
Agreement if the arbitrator(s) agree(s) with Acquiror's
position regarding the Adverse Matters Amount,
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or, in the alternative, to Close this transaction in accordance
with Clause (B) of this sentence. In the event that Acquiror
shall elect to Close this transaction pursuant to clause (i)
above, Contributor shall have the right to arbitrate the
Adverse Matters Amount pursuant to the arbitration
provisions set forth in SECTION 8.5, but notwithstanding the
outcome of said arbitration, Contributor shall be obligated
to Close this transaction, provided that the reduction in
the Contribution Consideration shall be the difference
between the lesser of the Termination Trigger Amount or the
Adverse Matters Amount determined by arbitration, on the one
hand, and, on the other hand, the Materiality Threshold
Amount. Notwithstanding anything to the contrary set forth
in this Agreement, if the Adverse Matters Amount exceeds ten
percent (10%) of the Contribution Consideration, Acquiror
may elect to terminate this Agreement without regard to
Contributor's willingness to reduce the Contribution
Consideration by an amount equal to the excess of the
Adverse Matters Amount over the Materiality Threshold
Amount, subject to Contributor's right to arbitrate the
Adverse Matters Amount pursuant to SECTION 8.5.
Notwithstanding anything herein to the contrary, the amount
of the reduction in the Gross Contribution Consideration
shall be reduced by the excess, if any, of the Materiality
Threshold Amount over the Adverse Matters Amount in the
Meridian Transaction.
(e) In the event that Contributor has elected to
pursue arbitration pursuant to clause (C) of SECTION 3.2(D)
hereof, the termination by Acquiror pursuant to clause (ii)
of such Section shall not be effective until the conclusion
of such arbitration. If such arbitration shall have
determined that the Adverse Matters Amount is greater than
the Termination Trigger Amount, this Agreement shall be
terminated unless Contributor elects, within five (5)
Business Days after receipt of notice of such determination
through arbitration to agree to Close this transaction on
the basis of a reduction in the Contribution Consideration
in the full amount of the excess of the Adverse Matters
Amount over the Materiality Threshold Amount by giving
written notice to Acquiror, in which event the Closing shall
occur on the second business day after Acquiror receives
such notice. In addition, if Contributor shall have elected
to pursue arbitration pursuant to clause (C) of SECTION
3.2(D), Contributor shall have the right to require that the
Closing occur on the Closing Date prior to the conclusion of
the arbitration, in which event the parties shall be
obligated to Close this transaction on the Closing Date and
the Contribution Consideration shall be reduced by the
excess of the Adverse Matters Amount over the Materiality
Threshold Amount as determined by such arbitration. Escrow
arrangements shall be made pursuant to the provisions of
SECTION 8.5(D) hereof.
(f) In the event that Post-Confirmation Period
Material Events (as defined in SECTION 3.2(A)) occur prior
to the Closing Date, Acquiror as its sole remedy shall be
entitled to recalculate the Adverse Matters Amount by adding
to the amount of Adverse Matters discovered during the
Confirmation Period the amount of any new Adverse Matters
created as a result of a Post Confirmation Period Material
Event and deliver a new Confirmation Notice to Contributor
prior to the scheduled Closing Date
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setting forth the results of such recalculation and containing
the information required under SECTION 3.2(A). Thereupon, the
procedures set forth in SECTIONS 3.2(B), (C), (D) and (E) shall
be implemented, and the Closing Date shall be delayed a
sufficient period of time to permit such implementation.
(g) Notwithstanding anything in this Agreement to the
contrary, any matters identified by Acquiror prior to the
Closing Date that constitute breaches of representations,
warranties and covenants and also constitute Adverse Matters
shall be treated solely as Adverse Matters and shall not be
the subject of any claim for breach of representation,
warranty or covenant under ARTICLE V.
(h) Notwithstanding anything to the contrary set forth
above, Acquiror and Contributor agree that the following
categories of Adverse Matters ("Non-Curable Adverse
Matters"), if discovered or occurring with respect to the
Property at any time after the date hereof and prior to
Closing, are not readily quantifiable or are otherwise not
of a nature which Acquiror should be obligated to accept
even if Contributor were prepared to reduce the Net
Contribution Consideration: A release of Hazardous
Materials which is of such seriousness as to materially
adversely affect the viability of the Property as a shopping
center. Within three (3) Business Days following the
discovery or occurrence of a Non-Curable Adverse Matter,
Acquiror shall notify Contributor of the nature of the Non-
Curable Adverse Matter and that Acquiror elects (i) to
terminate this Agreement; (ii) to Close this transaction
without adjustment to the Net Contribution Consideration,
notwithstanding the existence of such Non-Curable Adverse
Matter, or (iii) to Close this transaction provided that
Contributor agrees to cure such Non-Curable Adverse Matter
in a manner reasonably satisfactory to Acquiror or to reduce
the Net Contribution Consideration by an amount reasonably
acceptable to Acquiror. In the event that Acquiror elects
item (iii) in the preceding sentence, Contributor shall
elect, by written notice to Acquiror, within five (5)
Business Days thereafter, either (x) to agree to cure the
Non-Curable Adverse Matter in a manner proposed in such
notice or to accept a reduction in the Net Contribution
Consideration by an amount proposed in such notice, or
(y) to terminate this Agreement. If Contributor elects to
terminate this Agreement, Acquiror shall have the right, by
written notice to Contributor within five (5) Business Days
thereafter, to proceed to Close the transaction without cure
or reduction, in which event Contributor shall be obligated
to Close the transaction. Notwithstanding anything to the
contrary set forth above, in the event the Contributor
disputes the existence of a Non-Curable Adverse Matter
alleged by Acquiror, Contributor shall be entitled to
arbitrate the matter pursuant to the provisions of
SECTION 8.5.
Section 3.3 Title Exceptions.
(a) Acquiror has secured and may continue to secure,
at Acquiror's expense, during the Confirmation Period any
additional title report or survey updates desired by
Acquiror. Any title exceptions or issues disclosed by title
or survey updates, disclosed
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by Contributor to Acquiror or otherwise identified by Acquiror,
and which are not within the definition of Permitted Exceptions,
shall be referred to as "Additional Exceptions." Acquiror, in any
event, shall endeavor in good faith to cause the Title Company to
delete or insure over any Additional Exceptions prior to Acquiror's
expression of such matters in an Additional Exception Notice
(as hereinafter defined).
(b) Acquiror shall have the right to deliver a notice
to Contributor identifying any Additional Exceptions
("Additional Exception Notice") (i) on or prior to the
expiration of the Confirmation Period, and (ii) on or prior
to the Closing Date solely with respect to matters that (A)
are set forth in an update to the Title Report first
received by Acquiror after the expiration of the
Confirmation Period which materially and adversely affect
the Property or Acquiror's rights in the Property, or (B)
arise as a result of an act or omission of Contributor, its
partners, employees or agents and materially and adversely
affect the Property or Acquiror's rights in the Property.
Acquiror's failure to deliver any such notice in timely
fashion shall be deemed an approval of the applicable
Additional Exceptions disclosed to Acquiror in the Title
Report or any title or survey updates, or disclosed to
Acquiror by Contributor in writing or otherwise discovered
by Acquiror during the Confirmation Period. Except as set
forth above, Acquiror shall have no right to deliver an
Additional Exception Notice following the close of the
Confirmation Period. If Acquiror delivers an Additional
Exception Notice within such period, Acquiror and
Contributor shall promptly attempt to agree upon the method
or cost to cure or remove such Additional Exception or, if
not susceptible to cure or removal such Additional Exception
shall be deemed to be an Adverse Matter and shall be
resolved in accordance with the procedures set forth in
SECTION 3.2. Notwithstanding the foregoing, Acquiror shall
not have the right to object to any Additional Exception if
the Title Company is willing to affirmatively insure or
endorse over such Additional Exception at Contributor's
expense.
(c) "Permitted Exceptions" shall refer to (i) all
Leases listed on the Lease List; (ii) any and all exceptions
to title set forth in the Title Report attached as EXHIBIT P
or the Survey identified on Exhibit P, (iii) zoning
ordinances and regulations and other similar laws or
regulations governing use or enjoyment of the Property, (iv)
matters affecting title created by or with the written
consent of Acquiror, (v) liens to secure taxes and
assessments not yet due and payable, (vi) mortgages or deeds
of trust and related encumbrances securing the Assumed
Indebtedness, and (vii) any Additional Exceptions agreed to
or accepted by Acquiror in writing in accordance with the
terms of this Agreement. Notwithstanding the foregoing, on
the Closing Date, Contributor shall, at Contributor's sole
cost and expense, remove any liens of any mortgages or deeds
of trust securing indebtedness of Contributor (excluding
therefrom any mortgages or deeds of trust and related
encumbrances securing the Assumed Indebtedness and any
evidence of the KeyBank Loan and Wisconsin Power Loan),
liens for other monetary obligations that are not assumed by
Acquiror (for such purposes, all unpaid installments of
assessments not yet due and payable collected with
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ad valorem real estate taxes shall be assumed by Acquiror,
subject to the prorations set forth in SECTION 7.3, and
represent Permitted Exceptions) and any title matters
created in violation of Contributor's covenant set forth in
SECTION 5.2(H), except for any Additional Exceptions agreed
to or accepted by Acquiror in writing in accordance with the
terms of this Agreement.
(d) Contributor shall have no obligation to execute
any affidavits or indemnifications in connection with the
issuance of the Title Policy (hereinafter defined in SECTION
4.1(A)), excepting only customary affidavits such as
regarding authority, the non-foreign status of Contributor,
the rights of tenants in possession and the status of
mechanics' liens in the form attached hereto as EXHIBIT Q.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4. l Conditions.
(a) Notwithstanding anything in this Agreement to the
contrary, Acquiror's obligation to purchase the Property
shall be subject to and contingent upon the satisfaction or
waiver of each of the following conditions precedent at or
prior to Closing:
(i) The written commitment, upon the sole
condition of the payment of any regularly scheduled
premium, of the Title Company to issue, with respect to
the Property, an American Land Title Association
Owner's Policy of Title Insurance in conformity with
the Title Report (the "Title Policy") insuring
Acquiror's fee simple title to the Real Property on the
Closing Date in an amount equal to the Gross
Contribution Consideration, subject only to the printed
conditions and exceptions of such policy, the Permitted
Exceptions and such Additional Exceptions as are agreed
to by Acquiror pursuant to SECTION 3.3(B) above,
together with such customary endorsements and
affirmative coverage as Acquiror shall reasonably
request; provided that Contributor shall bear no
additional expense as a result thereof;
(ii) Contributor's performance, observance or
tender of performance of all Closing obligations and
other material covenants and conditions required of
Contributor under this Agreement;
(iii) All representations and warranties of
Contributor set forth in SECTIONS 5.1(A) AND 5.1(C)
hereof 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 and Contributor shall have so
certified in writing (provided that nothing herein is
intended to abrogate Acquiror's right to terminate this
transaction pursuant to
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SECTION 3.2 based upon breaches of the representations
and warranties set forth in SECTION 5.1(B));
(iv) Receipt by Acquiror no later than the
Closing Date of the following estoppel letters:
(A) Estoppel letters from Sears, JC
Penney, Boston's and Kohl's (collectively, the
"Majors") dated no earlier than sixty (60) days
prior to Closing in the form required under their
respective Leases (provided that Contributor shall
make reasonable efforts to obtain estoppel letters
on the form attached hereto as EXHIBIT R); and
(B) Estoppels dated no earlier than
sixty (60) days prior to Closing in the form
attached hereto as EXHIBIT R from all tenants
under Leases of Ten Thousand (10,000) square feet
or more of gross leasable area within the Property
and from not less than seventy-five (75%) of all
other tenants of the Property leasing less than
ten thousand (10,000) square feet computed by
reference to gross leasable area; and
(C) In addition to the foregoing
estoppels, a master estoppel in the form attached
hereto as EXHIBIT S (the "Master Estoppel") from
Contributor with respect to all Leases (other than
the Leases described in subparagraph (A) and
Leases of 10,000 square feet or more of gross
leasable area unless Acquiror has waived in
writing such conditions as to any such Lease) for
which estoppels have not been obtained and
delivered. For one (1) year after Closing,
Contributor shall use its reasonable good faith
efforts to obtain and deliver such tenant
estoppels. Any statements made by Contributor in
such master estoppel shall constitute warranties
and representations by Contributor which shall
survive the Closing until the earlier to occur of
(x) the first anniversary of the Closing Date, or
(y) the date on which any tenant supplies its own
estoppel, to the extent such tenant's estoppel
covers the items set forth in the Master Estoppel;
provided, however, that to the extent that any
tenant estoppel differs materially from the Master
Estoppel, Acquiror shall be permitted to treat
such material difference as a claim for breach of
a representation or warranty pursuant to Section
5.5(b); and provided, further, that,
notwithstanding anything in this Agreement to the
contrary, Acquiror shall have until the earlier of
(i) three (3) months after the receipt by Acquiror
of the tenant estoppel in question, or (ii) one
(1) year after Closing, to deliver a Claim Notice
to Contributor with respect to such breach; and
(D) The estoppel letter (or other
reasonable evidence) from the Assumed Indebtedness
Lender dated no earlier than thirty (30) days
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prior to Closing, reflecting no material defaults
then existing under the Assumed Indebtedness and
confirming (A) the outstanding principal balance
thereof, (B) the interest rate, (C) the date
installments of interest and/or principal were
last paid, (D) consenting to the assumption of the
Assumed Indebtedness by Acquiror, and (E) listing
each of the Assumed Loan Documents and stating
that none of the Assumed Loan Documents have been
modified (or, if modified, that such modification
is set forth in the assumed Loan Documents).
Notwithstanding anything in this Agreement to the
contrary, if the foregoing condition (iv) has not been
satisfied or waived on or before the scheduled Closing
Date, Contributor shall have the right to extend the
Closing Date until the earlier of (x) sixty (60) days
following the scheduled Closing Date or (y) the date on
which such conditions are satisfied or waived.
(v) The execution and delivery by all OP Unit
Recipients of the Acknowledgment.
(vi) There having occurred no Non-Curable
Adverse Matters following the Contract Date; unless the
foregoing condition is waived by Acquiror pursuant to
the provisions of SECTION 3.2(H).
(vii) The following shall not have occurred:
(A) the bankruptcy of any Major; or
(B) the actual, or delivery of notice
of, closing of business of the store operated by
any of the Majors other than for repairs,
inventory, remodeling and similar matters which
are intended to be on a temporary basis;
(viii) There being no material litigation or
other proceeding pending against Contributor or the
Property that would have a material adverse effect on
the Property or Acquiror's use thereof as a shopping
centers; and
(ix) The execution and delivery by all parties
thereto of an amendment of the lease with Penney
relating, among other things, to the reduction of the
required parking ratio in certain circumstances to 4
per thousand in the form of EXHIBIT L.
(x) The execution and delivery of the consent
of the Assumed Indebtedness Lender in accordance with
the terms of 4.1(C) hereof.
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(b) Notwithstanding anything in this Agreement to the
contrary, Contributor's obligation to sell the Property
shall be subject to and contingent upon the satisfaction or
waiver of the following conditions precedent at or prior to
Closing:
(i) Acquiror's performance or tender of
performance of all Closing obligations and other
material covenants and conditions required of Acquiror
under this Agreement; and
(ii) All representations and warranties of
Acquiror set forth in ARTICLE V hereof 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 and
Acquiror shall have so certified in writing.
(v) The execution and delivery by Acquiror of
the Acknowledgments.
(c) Acquiror acknowledges and agrees that the
Contributor must obtain the consent of the Assumed
Indebtedness Lender to the transfer of the Property to
Acquiror subject to the Assumed Loan Documents and to the
assumption by Acquiror of the Assumed Indebtedness. If,
despite the reasonable good faith efforts of Acquiror and
Contributor (as provided in SECTIONS 5.2(H) and 5.4(A)
hereof), the Assumed Indebtedness Lender fails to give its
consent to the transfer of the Property on terms and
conditions satisfactory to the Contributor and Acquiror,
each acting reasonably, by the close of the Confirmation
Period, then the Acquiror together with Contributor
shall continue to seek such Assumed Indebtedness Lender's
consent for an additional period of sixty (60) days after
the close of the Confirmation Period, in which case if such
consent is not obtained within ten (10) days after the end
of the Confirmation Period, the Closing Date will be
deferred to that date which is two (2) Business Days after
such Assumed Indebtedness Lender's consent is obtained. If
the parties are unable to obtain the Assumed Indebtedness
Lender's consent or, in the alternative, to arrange for
mutually agreeable replacement financing within the
additional period of sixty (60) days provided hereunder,
then this Agreement may be terminated by either party by
giving written notice to the other at any time prior to the
receipt of such consent, and, upon delivery of such notice
of termination, the Deposit will be returned to Acquiror and
the parties will thereafter be relieved of all further
liability hereunder, except the Surviving Covenants. For
purposes of this SECTION 4.1(C), it is agreed that the
consent by the Assumed Indebtedness Lender shall be deemed
acceptable only if the Assumed Indebtedness Lender approves
of the transaction contemplated herein, issues a clean
estoppel certificate and agrees to modify the Assumed Loan
Documents in order to provide, in substance, that
(i) the transfer of shares of the REIT or the
merger or consolidation of the REIT with or into any
other entity shall be permitted;
(ii) the transfer of operating partnership units
in Acquiror or the merger or consolidation of Acquiror
into or with any other entity, shall be permitted;
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(iii) transfers of the Property to entities which
are, directly or indirectly, controlled and at least
50% owned by Acquiror, or its permitted successors,
shall be permitted without the payment of any transfer
fee;
(iv) one subsequent transfer of ownership of the
Property (whether or not to an entity that is permitted
under clause (iii)) shall be permitted provided the
transferee is approved and a 1% transfer fee is paid to
the Assumed Indebtedness Lender, as provided under
Section 3.5(1)(b) of the mortgage contained within the
Assumed Loan Documents;
(v) changes in the management of the Property
shall be permitted to entities that are affiliates of
Acquiror; and
(vi) the existing side letters, except the side
letter relating to outlot development, between
Contributor and the Assumed Indebtedness Lender shall
continue to be in effect and shall run to the benefit
of Acquiror.
Section 4.2 Failure or Waiver of Conditions Precedent.
If any of the conditions set forth in SECTION 4.1 are not
fulfilled or waived at or prior to Closing, then the party
benefitted by such condition may, by written notice to the other
party, terminate this Agreement, whereupon all rights and
obligations hereunder of each party shall cease and terminate and
be of no further force or effect except for the Surviving
Covenants, unless the other party is able to secure the
satisfaction of the noted condition within five (5) Business Days
of such termination notice, in which event this Agreement shall
not terminate. Notwithstanding the foregoing, the termination of
this Agreement pursuant to this SECTION 4.2 shall not be deemed
to waive any rights that a party may have pursuant to Article VI
of this Agreement. Either party may, at its election, at any
time or times at or before the Closing, waive in writing the
benefit of any of the conditions set forth in SECTION 4.1(A) and
SECTION 4.1(B). In any event, Acquiror's consent to the Close of
escrow pursuant to this Agreement shall waive any remaining
unfulfilled conditions except as otherwise specified by the
provisions in writing. If this Agreement is terminated by
Acquiror as a result of the failure of any condition set forth in
SECTION 4.1(A), the Title Company, as escrow agent, shall return
the full amount of the Deposit to Acquiror, together with any
interest accrued thereon.
Section 4.3 Either party shall have the right to
terminate this Agreement in the event that the Contribution,
Exchange and Sale Agreement of even date herewith concerning the
Meridian Property (the "Meridian Contract") is terminated as a
result of the "Potential Pipeline Spill" (as such term is defined
therein) by giving notice to the other party with two (2) days
after the termination of the Meridian Contract. In the event this
Agreement is terminated under this Section 4.3, the Deposit shall
be promptly returned to the Acquiror, together with interest
accrued thereon, in any, and neither party shall any further
rights in obligations hereunder. Notwithstanding anything to the
contrary contained herein, the Closing Date hereunder shall be
automatically extended until the date that is two (2) days after
each party's termination rights with respect to the Potential
Pipeline Spill shall have lapsed.
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ARTICLE V
COVENANTS WARRANTIES AND REPRESENTATIONS
Section 5.1 Contributor's Warranties and
Representations. Contributor makes the following representations
and warranties to Acquiror, provided that Acquiror acknowledges
and agrees that each of such representations and warranties shall
be deemed expressly qualified by any information set forth on the
Disclosure Materials List and Statement or in the Disclosure
Materials set forth on the Disclosure Materials List & Statement.
(a) Contributor's Organizational Representations.
Contributor represents and warrants as follows:
(i) Contributor is a partnership organized,
validly existing and in good standing under the laws of
the State of Ohio and has qualified to do business in
the State of Wisconsin. Contributor has full power and
lawful authority to enter into and carry out the terms
and provisions of this Agreement and to execute and
deliver all documents which are contemplated by this
Agreement, and all actions of Contributor necessary to
confer such power and authority upon the persons
executing this Agreement (and all documents which are
contemplated by this Agreement) on behalf of
Contributor have been taken and this Agreement
constitutes a valid and legally binding obligation of
Contributor enforceable against Contributor 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
principles of equity.
(ii) Contributor's execution and delivery of
this Agreement, the consummation of the transactions
contemplated hereby and the performance of
Contributor's obligations under the instruments
required to be delivered by Contributor at the Closing,
do not and will not require the consent, approval or
other authorization of, or registration, declaration or
filing with, or payment of any premium, fee or penalty
to any Governmental Authority (excepting the
recordation of Closing documents to the extent
contemplated in this Agreement and any transfer taxes
payable in connection therewith) and do not and will
not result in the creation of or claim of any lien,
charge or encumbrance upon the Property or any portion
thereof or any violation of, or default under, any law,
regulation, rule, order or judgment of any Governmental
Authority or any term or provision of any agreement,
instrument, mortgage, loan agreement or similar
document to which Contributor is a party or by which
Contributor is bound; provided, however, that the
Contributor must obtain the consent of the Assumed
Indebtedness Lender to permit the transfer of the
Property to Acquiror and Acquiror's assumption of the
Assumed Indebtedness, which consent may be subject to
certain conditions imposed by the Assumed Indebtedness
Lender or otherwise set forth in the Assumed Loan
Documents.
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(iii) There is no litigation, investigation or
proceeding pending or, to Contributor's knowledge,
contemplated or threatened against Contributor that, if
decided adversely to Contributor, would materially and
adversely affect the value of the Property or
Contributor's ability to perform Contributor's
obligations under this Agreement or any other
instrument or document related hereto.
(iv) Contributor is not a "foreign person" as
defined in SECTION L445(F)(3) of the Code.
(v) As of December 31, 1997, Contributor's
adjusted tax basis in the Property for federal income
tax purposes was approximately as set forth on
EXHIBIT U, and the scheduled tax depreciation, cost
recovery and amortization deductions for future years
are approximately as set forth on such Exhibit. Except
as noted on such Exhibit, adjusted tax basis and the
scheduled tax depreciation, cost recovery and
amortization deductions for future years for state
income tax purposes do not differ materially from the
federal amounts.
(vi) As of December 31, 1997, the "outside tax
basis" of each of the partners of Contributor, their
capital accounts and share of liabilities is
approximately as set forth on EXHIBIT V.
(b) Property Status. Contributor represents and
warrants with respect to the Property, except as otherwise
disclosed in the Disclosure Materials set forth on the
Disclosure Materials List and Statement (EXHIBIT D hereof):
(i) Attached hereto as EXHIBIT H is a Lease
List (Rent Roll) with respect to the Property which is
true, correct and complete.
(ii) The Lease List for the Property lists all
of the Leases affecting the Property. Contributor has
made true, correct and complete originals or copies of
all Leases in effect as of the date hereof available to
Acquiror for its review. To Contributor's knowledge
except as may be set forth on the Lease List, each
Lease identified on the Lease List is in full force and
effect and has not been modified, assumed or extended
except as specified, and, except as disclosed in the
Disclosure Materials List and Statement, no tenant is
in material default under any such Lease and
Contributor has not received written notice of any
material default by the landlord under any such Lease.
No tenant or other person or entity has an option to
purchase or right of first refusal with respect to the
sale of all or any part of the Property.
(iii) All leasing commissions in respect of the
current terms of the Leases currently in effect have
been or will be paid in full by Contributor, except as
provided on EXHIBIT W.
(iv) Except as set forth on EXHIBIT X,
Contributor has received no written notice within the
thirty-six (36) month period immediately preceding the
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date hereof, from any tenant under any Lease which is
still outstanding and otherwise has no knowledge 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 any other sums due any
tenant pursuant to the terms of its Lease, or is
entitled to cancel or terminate its Lease or to be
released of any of its material obligations thereunder.
(v) To Contributor's knowledge, all work which
is required to be performed by the landlord under each
Lease has been performed to the Tenant's satisfaction
or as required to be performed by landlord pursuant to
such Lease, except for work not completed and listed on
EXHIBIT Y, and the parties shall bear responsibility
for the same as indicated on such Exhibit.
(vi) All amounts in respect of tenant cash
allowances, lease takeover payments or takeback payment
obligations and all other tenant cash inducements have
been paid or satisfied in full, except as set forth on
EXHIBIT Z, and the parties shall bear responsibility
for the same as indicated on such Exhibit.
(vii) All security deposits currently held
pursuant to the Leases are listed on EXHIBIT H hereto
(including all accrued interest thereon, which is
listed separately). All security deposits furnished to
the landlord under the Leases have been held and
applied in compliance with the applicable Leases.
(viii) Except for Penney, no person or entity
using or occupying space at the Property under any
Lease is an affiliate of Contributor, nor does
Contributor or any affiliate thereof have any interest
(other than owning securities of such affiliate which
is publicly traded) in any such person or entity.
(ix) There are no unexpired "free rent" periods
(or similar concessions) granted to any tenants under
any of the Leases, except as set forth on EXHIBIT H.
(x) Contributor has not received any notice
from a tenant within the thirty-six (36) month period
preceding the date of this Agreement that has not been
cured stating that a condition exists that would now
permit a Tenant to cancel or terminate such Lease (or
any portion thereof), to be released from liability
under such Lease or cease operating or reduce its
obligations under such Lease.
(xi) Contributor has made originals or copies of
all Contracts in effect as of the date hereof which
survive the Closing available to Acquiror for its
review, all of the documents comprising such Contracts
being identified in EXHIBIT AA hereto.
(xii) Except as set forth on EXHIBIT AA,
Contributor has not given or received any written
notice of default to or from any party to a Contract
which
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survives the Closing which is still outstanding
and otherwise has no knowledge that Contributor or any
such party has defaulted in any material respects in
performing any of its material obligations under such
Contract.
(xiii) Except as set forth on EXHIBIT AA, no
cancellation or termination fee is payable in
connection with the early termination of any Contract
which survives the Closing.
(xiv) Contributor has no direct or indirect
ownership interest in any service provider or any fees
payable to such provider under any contract which will
remain in effect after the Closing.
(xv) There are no agreements with brokers or any
other persons or entities providing for the management
or leasing of the Property or with contractors
providing for construction within the Property which
will remain in effect following the Closing, except as
set forth on EXHIBIT AA or elsewhere in this Agreement.
(xvi) The copies of the Disclosure Materials
provided to Acquiror are, to Contributor's knowledge,
true, accurate and complete in all material respects.
(xvii) To Contributor's knowledge, within the
thirty-six (36) month period preceding the date of this
Agreement, Contributor has received no written notice
from any Governmental Authorities that eminent domain
proceedings for the condemnation of or any zoning, land
use or similar proceedings relating to the Property or
any part of the Property are pending and, to
Contributor's knowledge, no such proceedings are
threatened (in writing).
(xviii) To Contributor's knowledge, within the
thirty-six (36) month period preceding the date of this
Agreement, Contributor has received no written notice
of and has no knowledge of any threatened (in writing)
or pending litigation against Contributor, including
litigation pursuant to any Environmental Law, which, if
decided adversely to Contributor, would materially and
adversely affect the Property;
(xix) To Contributor's knowledge, within the
thirty-six (36) month period preceding the date of this
Agreement, Contributor has received no written notice
that has not been cured or corrected from any
Governmental Authority that the improvements
constituting the Property are presently in violation of
any applicable building codes;
(xx) To Contributor's knowledge, Contributor has
received no written notice from any Governmental
Authority that has not been cured or corrected that the
current use of the Property is in violation of any
applicable zoning, land use or other similar law
affecting the Property;
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(xxi) To Contributor's knowledge, no Taxes or
Assessments are currently the subject of protest or
appeal.
(xxii) To Contributor's knowledge, Contributor
has not received any written notice within the thirty-
six (36) month period preceding the date of this
Agreement which has not been cured or corrected
(A) from any Governmental Authority of any failure by
Contributor to obtain any certificate, permit, license
or approval (including those required under
Environmental Law) with respect to the Property, or any
intended revocation, modification or cancellation of
any of the same or (B) 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
Exception.
(xxiii) To Contributor's knowledge, there are no
Contracts with respect to the Property that are not
cancelable by the owner of the Property within thirty
(30) days after written notice from Contributor, except
as disclosed on EXHIBIT AA.
(xxiv) Contributor is the fee simple owner of
the Land and Improvements and has the full and sole
right, power and authority to sell, assign and convey
the Property pursuant to this Agreement. Contributor
has not leased, mortgaged, hypothecated, pledged or
assigned all or any portion of Contributor's estate,
right, title and interest in and to the Property to any
person, except for Permitted Exceptions and any
encumbrances to be removed by Contributor at or prior
to Closing.
(xxv) Except as set forth in the environmental
reports listed on EXHIBIT D included within the
Disclosure Materials, any reports or studies prepared
by or for Acquiror and any reports obtained by
Acquiror: (A) to Contributor's knowledge, within the
thirty-six (36) month period preceding the date of this
Agreement, Contributor has received no written notice
from any Governmental Authority which has not been
cured or corrected of the presence of any Hazardous
Materials presently deposited, stored, or otherwise
located on, under, in or about the Property, except for
Hazardous Materials used by Contributor or tenants of
the Property in the ordinary course of business or as
part of their inventory; and (B) to Contributor's
knowledge, there are no underground storage tanks on
the Property.
(xxvi) A schedule of the material items of
personal property owned by Contributor included in the
sale is attached hereto as EXHIBIT E, which Exhibit
separately identifies any leased personal property, the
leases for which are listed on EXHIBIT E-1 annexed
hereto.
(xxvii) Contributor is not a party to, or
otherwise bound by, any union or collective bargaining
agreement that would be binding on Acquiror after the
Closing.
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(xxviii) There are no tax abatements or
exemptions affecting the Property and, within the
thirty-six (36) month period preceding the date of this
Agreement, to Contributor's knowledge, Contributor has
not received any written notice of any proposed public
improvement assessments.
(xxix) To Contributor's knowledge, there is no
real property other than the Property that comprises
the regional shopping center commonly known as
"Janesville Mall" located in the Janesville, Wisconsin
metropolitan area and Contributor does not own or lease
any property other than the Property that is used in
connection with the operation of the regional shopping
center commonly known as "Janesville Mall" located in
the Janesville, Wisconsin metropolitan area.
(xxx) True, complete and correct copies of the
financial statements identified on EXHIBIT D hereto
have previously been delivered to Acquiror and fairly
and accurately present the assets, liabilities,
financial position and condition, results or operations
and changes in financial positions of the subjects
thereof as of the dates thereof for the period referred
to therein.
(xxxi) To Contributor's knowledge, within the
thirty-six (36) month period preceding the date of this
Agreement, Contributor has received no notice of
outstanding unpaid obligations to pay the cost of
connection of any utility lines, pipes or other
equipment serving the Property.
(xxxii) (A) To Contributor's knowledge, within
the thirty-six (36) month period preceding the date of
this Agreement, Contributor has not received any notice
that development, site assessment or other similar fees
payable in connection with the Property have not been
paid, and (B) to Contributor's knowledge, no such fees
are payable after the date hereof with respect to the
Property as it exists on the date hereof.
(xxxiii) There are no reciprocal easement
agreements or similar agreements affecting the
Property, except as may be set forth in the Permitted
Exceptions.
(xxxiv) To Contributor's knowledge, within the
thirty-six (36) month period preceding the date of this
Agreement, Contributor has not received written notice
from a Governmental Authority that has not been cured
or corrected that the number of parking spaces at the
Property is required to be increased above the number
of parking spaces existing on the date hereof.
(xxxv) To Contributor's knowledge within the
thirty-six (36) month period proceeding the day of this
Agreement, Contributor has not received written notice
from any Board of Fire Underwriters of any defect or
inadequacy in connection with the Property or its
operation.
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(xxxvi) Contributor is presently maintaining the
insurance policies and coverage set forth in the
insurance summary dated November 7, 1997 included in
the Disclosure Materials.
(xxxvii) In the thirty-six (36) month period
preceding the date hereof, to Contributor's knowledge,
Contributor has not received any written notice of any
proposed (but not yet implemented) increase in the real
estate taxes or assessed valuation of the Property.
As used herein, the terms "Contributor's knowledge"or words of
similar effect shall mean and be limited to, the current actual
knowledge of any of Robert T. Samuels, Roger E. Benjamin, Michael
Montlack or Arthur Weisman as being the persons having knowledge
of the Property; provided, however, that said individuals shall
not be deemed to have personally made any representations or
warranties and shall not have any personal liability therefor,
and, provided, further that except as expressly provided herein
no independent investigation or study shall have been performed
for purposes of such representations and warranties. Each such
individual's knowledge shall not include information or material
which may be in the possession of any employee or agent of
Contributor or of the named individuals, but of which the named
individuals are not actually aware. Contributor shall have no
liability for the breach of any representations or warranties
absent a judicial finding that the named individual(s) withheld
material information known to such individual from Acquiror with
respect to the subject matter of the representation or warranty
or falsified information delivered to and relied upon by Acquiror
and that such action amounted to a violation of a representation
or warranty expressly set forth in this Agreement. None of the
named individuals, shall bear personal responsibility for any
breach of such representation or warranty.
(c) Assumed Indebtedness. Contributor represents and
warrants the following:
(i) The Assumed Loan Documents are presently in
full force and effect and Contributor is not in
monetary default under any of the Assumed Loan
Documents and has received no written notice of any
non-monetary default under any of the Assumed Loan
Documents which has not been cured;
(ii) The Assumed Loan Documents identified on
EXHIBIT B are all of the loan documents evidencing,
securing or providing for the Assumed Indebtedness; and
(iii) Upon obtaining the written consent of
the Assumed Indebtedness Lender and compliance with all
requirements imposed by the Assumed Indebtedness Lender
or set forth in the Assumed Loan Documents, Contributor
shall have full power and authority and shall be
permitted to transfer the Property to Acquiror subject
to the Assumed Loan Documents and Acquiror shall be
permitted to assume the Assumed Indebtedness.
Section 5.2 Contributor's Covenants. Contributor
hereby covenants and agrees as follows:
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(a) During the Contract Period, Contributor will
exercise reasonable and good faith efforts to operate and
maintain the Property in the ordinary course of business and
in a manner consistent with current practices and as may be
required by any Lease, Contract or applicable Legal
Requirement and the Assumed Loan Documents.
(b) During the Contract Period, Contributor will not
sell or otherwise dispose of any significant items of the
Personal Property unless replaced with an item of like
value, quality and utility.
(c) During the Contract Period, Contributor shall not
enter into or modify any Contracts relating to the operation
or maintenance of the Property, except for those entered
into in the ordinary course of business and which are
cancelable upon not more than thirty (30) days' prior notice
(with any cancellation fee being paid by Contributor) or
those otherwise approved by Acquiror, which approval shall
not be unreasonably withheld and shall be deemed given if
Acquiror should fail to approve or disapprove proposed
Contract matters in writing within five (5) Business Days
following Acquiror's receipt of Contributor's written
request. At Acquiror's written request, Contributor shall
deliver notice of termination on the Closing Date as to any
and all Contracts that Acquiror desires to terminate,
provided that such termination shall be effective following
any notice or waiting period for such termination described
in the Contract and that Contributor shall not be required
to bear any termination or cancellation fee or charge that
may be assessed under such Contract based upon an early
termination. The existing Management Agreement for the
Property shall be terminated as of the Closing Date and
Contributor shall pay all termination fees, if any, in
connection therewith.
(d) Contributor shall terminate, or cause to be to be
terminated, (such termination to be effective as of the
Closing) all employees of Contributor or the manager of the
Property who are employed in connection with the Property
and shall pay, or cause to be paid, when due all wages and
other sums payable in connection with any such terminations,
including, without limitation, any and all amounts due (i)
for severance pay, (ii) on account of accrued vacation,
(iii) under any applicable union agreement or pension plan
by reason of withdrawal thereunder or otherwise, and (iv)
under the Workers Adjustment and Retraining Notification Act
("WARN Act").
(e) Contributor agrees to defend, indemnify and hold
harmless Acquiror and its agents from and against any and
all losses, claims, obligations, liabilities, and expenses
(including, without limitation attorneys' fees and
disbursements) of every kind and description, contingent or
otherwise, arising out of (i) any claims under the Workers
Adjustment and Retraining Notification Act and/or the
Comprehensive Omnibus Budget Reconciliation Act ("COBRA");
(ii) any claims asserted at any time by any person that was
employed at the Property at any time prior to the Closing to
the extent such claims are based on acts or omissions which
occurred prior to Closing; and/or (iii) Contributor's
failure to comply with its obligations under SECTION 5.2(D)
immediately above.
(f) During the Contract Period, Contributor will not
execute or modify in any fashion any Leases (i) without
promptly notifying Acquiror of the proposed lease or
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modification and providing Acquiror with copies of the
proposed lease or modification documents which shall be
subject to Acquiror's approval, which approval shall not be
unreasonably withheld and which shall be deemed given if
Acquiror should fail to approve or disapprove such proposed
lease or modification in writing within five (5) Business
Days following Acquiror's receipt of Contributor's written
request, (ii) as to any Lease termination, and (iii) as to
any Lease providing for or creating an obligation for
payment of any brokerage commission irrespective of when due
or providing for payment of any tenant improvement allowance
or other concession, or as to any lease (or modification of
a Lease) pertaining to premises in excess of 10,000 rentable
square feet, without Acquiror's prior consent, which consent
shall be deemed given as to the leases set forth in EXHIBITS
F, F-1 AND F-2 hereof (provided that the same are entered
into on substantially the terms set forth on such exhibits
and pursuant to documentation reasonably acceptable to
Acquiror (with the understanding that Acquiror shall grant
its consent to leases of a kind generally used by
Contributor with respect to the type of tenant in question),
and which otherwise shall not be unreasonably withheld and
shall be deemed given if Acquiror should fail to approve or
disapprove proposed lease matters in writing within five (5)
Business Days following Acquiror's receipt of Contributor's
written request.
(g) During the Contract Period, Contributor shall
comply in all material respects with the provisions of all
of the Leases and Contracts that survive the Closing.
(h) During the Contract Period, Contributor shall not
voluntarily create, consent to or acquiesce in the creation
of liens or exceptions to title other than the Permitted
Exceptions without Acquiror's prior written consent,
provided that Acquiror shall not unreasonably withhold or
delay consent to any proposed matters affecting title which
Contributor would execute in the ordinary course of business
and are beneficial to the Property and do not give rise to
any monetary or other material obligation extending beyond
the Closing Date.
(i) During the Contract Period, Contributor shall
maintain policies of property casualty insurance and rental
loss insurance (if any) for the Improvements with coverage,
terms, conditions and deductible amounts substantially
consistent with Contributor's property casualty insurance
policies currently in effect.
(j) Intentionally Deleted.
(k) During the Contract Period, Contributor shall pay
as and when the same become due and payable all payments to
be made by Contributor under the Assumed Loan Documents and
shall comply in all material respects with all other terms
and provisions of the Assumed Loan Documents and shall not
cause or permit a default by Contributor thereunder.
(l) Contributor shall use reasonable good faith
efforts to obtain from the Assumed Indebtedness Lender
consent to the transfer of the Property to Acquiror subject
to the Assumed Loan Documents and to Acquiror's assumption
of the Assumed Indebtedness. Contributor shall pay one-half
(1/2) of the Assumed Indebtedness Lender's
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transfer/assumption fees, and other costs of the Assumed
Indebtedness Lender pertaining thereto, if any.
(m) During the Contract Period, Contributor shall not,
without the prior written consent of Acquiror, in Acquiror's
sole discretion, amend or modify any of the Assumed Loan
Documents or prepay the Assumed Indebtedness in whole or in
part.
(n) During the Contract Period, Contributor shall not
initiate or settle any proceeding with respect to the
reduction of any Taxes.
(o) During the Contract Period, Contributor will
notify Acquiror of any of the following matters: (i)
notices of default given or received by Contributor with
respect to any Lease, Contract surviving Closing, or Assumed
Loan Document, (ii) litigation commenced by Contributor, or
litigation for which Contributor has received written notice
commenced or threatened in writing against Contributor, with
respect to the Property, (iii) notices received by
Contributor of condemnation proceedings commenced or
directed against all or any portion of the Property,
(iv) casualty losses to all or any portion of the Property,
and (v) notice of any Violation received by Contributor.
(p) Except to the extent arising from the acts or
omissions of Acquiror, its agents, employees or contractors,
Contributor agrees to defend, indemnify and hold harmless
Acquiror and its agents from and against any and all losses,
claims, obligations, liabilities and expenses arising out of
any tort claims (other than environmental claims) asserted
against Acquiror or its agents arising out of events or
occurrences prior to the Closing Date; provided that the
foregoing indemnity shall not include attorneys fees
incurred by Acquiror or its agents in connection with
defending Acquiror or its agents with respect to such tort
claims.
(q) Contributor agrees to defend, indemnify and hold
harmless Acquiror and its agents from and against any and
all losses, claims, obligations, liabilities and expenses
arising out of (i) any material breaches of the Assumed Loan
Documents if the Assumed Indebtedness Lender asserts a claim
of default in writing arising prior to the Closing Date
other than a claim relating to the physical condition of the
Property (ii) any breaches prior to the Closing Date of any
of the documents relating to the Wisconsin Power Loan or the
KeyBank Loan or (iii) any breaches, at any time, of any
obligations with respect to the KeyBank Loan other than the
payment of the principal of and accrued interest on the
KeyBank Loan. Acquiror shall notify Contributor of any
alleged material breaches within thirty (30) days after it
has knowledge of such claimed breach.
Section 5.3 Acquiror's Warranties and Representations.
Acquiror represents and warrants to Contributor that the
following are true as of the date of this Agreement:
(a) Acquiror is a duly formed and validly existing
limited partnership under the laws of the State of Delaware
and is in good standing under the laws of said State.
Acquiror has the full right, authority and power to enter
into this Agreement, to consummate the transactions
contemplated herein and to perform Acquiror's obligations
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hereunder and under those documents and instruments to be
executed by Acquiror on the Closing Date, and each of the
individuals executing this Agreement on behalf of Acquiror
is authorized to do so, and this Agreement constitutes a
valid and legally binding obligation of Acquiror enforceable
against Acquiror 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 principles of equity.
(b) Acquiror's execution and delivery of this
Agreement, the consummation of the transactions contemplated
hereby and the performance of Acquiror's obligations under
the instruments required to be delivered by Acquiror on the
Closing Date, do not and will not result in any violation
of, or default under, any term or provision of any
agreement, instrument, mortgage, loan agreement or similar
document to which Acquiror is a party or by which Acquiror
is bound.
(c) There is no litigation, investigation or
proceeding pending or, to the best of Acquiror's knowledge,
contemplated or threatened in writing against Acquiror that
would materially impair or materially adversely affect
Acquiror's ability to perform its obligations under this
Agreement or any other instrument or document related
hereto.
(d) Acquiror and, as applicable, its agents, have
complied fully with all terms and conditions of the
Confidentiality Agreement and have not communicated with any
tenant of the Property or any officers, managers, employees,
lawyers, accountants, consultants or agents of any such
tenant, in each case without prior consent of Contributor,
except to the extent permitted in the Confidentiality
Agreement.
(e) Acquiror's taxpayer identification number is 62-
1542285.
(f) The Acquiror and each of the existing Subsidiary
Partnerships qualifies as a partnership for federal income
tax purposes and is not treated as an association taxable as
a corporation under Section 7701 or Section 7704 of the Code
or any other provision.
(g) Neither the Acquiror nor any of the Subsidiary
Partnerships has any plan or intention to sell or dispose of
the Property or any substituted basis property (within the
meaning of Section 7701(a)(42) of the Code) with respect
thereto for a period of twelve (12) years other than in a
nonrecognition transaction in which no gain or loss is
recognized (as described in Treasury Regulation Section
1.704-3(a)(8)).
(h) Neither the Acquiror nor any of the Subsidiary
Partnerships has a plan or intention to refinance, repay
prior to the term, or otherwise accelerate the payment of
the principal balance of any Assumed Indebtedness.
(i) (i) The execution of this Agreement and
associated documents and the transactions contemplated
herein do not conflict with the REIT's organizational
documents or any shareholder or voting trust agreements
applicable to the REIT; (ii) the execution of this Agreement
and the associated documents and the transactions
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contemplated herein do not conflict with any documents
applicable to Acquiror or any partnership interests in
Acquiror; (iii) Acquiror is duly authorized to issue the OP
Units; (iv) no consents or approvals are necessary to issue
the OP Units or for the REIT to be bound by the Registration
Rights Agreement (except for such consents or approvals as
shall have been obtained); (v) upon issuance of the OP
Units, the OP Units will be validly issued, fully paid and,
except as provided by law, non-assessable and the OP Units
are free of liens (except for liens created by the acts of
Contributor or any OP Unit Recipient); (vi) there are no
preemptive or similar rights, options, warrants or
convertible or exchangeable securities (or instruments
exchangeable or convertible into any of the foregoing) or
puts, calls, commitments or agreements or arrangements or
undertakings of any kind to which the Acquiror or the REIT
is bound; (vii) no bankruptcy or reorganization filings have
been made by or are contemplated by or, to Acquiror's
knowledge, against Acquiror or the REIT; and (viii) the
Informational Materials for the Acquiror and the REIT do not
contain any untrue statement of material fact or omit any
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
in which they were made, not misleading.
(k) The REIT is a real estate investment trust within
the meaning of Section 856(a) of the Code.
(l) The REIT has no plan or intention to assume or
guarantee, or to allow any other partner (other than the
Contributor or the OP Unit Recipients) to assume or
guarantee, any debt to which the Property is subject.
(m) The REIT is a duly formed and validly existing
corporation under the laws of the State of Delaware and is
in good standing under the laws of the State. The REIT has
full right, power, and authority to join in this Agreement
for the purposes set forth herein and each of the
individuals executing this Agreement on behalf of the REIT
is authorized to do so.
(n) Acquiror has validly made an election under
Section 754 of the Code.
As used herein, the terms "Acquiror's knowledge" or
words of similar effect shall mean, and be limited to, the
current actual knowledge of Charles B. Lebovitz, Stephen
Lebovitz, John Foy, Keith Honnold, H. Jay Wiseman, Jr., or Mary
Ann Sinnott as being the persons having knowledge of the subject
matter, provided, however, that said individuals shall not be
deemed to have personally made representations or warranties and
shall not have any personal liability therefor. Each such
individual's knowledge shall not include information or material
which may be in the possession of Acquiror, but of which the
named individuals are not actually aware. Acquiror shall have no
liability for the breach of any representations or warranties
absent any arbitrated or judicial finding that the named
individual(s) failed to disclose material information known to
such individual to Contributor with respect to the subject matter
of the representations or warranty or falsified information
delivered to and relied upon by Contributor and that such action
amounted to a violation of representation or warranty expressly
set forth in this Agreement. None of the individuals identified
above shall bear personal responsibility for any breach of such
representation or warranty.
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Section 5.4 Acquiror's Covenants. Acquiror hereby
covenants and agrees as follows, all of which covenants (except
SECTION 5.4(A)) shall survive the Closing of the transaction
contemplated by this Agreement and the filing of the Deed for
record:
(a) Acquiror hereby covenants and agrees to use
reasonable good faith efforts to cooperate with Contributor
in obtaining the consent of the Assumed Indebtedness Lender
to the transfer of the Property to Acquiror subject to the
Assumed Loan Documents and Acquiror's assumption of the
Assumed Indebtedness. The aforesaid cooperation shall
include, without limitation, Acquiror's prompt delivery of
information, documents, financial statements and the like
reasonably requested by the Assumed Indebtedness Lender and
Acquiror's compliance with any conditions or requirements
reasonably imposed or requested by the Assumed Indebtedness
Lender in connection with such Assumed Indebtedness Lender's
consent. Acquiror shall pay one-half (1/2) of the Assumed
Indebtedness Lender's transfer/assumption fees, and other
costs of the Assumed Indebtedness Lender pertaining thereto,
if any.
(b) As to obligations which arise and accrue from and
after the Closing Date with respect to which Contributor or
any of the general partners of Contributor may be liable,
but for this assumption, Acquiror shall (i) pay as and when
the same become due and payable, all payments to be made
under the Assumed Loan Documents, (ii) comply in all
respects with all terms and provisions of the Assumed Loan
Documents, and (iii) not cause or permit a default under any
of the Assumed Loan Documents. Without limiting the
foregoing, Acquiror shall take no action that could result
in, and shall not fail to take any action that could prevent
or avoid, any liability, damage, loss, cost or expense to
the Contributor or the Contributor Related Parties, or the
assertion of any claims, demands or causes of action against
the Contributor or the Contributor Related Parties, under
the Assumed Loan Documents or with respect to the Assumed
Indebtedness.
(c) Acquiror shall indemnify, protect, defend and hold
the Contributor and the Contributor Related Parties harmless
from and against, any and all claims, demands, losses,
damages, liabilities, causes of action, liens, costs and
expenses (excluding punitive and consequential damages)
including, without limitation, reasonable attorneys' fees
and costs (to the extent permitted by law), directly or
indirectly related to, arising out of or in any manner
connected with (i) the Property and/or the Assumed
Indebtedness to the extent that the same directly or
indirectly relates to, arises out of, or is in any manner
connected with any incidents or occurrences occurring from
and after the Closing Date, and/or (ii) any breaches of
Acquiror's obligations under this Agreement or in any
instrument, document or agreement executed or delivered by
Acquiror in connection with the transaction contemplated by
this Agreement, including, without limitation, Acquiror's
assumption of the Assumed Indebtedness.
(d) For a period of twelve (12) years following the
Closing Date, the Acquiror will at all times qualify, and
cause each Subsidiary Partnership to qualify, as a
partnership
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for federal income tax purposes and not as an
association taxable as a corporation under Section 7701 or
Section 7704 of the Code or any other provision of the Code.
(e) Except to the extent permitted in SECTION 5.4(J),
the Acquiror shall not, and shall not permit the Subsidiary
Partnerships to, sell, transfer or otherwise dispose of the
Property or any substituted basis property (within the
meaning of Section 7701(a)(42) of the Code) with respect
thereto for a period of twelve (12) years following the
Closing Date other than in a nonrecognition transaction in
which no gain or loss is recognized (as described in
Treasury Regulation Section 1.704-3(a)(8)) (a
"Nonrecognition Transaction").
(f) The Acquiror will allocate items of income, gain,
loss and deduction with respect to the Property using the
traditional method described in Treasury Regulation Section
1.704-3(b).
(g) Except to the extent permitted in SECTION 5.4(J),
the Acquiror shall not, and shall not permit the Subsidiary
Partnerships, within the period of twelve (12) years
following the Closing Date, to reduce the aggregate
principal balance (other than through scheduled periodic
amortization of principal or as required by law) of
Acquiror's "nonrecourse liabilities" (as defined in Treasury
Regulation Section 1.752-1(a)(1)or(2)) allocable in the
aggregate to the Contributor and the Contributor Related
Parties pursuant to Treasury Regulation Sections 1.752-
3(a)(1)or(2), as in effect as of the date hereof, below the
amount so allocable immediately following Closing.
(h) Acquiror shall notify the Contributor and each
Contributor Related Party not less than sixty (60) days (or,
if Acquiror itself has less than sixty (60) days prior
notice, as promptly as practicable) prior to any event that
would result in a taxable distribution (or deemed
distribution) of cash in excess of the tax basis in the OP
Units held by the Contributor or any Contributor Related
Party. To the extent that it is affected by an event
described in the preceding sentence, the Contributor or any
Contributor Related Party (an "Affected Party") may inform
the Acquiror of any action it desires to take in order to
increase its "economic risk of loss" within the meaning of
Treasury Regulation Section 1.752-2 (each such action, an
"Incurrence") with respect to the liabilities of Acquiror or
any Subsidiary Partnership. Unless advised by counsel that
no reasonable basis exists for treating the proposed
Incurrences in the manner intended by the Affected Parties
(in which event, Acquiror shall promptly so inform the
Affected Parties), Acquiror shall cooperate in a
commercially reasonable manner with the Affected Parties in
structuring the liabilities of Acquiror and the Subsidiary
Partnerships, and the guarantees thereof, to facilitate the
Incurrences in a manner that results in the least amount of
real economic risk being borne by each Affected Party,
provided, however, that Acquiror shall not be required to
incur any material expense or liability (other than an
expense or liability as to which the Affected Parties agree
to reimburse and indemnify Acquiror); and provided further
that in structuring any such arrangements, Acquiror shall
not be required to take or permit any action that would
materially adversely affect other holders of Common Units.
Acquiror shall be permitted to offer its other partners the
opportunity to enter into arrangements substantially
equivalent to the Incurrences at the time the
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Incurrences are structured. Acquiror shall allocate to each
Affected Party for federal and state income tax purposes an
additional amount of its liabilities equal to the amount of
any Incurrence and shall take no position inconsistent
therewith, unless advised by counsel that as a result of a
material change in circumstances (beyond the control of
Acquiror) or law occurring after implementation of the
Incurrence, no reasonable basis exists for such an
allocation. Notwithstanding the other provisions of this
subsection 5.5(h), if, in connection with notices given to
the Affected Parties under this subsection 5.5(h), the
aggregate of the additional liabilities to be allocated to
the Affected Parties as a result of the Incurrences (as
determined immediately after such Incurrences) does not
exceed the amount of the taxable distributions described in
such notices by at least the Materiality Threshold Amount,
Acquiror shall not be required to give subsequent notices
under this subsection 5.5(h) unless the aggregate taxable
distributions that would be described in such subsequent
notices would equal or exceed the Materiality Threshold
Amount.
(i) Acquiror shall treat the transfer of the Property
pursuant to this Agreement for purposes of all federal
income tax returns, reports and other filings, as a tax-free
contribution of property to the Acquiror by the Contributor
that is governed by the provisions of Section 721 of the
Code (except to the extent resulting from the application of
Section 7.4(b) hereof), and shall take no position
inconsistent therewith. Acquiror shall similarly treat the
transfer of the Property pursuant to this Agreement for all
state and local tax purposes.
(j) Notwithstanding SECTIONS 5.4(E) and 5.4(G), the
Acquiror may, and may permit the Subsidiary Partnerships,
within the period of (12) twelve years following the Closing
Date, to (i) sell, transfer or otherwise dispose of the
Property or any substituted basis property in a transaction
that is not a Nonrecognition Transaction (a "Taxable
Transaction") or (ii) reduce the aggregate principal balance
of Acquiror's "nonrecourse liabilities" (as defined in
Treasury Regulation Section 1.752-1(a)(2)) allocable, in the
aggregate, to the Contributor and the Contributor Related
Parties pursuant to Treasury Regulation Sections 1.752-
3(a)(1) and (2), as in effect as of the date hereof, below
the amount allocable immediately following Closing,
provided, however, that in any case described in (i) or (ii)
above, Acquiror shall pay, indemnify and hold harmless each
of the Contributor and the Contributor Related Parties
against their respective Tax Costs, within the meaning of
SECTION 5.4(K), and provided, further, that prior to the
occurrence of any event described in clauses (i) or (ii) of
this SECTION 5.4(J), the Acquiror shall first establish a
security arrangement to the reasonable satisfaction of
eighty percent (80%) of the OP Unit Recipients as measured
on the basis of their respective percentage interests in the
Acquiror at such time. Provided that Acquiror satisfies all
of its obligations in this Section 5.4(j), then
notwithstanding anything to the contrary in this Agreement
(including, without limitation, under Section 5.5(e)), the
Contributor's and the Contributor Related Parties' sole and
exclusive remedy with respect to Acquiror's obligations
under SECTIONS 5.4(E) AND (G) shall be as provided in the
preceding sentence.
(k) For purposes of SECTION 5.4(J), the Tax Cost of
the Contributor and each Contributor Related Party shall
mean the sum of, (i) in the case of (A) a Taxable
Transaction described in SECTION 5.4(J)(I), any liability
for taxes arising in connection with
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such Taxable Transaction and as a direct or indirect result of
the operation of Section 704(c) of the Code and the Treasury
Regulations promulgated thereunder (or any comparable state
or local provisions), or (B) an event described in SECTION
5.4(G), any liability for federal, state or local taxes
arising as a direct or indirect result of such event,
(ii) any costs and expenses including, without limitation,
interest, penalties, reasonable attorneys' and accountants
fees, and any other costs directly or indirectly related to,
arising out of or in any manner connected with the payments
described in this sentence, and (iii) any additional
liability for taxes associated with the receipt of any
payments of amounts described in clauses (i), (ii) and (iii)
of this SECTION 5.4(K). In determining such Tax Cost in the
case of any Contributor Related Party that holds its
interest in Acquiror through one or more related entities
treated as partnerships for federal income tax purposes and
in making the determination set forth in the last proviso of
Section 5.4(l) hereof, it shall be assumed that all such
entities had in effect a valid election under Section 754 of
the Code for all periods during which such Contributor
Related Party held its interest in Acquiror. Prior to
engaging in a transaction described in Section 5.4(j),
Acquiror may require any or all of the Contributor Related
Parties to reasonably cooperate with it in estimating the
Tax Cost of such transaction within 60 days of such request,
provided, however, that Acquiror shall reimburse and
indemnify such Contributor Related Parties for any costs
incurred in connection with such request.
(l) Notwithstanding any other provision of this
Agreement to the contrary, the Acquiror's covenants and
obligations contained in SECTIONS 5.4(F), (H), (I), (J) AND
(K) and SECTION 8.3 shall not terminate prior to the
expiration of the applicable statute of limitations for the
assessment or imposition of any tax upon the Contributor or
a Contributor Related Party, as the case may be, for any tax
liability directly or indirectly related to, arising out of
or in any manner connected with a breach of any such
covenant or obligation; provided, further, however, that the
twelve (12) year period set forth in SECTION 5.4(E) AND (G)
hereof shall terminate with respect to the Contributor or a
Contributor Related Party if there has been a Basis Step-Up
Transaction with respect to all of such party's OP Units.
For this purpose, a Basis Step-Up Transaction with respect
to an OP Unit shall mean a taxable sale or other taxable
disposition of an OP Unit, the death of an individual
Contributor Related Party or, in the case in which a
Contributor Related Party holds its interest in the OP Unit
through one or more entities treated as partnerships for
federal income tax purposes, a taxable sale or other
disposition of such Contributor Related Party's interest in
the entity; provided, however, in each case, that such
Basis Step-Up Transaction results in a full step-up of the
basis of such OP Unit for federal income tax purposes to its
then fair market value, and provided further that a
termination of the twelve year period as described in this
Section 5.4(l) shall be without prejudice to any rights of
Contributor or a Contributor Related Party in respect of any
breach, occurring prior to the time of such termination, by
Acquiror or a Subsidiary Partnership, of any obligation
hereunder.
(m) Acquiror consents in advance to the admittance of
the OP Unit Recipients as limited partners of Acquiror.
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(n) All OP Units shall be transferable in accordance
with the terms of the Partnership Agreement and this
Agreement.
(o) Acquiror agrees that it shall cause the REIT to
reserve a sufficient quantity of authorized Stock at all
times to accommodate the immediate exchange of OP Units for
Stock or Acquiror shall pay in cash the market value of the
Stock for which the OP Units would have been exchanged.
(p) Acquiror shall not exercise any rights of an
attorney-in-fact (if any) granted under the Partnership
Agreement with respect to OP Units held by Realty or its
affiliates; provided, however, that Realty agrees not to
unreasonably withhold or delay its consent to such action by
the Acquiror, and provided further that the foregoing shall
not be deemed to grant any right of consent or approval to
Realty other than such rights which are granted to all
limited partners under the Partnership Agreement.
(q) Acquiror shall cause the amounts of its excess
nonrecourse liabilities (as defined in Treasury Regulations
Section 1.752-3(a)(3)) properly allocable to the Contributor
and the Contributor Related Parties as of the Closing Date
to be not less than the amounts set forth on Exhibit BB.
(r) Acquiror shall indemnify, defend and hold harmless
the Contributor and the Contributor Related Parties from and
against any and all claims, demands, losses, damages,
liabilities, obligations, causes of action, liens,
judgments, assessments, costs and expenses, including,
without limitation, reasonable attorneys' fees and costs (to
the extent permitted by law) directly or indirectly related
to, arising out of or in any manner connected with (i) the
Wisconsin Power Loan or (ii) the repayment of the principal
and accrued interest under the KeyBank Loan, in either case,
from and after the Closing Date.
Section 5.5 Survival/Limitations/Joinder.
(a) Subject to subsection (b) below, the parties agree
that except for the Surviving Covenants, Contributor's
representations, warranties and covenants contained in this
Agreement and in any document executed by Contributor
pursuant to this Agreement shall terminate on the Closing
Date, except that (i) those representations and warranties
contained in SECTIONS 5.1(A)(I), (II) AND (III), 5.2(P)
5.1(B) (III), (VIII), (XI), (XII), (XIII), (XIV), (XV),
(XVII), (XVIII), (XIX), (XX), (XXII), (XXIII), CLAUSE (A) OF
(XXV), (XXVI), (XXVII), (XXIX), (XXX), (XXXI), CLAUSE (A)
OF (XXXII), (XXXIV), (XXXV) AND (XXXVII), 5.1(C), 6.2, 7.3
AND 7.4 shall terminate on the first anniversary of the
Closing Date, (ii) those representations, warranties and
covenants contained in Sections 5.2(d) and 5.2 (e) shall
terminate eighteen (18) months after the Closing Date, (iii)
those representations, warranties and covenants contained in
SECTIONS 5.1(A) (EXCEPT AS SET FORTH ABOVE), 5.2(Q), 7.5 AND
8.2 shall terminate on the sixth anniversary of the Closing
Date. Any such termination shall apply to known as well as
unknown breaches of such representations, warranties or
covenants. Subject to subsection (b) below, Acquiror's
waiver and release set forth in SECTION 3.1 shall apply
fully to liabilities under such representations, warranties
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and covenants. Acquiror specifically acknowledges and
agrees that such termination of liability represents a
material element of the consideration to Contributor.
(b) Any claim of Acquiror based upon a breach of any
representation or warranty of Contributor or upon a breach
of any of the covenants of Contributor shall be expressed,
if at all, in writing delivered to Contributor promptly
following Acquiror's discovery of such breach, which writing
shall set forth in reasonable detail the basis and character
of the claim ("Claim Notice"). Notwithstanding the
foregoing, subject to SECTION 6.2, (i) Acquiror shall not
make any claim on account of a breach of representations,
warranties or covenants discovered after the Closing Date
unless and until (A) the aggregate measure of such claims
exceeds One Hundred Eighteen Thousand Five Hundred Fifty
Dollars ($118,550.00), and (B) the aggregate measure of such
Claims with respect to the Meridian Transaction and this
transaction exceeds Five Hundred Thousand Dollars
($500,000.00), (ii) Contributor's aggregate liability for
all claims arising out of such representations, warranties
or covenants discovered after the Closing Date shall not
exceed Seven Hundred Eleven Thousand Three Hundred Dollars
($711,300), (iii) all claims for breach of representations,
warranties or covenants discovered prior to the Closing Date
shall be governed by the procedures set forth in Section 3.2
rather than this Section 5.5, and (iv) Acquiror shall not
have the right to deliver to Contributor Claim Notices with
respect to any breach of representation, warranty or
covenants after the expiration of any survival of the
representation, warranty or covenant in question.
(c) Contributor shall have a period of thirty (30)
days within which to cure any breach identified in a Claim
Notice, or, if such breach cannot reasonably be cured within
such thirty (30) days, an additional reasonable time period,
so long as such cure has been commenced within such thirty
(30) days and is at all times diligently pursued; provided,
however, that such additional reasonable period shall not
extend beyond sixty (60) days if Acquiror is incurring
damages as a result of Contributor's failure to cure such
breach. If the breach is not cured after actual written
notice and within such cure period, Acquiror's sole remedy
shall be an action at law for damages against the
Contributor, which must be commenced, if at all, within a
period of forty-five (45) days following the date of
delivery of the Claim Notice; provided, however, that if
Contributor commences to cure and thereafter terminates such
cure effort without completing such cure, then Acquiror
shall have an additional thirty (30) days from the date of
written notice from Contributor of such termination within
which to commence an action at law for damages as a
consequence of the failure to cure.
(d) The parties agree that Acquiror's representations
and warranties contained in SECTION 5.3 and any
representation made in accordance with SECTION 8.3 of this
Agreement and the covenants set forth in SECTION 5.4 of this
Agreement and in any document executed by Acquiror pursuant
to this Agreement shall survive the Closing of this
transaction and the recording of the Deed.
(e) Acquiror and the REIT agree that, except as
otherwise provided in this Agreement, in the event of the
breach of any representation or warranty contained in
SECTION 5.3 and any representation made in accordance with
SECTION 8.3 of this
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Agreement and in any document executed by Acquiror
pursuant to this Agreement and any covenant set forth
in SECTION 5.4 which survives the Closing, Contributor
and/or any of the OP Unit Recipients shall have all remedies
available at law or in equity with respect to such breach,
including, without limitation, the right to injunctive
relief to prevent any such breach. Any provision of this
Agreement to the contrary notwithstanding, in no event or
circumstance whatsoever shall liability by asserted or
recourse be had against any partner of Acquiror, the REIT,
or its officers, directors, shareholders, employees or
agents, as to any claim arising directly or indirectly, in
full or in part, pursuant to this Agreement; provided,
however, that the foregoing shall not preclude any claim
against the Acquiror, even if such claim is based upon the
covenants, warranties or representations of or with respect
to the REIT or the satisfaction of any judgment against the
REIT, as general partner of Acquiror.
(f) Contributor shall deposit with the Title Company
immediately after Closing cash or OP Units equal to Seven
Hundred Eleven Thousand Three Hundred Dollars ($711,300)
(the "Claim Deposit") to secure any claims owed by
Contributor pursuant to this Agreement for breach by
Contributor of representations, warranties or covenants and
not waived pursuant to the provisions of this Agreement as
of Closing. If Claim Notices aggregating claims less than
Seven Hundred Eleven Thousand Three Hundred Dollars
($711,300) shall have been delivered after Closing and prior
to the first anniversary of the Closing Date, subject to
Contributor's right to contest, the Title Company shall
deliver to Contributor cash or OP Units equal in amount to
the difference between the amount of claims specified in the
Claim Notices and the amount of such Claim Deposit. To the
extent Claim Notices have been delivered to Contributor, the
Claim Deposit shall remain with the Title Company until such
claims shall have been resolved; provided, however, that as
claims become resolved, the Title Company shall deliver to
the Contributor or Acquiror, as the case may be, the amount
held for such claim upon written notice from Contributor and
Acquiror (acting reasonably) directing the Title Company to
release such amount to Contributor or Acquiror. The Title
Company shall invest the cash portion of the Claim Deposit
in United States Treasury bills or notes with a ninety day
maturity. Any dividends payable with respect to OP Units
held in the Claim Deposit shall belong to the OP Unit
Recipients.
ARTICLE VI
DEFAULT
Section 6.1 Acquiror's Deposit and Default.
Contemporaneously with (i.e., within forty-eight (48) hours of)
the execution of this Agreement, Acquiror shall deliver to the
Title Company, as escrow agent, for deposit, an amount equal to
One Million Five Hundred Thousand Dollars ($1,500,000) (the
"Deposit"), which Deposit may, at Acquiror's sole election, be in
the form of a Letter of Credit. The Title Company shall invest
any cash Deposit in United States Treasury bills or notes with a
ninety (90) day maturity. In the event that this transaction is
consummated as contemplated by this Agreement, then the entire
amount of the Deposit, together with any interest accrued
thereon, shall be returned to Acquiror at Closing. The entire
amount of the Deposit, together with any interest accrued
thereon, shall be returned immediately to Acquiror
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and neither party shall have any further rights or obligations
hereunder except with respect to the Surviving Covenants (a) in the
event of a termination of this Agreement pursuant to SECTION 3.2 or
as the result of the failure of any of the conditions precedent set
forth in SECTION 4.1(A) OR (C) above, (b) in the event that (i)
the conditions precedent set forth in SECTION 4.1(B) shall have
been satisfied or waived, (ii) Acquiror shall have performed
fully or tendered full performance of Acquiror's material Closing
obligations hereunder and (iii) Contributor shall fail to perform
Contributor's material Closing obligations under this Agreement,
or (c) in the event that this Agreement shall be terminated
pursuant to the provisions of SECTION 8.1 hereof. IN THE EVENT
OF BREACH OF THIS AGREEMENT BY ACQUIROR, THE ENTIRE AMOUNT OF THE
DEPOSIT, PLUS ACCRUED INTEREST, SHALL BE DELIVERED TO AND
RETAINED BY CONTRIBUTOR AS LIQUIDATED DAMAGES. ACQUIROR AND
CONTRIBUTOR HEREBY ACKNOWLEDGE AND AGREE THAT CONTRIBUTOR'S
DAMAGES IN THE EVENT OF SUCH A BREACH OF THIS AGREEMENT BY
ACQUIROR WOULD BE DIFFICULT OR IMPOSSIBLE TO DETERMINE, THAT THE
AMOUNT OF THE DEPOSIT PLUS ACCRUED INTEREST IS THE PARTIES' BEST
AND MOST ACCURATE ESTIMATE OF THE DAMAGES CONTRIBUTOR WOULD
SUFFER IN THE EVENT THE TRANSACTION PROVIDED FOR IN THIS
AGREEMENT FAILS TO CLOSE AND THAT SUCH ESTIMATE IS REASONABLE
UNDER THE CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT.
ACQUIROR AND CONTRIBUTOR AGREE THAT CONTRIBUTOR'S RIGHT TO RETAIN
THE DEPOSIT PLUS ACCRUED INTEREST SHALL BE THE SOLE REMEDY OF
CONTRIBUTOR IN THE EVENT OF A BREACH OF THIS AGREEMENT BY
ACQUIROR PRIOR TO CLOSING.
This SECTION 6.1 is intended only to liquidate and
limit Contributor's rights to damages arising due to Acquiror's
failure to purchase the Property and shall not limit the
indemnification obligations of Acquiror pursuant to (i) the
Confidentiality Agreement, (ii) any other documents delivered
pursuant to this Agreement or (iii) SECTIONS 3.1(B), 3.1(C),
3.1(D), 5.4(C)-(R), 5.5(E), 8.2, 8.9 AND 8.13 of this Agreement.
In no event shall Acquiror or any Acquiror Related Parties be
liable to Contributor for any consequential or punitive damages
based upon a breach of this Agreement, including, without
limitation, breaches of representation, warranty or covenant.
Section 6.2 Contributor's Default. (a) If (i) the
conditions precedent set forth in SECTION 4.1(B) shall have
been satisfied or waived, and (ii) Contributor shall fail to
perform its material Closing obligations under this
Agreement and Acquiror shall not have terminated this
Agreement as permitted hereunder, then, in addition to the
return of the Deposit set forth in SECTION 6.1, Acquiror
shall have the right to recover its actual monetary damages
from Contributor up to an aggregate maximum amount equal to
Seven Hundred Eleven Thousand Three Hundred Dollars
($711,300) or, in the alternative, to pursue an action for
specific performance as its sole remedy; provided, however,
that upon the occurrence of an Intentional Material Default
(as hereinafter defined), Acquiror may seek damages (not
subject to any floor or cap) from Contributor provided that,
solely in the event of an Intentional Material Default
described in Clauses (i) and (ii) below, Acquiror has
diligently in good faith sought and been unable to obtain
specific performance within six (6) months after the
occurrence of such Intentional Material
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Default. "Intentional Material Default" means any of the
following: (i) sale directly or indirectly of all or any portion
of the Property to a person other than Acquiror or the execution
of an agreement for the same; (ii) effecting a financing
encumbering all or any portion of the Property or the
execution of an agreement for the same; (iii) modification
of the Assumed Loan Documents except in accordance with this
Agreement; (iv) material modification or termination after
July 16, 1998, of Leases aggregating in excess of 20,000
square feet, except in accordance with this Agreement; or
(v) entering into any Contracts after July 16, 1998, which
are not cancelable at Closing and which result in a material
adverse economic impact on Acquiror or the Property, except
in accordance with this Agreement. Except as expressly
provided in this Section 6.2(a), Contributor's liabilities
relating to a breach of representation, warranty or covenant
shall be subject to the provisions of SECTION 5.5 and any
additional limitations set forth in this Agreement.
(b) Subject to the provisions of this Section 6.2, in
no event shall Contributor or any Contributor Related
Parties be liable to Acquiror for any consequential or
punitive damages based upon any breach of this Agreement,
including, without limitation, breaches of representation,
warranty or covenant. Subject to the provisions of this
Section 6.2, Acquiror further agrees that recourse for any
liability of Contributor under this Agreement or any
document or instrument delivered simultaneously or in
connection with or pursuant to this Agreement shall be
limited to Seven Hundred Eleven Thousand Three Hundred
Dollars ($711,300). Subject to applicable principles of
fraudulent conveyance, in no event shall Acquiror seek
satisfaction for any obligation from any partners, members,
managers, shareholders, officers, directors, employees,
agents, legal representatives, successors or assigns of
Contributor, nor shall any of the foregoing have any
personal liability for any such obligations of Contributor.
ARTICLE VII
CLOSING
Section 7.1 Escrow Arrangements. An escrow for the
purchase and sale contemplated by this Agreement has been opened
by Acquiror and Contributor with the Title Company as escrow
agent. On the Closing Date, Contributor and Acquiror shall each
deliver escrow instructions to Title Company consistent with this
ARTICLE VII, and designating the Title Company as the "Reporting
Person" for the transaction pursuant to Section 6045(e) of the
Code. In addition, the parties shall deposit in escrow with the
Title Company as escrow agent, on the Closing Date (unless
otherwise provided in this SECTION 7.1), the documents described
below and shall deposit on the Closing Date the funds described
below:
(a) Contributor shall deposit (or cause to be
deposited), with respect to itself or the Property, the
following:
(i) a duly executed and acknowledged Deed for
the Property;
(ii) a duly executed bill of sale pertaining to
the Personal Property in the form attached to this
Agreement as EXHIBIT CC (the "Bill of Sale");
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(iii) four (4) duly executed counterparts of an
assignment pertaining to the Intangible Property in the
form attached to this Agreement as EXHIBIT DD (the
"Assignment of Intangibles");
(iv) four (4) duly executed counterparts of an
assignment and assumption pertaining to the Leases in
the form attached to this Agreement as EXHIBIT EE (the
"Assignment of Leases");
(v) four (4) duly executed counterparts of an
assignment and assumption pertaining to any Contracts
being assumed by Acquiror, in the form attached to this
Agreement as EXHIBIT FF (the "Assignment of
Contracts");
(vi) four (4) duly executed and acknowledged
counterparts of an Assumption of Loan Documents for the
Assumed Indebtedness, in such form as may be reasonably
acceptable to Aquiror and the Assumed Indebtedness
Lender (the "Assumption of Loan Documents");
(vii) a certificate from Contributor certifying
that Contributor is not a "foreign person" as defined
in Section 1445(f)(3) of the Code ("FIRPTA
Certificate");
(viii) a certificate from Contributor
reaffirming, as of the Closing Date, the
representations and warranties made in SECTION 5.1(A)
in form as set forth on EXHIBIT HH;
(ix) evidence reasonably required by Acquiror
demonstrating that (i) Contributor is an entity validly
existing and (if applicable) in good standing under the
laws of the jurisdiction in which it was formed, and
(ii) Contributor's execution and delivery of this
Agreement and the other documents delivered pursuant
hereto and the consummation of the transactions
contemplated hereby have been fully authorized, which
evidence, if Contributor is a corporation, or a
partnership or limited liability company in which any
of the general partners or managers, as the case may
be, is a corporation, shall mean (x) certified copies
of corporate resolutions duly adopted by the board of
directors of Contributor (or its corporate general
partner or manager) approving Contributor's execution
and delivery of this Agreement and the other documents
delivered pursuant hereto and the consummation of the
transactions contemplated hereby, (y) certificates of
incumbency and (z) certificates of good standing;
(x) the estoppel letters or certificates from
the Assumed Indebtedness Lender, the Majors, the other
tenants and the Master Estoppel of Contributor pursuant
to Section 4.1(a)(iv) hereof;
(xi) any instruments, certificates or documents
required by the Assumed Indebtedness Lender in
connection with the transfer of the Property to
Acquiror and the assumption by Acquiror of the Assumed
Indebtedness.
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(xii) the Registration Rights Agreement, dated as
of the Closing Date and duly executed by Contributor
and any of the partners of Contributor acquiring OP
Units hereunder; in form as set forth on EXHIBIT N
hereof;
(xiii) the Acknowledgment, duly executed by
each OP Unit Recipient;
(xiv) any transfer tax forms, if applicable, and
other forms and documents reasonably required by the
Title Company; and
(xv) notices directing Tenants, among other
things, to make future payments to Acquiror, including
copies of EXHIBIT II; and
(xvi) reasonable evidence in customary form and
substance, of the outstanding principal balance and all
accrued interest and any prepayment penalties or
premiums on the KeyBank Loan and the Wisconsin Power
Loan as of the Closing Date and
(xvi) any and all other documents reasonably
requested or required in order to consummate the
transactions contemplated herein.
In addition, Contributor shall deliver to Acquiror on the Closing
Date, outside of escrow, the originals of all Leases, Contracts
(if not terminated at or before Closing) or copies thereof if
originals are not available, tenant files, plans of the Property,
leasing brochures for the Property, and all keys to the Property
and all other property relating to the Property in the possession
or control of Contribute, other than files and information
relating solely to Contributor as an entity and not to the
Property.
(b) Acquiror shall deposit:
(i) Acquiror's share of all escrow costs and
Closing expenses;
(ii) four (4) duly executed counterparts for
each of the Assignment of Intangibles, Assignment of
Leases, Assignment of Contracts, and Assumption of Loan
Documents;
(iii) a certificate duly executed by Acquiror in
favor of Contributor confirming the waivers and
acknowledgments set forth in SECTIONS 3.1 AND 5.5
above;
(iv) any instruments, certificates or documents
reasonably required by the Assumed Indebtedness Lender
in connection with the transfer of the Property to
Acquiror and the assumption by Acquiror of the Assumed
Indebtedness;
(v) any and all other documents reasonably
requested or required in order to consummate the
transactions contemplated herein;
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(vi) evidence reasonably required by
Contributor demonstrating that (A) Acquiror is an
entity in good standing under the laws of the
jurisdiction in which was formed, and (B) Acquiror's
execution and delivery of this Agreement and the other
documents delivered pursuant hereto and the
consummation of the transaction contemplated hereby
have been fully authorized, which evidence shall mean
(1) certified copies of corporate resolutions duly
adopted by the board of directors of the REIT, as
Acquiror's general partner, approving Acquiror's
execution and delivery of this Agreement and the other
documents delivered pursuant hereto and the
consummation of the transactions contemplated hereby,
(2) certificates of incumbency and (3) certificates of
good standing;
(vii) a certificate of Acquiror reaffirming as of
the Closing Date the representations and warranties
made by Acquiror in ARTICLE V.
(viii) the Acknowledgment, duly executed by the
general partner of Acquiror;
(ix) the Registration Rights Agreement dated as
of the Closing Date and duly executed by the general
partner(s) of Acquiror;
(x) Intentionally Deleted;
(xi) a copy of the Partnership Agreement and all
organization documents of the REIT, duly certified by
the REIT as true, complete and correct, and a certified
copy of the Certificate of Limited Partnership of
Acquiror from the Secretary of State of the state of
its formation, dated not more than twenty (20) days
before the Closing Date;
(xii) a copy, certified by the Secretary of State
of the REIT's state of incorporation, of the Articles
of Incorporation of the REIT and a good standing
certificate of the REIT;
(xiii) an opinion by counsel for the REIT
addressed to Contributor and each OP Unit Recipient
stating that the Acquiror and any existing Subsidiary
Partnership each qualifies as a partnership for federal
income tax purposes and is not treated as an
association taxable as a corporation under Section 7704
of the Code or any other provision, which opinion shall
be subject to such counsel's usual assumptions and
qualifications and reliance upon officer's certificates
in similar types of opinions previously given by such
counsel;
(xiv) an opinion by counsel for the REIT
addressed to Contributor and each OP Unit Recipient
stating that the REIT is qualified to operate, is
currently operating as and its proposed methods of
operations will enable it to continue to operate as a
real estate investment trust within the meaning of
Section 856(a) of the Code, which opinion shall be
subject to such counsel's
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usual assumptions and qualifications and reliance upon
officer's certificates in similar types of opinions
previously given by such counsel
(xv) an opinion by counsel for the REIT
addressed to Contributor and each OP Unit Recipient
stating that the Acquiror and REIT, respectively, have
been duly organized and are in good standing, that the
OP Units have been issued in accordance with all
applicable Legal Requirements and the Partnership
Agreement, that the OP Unit Recipients are limited
partners of Acquiror as of the Closing, and that this
transaction is exempt from pre-closing approval
requirements under the Hart-Scott-Rodino Act. which
opinion shall be subject to such counsel's usual
assumptions and qualifications and reliance upon
officer's certificates in similar types of opinions
previously given by such counsel; and
(xvi) any other forms or documents reasonably
requested by the Title Company.
Section 7.2 Closing. The Title Company shall Close the
transaction contemplated by this Agreement ("Closing") on the
Closing Date (as may be extended pursuant to the terms hereof)
by:
(a) recording the Deed;
(b) issuing the Title Policy to Acquiror;
(c) delivering to Acquiror the Bill of Sale, the
FIRPTA Certificate, and two (2) originals (fully-executed in
counterpart) of the Assignment of Intangibles, Assignment of
Leases, Assignment of Contracts, and Assumption of Loan
Documents;
(d) delivering to Contributor (i) two (2) originals
(fully-executed in counterpart) of the Assignment of
Intangibles, Assignment of Leases, Assignment of Contracts,
Assumption of Loan Documents and the Acknowledgment with
respect to each OP Unit Recipient, (ii) the certificate
described in SECTION 7.1(B)(III) above, (iii) the opinions
of counsel to the REIT described in SECTIONS 7.1(B)(XIII),
7.1(B)(XIV) AND 7.1(B)(XV), and the required OP Units;
(e) returning the Deposit to Acquiror; and
(f) delivering to the parties designated therein any
other instruments delivered into escrow by Contributor
pursuant to SECTION 7.1(A) or Acquiror pursuant to
SECTION 7.1(B).
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Section 7.3 Prorations.
(a) Taxes. (i) Real estate taxes and any
general or special assessments with respect to the
Property for 1998 which are not billed directly by the
taxing authority to tenants (collectively, "Taxes and
Assessments") shall be prorated as of the Closing Date,
with Contributor being responsible for all such Taxes
and Assessments that are allocable to any period on or
prior to the Closing Date and Acquiror being
responsible for all Taxes and Assessments that are
allocable to any period after the Closing Date. If the
actual amount of Taxes and Assessments to be prorated
for the year in which the Closing occurs is not known
as of the Closing Date, the proration shall be based on
the Taxes and Assessments for the tax year 1997. When
the Taxes and Assessments for the year of the Closing
shall have been determined, Contributor shall be
responsible for the excess, if any, of the actual Taxes
and Assessments allocable to the period of the
proration over the amount of the proration minus the
amounts which shall be received by Acquiror from
tenants for such excess; and Acquiror shall pay to
Contributor the difference allocable to the period of
the proration between the amount of the proration and
the actual Taxes and Assessments, if the actual Taxes
and Assessments shall have decreased.
(ii) Personal Property taxes shall be prorated
as of the Closing Date.
(b) Prepaid Expenses. Acquiror shall be charged for
those prepaid expenses allocable to any period after the
Closing Date, including, without limitation, prepaid rents
under any personal property or ground leases, annual permit
and confirmation fees, fees for licenses and all security or
other deposits paid by Contributor to third parties.
(c) Interest on Assumed Indebtedness. Accrued
interest on the Assumed Indebtedness shall be prorated as of
the Closing Date, with the Contributor being responsible for
all accrued interest allocable to any period on or prior to
the Closing Date and Acquiror being responsible for all
accrued interest allocable to any period after the Closing
Date.
(d) Funds Held by or on Behalf of Assumed Indebtedness
Lender. Acquiror shall be charged with the amount of all
funds of Contributor held in escrow by Lender, Huntington
National Bank, or otherwise, including, without limitation,
any reserves and any funds held for the payment of Taxes and
Assessments and insurance premiums or for any maintenance,
repair or tenant improvements to be made or performed at the
Property. As of June 30, 1998, Huntington National Bank
held Two Hundred Fifty-Five Thousand Four Hundred Sixty-
Seven and 16/100 Dollars ($255,467.16) in such escrow.
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(e) Property Income and Expense. The following
prorations and adjustments shall occur as of the Closing
Date. Contributor shall receive and retain all income
arising from the Property to the Closing Date and shall bear
all expenses of the operation of the Property to the Closing
Date. Prior to the Closing Date, Contributor shall provide
all information to Acquiror and the Title Company reasonably
required to calculate such prorations and adjustments and
representatives of Acquiror and Contributor shall together
make such calculations (and shall deliver such calculations
to the Title Company at least one (l) Business Day prior to
Closing):
(i) General. (A) Subject to the specific
provisions of clause (ii) below, income and expense
shall be prorated on the basis of a thirty (30)-day
month and on a cash basis (except for items of income
and expense that are payable less frequently than
monthly, which shall be prorated on an accrual basis).
All such items attributable to the period on or prior
to the Closing Date shall be credited to Contributor;
all such items attributable to the period following the
Closing Date shall be credited to Acquiror. Acquiror
shall be credited at Closing with (1) any portion of
security deposits made pursuant to the Leases that are
refundable to existing tenants and have not been
applied to outstanding tenant obligations in accordance
with the terms of the applicable Lease and (2) rent
from tenants prepaid beyond the Closing Date. Acquiror
shall not be entitled to any interest on Lease deposits
or prepaid rent accrued on or before the Closing Date,
except to the extent any such amount of interest is
required to be accrued and refunded or paid to any
tenant under a Lease. Contributor shall be credited
with any refundable deposits or bonds held by any
utility, governmental agency or service contractor, to
the extent such deposits or bonds are assigned to
Acquiror on the Closing Date.
(B) Acquiror shall be credited at
Closing with any tenant allowances or other tenant
inducements to be paid in cash or cash equivalents
(excluding rental abatement) by Acquiror after the
Closing Date with respect to the current term of any
Lease executed, or any extension or expansion of
premises option exercised, in each case, prior to the
date of this Agreement, and with respect to the In-
Negotiation Leases executed prior to the Closing Date
(but not for the Prospective Leases listed on EXHIBIT
F-1 and the Lease Extension Modifications listed on
EXHIBIT F-2). Contributor shall be responsible for the
payment of any leasing commissions with respect to the
current term of any lease executed, or any option to
extend or expand the leased premises which has been
exercised, in each case, prior to the date of this
Agreement and with respect to the In-Negotiation Leases
executed within six (6) months after the Closing (but
not for the Prospective Leases listed on EXHIBIT F-1
and the Lease Extension Modifications listed on EXHIBIT
F-2). With respect to In-Negotiation Leases not
executed on the Closing Date, but which are executed
within six (6) months after the Closing Date,
Contributor shall
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be responsible for the payment of any leasing commissions
and shall reimburse Acquiror for any tenant allowances to
be paid in cash pursuant to the In-Negotiation Leases,
within thirty (30) days following receipt of an invoice
which may be rendered when the In-Negotiation Leases shall
have been executed by both parties and construction has been
completed. In the alternative, Acquiror shall have the right
to deduct the amount of the tenant allowances to be paid
in cash from the "In-Negotiation Lease Deposit" being
held by the Title Company pursuant to the provisions of
SECTION 7.3(I) hereof.
(C) Acquiror shall assume all
obligations for any leasing commissions, tenant
improvements and other allowances with respect to the
Prospective Leases set forth on EXHIBIT F-1 and Lease
Extension Modifications set forth on EXHIBIT F-2,
executed not later than six (6) months after the
Closing. Contributor shall be credited at Closing with
any leasing commissions or allowances paid in cash or
incurred by Contributor to the extent such items relate
to Prospective Leases or Lease Extension Modifications
executed in accordance with the terms of this Agreement
prior to the Closing Date. Any amounts payable to
Contributor which are not credited at Closing to
Contributor and are due pursuant to this paragraph
shall be paid within thirty (30) days following receipt
of an invoice which may be rendered when the
Prospective Lease or Lease Extension Modification shall
have been executed by both parties.
(ii) Rents.
(A) Fixed or minimum rents, taxes and
assessments and compactor charges (collectively
referred to in this Section 7.2(d)(ii)(A) as "Rents")
payable by tenants under the Leases shall be prorated
as of the Closing Date (whether such collection occurs
prior to, on, or after the Closing Date). Acquiror
shall receive a credit for the amounts actually
received by Contributor on or before the Closing Date
and which pertain to any period after the Closing Date.
Acquiror shall not receive a credit at the Closing for
any rents for the month in which the Closing occurs
which are in arrears and have not then been received.
Notwithstanding any provision of this Agreement,
Contributor shall have the right, in its sole
discretion prior to Closing, to apply any security
deposits held by Contributor under any Leases to remedy
any default or delinquencies under such Leases in
accordance with the terms thereof. As to any tenants
that are delinquent in the payment of Rent or other
charges on the Closing Date, Acquiror shall use
reasonable efforts (but shall not be required to
commence legal action) to collect or cause to be
collected such delinquent rents for twelve (12) months
following the Closing Date. Any and all Rents and
other charges so collected by Acquiror following the
Closing (less a deduction for all reasonable collection
costs and expenses incurred by Acquiror) shall be
successively applied to the payment of (1) Rent and
other charges due and payable in the month in which the
Closing occurs, (2) Rent and other charges
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due and payable in the months succeeding the month in which
the Closing occurs (up to and including the month in which
payment is made) and (3) Rent and other charges due and
payable in the months preceding the month in which the
Closing occurs. If all or part of any Rents or other
charges received by Acquiror following the Closing are
allocable to Contributor pursuant to the foregoing
sentence, then such sums shall be promptly paid to
Contributor. Contributor reserves the right to collect
delinquent Rents and other charges owed to Contributor
and to pursue any damages remedy Contributor may have
against any tenant or former tenants with respect to
delinquent Rents and other charges, but shall have no
right to exercise any other remedy under the Lease
(including, without limitation, termination, eviction,
or commencing involuntary bankruptcy proceeding against
tenants). Contributor shall promptly pay to Acquiror
amounts allocable to Acquiror pursuant to this Section.
(B) Intentionally deleted.
(C) With respect to the Promotion Fund
- Media Fund (the "PM Fund"), Contributor shall pay all
invoices received prior to the Closing Date and shall
deliver to Acquiror the funds therein that exist on the
Closing Date. Acquiror shall pay all invoices related
to the PM Fund received by Acquiror or Contributor on
or after the Closing Date whether relating to periods
before or after the Closing Date. Contributor warrants
that the amounts remaining in the PM Fund as of the
Closing Date will be sufficient to satisfy all
outstanding obligations with respect to the PM Funds
incurred prior to the Closing Date. The provisions of
the immediately preceding sentence shall survive the
Closing for one (1) year.
(D) With respect to the gift
certificate program, commencing on or about
December 15, 1997 Landlord has been under contract
with Mid-America Money Order Company ("Mid-America")
to operate the gift certificate program for the
Property, so that Mid-America is responsible for
honoring any gift certificates redeemed by customers of
the Property sold while Mid-America's Gift Certificate
Trust Agreement has been in effect. Contributor shall
cause Mid-America to deliver an estoppel certificate
confirming the foregoing facts and stating the amounts
of gift certificates outstanding for which it is
responsible. Contributor will pay to Acquiror on the
Closing Date an amount equal to the unexpired gift
certificates issued by Contributor prior to the
commencement of the program with Mid-America as set
forth on EXHIBIT JJ hereto, which Contributor warrants
to be true and complete. The provisions of the
immediately preceding sentence shall survive the
Closing for one (1) year.
(E) Any charges for common area,
insurance charges, operating and maintenance expenses,
escalation rents or charges, electricity
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charges, cost of living increases or any other charges of
a similar nature other than fixed or base rent under the
Leases (collectively, "Additional Rents") shall be prorated
as of the Closing Date between Acquiror and Contributor on
or before the date which is sixty (60) days following
the Closing Date, based on the actual amount spent and
received as of the Closing Date and the amount that
will be paid by tenants under their Leases for the
calendar year 1998. Contributor shall provide Acquiror
with information regarding Additional Rents which were
received by Contributor on or prior to Closing and the
amount of reimbursable expenses paid or incurred by
Contributor on or prior to Closing on before the date
which is sixty (60) days following the Closing
("Reconciliation"). Upon reasonable notice and during
normal business hours, Contributor shall make available
to the Acquiror all information reasonably required to
confirm the Reconciliation. In the event of any
overpayment of Additional Rents by the tenants to
Contributor, Contributor shall promptly, but in no
event later than thirty (30) days after date of the
Reconciliation, pay to Acquiror the amount of such
overpayment. In the event of an anticipated
underpayment of Additional Rents by the Tenants to
Contributor, Acquiror shall pay to Contributor the
amount of such underpayment within thirty (30) days
following Acquiror's receipt of such Reconciliation.
(F) With respect to percentage rents
due from tenants for lease years which end on or before
the Closing Date, Contributor shall be entitled to all
such percentage rents. With respect to percentage
rents due from tenants with lease years that end
between the day after the Closing Date and the first
anniversary of the Closing Date, Acquiror shall pay to
Contributor the percentage rent received by Acquiror
for such lease year times a fraction the numerator of
which shall be the number of days between the beginning
of such lease year and including the Closing Date, and
the denominator of which shall be 365. Such amount
shall be paid within thirty (30) days after Acquiror
receives such percentage rents. Upon reasonable notice
and during normal business hours, Acquiror shall make
available to Contributor all information reasonably
required to reconcile the amounts payable hereunder
with respect to percentage rent. Acquiror shall
deliver to Contributor on a quarterly basis copies of
all annual statements of gross sales received by
Acquiror with respect to the period covered by the
percentage rent proration. In the event that Acquiror
audits any tenant paying percentage rent with respect
to the period of the proration or before, Acquiror
shall deliver to Contributor a copy of the results of
such audit within thirty (30) days following receipt
and Contributor will be entitled to any additional
percentage rent for the period of the proration and
before. If any percentage rent has been collected by
Contributor before the Closing, the parties will adjust
the amounts owed hereunder to reflect such receipt of
funds.
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(f) Partnership Distributions - Dilution Reduction.
Distributions in respect of the OP Units acquired by the OP
Unit Recipients shall begin to accrue from and after the
Closing Date (notwithstanding the fact that such date may
not be the applicable Record Date under the Partnership
Agreement), and the amount of distributions paid or to be
paid to the OP Unit Recipients for the calendar quarter in
which the Closing Date occurs shall be prorated accordingly.
For example, if the Closing Date is August 1, 1998, the OP
Unit Recipients shall be entitled to 61/92 of the
distribution to be made in respect of the OP Units for the
third quarter of 1998 when such distribution is paid with
respect to all Common Units of Acquiror. In addition,
distributions to be paid to the OP Unit Recipients for the
one (1) year period following the Closing shall be reduced
to reflect the dilution resulting from this Transaction in
accordance with the Acknowledgment. The exact amount of
such dilution shall be calculated at Closing and reflected
in the Acknowledgment.
(g) Adjustments to Prorations. After the Closing, the
parties shall from time to time, as soon as practicable
after accurate information becomes available, and in any
event within three hundred sixty-five (365) days following
the Closing Date, recalculate and reapportion any of the
items subject to proration or apportionment (i) which were
not prorated and apportioned at the Closing because of the
unavailability of the information necessary to compute such
proration, or (ii) which were prorated or apportioned at the
Closing based upon estimated or incomplete information or
(iii) for which any errors or omissions in computing
prorations at the Closing are discovered subsequent thereto,
and thereafter the proper party shall be reimbursed based on
the results of such recalculation and reapportionment.
Unless otherwise specified herein, all such reimbursements
shall be made on or before thirty (30) days after receipt of
notice of the amount due. Any such reimbursements not
timely paid shall bear interest at the rate often percent
(10%) per annum from the due date until all such unpaid sums
together with all interest accrued thereon is paid.
(h) Rental Concessions. There shall be no proration
or reduction of the Contribution Consideration with respect
to any tenants that have the right to abate rent or
additional rent for a period of time after the Closing; and
there shall be no proration or reduction in the Contribution
Consideration with respect to signed leases for which rent
shall not have commenced as a result of a construction
allowance, inducement payment or otherwise.
(i) Pending Leases. With respect to any In-
Negotiation Leases which shall not have been signed on the
Closing Date, Contributor shall deposit (the "In-Negotiation
Lease Deposit") with the Title Company an amount equal to
one year of Fixed Minimum Rent and CAM, Taxes and insurance
charges (based on 1998 estimates being charged to tenants)
payable with respect to such In-Negotiation Leases. The
Title Company shall invest the In-Negotiation Lease Deposit
in United States Treasury bills or notes with a ninety (90)
day maturity. In the event that any In-Negotiation Lease is
not signed within six (6) months following the Closing, the
Title
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Company shall deliver to Acquiror the portion of the
In-Negotiation Deposit applicable to such In-Negotiation
Lease. If an In-Negotiation Lease shall be executed within
the six (6) month period following the Closing, the Title
Company shall deliver to Contributor the portion of the In-
Negotiation Deposit attributable to such In-Negotiation
Lease. Following the Closing Date, subject to Acquiror's
reasonable approval rights, Contributor shall continue the
negotiation in good faith and shall use reasonable efforts
to obtain the execution of the In-Negotiation Leases,
Prospective Leases, and Lease Extension Modifications during
the six-month period following the Closing Date and Acquiror
shall cooperate with Contributor in that endeavor. With
respect to payment of leasing commissions relating to In-
Negotiation Leases, Prospective Leases and Lease Extension
Modifications executed not later than six (6) months after
the Closing Date, Acquiror will pay Contributor or its
designated agents 50% of such commission on signing and 50%
of such commission on opening.
(j) Assumed Indebtedness Adjustment. There shall be a
reduction in the Contribution Consideration equal to the
difference between (i) the present net worth of all
remaining scheduled payments of the Assumed Indebtedness
discounted at "market treasury" plus 100 basis points, less
the outstanding principal balance of the Assumed
Indebtedness. The "market treasury" shall be the yield on
U.S. Treasury 71/4 May 2016 at the close of business on the
day preceding the Closing Date. An example of the
calculation is set forth on EXHIBIT LL.
(k) Timing. Except as otherwise expressly set forth
in this Agreement, all prorations shall be made as of 11:59
p.m. on the night before the Closing. Five (5) days prior
to Closing, Contributor and Acquiror shall agree upon the
proration schedule which will be used by the parties in
determining the Net Contribution Consideration to be
received by Contributor at Closing, subject to post-closing
adjustments pursuant to the terms of this Agreement.
Section 7.4 Other Closing Costs.
(a) Contributor shall be responsible for (i) one-half
(1/2) of any governmental documentary transfer or
transaction taxes or fees due on the transfer of the
Property, (ii) one-half (1/2) of any escrow fee to the Title
Company, (iii) one-half (1/2) of the cost of issuing the
Title Report, (iv) one-half (1/2) of any cost of the
ALTA/ACSM survey of the Property ("Survey") incurred by
Contributor in 1997 and 1998, (v) one-half (1/2) of the
assumption transfer fees and other expenses of the Assumed
Indebtedness Lender in connection with the Acquiror's
assumption of the Assumed Indebtedness, and (vi) recording
fees for the Deed.
(b) Acquiror shall be responsible for and pay (i) one-
half (1/2) of any governmental documentary transfer or
transaction taxes or fees due on the transfer of the
Property, (ii) one-half (1/2) of any escrow fee to the Title
Company, (iii) one-half (1/2) of the cost of issuing the
Title Report, (iv) one-half (1/2) of any cost of the
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Survey incurred by Contributor in 1997 and 1998, (v) one-half
(1/2) of the assumption transfer fees and other expenses of
the Assumed Indebtedness Lender in connection with Acquiror's
assumption of the Assumed Indebtedness, and (vi) any title
premium in connection with the issuance of the Title
Policies (including endorsements, standard or extended
coverage and any related survey update costs).
(c) Notwithstanding anything to the contrary set forth
in this Agreement, it is understood that any reference to
amounts to be "paid" by Contributor at the Closing shall
mean that such amounts shall be treated as an Adjustment to
the Contribution Consideration and, consequently, Acquiror
shall be responsible for providing the cash to pay all
amounts required to complete the Closing. Any amounts to be
paid by Acquiror to Contributor after the Closing will be
paid in cash
Section 7.5 Further Documentation. At or following the
Closing, Acquiror and Contributor shall execute any certificate
or other instruments required by this Agreement, by law or local
custom or otherwise reasonably requested by the other party to
effect the transactions contemplated by this Agreement.
Section 7.6 Possession of the Properties. Contributor
shall grant and deliver to Acquiror on the Closing Date exclusive
possession of the Property, in the condition required by this
Agreement, subject only to the Permitted Exceptions, free and
clear of all tenancies and rights of occupants other than
occupants and rights under the Leases.
Section 7.7 Escrow Instructions. The provisions of
this Agreement shall be deemed to be escrow instructions to the
Title Company, which the Title Company hereby accepts. The Title
Company shall have the right to require the parties to execute
standard escrow conditions, but in the event of any conflict
between the provisions of this Agreement and such standard escrow
conditions, the provisions of this Agreement shall control.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Damage or Destruction/Eminent Domain.
(a)(i) Acquiror shall be bound to acquire the
Property as required by the terms of this Agreement without
regard to the occurrence or effect of any damage to or
destruction of the Property or condemnation of any Property
by right of eminent domain, provided that the occurrence of
any damage or destruction to the Property involves repair
costs equal to or less than ten percent (10%) of the
Contribution Consideration with respect to insured
casualties and five percent (5%) of the Contribution
Consideration with respect to uninsured casualties ("Damage
Threshold Amount"), and any condemnation that does not
materially and adversely affect the use or value of the
Property ("Immaterial Condemnation"). If Acquiror is so
bound to
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purchase the Property notwithstanding the occurrence
of damage, destruction or condemnation, or if Acquiror
elects not to terminate this Agreement pursuant to
SECTION 8.1(B), then upon the Closing in the event of damage
covered by insurance or an Immaterial Condemnation occurring
during the Contract Period, Acquiror shall receive a credit
against the Contribution Consideration in the amount (net of
collection costs and costs of repair reasonably incurred by
the Contributor and not then reimbursed) of any insurance
proceeds or condemnation award collected and retained by the
Contributor as a result of any such damage, destruction or
condemnation, plus (in the case of damage) the amount of the
deductible portion of the Contributor's insurance policy,
and the Contributor shall assign to Acquiror all rights to
such net insurance proceeds or condemnation awards as shall
not have been collected prior to the Closing. In the event
of damage not covered by insurance, the amount of such
damage shall be treated as an Adverse Matter pursuant to
Section 3.2.
(ii) In the event of any assignment of insurance
proceeds in accordance with this Section, Contributor shall
notify Acquiror of any disputes between Contributor and the
insurance carrier related to the claim giving rise to such
proceeds. Contributor will reasonably cooperate with
Acquiror in attempting to collect such proceeds from the
insurance carrier and if, in the reasonable judgment of
Acquiror, a collection action is necessary to obtain such
proceeds, the reasonable costs of such collection action
will be divided equally between Contributor and Acquiror.
The provisions of this SECTION 8.1(A) shall survive the
Closing.
(b) If, prior to the Closing Date, any Property
suffers damage or destruction that involves repair costs in
excess of the Damage Threshold Amount or condemnation that
materially and adversely affects the use and value of the
Property, then Acquiror may terminate this Agreement by
giving written notice to Contributor within five (5)
Business Days after Acquiror receives notice of the
occurrence of such damage or condemnation, in which event
the Deposit shall be returned to Acquiror. If the parties
disagree as to whether or not Acquiror is entitled to
terminate this Agreement pursuant to this SECTION 8.1(B),
then such disagreement shall be promptly submitted to
arbitration pursuant to SECTION 8.5.
Section 8.2 Fees and Commissions. Contributor
represents and warrants to Acquiror, and Acquiror represents and
warrant to Contributor, that no person or entity other than
Salomon Smith Barney can properly claim a right to a real estate
broker's or investment banker's commission, finder's fee,
acquisition fee or other brokerage-type compensation
(collectively, "Real Estate Compensation") with respect to the
transaction contemplated by this Agreement based upon the acts of
the representing party. Contributor shall be responsible for any
Real Estate Compensation that may be due to Salomon Smith Barney
resulting from the transaction contemplated by this Agreement.
Contributor shall indemnify, protect, defend and hold Acquiror
harmless from and against, any and all claims, demands, losses,
damages, liabilities, causes of action, liens, costs and expenses
including, without limitation, reasonable attorneys' fees and
costs (to the extent permitted by law) and returned commissions,
directly or
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indirectly related to, arising out of or in any manner
connected with, in whole or in part, from any claim for
Real Estate Compensation by any person or entity with respect to
the transaction contemplated by this Agreement based upon the
acts of such Contributor or anyone acting or claiming to act on
the part of Contributor. Acquiror shall indemnify, protect,
defend and hold each of the Contributor and the Contributor
Related Parties harmless from and against, any and all claims,
demands, losses, damages, liabilities, causes of action, liens,
costs and expenses including, without limitation, reasonable
attorneys' fees and costs (to the extent permitted by law) and
returned commissions, directly or indirectly related to, arising
out of or in any manner connected with, in whole or in part, any
claim for Real Estate Compensation by any person or entity (other
than Salomon Smith Barney) with respect to the transaction
contemplated by this Agreement based upon the acts of the
Acquiror or anyone acting or claiming to act on the part of
Acquiror.
Section 8.3 Successors and Assigns. Acquiror may not
assign any of Acquiror's rights or duties hereunder without the
prior written consent of Contributor, which consent may be
withheld by Contributor in its absolute discretion.; provided,
however, that Acquiror may assign this Agreement to a wholly-
owned affiliate of Acquiror (an "Affiliate") without
Contributor's consent (but with prior notice to Contributor)
provided that Acquiror (i) represents that such Affiliate is, as
of the Closing Date, an entity that is disregarded as an entity
separate from its owner for federal income tax purposes (in
accordance with Treasury Regulation Section 301.7701-3(b)(1)(ii))
and for applicable state income tax purposes ("Ignored"), and
(ii) agrees to pay, indemnify and hold harmless each of the
Contributor and Contributor Related Parties against (A) any
liability for federal, state or local taxes arising as a direct
or indirect result of any failure of an Affiliate to be Ignored
as of the Closing Date, (B) any costs and expenses including,
without limitation, interest, penalties, reasonable attorneys'
and accounting fees, and any other costs directly or indirectly
related to, arising out of or in any manner connected with the
payments described in this sentence, and (C) any additional
liability for taxes associated with the receipt of any payments
of amounts described in clauses (A) and (B) of this Section 8.3.
Notwithstanding any such assignment, Acquiror agrees that
Acquiror shall remain primarily liable for all representations,
warranties and covenants by Acquiror set forth in this Agreement,
and the OP Units shall be issued by Acquiror and the covenants of
SECTION 5.4 shall continue as obligations of Acquiror.
Section 8.4 Notices. All notices or other
communications required or provided to be sent by either party
shall be in writing and shall be sent by United States Postal
Service, postage prepaid, by certified mail, return receipt
requested, or by any nationally known overnight delivery service,
or by courier hand delivery, provided a receipt is obtained
therefor, or by facsimile transmission provided a confirmation is
received therefor. All notices shall be deemed to have been
given forty-eight (48) hours following deposit in the United
States Postal Service or upon
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delivery if sent by overnight delivery service, courier or
facsimile. All notices shall be addressed to the party at
the address below:
To Contributor: Janesville Properties Co.
Limited Partnership
Attention: Arthur Weisman
17401 Aldersyde Drive
Shaker Heights, OH 44120
and: Robert T. Samuels
Samuels & Associates
433 South Main Street, Suite 110
West Hartford, Connecticut 06110
Telephone No: (860) 561-6764
Fax No: (860) 561-6768
and: Roger E. Benjamin
Samuels & Associates
7589 Fairmont Court
Boca Raton, FL. 33496
with a copy to: Gary W. Melsher, Esq.
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Telephone No: (216) 586-7274
Fax No: (216) 579-0212
and a copy to: John R. Herbert
Salomon Smith Barney
388 Greenwich Street
New York, New York 10013
Telephone No: (212) 816-7114
Fax No: (212) 816-7491
To Acquiror: CBL & Associates Limited Partnership
Attention: Charles B. Lebovitz
Watermill Center
800 South Street, Suite 395
Waltham, Massachusetts 02154-1439
Telephone No: (781) 647-3330
Fax No: (781) 647-1611
with a copy to: Keith L. Honnold
Watermill Center
800 South Street, Suite 395
Waltham, Massachusetts 02154-1439
Telephone No: (781) 647-3330
Fax No: (781) 647-1611
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with a copy to: Mary Ann Sinnott
CBL & Associates Properties, Inc.
One Park Place
6148 Lee Highway
Chattanooga, Tennessee 37421
Telephone No: (423) 490-8638
Fax No: (423) 490-8390
(423) 490-8662
with a copy to: Eugene A. Pinover
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019
Telephone: (212) 728-8254
Fax No.: (212) 728-8111
Any address or name specified above may be changed by notice
given to the addressee by the other party in accordance with this
SECTION 8.4. The inability to deliver because of a changed
address of which no notice was given, or rejection or other
refusal to accept any notice, shall be deemed to be the receipt
of the notice as of the date of such inability to deliver or
rejection or refusal to accept.
Any notice required hereunder to a OP Unit Recipient which holds
OP Units, shall be deemed given if sent to such party in the
manner set forth in Section 8.4 of the Agreement at the address
set forth in a letter given by Jamesville and each OP Unit
Recipient at the Closing to Acquiror directing Acquiror to
deliver the OP Units directly to the OP Unit Recipients or at
such other address as to which an OP Unit Recipient shall notify
Acquiror pursuant to the provisions of this Section 8.4 hereof.
Section 8.5 Arbitration of Disputes.
(a) Controversies or claims to be submitted to
arbitration pursuant to SECTIONS 3.2, 3.3, 4.2 or 8.1(B)
above shall be resolved exclusively and solely by a
"baseball-style" arbitration conducted before a single
Arbitrator selected under the mutual-elimination procedures
set forth in Section 13 of the Commercial Rules of the
American Arbitration Association ("AAA Rules"). A
"baseball-style" arbitration shall be one in which each of
Acquiror and Contributor makes its best case and the
Arbitrator selects which one of the two is more correct,
without averaging of the two positions of the parties.
Arbitration shall be conducted in Boston, Massachusetts and
Acquiror and Contributor hereby consent to jurisdiction over
their respective persons before the American Arbitration
Association in Boston Massachusetts and before state and
federal courts in Boston Massachusetts for any proceedings
to enforce an arbitration award or decision rendered
pursuant to this Agreement. Contributor and Acquiror hereby
agree that Boston, Massachusetts is a proper venue for all
of the foregoing proceedings. The Arbitrator(s) shall give
effect to statutes of limitation in determining any claim.
Any controversy concerning whether an issue is arbitrable
shall be determined by the Arbitrator(s). The Arbitrator(s)
shall use best efforts to conduct a hearing on the merits
within five (5) Business Days after the appointment of the
Arbitrator(s). The loser of the Arbitration shall pay all
costs in connection therewith. The instructions to the
Arbitrator shall state
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that the arbitration must be completed within ten (10) Business
Days, but neither party shall have the right to terminate the
Arbitration unless such Arbitrators' decision shall not be rendered
within sixty (60) days of the date of commencement of the
Arbitration proceeding. If such Arbitration is terminated,
the parties will immediately commence another Arbitration to
resolve the issue.
(b) Judgment upon the arbitration award may be entered
in any court of competent jurisdiction. The institution and
maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a
waiver of the right of any party, including the plaintiff,
to submit the controversy or claim to arbitration if any
other party contests such action for judicial relief.
(c) Notwithstanding anything to the contrary set forth
above, in the event that any arbitrable dispute involves the
environmental or physical condition of the Property, the
matter shall be submitted for decision to a single referee
(the "Referee"). The Referee shall be a person of
recognized expertise in the applicable discipline chosen by
Acquiror from a list of three (3) potential Referees
presented by Contributor within one (1) week following the
demand for arbitration. The Referee shall use his or her
best efforts to conduct an informal hearing on the matter in
dispute within ten (10) days of selection, and to render a
decision within thirty (30) days of selection. The losing
party shall pay all costs, including the fee of the Referee.
(d) Notwithstanding anything to the contrary set forth
above, in the event either party demands arbitration
pursuant to the provisions of this Agreement, except as
otherwise expressly provided hereunder, the Closing Date
shall be deferred until the matter is decided pursuant to
the provisions of this SECTION 8.5, unless Contributor
elects to complete the arbitration after the Closing by
delivering written notice to Acquiror within three (3)
Business Days following receipt or delivery of an
arbitration notice. In the event that Contributor elects to
complete the arbitration after the Closing, a portion of the
Net Contribution Consideration comprised of OP Units equal
in value to the estimated amount in dispute in excess of the
Materiality Threshold Amount (as reasonably determined by
Acquiror) shall be held in escrow by the Title Company
following the Closing pending completion of the arbitration.
In the event that the Arbitrator's or Referee's
determination results in a reduction in the Net Contribution
Consideration pursuant to the terms of this Agreement, the
Title Company shall return to Acquiror OP Units with a value
equal to the amount of such reduction and the balance of the
OP Units held in escrow shall be released to Contributor for
allocation among the OP Unit Recipients. In the event that
the arbitration involves economic issues, such as, for
example, discrepancies between the rents reflected on the
Tenant List attached to this Agreement and the actual
Leases, the parties agree that the estimated amount held in
escrow pursuant to this SECTION 8.5(D) shall be determined
by using a cap rate of eight and 75/100 percent (8.75%).
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Section 8.6 Acquiror and Contributor Representatives.
(a) Acquiror shall be entitled to rely upon any
notice, approval or decision with respect to the Property,
if the same is given, made or expressed by the following
individuals acting on behalf of the Contributor: Robert T.
Samuels or Roger E. Benjamin.
(b) Contributor shall be entitled to rely upon any
notice, approval or decision given, made or expressed by the
following individuals acting on behalf of Acquiror: Stephen
Lebovitz, Keith L. Honnald or Mary Ann Sinnott.
Section 8.7 Time is of the Essence. Time is of the
essence of every provision contained in this Agreement.
Section 8.8 Incorporation by Reference. All of the
exhibits and schedules attached to this Agreement or referred to
herein and all documents in the nature of such exhibits, when
executed, are by this reference incorporated in and made a part
of this Agreement.
Section 8.9 Attorneys Fees. In the event any dispute
between Acquiror and Contributor should result in litigation, the
prevailing party shall be reimbursed for all reasonable costs
incurred in connection with such litigation including without
limitation, reasonable attorneys' fees and costs. Attorneys fees
shall be included in the cap on Contributor's exposure set forth
in this Agreement.
Section 8.10 Construction. The parties acknowledge that
each party and its counsel have reviewed and revised this
Agreement and that the normal rules of construction to the effect
that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of this
Agreement or any amendments or exhibits hereto.
Section 8.11 Governing Law. This Agreement shall be
construed and interpreted in accordance with and shall be
governed and enforced in all respects according to the laws of
the State of Wisconsin (without giving effect to principles of
conflicts of laws).
Section 8.12 Operating Records. At the Closing
Contributor agrees to deliver to Acquiror Contributor's unaudited
monthly balance sheets and income statements for the Property for
the 1998 calendar year through the last calendar quarter ended
before the Closing Date and for the comparable portion of the
1997 calendar year. Contributor shall have reasonable access to
the financial and all other records delivered by Contributor to
Acquiror.
Section 8.13 Confidentiality. (a) Acquiror and
Contributor each acknowledge and agree that this Agreement and
the terms and conditions set forth are to be kept confidential
and not disclosed to any person or entity that is not a party to
this Agreement or the owner of an interest in the entities that
are a party to this Agreement, unless and until the Closing
occurs in accordance with the terms of this SECTION 8.13;
provided, however, that in accordance with the terms of the
Confidentiality Agreement each party shall be entitled to discuss
and disclose the transaction with employees, agents, consultants,
attorneys, accountants, lenders, clients and representatives of
such party that are engaged in this transaction, subject to the
requirement that
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each of the foregoing shall also be bound by the terms
of this SECTION 8.13. Any public release of information
with respect to the pendency or content of the transaction shall
be subject to the approval of Acquiror and Contributor.
Notwithstanding the foregoing, after the execution of this
Agreement, Acquiror shall be permitted to disclose any matter
relating to the contemplated transaction, the Property or its
operating or financial results as Acquiror may reasonably
determine is necessary or advisable in connection with fulfilling
the Acquiror's or the REIT's obligations under state and federal
securities laws or in connection with discussions with financial
analysts, provided that any such disclosures shall be limited to
the categories of information set forth on EXHIBIT MM, and
provided further that Acquiror shall deliver to Contributor prior
to release any proposed press release relating to the transaction
and shall afford Contributor reasonable opportunity to comment
thereon. None of the Contributor or the Contributor Related
Parties shall have any responsibility with respect to the timing
or content of any such disclosures whatsoever except to the
extent of any disclosure required by applicable law to be made by
Contributor, and Acquiror shall indemnify, protect, defend and
hold the Contributor and the Contributor Related Parties harmless
from and against, any and all claims, demands, losses, damages,
liabilities, causes of action, liens, costs and expenses
including, without limitation, reasonable attorneys' fees and
costs (to the extent permitted by law), directly or indirectly
related to, arising out of or in any manner connected with, in
whole or in part, any inaccuracies in Acquiror's disclosures
pertaining to this Agreement or the contemplated transactions
except for inaccuracies based on information provided by
Contributor to Acquiror. Notwithstanding anything herein to the
contrary, neither party shall make any public announcement or
filing with respect to this transaction until the expiration of
each party's right to terminate the Meridian Contract pursuant to
Section 3.2(i) thereof.
(b) Notwithstanding the termination of this Agreement,
any disclosure of information permitted by Acquiror or the REIT
under paragraph (a) above shall not be deemed a breach or
violation by such Person of the provisions of the Confidentiality
Agreement.
Section 8.14 Counterparts. This Agreement may be
executed in one or more identical counterparts. All counterparts
so executed shall constitute one contract, binding on all
parties, even though all parties are not signatory to the same
counterpart.
Section 8.15 Entire Agreement. The Confidentiality
Agreement and this Agreement, and the attached exhibits, which
are by this reference incorporated herein, and all documents in
the nature of such exhibits and schedules when executed, contain
the entire understanding of the parties and supersede any and all
other written or oral understanding.
Section 8.16 Access to Information. From the date of
this Agreement and from time to time following Closing,
Contributor shall provide to Acquiror, at Acquiror's expense,
such information from Contributor's accountants as Acquiror may
reasonably request and Acquiror shall provide to Contributor at
Contributor's expense, such information relating to the Property
as Contributor may reasonably request in connection with the
preparation of Contributor's tax returns, or for any reason
relating to the historical performance of the Property prior to
the Closing. This provision shall survive the Closing.
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Section 8.17 Waive of Jury Trial. Contributor and
Acquiror waive any right to trial by jury of any claim arising
under or with respect to this Agreement, whether now existing or
hereafter arising. Contributor and Acquiror hereby agree that,
except as provided in SECTION 8.5, any such claim shall be
decided by a court trial without a jury and that any party hereto
may file an original counterpart or copy of this Section with any
court as written evidence of the consent of the other party
hereto to the waiver of its right of trial by jury.
Section 8.18 Binding Agreement. Subject to the
provisions of SECTION 8.3, the provisions of this Agreement shall
be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. All
representations, warranties and covenants shall not survive the
Closing unless stated to the contrary in this Agreement.
Section 8.19 Code or Treasury Regulation References.
Any reference in this Agreement to sections of the Code or
Treasury Regulations shall be deemed to include any successor
provisions thereto.
Section 8.20 Third Party Beneficiaries. Each OP Unit
Recipient shall be deemed to be a third party beneficiary of this
Agreement and shall have the right to institute any legal actions
without joining Contributor or any other OP Unit Recipients. No
other party shall be deemed to be a third beneficiary of this
Agreement.
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IN WITNESS WHEREOF, Contributor and Acquiror have executed
this Agreement as of the day and year first written above.
ACQUIROR:
CBL & ASSOCIATES LIMITED PARTNERSHIP,
a Delaware limited partnership
By: CBL Holdings I, Inc.
By: /s/ Stephen D. Lebovitz
---------------------
Name: Stephen D. Lebovitz
Title: Executive Vice President
CONTRIBUTOR:
JANESVILLE PROPERTIES CO. LIMITED PARTNERSHIP,
an Ohio limited partnership
And By: /s/ Robert T. Samuels
--------------------------
Name: Robert T. Samuels
Title: General Partner
CONTRIBUTION, EXCHANGE AND SALE AGREEMENT
FOR
MERIDIAN MALL
DATED AUGUST 27, 1998
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - BASIC DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - SALE, CONTRIBUTION AND EXCHANGE . . . . . . . . . . . . . . . 9
Section 2.l. Sale and Contribution . . . . . . . . . . . . . . 9
Section 2.2. Contribution Consideration. . . . . . . . . . . . 9
Section 2.3. Meridian Indebtedness.. . . . . . . . . . . . . . 9
Section 2.4. OP Units. . . . . . . . . . . . . . . . . . . . . 10
Section 2.5. Informational Materials . . . . . . . . . . . . . 11
Section 2.6. Registration Rights . . . . . . . . . . . . . . . 11
ARTICLE III - ACQUIROR'S DUE DILIGENCE . . . . . . . . . . . . . . . . . . 11
Section 3.1 Acquiror's Review and Meridian's Disclaimer . . . 11
Section 3.2 Material Adverse Matters. . . . . . . . . . . . . 16
Section 3.3 Title Exceptions. . . . . . . . . . . . . . . . . 21
ARTICLE IV - CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . 22
Section 4.l Conditions. . . . . . . . . . . . . . . . . . . . 22
Section 4.2 Failure or Waiver of Conditions Precedent . . . . 26
ARTICLE V - COVENANTS WARRANTIES AND REPRESENTATIONS . . . . . . . . . . . 26
Section 5.1 Transferors' Warranties and Representations . . . 26
Section 5.2 Transferors' Covenants. . . . . . . . . . . . . . 34
Section 5.3 Transferors' Additional Representations,
Warranties and Covenants. . . . . . . . . . . . 37
Section 5.4 Acquiror's Warranties and Representations . . . . 37
Section 5.5 Acquiror's Covenants. . . . . . . . . . . . . . . 40
Section 5.6 Survival/Limitations/Joinder. . . . . . . . . . . 46
ARTICLE VI - DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.1 Acquiror's Deposit and Default. . . . . . . . . . 49
Section 6.2 Default by Meridian and/or Transferors. . . . . . 50
ARTICLE VII - CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.1 Escrow Arrangements . . . . . . . . . . . . . . . 51
Section 7.2 Closing . . . . . . . . . . . . . . . . . . . . . 55
Section 7.3 Prorations. . . . . . . . . . . . . . . . . . . . 55
Section 7.4 Other Closing Costs . . . . . . . . . . . . . . . 62
Section 7.5 Further Documentation . . . . . . . . . . . . . . 62
Section 7.6 Possession of the Properties. . . . . . . . . . . 62
Section 7.7 Escrow Instructions . . . . . . . . . . . . . . . 63
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ARTICLE VIII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 63
Section 8.1 Damage or Destruction/Eminent Domain. . . . . . . 63
Section 8.2 Fees and Commissions. . . . . . . . . . . . . . . 64
Section 8.3 Successors and Assigns. . . . . . . . . . . . . . 64
Section 8.4 Notices . . . . . . . . . . . . . . . . . . . . . 65
Section 8.5 Arbitration of Disputes . . . . . . . . . . . . . 67
Section 8.6 Acquiror and Contributor Representatives. . . . . 69
Section 8.7 Time is of the Essence. . . . . . . . . . . . . . 69
Section 8.8 Incorporation by Reference. . . . . . . . . . . . 69
Section 8.9 Attorneys Fees. . . . . . . . . . . . . . . . . . 69
Section 8.10 Construction. . . . . . . . . . . . . . . . . . . 69
Section 8.11 Governing Law . . . . . . . . . . . . . . . . . . 69
Section 8.12 Operating Records . . . . . . . . . . . . . . . . 69
Section 8.13 Confidentiality . . . . . . . . . . . . . . . . . 70
Section 8.14 Counterparts. . . . . . . . . . . . . . . . . . . 70
Section 8.15 Entire Agreement. . . . . . . . . . . . . . . . . 70
Section 8.16 Tax Returns . . . . . . . . . . . . . . . . . . . 71
Section 8.17 Waiver of Jury Trial. . . . . . . . . . . . . . . 71
Section 8.18 Binding Agreement . . . . . . . . . . . . . . . . 71
Section 8.19 Code or Treasury Regulation Reference . . . . . . 71
ii
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CONTRIBUTION, EXCHANGE AND SALE AGREEMENT
THIS CONTRIBUTION, EXCHANGE AND SALE AGREEMENT ("Agreement') is
made and entered into as of this 18th day of August, 1998, by and
between MERIDIAN MALL ASSOCIATES LIMITED L.C., an Ohio limited
liability company ("Meridian"), and CBL & ASSOCIATES LIMITED
PARTNERSHIP, a Delaware limited partnership ("Acquiror").
RECITALS
A. Meridian is the owner of an enclosed mall regional shopping
center, known as "Meridian Mall", located in Meridian Township, Ingham
County, Michigan, as described on the legal description attached to
the Deed attached hereto as EXHIBIT A (the "Property").
B. Subject to the terms and conditions set forth in this
Agreement, Acquiror desires to acquire the Property from Meridian and
Meridian desires to contribute the Property to Acquiror, in exchange
for cash and OP Units (hereafter defined).
AGREEMENT
NOW, THEREFORE, Acquiror and Meridian do hereby agree as
follows:
ARTICLE I
BASIC DEFINITIONS
"Accredited Investor" shall mean an "accredited investor" as
such term is defined in Regulation D promulgated under the Securities
Act (as hereinafter defined).
"Additional Exceptions" shall have the meaning set forth in
SECTION 3.3(A).
"Additional Title Exception Notice" shall have the meaning set
forth in SECTION 3.3(B).
"Adjustments" shall mean Meridian's Closing Costs, any
prorations described in SECTION 7.3 below and other adjustments set
forth in this Agreement.
"Adverse Matters" shall mean any material facts or circumstances
relating to the status of the Property and/or the Outlot Parcels
constituting inaccuracies in the Disclosure Materials or matters
discovered in the course of on-site inspections of the Property and/or
the Outlot Parcels (provided that any such matters which are
reimbursable by tenants pursuant to the terms of the Leases shall not
be "Adverse Matters" for purposes of this Agreement) that are
<PAGE>
identified by Acquiror prior to the expiration of the Confirmation
Period in accordance with the provisions of this Agreement and that
diminish the fair market value of such Property and/or the Outlot
Parcels; provided, however, that in no event shall any of the
following constitute Adverse Matters: (i) any matters included or
disclosed in the Disclosure Materials set forth in the Disclosure
Materials List & Statement, (ii) economic, competitive, general or
specific market conditions, (iii) the Permitted Exceptions,
(iv) methodologies of or express assumptions in financial
projections, calculations or reports included within the Disclosure
Materials set forth in the Disclosure Materials List & Statement, or
(v) any matters otherwise known by Acquiror as of the date of this
Agreement.
"Adverse Matters Amount" shall mean the amount, if any, of any
decrease in the fair market value of the Property and/or the Outlot
Parcels caused by any Adverse Matters relating to the Property and/or
the Outlot Parcels, after netting against such decrease the amount of
any increase in the fair market value of the Property and/or the
Outlot Parcels resulting from the discovery prior to the expiration
of the Confirmation Period of any inaccuracies in the rent roll
contained in the Disclosure Materials.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a federal holiday.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. section9601 et seq., as amended.
"Close" or "Closing" shall have the meaning set forth in SECTION
7.2.
"Closing Date" shall mean August 27, 1998, unless extended
pursuant to the provisions of SECTION 3.2 OR SECTION 4.1(C) hereof;
provided, however, that in the event that the Closing has not
occurred by August 31, 1998, Meridian may, at its sole discretion,
terminate this Agreement, by giving notice to Acquiror within seven
(7) days thereafter, as to which time shall be of the essence,
provided that Janesville and Sellers under each of the Other
Agreements shall have also terminated the Other Agreements, in which
event the Deposit shall be returned to Acquiror and no party shall
have any further rights or obligations hereunder.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" shall mean that certain
Confidentiality Agreement dated March 24, 1998, as clarified by
letter from Acquiror to Bill Frauenhofer of Salomon Smith Barney
dated March 25, 1998, executed by Acquiror for the benefit of
Meridian with respect to the Disclosure Materials and this
transaction.
"Confirmation Letter" shall mean the letter in the form of
EXHIBIT C, attached hereto and made a part hereof, to be delivered by
Acquiror to Meridian on or prior to the close of the Confirmation
Period pursuant to SECTION 3.2.
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"Confirmation Period" shall mean the period commencing on
June 3, 1998, and ending at 5:00 p.m. Eastern Standard Time on
July 8, 1998; provided, however, that the Confirmation Period may
expire earlier, at Acquiror's election, upon delivery by Acquiror to
Meridian of the Confirmation Letter, in which event Acquiror shall be
deemed to have absolutely and conclusively waived any further
Confirmation Period.
"Contract Period" shall mean the period from the date of this
Agreement through and including the Closing Date.
"Contracts" shall mean all maintenance, service and other
operating contracts, equipment leases and other arrangements or
agreements to which Meridian is a party, affecting the ownership,
repair, maintenance, management, leasing or operation of the
Property, but excluding all Leases.
"Deed" shall mean a limited warranty deed in the form attached
hereto as Exhibit A, which will convey title to the Land subject to
the Permitted Exceptions. The Deed shall recite that it is also
subject to all other matters of record.
"Deposit" shall have the meaning set forth in SECTION 6.1.
"Disclosure Materials" shall mean all those materials relating
to the Property that are generally described in SECTION A of the
Disclosure Materials List & Statement, all of which have been made
available to Acquiror in a so-called "data room" containing files of
information on the Property.
"Disclosure Materials List & Statement" shall mean the list of
Disclosure Materials and the statements relating to the Property set
forth on EXHIBIT D.
"Environmental Laws" shall mean all applicable federal, state
and local laws, rules, regulations, codes, policies and ordinances,
and binding determinations, orders, permits, licenses, injunctions,
writs, decrees or rulings of any governmental or judicial authority,
relative to or that govern air quality, soil quality, water quality,
wetlands, solid waste, hazardous waste, hazardous or toxic
substances, pollution or the protection of public health, human
health or the environment, including, but not limited to, CERCLA, the
Hazardous Material Transportation Act (49 U.S.C. section 1801 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. section 1251 et seq.), the
Safe Drinking Water Act (42 U.S.C. section 201 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. section 6901 et seq.), the Clean
Air Act (42 U.S.C. section 7401 et seq.), the Toxic Substances Control Act
(15 U.S.C. section 2601 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. section 136 et seq.), and the Occupational Safety
and Health Act of 1970 (29 U.S.C. section 651 et seq.), as each of these
laws may have been amended, and any analogous or related, federal,
state or local statutes and the regulations promulgated pursuant
thereto whether currently in existence or hereafter enacted.
"Equipment" shall mean all of the following items (if any) to
the extent owned or leased by Meridian: all fixtures, fittings,
appliances, apparatus, equipment, supplies, machinery, carpeting and
other materials installed, located or stored on the Property, and
3
<PAGE>
other personal property and any replacements thereof, or additions
thereto, actually or constructively affixed, or attached to the
Property, or placed upon, under or used in any way in connection with
the complete and comfortable use, enjoyment, occupancy and/or
operation of the Property, including, without limitation, all parts
of the plumbing, heating, ventilating, air-conditioning, electrical
and mechanical systems of the Improvements; elevators; incinerators;
trash compactors; all equipment, materials and supplies used or
usable in connection with the maintenance, repair and cleaning of the
Property and the interior and exterior of all Improvements; all racks
or similar apparatus necessary for the placement and/or retention of
broadcasting antennae or other telecommunication equipment and
property on the roof of or otherwise within or about the
Improvements; all keys and master keys; all built-in equipment; all
heating, air-conditioning, freezing, lighting, incinerating and power
equipment; lampposts; all electrical equipment, transformers, wiring,
conduit, meters, fixtures aid apparatus; engines; pipes; pumps;
tanks; motors; hydraulic equipment; conduits; lifting, cleaning, fire
prevention, fire extinguishing, smoke detection, refrigerating,
ventilating and communications apparatus; boilers, furnaces, oil
burners or units thereof and any firing and control apparatus used in
connection therewith; appliances; air-cooling and air-conditioning
apparatus; vacuum cleaning systems; storage systems; built-in or
attached shelving; shades; awnings; windows; attached cabinets;
partitions; ducts and compressors; rugs and carpets; draperies;
landscaping, sod, arbors, shrubs, plants, trees, planters and
planting beds or boxes; retaining walls and enclosures; directories;
mailboxes; signs; television or radio antennae; together with all
building materials and equipment now or hereafter delivered to the
Property and intended to be installed therein, thereon or thereunder,
including but not limited to, lumber, plaster, cement, plumbing,
fixtures, pipe, lath, wallboard, cabinets, nails, sinks, toilets,
furnaces, heaters, brick, tile, water heaters, glass, doors,
flooring, paint, lighting fixtures, heating and ventilating
appliances and equipment, locks and lockets; together with all
additions, accessions, proceeds, products, replacements, renewals and
substitutions of and for all of the foregoing, including without
limitation those items listed on EXHIBIT E.
"Exchange" shall mean the transfer of the Property in exchange
for OP Units and cash.
"Governmental Authorities" shall mean all agencies, bureaus,
departments and officials of federal, state, county, municipal and
local governments and public authorities.
"Gross Consideration" shall mean the total consideration to be
paid to Meridian by Acquiror prior to Adjustments and other
deductions set forth in SECTION 2.2.
"Ground Lease" shall mean the collective reference to the
documents listed on EXHIBIT F.
"Hazardous Materials" shall mean any pollutant, contaminant,
substance or waste containing hazardous substances, as those terms
are defined or listed in CERCLA, and any other individual or class of
pollutants, contaminants, wastes or materials defined, listed,
designated, regulated, classified or identified under any applicable
Environmental Laws. This
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definition of Hazardous Materials includes friable asbestos, petroleum
or petroleum-based products, radioactive materials, flammable explosives
and polychlorinated biphenyls.
"HVAC Plant" means equipment, machinery and other property
within the Real Property which produces water for use in the heating
and air conditioning of a portion of the Real Property.
"Improvements" shall mean any and all structures, buildings,
facilities, parking areas or other improvements situated on the Real
Property and owned by Meridian, together with all Equipment situated
on the Real Property, to the extent that such Equipment constitutes a
fixture.
"In-Negotiation Leases" shall mean those leases or modifications
to existing Leases listed on EXHIBIT G.
"Intangible Property" shall mean the right, title and interest
(if any) of Meridian in: (a) any and all permits, entitlements,
filings, building plans, specifications and working drawings,
certificates of occupancy, operating permits, sign permits,
development rights and approvals, certificates, licenses, warranties
(including, without limitation the roof warranties listed on EXHIBIT
H hereto) and guarantees, engineering, soils, pest control, survey,
environmental, appraisal, market and other reports relating to the
Property, (b) all trade names, service marks, designations and logos,
and the appurtenant goodwill, including, without limitation, the name
"Meridian Mall" and any variation thereof, and all tenant lists,
advertising materials and telephone exchange numbers identified with
the Property, and (c) all books, records, files and correspondence
relating to the Property and (d) all other transferable intangible
property, miscellaneous rights, benefits, or privileges of any kind
or character with respect to the Property, provided that the
Intangible Property shall not include any claims, actions, causes of
action, judgments, accounts receivable, cash, securities and cash
equivalents, or the name of Meridian.
"Janesville Property" shall mean that certain shopping center
located in Janesville, Wisconsin, which is owned by Janesville
Properties Co. Limited Partnership ("Janesville"), an Ohio limited
partnership.
"Janesville Transaction" shall mean the transaction in which
Acquiror shall acquire the Janesville Property.
"Land" shall mean the real property owned in fee by Meridian
described in the legal description attached hereto as EXHIBIT A.
"Lease List" shall mean the list of Leases set forth on EXHIBIT I.
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"Leases" shall mean all leases, rental agreements or other
agreements (including all renewals, amendments or modifications
thereto) which entitle any person to the occupancy or use of any
portion of the Real Property and all guarantees thereof.
"Legal Requirements" shall mean all statutes, laws, ordinances,
rules, regulations, executive orders and requirements of all
Governmental Authorities which are applicable to the Property 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, including, without limitation, Environmental Laws.
"Letter of Credit" shall mean an unconditional, irrevocable,
renewable and transferable demand letter of credit, the beneficiary
of which shall be Acquiror or Meridian as the case may be,
substantially in the form(s) set forth in EXHIBIT J.
"Materiality Threshold Amount" shall mean Five Hundred Thousand
Dollars ($500,000).
"Meridian Indebtedness" shall mean the loan of $48,500,000.00 to
Meridian's predecessor from T-L Advance, Inc. on December 15, 1992,
evidenced by a Promissory Note and secured by a Mortgage and Security
Agreement and other instruments (collectively, the "Meridian Loan
Documents").
"Meridian Related Parties" shall mean Meridian and its partners,
members, managers, shareholders, officers, directors, affiliates and
agents, and the respective heirs, executors, administrators, personal
representatives, successors and assigns of each of the foregoing.
"Meridian's Closing Costs" shall mean those closing costs for
which Meridian is responsible pursuant to SECTIONS 7.2 AND 7.3
hereof.
"Net Contribution Consideration" shall have the meaning set
forth in SECTION 2.2.
"OP Unit Recipients" shall mean those members of Meridian
identified on EXHIBIT B-2 that shall receive OP Units at the Closing,
and their respective heirs, personal representatives, successors and
assigns permitted in accordance with this Agreement and the
Partnership Agreement.
"OP Units" shall mean Class B Common Units of Acquiror, to be
issued pursuant to the provisions of SECTION 4.4 of the Partnership
Agreement, which shall be entitled to the same rights and privileges
as Acquiror's currently outstanding Common Units except as set forth
in the Acknowledgment in the form attached hereto as EXHIBIT K (the
"Acknowledgment").
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"Other Agreements" shall mean the Outlot Purchase Agreements and
that certain Contribution and Exchange Agreement dated of even date
herewith concerning the Janesville Property.
"Outlot Parcels" shall mean those parcels of real property
contiguous to the Real Property which are owned by the Outlot
Partnerships and which are being acquired by Acquiror or Acquiror's
affiliates contemporaneously with the Closing of this transaction
pursuant to the Outlot Purchase Agreements.
"Outlot Partnerships" shall mean East Lansing Properties Co.,
Parkway Enterprises Limited Partnership and Township Properties Co.
which are the respective owners of the Outlot Parcels.
"Outlot Purchase Agreement" shall mean the three (3) agreements
of even date herewith between Acquiror or its affiliate and the
Outlot Partnerships, respectively, for the purchase of the Outlot
Parcels.
"Partnership Agreement" shall mean the Second Amended and
Restated Agreement of Limited Partnership of Acquiror, dated June 30,
1998, attached hereto as EXHIBIT L.
"Permitted Exceptions" shall mean the various matters affecting
title to the Properties that are approved or deemed approved by
Acquiror pursuant to SECTION 3.3(C).
"Personal Property" shall mean all Equipment, furniture,
furnishings, trade fixtures and other tangible personal property
directly or indirectly owned by Meridian, that is located at and used
in connection with the operation of the Real Property.
"Property" shall mean the shopping center property known as
"Meridian Mall", which is comprised of the Real Property, Personal
Property, Leases, Contracts and Intangible Property that is a part
thereof.
"REA" shall mean the
(1) Operating Agreement between Meridian Mall Associates,
Meridian Plaza and Dayton-Hudson Corporation dated June 1, 1981,
recorded in Liber 1380, Page 1112 of Ingham County, Michigan
Records, as amended by a Supplement to Operating Agreement dated
June 1, 1981, a second Supplement to Operating Agreement dated
as of August 11, 1986, a third Supplement to Operating Agreement
dated as of October 31, 1986, and a fourth Supplement to
Operating Agreement dated July 21, 1987, which was recorded in
Liber 1649, Page 256 of Ingham County, Michigan Records (the
"Hudson REA").
(2) Reciprocal Easement Agreement dated August 31, 1977,
between Roger E. Benjamin and Leonard Perlick, Trustees, and
Meridian Plaza, recorded in Liber 1241,
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Page 938 of Ingham County, Michigan Records, as the same may
have been amended as set forth on Exhibit P.
(3) Reciprocal Easement Agreement dated as of October 2,
1992, between Meridian Mall Associates, Meridian Plaza and Park
Central Properties, recorded in Liber 2021, Page 839 of Ingham
County, Michigan Records, as the same may have been amended as
set forth on Exhibit P.
(4) Reciprocal Easement Agreement, dated June 15, 1989,
by and between Meridian Mall Associates and Meridian Plaza and
Parkway Enterprises Limited Partnership recorded in Liber 1760,
Page 891 of Ingham County Records, as the same may have been
amended as set forth on Exhibit P.
"Real Property" shall mean the Land, the leasehold estate under
the Ground Lease, the Improvements and all rights, privileges,
easements, and appurtenances to the Land or the Improvements,
including, without limitation, (i) any air, development, water,
hydrocarbon or mineral rights held by Meridian, (ii) all licenses,
easements, rights-of-way, claims, rights or benefits, covenants,
conditions and servitudes and other appurtenances used or connected
with the beneficial use or enjoyment of the Land, the leasehold
estate under the Ground Lease or the Improvements, (iii) all rights
or interests relating to any roads, alleys or parking areas adjacent
to or servicing the Land, the leasehold estate under the Ground Lease
or the Improvements, and (iv) all condemnation awards to be made in
lieu of any of the foregoing, or for damages to the Real Property by
reason of the change of grade of any street, highway or avenue.
"Registration Rights Agreement" shall mean EXHIBIT M hereof.
"REIT" shall mean CBL & Associates Properties, Inc., a Delaware
corporation.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Sellers" shall mean those members of Meridian identified as
Exhibit B-1 that shall receive cash at the Closing.
"Stock" shall mean the common stock of the REIT.
"Subsidiary Partnership" shall mean any partnership in which
Acquiror has or may acquire in the future a direct or indirect
interest.
"Surviving Covenants" shall mean those covenants set forth in
SECTIONS 3.1(C) and (D) and SECTION 8.2, as well as those covenants
which survive pursuant to their express provisions.
"Termination Trigger Amount" shall mean One Million Dollars
($1,000,000.00).
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"Title Company" shall mean Lawyers Title Insurance Company.
"Title Report" shall mean the Lawyers Title Insurance Company
Commitment No. 517235, Revision No. 9, dated July 17, 1998 issued
with respect to the Real Property.
"Unadjusted Stock Price" shall mean the weighted (by trading
volume) average daily closing price of the Stock on the New York
Stock Exchange during the fifteen (15) trading days prior to the date
which is five (5) days prior to the Closing Date.
"Violations" shall mean violations of Legal Requirements with
respect to the Property.
ARTICLE II
CONTRIBUTION AND EXCHANGE
Section 2.l Contribution. Meridian agrees to contribute
and convey and Acquiror agrees to accept and assume from Meridian,
for the Net Contribution Consideration and on the terms and
conditions set forth in this Agreement, fee simple and leasehold
title to the Real Property and good and valid title to the remainder
of the Property.
Section 2.2. Contribution Consideration. The Gross
Consideration shall be One Hundred Three Million Two Hundred Twenty-
Five Thousand Dollars ($103,225,000.00) and shall be delivered to
Meridian less (a) Adjustments which reduce the Gross Consideration;
and (b) the amount of the Meridian Indebtedness (including accrued
interest, prepayment penalties and premiums and all other sums due
thereunder) (the "Loan Payoff Amount"); plus any Adjustments which
increase the Gross Consideration (i.e., the Net Contribution
Consideration). The Net Contribution Consideration shall be
delivered partly in cash (the "Cash Consideration") and partly in OP
Units (the "Unit Consideration"). The allocation of the Net
Consideration between the Cash Consideration and the Unit
Consideration shall be in accordance with EXHIBITS B-1 and B-2. The
value of the OP Units shall be determined pursuant to the formula set
forth below. Provided that all conditions precedent to Acquiror's
obligations to Close as set forth in this Agreement have been
satisfied and fulfilled or waived in writing by Acquiror, the Net
Contribution Consideration shall be delivered to Meridian at Closing
pursuant to SECTION 7.2.
Section 2.3. Meridian Indebtedness. Subject to the terms
of this Agreement, the Property shall be subject to the Meridian
Indebtedness when Acquiror acquires the Property at Closing.
Acquiror shall assume Meridian's obligation to repay the Loan Payoff
Amount, to the extent set forth in a letter from the lender under the
Meridian Loan Documents to be delivered to Acquiror prior to Closing.
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Section 2.4. OP Units.
(a) The portion of the Net Contribution Consideration
constituting the Unit Consideration shall be paid by issuance of
OP Units to Meridian in accordance with EXHIBIT B-2. Meridian
acknowledges that the OP Units are not certificated and that,
therefore, the issuance of the OP Units shall be evidenced by
the execution and delivery by Acquiror's general partner of the
Acknowledgment.
(b) The number of OP Units to be delivered in
satisfaction of payment of the Unit Consideration shall be the
number obtained by dividing the Unit Consideration by the
Unadjusted Stock Price. Meridian and Acquiror hereby agree,
conclusively and unconditionally, that such determination as to
the number of OP Units comprising the Unit Consideration shall
be made based upon the Unadjusted Stock Price, regardless of the
price per share of Stock (or any other securities of the REIT)
on the day of Closing, or at any time before or after Closing.
If such calculation would result in a fractional number of OP
Units to be delivered, the Acquiror shall pay the fractional
amount in cash so as to provide for delivery of a round number
of OP Units.
(c) Meridian has delivered or shall deliver to Acquiror a
completed questionnaire ("Investor Questionnaire") providing
information concerning each OP Unit Recipient's status as an
Accredited Investor. On the basis of the information set forth
in the Investor Questionnaires previously delivered to Acquiror
but subject to the provisions of Section 2.4(f), Acquiror agrees
to permit each member of Meridian listed on Exhibit B-2 to
become an OP Unit Recipient and to be admitted as a limited
partner in Acquiror provided that this transaction Closes in
accordance with its terms and each such party executes an
Acknowledgment.
(d) As a condition of receiving OP Units, each member of
Meridian that is an OP Unit Recipient shall deliver to Acquiror,
or to any other party designated by Acquiror, any documentation
that may be required under the Partnership Agreement or any
charter document of the REIT, and such other information and
documentation as may reasonably be requested by Acquiror, at
such time as any OP Units are exchanged for Stock as a condition
of exchanging OP Units. The preceding covenant shall survive
the Closing and shall not merge into any of the conveyancing
documentation delivered at Closing.
(e) The parties acknowledge that the OP Unit Recipients
intend to treat this transaction relating to the exchange of the
Property for OP Units as a tax-free partnership contribution
pursuant to Section 721 of the Code. Acquiror shall cooperate
in all reasonable respects with the OP Unit Recipients to
effectuate such exchange; provided that so long as Acquiror
shall perform in accordance with the terms of this Agreement and
shall not be in breach of any representations, warranties or
covenants set forth herein, (i) Acquiror shall have no liability
whatsoever for any tax
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liability or related expenses of Meridian or any OP Unit Recipient
except as expressly provided herein, and (ii) Acquiror shall have
no obligation to incur any cost, expense or liability, except as
expressly provided herein, unless Meridian or any OP Unit Recipient
has agreed to reimburse and/or indemnify Acquiror to Acquiror's
reasonable satisfaction in connection therewith.
(f) In the event that any of the Perlick entities shall
not have delivered its Investor Questionnaire which is
reasonably satisfactory to Acquiror as of the Closing Date, the
Closing shall occur, but such Perlick entities shall receive
cash in lieu of OP Units.
Section 2.5. Informational Materials. A true and correct
copy of the Partnership Agreement has been furnished by Acquiror to
Meridian. Meridian hereby covenants and agrees that, prior to the
Closing, it shall cause each OP Unit Recipient to deliver to Acquiror
an Acknowledgment that the ownership of OP Units by such OP Unit
Recipient and its respective rights and obligations as a limited
partner of the Acquiror (including, without limitation their right to
transfer, encumber, pledge and exchange OP Units) shall be subject to
all of the express limitations, terms, provisions and restrictions
set forth in the Partnership Agreement. In that regard, Meridian
hereby covenants and agrees that, at Closing, it shall cause each OP
Unit Recipient to execute any and all documentation reasonably
required by the Acquiror and the REIT to formally memorialize the
provisions of this SECTION 2.5. Each OP Unit Recipient further
acknowledges that it has received and reviewed, prior to the date of
this Agreement, the REIT's Annual Report on Form 10-K and Annual
Report to Shareholders for the year ended December 31, 1997, the
REIT's Proxy Statement soliciting proxy materials in connection with
the REIT's 1997 annual meeting, the REIT's Quarterly Report on Form
10-Q for the quarter ended March 31, 1998 and all forms 8-K filed by
the REIT with the SEC Subsequent to December 31, 1997 and all press
releases of the REIT since that date and Meridian agrees and
covenants that each OP Unit Recipient shall so acknowledge on or
prior to the Closing Date. All of the materials and information
referred to in this SECTION 2.5 are listed on EXHIBIT O hereto and
shall be collectively referred to as "Informational Materials."
Section 2.6. Registration Rights. At Closing, Acquiror
shall cause the REIT to confer to each OP Unit Recipient the benefits
of the Registration Rights Agreement, a copy of which has been
delivered to Meridian and is attached hereto as EXHIBIT M.
ARTICLE III
ACQUIROR'S DUE DILIGENCE
Section 3.1 Acquiror's Review and Meridian's Disclaimer.
(a) Acquiror acknowledges that Meridian has afforded
Acquiror and Acquiror's agents and representatives the
opportunity to review all of the Disclosure Materials prior to
the date of this Agreement and will continue to make them
available
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hereafter. In addition to the Disclosure Materials,
and subject to subparagraph (b) below, Meridian will make the
Property available for inspection by Acquiror and/or Acquirors
representatives and agents (as well as Acquiror's lenders and
their respective representatives, agents and contractors) and
such parties shall, at Acquiror's risk, be entitled to conduct
one or more property condition inspections and environmental
audits of the Property and in connection with any of the
foregoing to undertake such reasonable and customary physical,
environmental and other evaluations and/or investigations and/or
inspections of the Property as Acquiror and/or its lenders and
their respective representatives or agents deems appropriate.
Acquiror's (and its lenders') rights hereunder shall, without
limitation specifically include the following:
(i) The Acquiror and/or its lenders and their
respective representatives and agents shall have the
right, subject to the rights of tenants under their
respective Leases, to evaluate and inspect the physical
properties and structures of all Improvements on the
Property, the geological character of the Property, the
compliance of the Property with all Legal Requirements,
the status of operations and title of the Property and
matters of the survey, availability of utilities,
maintenance status and other matters pertaining to the
condition of the Property collectively (the "Property
Condition");
(ii) The Acquiror and its lenders and their
respective representatives and agents shall have the right
to conduct such interviews with tenants and/or adjoining
property owners as Acquiror desires and Meridian shall
facilitate the same; and
(iii) The Acquiror and/or its lenders and their
respective representatives and agents shall have the right
to examine the environmental status, compliance, quality
and condition of the Property, including any and all
Improvements and the subsurface thereof, and all adjacent
and proximate properties (subject to the rights of the
owners and/or occupants of such adjacent and proximate
properties) (the "Environmental Status").
Meridian shall also provide Acquiror and its lenders with
access to the Property and all books, records, files and
documents pertaining to the Property in Meridian's or Meridian's
managing agent's possession or at Meridian's reasonable disposal
at all reasonable times.
(b) Acquiror's exercise of the rights of review and
confirmation set forth in subsection (a) above shall be subject
to the following limitations: (i) any entry onto the Property by
Acquiror, its agents or representatives, shall be during normal
business hours following reasonable prior notice to Meridian and
at Meridian's discretion, accompanied by a representative of
Meridian, (ii) Acquiror shall not conduct any
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drilling, test borings or other disturbance of the Property for
review of soils, compaction, environmental, structural or other
conditions without the prior written consent of Meridian as to the
location and the time of such testing which, at Meridian's discretion,
shall be performed in the presence of a representative of
Meridian, (iii) any discussions or interviews with any
constituent partner, member, manager, shareholder, officer or
director of Meridian or any tenants of the Property or their
personnel, at Meridian's discretion, shall be conducted in the
presence of Meridian or its representatives, (iv) any
discussions or interviews with employees at the Property shall,
at Meridian's election, be conducted in the presence of Meridian
or their representatives, (v) Acquiror shall exercise reasonable
diligence not to disturb the use or occupancy or the conduct of
business at the Property and (vi) Acquiror shall indemnify,
protect, defend and hold Meridian and the Meridian Related
Parties harmless from and against any and all claims, demands,
losses, damages, liabilities, causes of action, liens, costs and
expenses, including, without limitation, reasonable attorneys'
fees and costs (to the extent permitted by law) (but expressly
excluding consequential or incidental damages) related to or
arising out of any entry or inspections performed by Acquiror,
its agents or representatives pursuant to clause (ii) of this
SECTION 3.1(B) or otherwise in violation of the provisions of
this SECTION 3.1(B), and Acquiror, at Acquiror's sole cost and
expense, shall promptly restore the Property and any damage
caused to the Property by any such inspection; provided that
except as expressly set forth herein, Acquiror shall have no
liability to Meridian arising from (x) any physical condition of
or the presence or disturbance of any Hazardous Material at the
Property existing prior to Acquiror's (or its representatives'
or agents') entry, whether known or unknown to Meridian, or
(y) any acts or omissions of Meridian or any of its employees,
agents or contractors (including, without limitation, any damage
due to errors or omissions in information provided to Acquiror
or its employees, agents or contractors) relating to
environmental matters. Meridian shall at all times exercise
reasonable diligence in providing Acquiror with access or
information that Acquiror requests, but shall bear no liability
if Meridian is not able despite reasonable efforts to afford
Acquiror such access or information. If Meridian elects to be
present during the Acquiror's exercise of the rights of review
and confirmation as provided herein, the Meridian shall make its
representative available in a timely fashion so as not to delay
or interfere with Acquiror's schedule or activities in
exercising its rights of review and confirmation. The
provisions of this SECTION 3.1(B) shall survive the Closing.
(c) Acquiror acknowledges (i) that Acquiror has entered
into this Agreement with the intention of making and relying
upon its own investigation of the physical, environmental,
economic and legal condition of the Property, (ii) that, other
than as specifically set forth in this Agreement, Meridian or
anyone acting or claiming to act on behalf of Meridian is not
making and has not at any time made any representation or
warranty of any kind or nature, either oral or written, directly
or indirectly, expressed, implied, statutory or otherwise, with
respect to the Property, including, without limitation,
representations or warranties as to habitability,
merchantability, fitness for a particular purpose, title (other
than Meridian's limited
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warranty of title set forth in the Deed), zoning, tax consequences,
latent or patent physical or environmental condition, health or
safety matters, utilities, operating history or projections,
valuation, projections, the applicability of any laws, rules or
regulations or compliance therewith, or the truth, accuracy or
completeness of the Disclosure Materials, (iii) other than as
specifically set forth in this Agreement, Acquiror is not relying
upon and is not entitled to rely upon any representations and/or
warranties made by Meridian or anyone acting or claiming to act on
behalf of Meridian, (iv) that the Disclosure Materials include certain
soil, environmental and physical reports prepared for Meridian
or Meridian's lenders by third parties as to which reports
Acquiror has no right of reliance except as expressly provided
in such reports, and Acquiror acknowledges that Acquiror has
conducted an independent evaluation and Meridian or anyone
acting or claiming to act on behalf of Meridian has made no
representations or warranties whatsoever as to accuracy,
completeness or adequacy of such reports and (v) that the
Disclosure Materials include certain economic projections that
reflect assumptions as to future market status and future
Property income and expense with respect to the Property which
are inherently uncertain and as to which Meridian has made no
representation, guaranty or warranty whatsoever. Acquiror
further acknowledges that Acquiror has not received from
Meridian or anyone acting or claiming to act on behalf of
Meridian, any accounting, tax, legal, architectural,
engineering, property management or other advice with respect to
this transaction and that Acquiror is relying solely upon the
advice of its own accounting, tax, legal, architectural,
engineering, property management and other advisors. Based upon
Acquiror's familiarity with the Property, Acquiror's due
diligence relating to the Property and Acquiror's experience and
knowledge as to the market in which the Property is situated and
as to investment in and operation of real estate in the nature
of the Property and commercial real estate in general, Acquiror
shall acquire the Property on the Closing Date in its "AS IS,
WHERE IS AND WITH ALL FAULTS" condition, without any
representation or warranty whatsoever except as expressly
provided in this Agreement, as aforesaid, and, except as
expressly provided in this Agreement, Acquiror fully assumes the
risk that adverse latent or patent physical, structural,
environmental, economic or legal conditions may not have been
revealed by Acquiror's investigations. Meridian and Acquiror
acknowledge that the Net Contribution Consideration to be paid
to Meridian for the Property has taken into account that the
Property is being contributed as the case may be, subject to the
provisions of this SECTION 3.1. Except as set forth in SECTION
5.6 nothing in this SECTION 3.1 shall be deemed to impair, limit
or otherwise affect Acquiror's rights under this Agreement in
respect of the representations, warranties and covenants of
Meridian set forth in this Agreement and the other express
provisions hereof binding on Meridian, and except as set forth
in SECTION 5.6 nothing contained in this SECTION 3.1 shall be
deemed to constitute a waiver by Acquiror of its rights at law
or in equity, if any, to seek contribution or other recourse
against Meridian in the event of a claim asserted against
Acquiror by a third party with respect to liabilities arising
from or relating to a breach of any express representations,
warranties or covenants by Meridian hereunder to the extent that
such representation, warranty or covenant has
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not been terminated pursuant to Section 5.6 (a). Meridian and
Acquiror agree that the provisions of this SECTION 3.1 shall
survive the Closing of this transaction.
(d) Without limiting the generality of the provisions of
this SECTION 3.1, except as expressly provided in this
Agreement, Meridian makes no representations or warranties as to
the presence or absence of any Hazardous Materials in, on, under
or about the Properties. Except as expressly provided in
Section 5.1(b) (xviii) or (xxii) of this Agreement. Acquiror
specifically waives any private right of action provided , and
agrees (for itself or anyone deriving rights by or through
Acquiror) not to sue or join Meridian in any suit, claim or
cause of action relating to environmental matters under CERCLA
or any other Environmental Laws and/or any principles of common
law to recover or be reimbursed for any liabilities, costs,
fees, or expenses from Meridian, Meridian Related Parties, or
any predecessors in interest; provided, however, that in no
circumstances will Acquiror protect, defend, hold harmless,
reimburse or indemnify Meridian or any Meridian Related Party in
any way from claims brought against Meridian or any Meridian
Related Party by any third parties in connection with the
presence of any Hazardous Materials or any violation of
Environmental Laws and/or common law relating to environmental
matters existing prior to the Closing Date. The provisions of
this SECTION 3.1(D) shall survive the Closing of this
transaction.
(e) Subject solely to SECTION 7.3 and the representations
set forth in SECTION 5.1, except as may be limited as set forth
in SECTION 5.6, effective as of the Closing Date, Acquiror, for
itself and its agents, partners, members, shareholders,
officers, directors, managers, affiliates, successors and
assigns, hereby releases and forever discharges Meridian and the
Meridian Related Parties from any and all rights, claims,
actions, causes of action, demands and liabilities at law or in
equity, whether known or unknown at the time of this Agreement
(collectively, "Claims"), which Acquiror has or may have in the
future, arising out of or related to the physical, structural,
environmental, economic or legal condition of the Property,
including, without limitation, all claims in tort or contract
and any claim for indemnification or contribution arising under
CERCLA or any other Environmental Laws or any other federal,
state or local statute, rule or ordinance now or at any time
hereafter in effect relating to liability of property owners or
operators for environmental matters, but excluding (i) claims
and liabilities specified in SECTION 5.2, subject to the
limitations in SECTION 5.6, or (ii) claims arising as a result
of gross negligence or wilful wrongdoing on the part of
Meridian. Without limiting the foregoing, on the Closing Date,
Acquiror shall be deemed to have waived, relinquished and
released Meridian and all of the Meridian Related Parties from
any and all Claims and other matters arising out of latent or
patent defects or physical conditions, violations of applicable
laws and any and all other acts, omissions, events,
circumstances or matters affecting the Property, subject,
however, to Acquiror's rights and remedies provided for in this
Agreement in the event of the breach of any of Meridian's
express warranties, representations or covenants contained
herein, subject to the limitations in SECTION 5.6, and subject
to the next to last sentence of SECTION 3.1(C) hereof.
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Section 3.2 Material Adverse Matters.
(a) On or prior to the last day of the Confirmation
Period, Acquiror has delivered to Meridian the Confirmation
Letter, as attached as EXHIBIT C, confirming, other than as
specified in the Confirmation Letter, Acquiror's satisfaction as
to the absence of any Adverse Matters Amount in excess of the
Materiality Threshold Amount. Acquiror's failure to deliver to
Meridian, on or prior to the last day of the Confirmation
Period, an executed Confirmation Letter shall be conclusively
deemed as Acquiror's confirmation of the absence of any Adverse
Matters Amount in excess of the Materiality Threshold Amount.
Other than for (i) breaches of Meridian's representations,
warranties and covenants as expressly set forth in this
Agreement that are discovered following the close of the
Confirmation Period, (ii) matters identified in tenant or lender
estoppel certificates which are inconsistent with written
disclosures or representations by Meridian on or prior to the
date hereof, (iii) matters discovered in the documents listed in
Exhibit I and designated with an asterisk OR (iv) events which
occur following the Confirmation Period but prior to Closing and
which are not covered by insurance or condemnation proceeds
(which are governed by SECTION 8.1 hereof) (collectively, "Post
Confirmation Period Material Events"), Acquiror and Meridian
shall have no rights or obligations based upon, and Acquiror
specifically waives any rights or claims relating to, any
Adverse Matters not identified (in accordance with the terms of
this Agreement) in the Confirmation Letter for any reason
whatsoever, including, without limitation, (i) mandatory
exclusion from the Confirmation Letter because the Adverse
Matters Amount does not exceed the Materiality Threshold Amount,
or (ii) Acquiror's failure or inability for any reason (unless
such reason results from Meridian's deliberate and malicious
action or inaction) to identify such Adverse Matters prior to
the close of the Confirmation Period.
(b) If the Adverse Matters Amount exceeds the Materiality
Threshold Amount, the Confirmation Letter shall set forth
(i) the exact nature of any claimed Adverse Matters that
contributed to such excess and the manner in which any such
claimed Adverse Matters have an adverse effect on the value of
the Property and/or the Outlot Parcels and (ii) reasonably
detailed evidence of the existence of such Adverse Matters and
Acquiror's rationale for and calculation of the Adverse Matters
Amount.
(c) If the Adverse Matters Amount, as reflected in the
Confirmation Letter, is less than Termination Trigger Amount but
more than the Materiality Threshold Amount, the Gross
Consideration shall be reduced by the Property's pro rata share
(based on the portion of the Adverse Matters Amount attributable
to the Property, with any excess allocated among Meridian and
the Outlot Parcels in a manner equitably determined by the
sellers of such properties) (its "Pro Rata Share") of the excess
of (i) the Adverse Matters Amount over (ii) the Materiality
Threshold Amount as reduced by the excess, if any, of the
Materiality Threshold Amount in the Janesville Transaction over
the Adverse Matters Amount in the Janesville Transaction. For
example, if the
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Adverse Matters Amount is $750,000 (i.e.
$250,000 above the Materiality Threshold Amount for the
Property), and the Adverse Matters Amount in the Janesville
Transaction is $400,000 (i.e. $100,000 below the Materiality
Threshold Amount for the Janesville Transaction), the Gross
Consideration for the Property shall be reduced by the
Property's Pro Rata Share of $150,000 instead of $250,000. In
such event the parties shall be obligated to Close this
transaction on the Closing Date in accordance with the terms of
this Agreement, but Meridian shall have the right to arbitrate
the Adverse Matters Amount pursuant to the arbitration
provisions set forth in SECTION 8.5 below. In the event that
the Janesville Transaction does not close prior to or
substantially contemporaneously with the Closing hereunder, the
calculation of the reduction in the Gross Consideration pursuant
to this SECTION 3.2(C) shall be made without regard to the
Adverse Matters Amount in the Janesville Transaction; provided,
however, that promptly following the closing of the Janesville
Transaction, such reduction in the Gross Consideration shall be
recalculated to take account of the excess, if any, of the
Materiality Threshold Amount in the Janesville Transaction over
the Adverse Matters Amount in the Janesville Transaction,
whereupon Meridian or Acquiror, as the case may be, shall pay,
in accordance with the terms of SECTION 7.3(G), to the other
party an amount equal to the adjustment that should have been
made in the Gross Consideration. The provisions of this Section
3.2(c) shall survive the Closing.
(d) If the Adverse Matters Amount, as reflected in the
Confirmation Letter, is greater than the Termination Trigger
Amount, then Acquiror shall elect in the Confirmation Letter
either (i) to Close this transaction on the basis of a reduction
of the Gross Consideration by the Property's Pro Rata Share of
the difference between the Termination Trigger Amount and the
Materiality Threshold Amount (but without any reduction in the
Gross Consideration for the excess over the Termination Trigger
Amount), or (ii) to terminate this Agreement (the "Termination
Notice"). Upon receipt by Meridian of the Confirmation Letter
with a Termination Notice, Meridian shall elect, within five (5)
Business Days thereafter, one of the following: (A) to agree to
the termination of this Agreement, in which event the Deposit
shall be returned to Acquiror; (B) to agree to Close this
transaction on the basis of a reduction in the Gross
Consideration in the full amount of the Property's Pro Rata
Share of the excess of the Adverse Matters Amount over the
Materiality Threshold Amount, in which event the parties shall
be obligated to Close this transaction on the Closing Date in
accordance with the terms of this Agreement, or (C) to elect to
pursue arbitration pursuant to SECTION 8.5 below, in which
event, Meridian shall be obligated to Close the transaction (in
accordance with clause (B) of this sentence but using the
arbitrator's determination of the Adverse Matters Amount as the
basis for reducing the Gross Consideration) if the arbitrator(s)
agree(s) with Meridian's position regarding the Adverse Matters
Amount, or Meridian shall be permitted to terminate this
Agreement if the arbitrator(s) agree(s) with Acquiror's position
regarding the Adverse Matters Amount, or, in the alternative, to
Close this transaction in accordance with Clause (B) of this
sentence. In the event that Acquiror shall elect to Close this
transaction pursuant to clause (i) above, Meridian shall have
the right to arbitrate the Adverse Matters Amount pursuant
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to the arbitration provisions set forth in SECTION 8.5, but
notwithstanding the outcome of said arbitration, Meridian shall
be obligated to Close this transaction, provided that the
reduction in the Gross Consideration shall be the difference
between the lesser of the Property's Pro Rata Share of the
Termination Trigger Amount or the Adverse Matters Amount
determined by arbitration, on the one hand, and, on the other
hand, the Materiality Threshold Amount. Notwithstanding
anything to the contrary set forth in this Agreement, if the
Property's Pro Rata Share of the Adverse Matters Amount exceeds
ten percent (10%) of the Gross Consideration, Acquiror may elect
to terminate this Agreement without regard to Meridian's
willingness to reduce the Gross Consideration by an amount equal
to the Property's Pro Rata Share of the excess of the Adverse
Matters Amount over the Materiality Threshold Amount, subject
to Meridian's right to arbitrate the Adverse Matters Amount
pursuant to SECTION 8.5. Notwithstanding anything herein to the
contrary, the amount of the reduction in the Gross Consideration
shall be reduced by the Property's Pro Rata Share of the excess,
if any, of the Materiality Threshold Amount over the Adverse
Matters Amount in the Janesville Transaction.
(e) In the event that Meridian has elected to pursue
arbitration pursuant to clause (C) of SECTION 3.2(D) hereof, the
termination by Acquiror pursuant to clause (ii) of such Section
shall not be effective until the conclusion of such arbitration.
If such arbitration shall have determined that the Adverse
Matters Amount is greater than the Termination Trigger Amount,
this Agreement shall be terminated unless Meridian elects,
within five (5) Business Days after receipt of notice of such
determination through arbitration to agree to Close this
transaction on the basis of a reduction in the Gross
Consideration in the full amount of the Property's Pro Rata
Share of the excess of the Adverse Matters Amount over the
Materiality Threshold Amount by giving written notice to
Acquiror, in which event the Closing shall occur on the second
business day after Acquiror receives such notice. In addition,
if Meridian shall have elected to pursue arbitration pursuant to
clause (C) of SECTION 3.2(D), Meridian shall have the right to
require that the Closing occur on the Closing Date prior to the
conclusion of the arbitration, in which event the parties shall
be obligated to Close this transaction on the Closing Date and
the Gross Consideration shall be reduced by the Property's Pro
Rata Share of the excess of the Adverse Matters Amount over the
Materiality Threshold Amount as determined by such arbitration.
Escrow arrangements shall be made pursuant to the provisions of
SECTION 8.5(D) hereof.
(f) In the event that Post-Confirmation Period Material
Events (as defined in SECTION 3.2(A)) occur prior to the Closing
Date, Acquiror as its sole remedy shall be entitled to
recalculate the Adverse Matters Amount by adding to the amount
of Adverse Matters discovered during the Confirmation Period the
amount of any new Adverse Matters created as a result of a Post
Confirmation Period Material Event and deliver a new
Confirmation Notice to Meridian prior to the scheduled Closing
Date setting forth the results of such recalculation and
containing the information required under SECTION 3.2(A).
Thereupon, the procedures set forth in SECTIONS 3.2(B),(C),(D)
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and (E) shall be implemented, and the Closing Date shall be
delayed a sufficient period of time to permit such
implementation.
(g) Notwithstanding anything in this Agreement to the
contrary, any matters identified by Acquiror prior to the
Closing Date that constitute breaches of representations,
warranties and covenants and also constitute Adverse Matters
shall be treated solely as Adverse Matters and shall not be the
subject of any claim for breach of representation, warranty or
covenant under ARTICLE V.
(h) Notwithstanding anything to the contrary set forth
above, Acquiror and Meridian agree that the following categories
of Adverse Matters ("Non-Curable Adverse Matters"), if
discovered or occurring with respect to the Property and/or the
Outlot Parcels at any time after the date hereof and prior to
Closing, are not readily quantifiable or are otherwise not of a
nature which Acquiror should be obligated to accept even if
Meridian were prepared to reduce the Net Consideration: A
release of Hazardous Materials which is of such seriousness as
to materially adversely affect the viability of the Property
and/or the Outlot Parcels as a shopping center. Within three
(3) Business Days following the discovery or occurrence of a
Non-Curable Adverse Matter, Acquiror shall notify Meridian of
the nature of the Non-Curable Adverse Matter and that Acquiror
elects (i) to terminate this Agreement; (ii) to Close this
transaction without adjustment to the Net Meridian
Consideration, notwithstanding the existence of such Non-Curable
Adverse Matter, or (iii) to Close this transaction provided that
Meridian agrees to cure such Non-Curable Adverse Matter in a
manner reasonably satisfactory to Acquiror or to reduce the Net
Consideration by an amount reasonably acceptable to Acquiror.
In the event that Acquiror elects item (iii) in the preceding
sentence, Meridian shall elect, by written notice to Acquiror,
within five (5) Business Days thereafter, either (x) to agree to
cure the Non-Curable Adverse Matter in a manner proposed in such
notice or to accept a reduction in the Net Contribution
Consideration by an amount proposed in such notice, or (y) to
terminate this Agreement. If Meridian elects to terminate this
Agreement, Acquiror shall have the right, by written notice to
Meridian within five (5) Business Days thereafter, to proceed to
Close the transaction without cure or reduction, in which event
Meridian shall be obligated to Close the transaction.
Notwithstanding anything to the contrary set forth above, in the
event the Meridian disputes the existence of a Non-Curable
Adverse Matter alleged by Acquiror, Meridian shall be entitled
to arbitrate the matter pursuant to the provisions of
SECTION 8.5.
(i) Acquiror has advised Meridian that the environmental
engineers engaged by Acquiror to perform due diligence with
respect to the Property (the "Consultant") have advised
Acquiror and U.S. Bank, N.A., its proposed lender for the
acquisition, that core samples and additional Phase II
environmental survey work, which shall be reasonably approved by
Meridian in writing (the "Phase II Work") must be performed to
determine whether there are any Petroleum products in the Soil
which have been released from certain oil pipelines that crossed
the Property during the 1960's (the
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"Potential Pipeline Spill") in the three (3) areas designated by
the Consultant where spills occurred in 1963, 1968 and 1969.
Following the execution of this Agreement Acquiror shall as
promptly as is reasonably practical perform such Phase II Work.
If any environmental contamination of the Property is revealed by
the Phase II Work which requires abatement or management under
applicable laws, the Acquiror's Consultant, in conjunction with
Meridian's Consultant, whose reasonable fees, costs and expenses
will be paid by Acquiror, shall provide a detailed analysis of the
costs of regulatory reporting, monitoring and/or remediation of same
in the manner and to the extent required by applicable law (the
"Remediation"). In the event Meridian disputes the existence of
such contamination, the extent of the required Remediation or
the PPS Costs, Meridian shall be entitled to arbitrate the
matter pursuant to SECTION 8.5 by giving notification five (5)
Business Days after Acquiror notifies Meridian of the required
Remediation, and/or estimated PPS Costs. (The estimated
reporting, monitoring and remediation costs, as so determined
are herein called the "PPS Costs"). Within one (1) day after
the determination of the PPS Costs, Meridian and Acquiror shall,
on the request of either party, execute a statement confirming
the PPS Costs (the "Confirmation"). Failure by either party to
respond within five (5) days after receipt of notice shall be
deemed an agreement with the other party's statement of the PPS
Costs. If the PPS Costs are $1,000,000, or less, Acquiror shall
be required to Close the transaction without any reduction or
abatement of the Gross Consideration. If the PPS Costs are more
than $1,000,000 but less than $3,000,000, the Closing shall
occur, but the Gross Consideration shall be reduced by 50% of
the excess of the PPS Costs over $1,000,000. If the PPS Costs
exceed $3,000,000 either Acquiror or Meridian shall have the
right to terminate this Agreement by giving notice within two
(2) Business Days after the PPS Costs are determined unless the
other party elects, within two (2) Business Days after notice of
the first party's election to terminate, to bear the entire cost
of such excess; provided that if the PPS Costs exceed
$10,000,000 Meridian may not reinstate the Agreement following a
termination by Acquiror. Failure by the parties to give a
termination notice within the time periods set forth herein
shall be deemed to be an irrevocable waiver of such termination
right in which event the Closing shall occur and the Gross
Consideration shall be reduced by 50% of the excess of the PPS
Costs over $1,000,000. Upon the termination of this Agreement
hereunder the Deposit shall be returned to Acquiror. The
provisions of this SECTION 3.2(I) shall govern and control all
matters relating to the Potential Pipeline Spill. The reduction
in the Gross Consideration with respect to the Potential
Pipeline Spill as set forth in this paragraph shall be
Meridian's sole obligations with respect to payment of the PPS
Costs. Notwithstanding any provision of this paragraph to the
contrary, in no event shall Acquiror be required to proceed to
Closing and Acquiror shall retain the right to terminate this
Agreement unless the PPS Costs have been fully resolved as
provided in this SECTION 3.2(I). Acquiror shall have the right
to terminate all (but not less than all) of this Agreement, the
Janesville Agreement and the Other Agreements if following the
Phase II environmental assessment the institutional lending
community would not provide non-recourse financing with recourse
to Acquiror but not to its partners (with normal carve outs and
an environmental indemnity) on normal terms and conditions,
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assuming the PPC Costs are secured by the borrower with cash or
other security, for the remediation of the Potential Pipeline
Spill and/or taking account any risk assessment analysis. Any
dispute concerning the institutional lending community standard
shall be resolved by arbitration in accordance with Section 8.5.
Time shall be of the essence with regard to the time periods set
forth herein.
Section 3.3 Title Exceptions.
(a) Acquiror has secured and may continue to secure, at
Acquiror's expense, during the Confirmation Period any
additional title report or survey updates desired by Acquiror.
Any title exceptions or issues disclosed by title or survey
updates, disclosed by Meridian to Acquiror or otherwise
identified by Acquiror, and which are not within the definition
of Permitted Exceptions, shall be referred to as "Additional
Exceptions." Acquiror, in any event, shall endeavor in good
faith to cause the Title Company to delete or insure over any
Additional Exceptions prior to Acquiror's expression of such
matters in an Additional Exception Notice (as hereinafter
defined).
(b) Acquiror shall have the right to deliver a notice to
Meridian identifying any Additional Exceptions ("Additional
Exception Notice") (i) on or prior to the expiration of the
Confirmation Period, and (ii) on or prior to the Closing Date
solely with respect to matters that (A) are set forth in an
update to the Title Report first received by Acquiror after the
expiration of the Confirmation Period which materially and
adversely affect the Property or Acquiror's rights in the
Property, or (B) arise as a result of an act or omission of
Meridian or any of its members, employees or agents and
materially and adversely affect the Property or Acquiror's
rights in the Property. Acquiror's failure to deliver any such
notice in timely fashion shall be deemed an approval of the
applicable Additional Exceptions disclosed to Acquiror in the
Title Report or any title or survey updates, or disclosed to
Acquiror by Meridian in writing or otherwise discovered by
Acquiror during the Confirmation Period. Except as set forth
above, Acquiror shall have no right to deliver an Additional
Exception Notice following the close of the Confirmation Period.
If Acquiror delivers an Additional Exception Notice within such
period, Acquiror and Meridian shall promptly attempt to agree
upon the method or cost to cure or remove such Additional
Exception or, if not susceptible to cure or removal such
Additional Exception shall be deemed to be an Adverse Matter and
shall be resolved in accordance with the procedures set forth in
SECTION 3.2. Notwithstanding the foregoing, Acquiror shall not
have the right to object to any Additional Exception if the
Title Company is willing to affirmatively insure or endorse over
such Additional Exception at Meridian's expense.
(c) "Permitted Exceptions" shall refer to (i) all Leases
listed on the Lease List; (ii) any and all exceptions to title
set forth in the Title Report attached as EXHIBIT P or the
Survey identified on EXHIBIT P, (iii) zoning ordinances and
regulations and other similar laws or regulations governing use
or enjoyment of the Property, (iv) matters affecting title
created by or with the written consent of Acquiror,
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(v) liens to secure taxes and assessments not yet due and payable,
(vi) mortgages or deeds of trust and related encumbrances
securing the Meridian Indebtedness, (vii) the Ground Lease,
(viii) the REA and (ix) any Additional Exceptions agreed to or
accepted by Acquiror in writing in accordance with the terms of
this Agreement. Notwithstanding the foregoing, on the Closing
Date, Meridian shall, at Meridian' sole cost and expense, remove
any liens of any mortgages or deeds of trust securing
indebtedness of Meridian (excluding therefrom the Meridian Loan
Documents), liens for other monetary obligations that are not
assumed by Acquiror (for such purposes, all unpaid installments
of assessments not yet due and payable collected with ad valorem
real estate taxes shall be assumed by Acquiror, subject to the
prorations set forth in SECTION 7.3, and represent Permitted
Exceptions) and any title matters created in violation of
Meridian' covenant set forth in SECTION 5.2(H), except for any
Additional Exceptions agreed to or accepted by Acquiror in
writing in accordance with the terms of this Agreement.
(d) Meridian shall have no obligation to execute any
affidavits or indemnifications in connection with the issuance
of the Title Policy (hereinafter defined in SECTION 4.1(A)),
excepting only customary affidavits such as regarding authority,
the non-foreign status of Meridian, the rights of tenants in
possession and the status of mechanics' liens in the form
attached hereto as EXHIBIT Q.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4. l Conditions.
(a) Notwithstanding anything in this Agreement to the
contrary, Acquiror's obligation to acquire the Property shall be
subject to and contingent upon the satisfaction or waiver of
each of the following conditions precedent at or prior to
Closing:
(i) The written commitment, upon the sole
condition of the payment of any regularly scheduled
premium, of the Title Company to issue, with respect to
the Property, an American Land Title Association Owner's
Policy of Title Insurance in conformity with the Title
Report (to the extent the same relates to the Property)
(the "Title Policy") insuring Meridian's fee simple and
leasehold title to the Real Property on the Closing Date
in an amount equal to the Gross Consideration, subject
only to the printed conditions and exceptions of such
policy, the Permitted Exceptions and such Additional
Exceptions as are agreed to by Acquiror pursuant to
SECTION 3.3(B) above, together with such customary
endorsements and affirmative coverage as Acquiror shall
reasonably request; provided that Meridian shall bear no
additional expense as a result thereof;
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(ii) Meridian's performance, observance or tender
of performance of all Closing obligations and other
material covenants and conditions required of Meridian
under this Agreement;
(iii) All representations and warranties of Meridian
set forth in SECTIONS 5.1(A) hereof 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 and Meridian shall
have so certified in writing (provided that nothing herein
is intended to abrogate Acquiror's right to terminate this
transaction pursuant to SECTION 3.2 based upon breaches of
the representations and warranties set forth in SECTION
5.1(B));
(iv) Receipt by Acquiror no later than the Closing
Date of the following estoppel letters:
(A) Estoppel letters from Hudsons, Mervyns,
Service Merchandise and J.C. Penney (collectively,
the "Majors") dated no earlier than sixty (60) days
prior to Closing in the form required under their
respective Leases (provided that Meridian shall make
reasonable efforts to obtain estoppel letters on the
form attached hereto as EXHIBIT R); and
(B) Estoppels dated no earlier than sixty (60)
days prior to Closing in the form attached hereto as
EXHIBIT R from all tenants under Leases of Ten
Thousand (10,000) square feet or more of gross
leasable area within the Property and from not less
than seventy-five (75%) of all other tenants of the
Property leasing less than ten thousand (10,000)
square feet computed by reference to gross leasable
area; and
(C) In addition to the foregoing estoppels, a
master estoppel in the form attached hereto as
EXHIBIT S (the "Master Estoppel") from Meridian with
respect to all Leases (other than the Leases
described in subparagraph (A) and Leases of 10,000
square feet or more of gross leasable area unless
Acquiror has waived in writing such conditions as to
any such Lease) for which estoppels have not been
obtained and delivered. For one (1) year after
Closing, Meridian shall use its reasonable good faith
efforts to obtain and deliver such tenant estoppels.
Any statements made by Meridian in such Master
Estoppel shall constitute warranties and
representations by Meridian which shall survive the
Closing until the earlier to occur of (x) the first
anniversary of the Closing Date, or (y) the date on
which any tenant supplies its own estoppel, to the
extent such tenant's estoppel covers the items set
forth in the Master Estoppel; provided, however, that
to the extent that any tenant estoppel differs
materially from the Master Estoppel, Acquiror
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shall be permitted to treat such material difference as
a claim for breach of a representation or warranty
pursuant to SECTION 5.5(B); and provided, further,
that, notwithstanding anything in this Agreement to
the contrary, Acquiror shall have until the earlier
of (i) three (3) months after the receipt by Acquiror
of the tenant estoppel in question, or (ii) one (1)
year after Closing, to deliver a Claim Notice to
Meridian with respect to such breach; and
(D) Estoppel letters from the lessor under
each Ground Lease dated no earlier than forty-five
(45) days prior to the Closing in the form attached
hereto as EXHIBIT T.
Notwithstanding anything in this Agreement to the
contrary, if the foregoing condition (iv) has not been
satisfied or waived on or before the scheduled Closing
Date, Meridian shall have the right to extend the Closing
Date until the earlier of (x) sixty (60) days following
the scheduled Closing Date or (y) the date on which such
conditions are satisfied or waived.
(v) The execution and delivery by all OP Unit
Recipients of the Acknowledgment.
(vi) There having occurred no Non-Curable Adverse
Matters following the Contract Date; unless the foregoing
condition is waived by Acquiror pursuant to the provisions
of SECTION 3.2(H).
(vii) The following shall not have occurred:
(A) the bankruptcy of any Major; or
(B) the actual, or delivery of notice of,
closing of business of the store operated by any of
the Majors other than for repairs, inventory,
remodeling and similar matters which are intended to
be on a temporary basis.
(viii) There being no material litigation or
other proceeding pending against the Property that would
have a material adverse effect on the Property or
Acquiror's use thereof as a shopping center.
(ix) Intentionally Deleted.
(x) Intentionally Deleted.
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(xi) Receipt by Escrow Agent of a payoff letter
with respect to the Meridian Indebtedness confirming the
Loan Payoff Amount, together with any instruments
necessary to confirm the satisfaction in full of the Loan
Payoff Amount;
(xii) The Ground Lease not having been terminated,
no default beyond applicable cure period then existing
thereunder and no notice of default having been delivered
to Meridian by any ground lessor thereunder which has not
been cured;
(xiii) Each ground lessor under the Ground Lease
shall have delivered a joinder and subordination or other
similar agreement in the form attached hereto as Exhibit
T-1; and
(xiv) Each ground lessor shall have consented (to
the extent it has any right to consent) in writing to the
financing to be put on the Property by Acquiror
immediately following the Closing.
(xv) The purchase by Acquiror or its affiliates of
the Outlot Parcels shall have closed, or shall close
immediately after the Closing of this transaction;
provided, however, that Acquiror shall be deemed to have
waived the condition set forth in this clause (xv) if the
failure of any Outlot Parcel(s) to close shall have been
caused by the default of the Acquiror or its affiliates
under the Outlot Purchase Agreement in question.
(b) Notwithstanding anything in this Agreement to the
contrary, Meridian's obligation to sell the Property shall be
subject to and contingent upon the satisfaction or waiver of the
following conditions precedent at or prior to Closing:
(i) Acquiror's performance or tender of
performance of all Closing obligations and other material
covenants and conditions required of Acquiror under this
Agreement;
(ii) All representations and warranties of Acquiror
set forth in ARTICLE V hereof 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 and Acquiror shall have so
certified in writing; and
(iii) The purchase by Acquiror of the Outlot Parcels
shall have closed, or shall close immediately after the
Closing of this transaction, provided, however, that
Meridian shall be deemed to have waived the condition set
forth in this clause (iii) if the failure of any Outlot
Parcel(s) to close shall have been caused by any reason
other than the default of Acquiror under the Outlot
Purchase Agreement with respect thereto; and
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(iii) The execution and delivery by Acquiror of
the Acknowledgment.
Section 4.2 Failure or Waiver of Conditions Precedent. If
any of the conditions set forth in SECTION 4.1 are not fulfilled or
waived at or prior to Closing, then the party benefitted by such
condition may, by written notice to the other party, terminate this
Agreement, whereupon all rights and obligations hereunder of each
party shall cease and terminate and be of no further force or effect
except for the Surviving Covenants, unless the other party is able to
secure the satisfaction of the noted condition within five (5)
Business Days of such termination notice, in which event this
Agreement shall not terminate. Notwithstanding the foregoing, the
termination of this Agreement pursuant to this SECTION 4.2 shall not
be deemed to waive any rights that a party may have pursuant to
Article VI of this Agreement. Either party may, at its election, at
any time or times at or before the Closing, waive in writing the
benefit of any of the conditions set forth in SECTION 4.1(A) and
SECTION 4.1(B). In any event, Acquiror's consent to the Close of
escrow pursuant to this Agreement shall waive any remaining
unfulfilled conditions except as otherwise specified by the
provisions in writing. If this Agreement is terminated by Acquiror
as a result of the failure of any condition set forth in SECTION
4.1(A) or by Meridian as a result of the failure of the condition set
forth in SECTIONS 4.1(B)(I), the Title Company, as escrow agent,
shall return the full amount of the Deposit to Acquiror, together
with any interest accrued thereon. Notwithstanding anything to the
contrary contained herein, (i) Acquiror may only waive the condition
set forth in SECTION 4.1(A)(XV) hereof if all of Acquiror's
conditions precedent in each of the Outlot Purchase Agreements (other
than those under which the seller thereunder shall have defaulted)
shall have been satisfied or waived and the purchaser thereunder
shall be ready, willing and able to close thereunder, and (ii)
Meridian may only waive the conditions set forth in
SECTION 4.1(B)(III) hereof if all of the seller's conditions
precedent in each of the Outlot Purchase Agreements (other than those
under which Acquiror shall have defaulted) shall have been satisfied
or waived and the sellers thereunder shall be ready, willing and able
to close thereunder.
ARTICLE V
COVENANTS WARRANTIES AND REPRESENTATIONS
Section 5.1 Meridian's Warranties and Representations.
Meridian makes the following representations and warranties to
Acquiror, provided that Acquiror acknowledges and agrees that each of
such representations and warranties shall be deemed expressly
qualified by any information set forth on the Disclosure Materials
List and Statement or in the Disclosure Materials set forth on the
Disclosure Materials List & Statement.
(a) Organizational Representations. Meridian represents
and warrants as follows:
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(i) Meridian is a limited liability company
organized, validly existing and in good standing under the
laws of the State of Ohio and has qualified to do business
in the State of Michigan. Meridian has full power and
lawful authority to enter into and carry out the terms and
provisions of this Agreement and to execute and deliver
all documents which are contemplated by this Agreement,
and all actions of Meridian necessary to confer such power
and authority upon the persons executing this Agreement
(and all documents which are contemplated by this
Agreement) on behalf of Meridian have been taken and this
Agreement constitutes a valid and legally binding
obligation of Meridian enforceable against Meridian 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
principles of equity.
(ii) Meridian's execution and delivery of this
Agreement, the consummation of the transactions
contemplated hereby and the performance of Meridian's
obligations under the instruments required to be delivered
by Meridian at the Closing, do not and will not require
the consent, approval or other authorization of, or
registration, declaration or filing with, or payment of
any premium, fee or penalty to any Governmental Authority
(excepting the recordation of Closing documents to the
extent contemplated in this Agreement and any transfer
taxes payable in connection therewith) and do not and will
not result in the creation of or claim of any lien, charge
or encumbrance upon the Property or any portion thereof or
any violation of, or default under, any law, regulation,
rule, order or judgment of any Governmental Authority or
any term or provision of any agreement, instrument,
mortgage, loan agreement or similar document to which
Meridian is a party or by which Meridian is bound.
(iii) There is no litigation, investigation or
proceeding pending or, to Meridian's knowledge,
contemplated or threatened against Meridian that, if
decided adversely to Meridian, would materially and
adversely affect the value of the Property or Meridian's
ability to perform Meridian's obligations under this
Agreement or any other instrument or document related
hereto.
(iv) Meridian is not a "foreign person" as defined
in Section 1445(f)(3) of the Code.
(v) As of December 31, 1997, Meridian's adjusted
tax basis in the Property for federal income tax purposes
was approximately as set forth on EXHIBIT U, and the
scheduled tax depreciation, cost recovery and amortization
deductions for future years are approximately as set forth
on such Exhibit. Except as noted on such Exhibit,
adjusted tax basis and the scheduled tax depreciation,
cost recovery and amortization deductions for future years
for state income tax purposes do not differ materially
from the federal amounts.
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(vi) As of December 31, 1997, the "outside tax
basis" of each of the OP Unit Recipients, their capital
accounts and share of liabilities is approximately as set
forth on EXHIBIT V apportioned to the extent that an OP
Unit Recipient may be receiving some cash as consideration
for this transaction.
(vii) Intentionally Deleted.
(viii) Intentionally Deleted.
(ix) Intentionally Deleted.
(x) Intentionally Deleted.
(xi) Intentionally Deleted.
(xii) Intentionally Deleted.
(xiii) Intentionally Deleted.
(xiv) Intentionally Deleted.
(xv) Intentionally Deleted.
(b) Property Status. Meridian represents and warrants
with respect to the Property, except as otherwise disclosed in
the Disclosure Materials set forth on the Disclosure Materials
List and Statement (EXHIBIT D hereof):
(i) Attached hereto as EXHIBIT I is a Lease List
(Rent Roll) with respect to the Property which is true,
correct and complete.
(ii) (A) The Lease List for the Property lists all
of the Leases affecting the Property. Meridian has made
true, correct and complete originals or copies of all
Leases (except for those documents designated with an
asterisk) in effect as of the date hereof available to
Acquiror for its review. To Meridian's knowledge, except
as may be set forth on the Lease List, each Lease
identified on the Lease List is in full force and effect
and has not been modified, assumed or extended except as
specified, and, except as disclosed in the Disclosure
Materials List and Statement, no tenant is in material
default under any such Lease and Meridian has not received
written notice of any material default by the landlord
under any such Lease. No tenant or other person or entity
has an option to purchase or right of first refusal with
respect to the sale of all or any part of the Property.
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(B) The list of REAs set forth in this Agreement
with respect to the Property is true, correct and
complete. The REAs listed herein constitute all of the
REAs affecting the Property. Meridian has made true,
correct and complete originals or copies of all REAs in
effect as of the date hereof available to Acquiror for its
review. To Meridian's knowledge, each REA identified in
this Agreement is in full force and effect and has not
been modified, assumed or extended except as specified,
and, except as disclosed in the Disclosure Materials List
and Statement, no party to an REA is in material default
under any such REA and Meridian has not received written
notice of any material default by a party to an REA. No
party to an REA or other person or entity has an option to
purchase or right of first refusal with respect to the
sale of all or any part of the Property.
(iii) All leasing commissions in respect of the
current terms of the Leases or REAs currently in effect
have been or will be paid in full by Meridian, except as
provided on EXHIBIT Y.
(iv) Except as set forth on EXHIBIT Z, Meridian has
received no written notice within the thirty-six (36)
month period immediately preceding the date hereof, from
any tenant under any Lease which is still outstanding and
otherwise has no knowledge 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
any other sums due any tenant pursuant to the terms of its
Lease, or is entitled to cancel or terminate its Lease or
to be released of any of its material obligations
thereunder.
(v) To Meridian 's knowledge, all work which is
required to be performed by Meridian under each Lease has
been performed to the Tenant's satisfaction or as required
to be performed by Meridian pursuant to such Lease, except
for work not completed and listed on EXHIBIT AA, and the
party indicated thereon shall be responsible for payment
of the same.
(vi) All amounts in respect of tenant cash
allowances, lease takeover payments or takeback payment
obligations and all other tenant cash inducements have
been paid or satisfied in full, except as set forth on
EXHIBIT BB, and the party indicated thereon shall be
responsible for payment of the same.
(vii) All security deposits currently held pursuant
to the Leases are listed on EXHIBIT I hereto (including
all accrued interest thereon, which is listed separately).
All security deposits furnished to the landlord under the
Leases have been held and applied in compliance with the
applicable Leases.
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(viii) No person or entity using or occupying
space at the Property under any Lease is an affiliate of
Meridian, nor does Meridian or any affiliate thereof have
any interest (other than owning securities of such
affiliate which is publicly traded) in any such person or
entity.
(ix) There are no unexpired "free rent" periods (or
similar concessions) granted to any tenants under any of
the Leases, except as set forth on EXHIBIT I.
(x) Meridian has not received any notice from a
tenant within the thirty-six (36) month period preceding
the date of this Agreement that has not been cured stating
that a condition exists that would now permit a Tenant to
cancel or terminate such Lease (or any portion thereof),
to be released from liability under such Lease or cease
operating or reduce its obligations under such Lease.
(xi) Meridian has made originals or copies of all
Contracts in effect as of the date hereof which survive
the Closing available to Acquiror for its review, all of
the documents comprising such Contracts being identified
in EXHIBIT CC hereto.
(xii) Except as set forth on EXHIBIT CC, Meridian
has not given or received any written notice of default to
or from any party to a Contract which survives the Closing
which is still outstanding and otherwise has no knowledge
that Meridian or any such party has defaulted in any
material respects in performing any of its material
obligations under such Contract.
(xiii) Except as set forth on EXHIBIT CC, no
cancellation or termination fee is payable in connection
with the early termination of any Contract which survives
the Closing.
(xiv) Meridian has no direct or indirect ownership
interest in any service provider or any fees payable to
such provider under any contract which will remain in
effect after the Closing.
(xv) There are no agreements with brokers or any
other persons or entities providing for the management or
leasing of the Property or with contractors providing for
construction within the Property which will remain in
effect following the Closing, except as set forth on
EXHIBIT CC or elsewhere in this Agreement.
(xvi) The copies of the Disclosure Materials
provided to Acquiror are, to Meridian's knowledge, true,
accurate and complete in all material respects.
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(xvii) To Meridian's knowledge, within the
thirty-six (36) month period preceding the date of this
Agreement, Meridian has received no written notice from
any Governmental Authorities that eminent domain
proceedings for the condemnation of or any zoning, land
use or similar proceedings relating to the Property or any
part of the Property are pending and, to Meridian's
knowledge, no such proceedings are threatened (in
writing).
(xviii) To Meridian's knowledge, within the
thirty-six (36) month period preceding the date of this
Agreement, Meridian has received no written notice of and
has no knowledge of any threatened (in writing) or pending
litigation against Meridian, including litigation pursuant
to any Environmental Law, which, if decided adversely to
Meridian, would materially and adversely affect the
Property;
(xix) To Meridian's knowledge, within the thirty-six
(36) month period preceding the date of this Agreement,
Meridian has received no written notice that has not been
cured or corrected from any Governmental Authority that
the improvements constituting the Property are presently
in violation of any applicable building codes;
(xx) To Meridian's knowledge, Meridian has received
no written notice from any Governmental Authority that has
not been cured or corrected that the current use of the
Property is in violation of any applicable zoning, land
use or other similar law affecting the Property;
(xxi) To Meridian's knowledge, no Taxes or
Assessments are currently the subject of protest or
appeal.
(xxii) To Meridian's knowledge, Meridian has not
received any written notice within the thirty-six (36)
month period preceding the date of this Agreement which
has not been cured or corrected (A) from any Governmental
Authority of any failure by Meridian to obtain any
certificate, permit, license or approval (including those
required under Environmental Law) with respect to the
Property, or any intended revocation, modification or
cancellation of any of the same or (B) 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 Exception.
(xxiii) To Meridians' knowledge, there are no
Contracts with respect to the Property that are not
cancelable by the owner of the Property within thirty (30)
days after written notice, except as disclosed on EXHIBIT
CC.
(xxiv) Attached hereto as EXHIBIT F is a list of
all of the documents constituting the Ground Lease and
true, correct and complete copies of each of
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such documents have been delivered to Acquiror. The Ground
Lease is in full force and effect, Meridian has not
assigned or otherwise transferred any of its rights
thereunder (other than in connection with the Meridian
Indebtedness). Meridian has not sent or received any
written notice to or from the ground lessor thereunder
asserting or alleging that ground lessor or Meridian, as
the case may be, is in default of the Ground Lease which
default remains uncured and Meridian has no knowledge of
any continuing default by ground lessor or Meridian
thereunder. No consent or approval of the ground lessor
under the Ground Lease is required in connection with
Meridian's execution and delivery of the Assignment of
Ground Lease (as defined below). Meridian owns the
leasehold interest under the Ground Lease free and clear
from all liens and encumbrances (except as set forth on
EXHIBIT P hereof) and such leasehold interest has not been
pledged, transferred or encumbered, in each case except as
set forth in the Title Report.
(xxv) Except as set forth in the environmental
reports listed on EXHIBIT D included within the Disclosure
Materials, any reports or studies prepared by or for
Acquiror, and any reports obtained by Acquiror: (A) to
Meridian's knowledge, within the thirty-six (36) month
period preceding the date of this Agreement, Meridian has
received no written notice from any Governmental Authority
which has not been cured or corrected of the presence of
any Hazardous Materials presently deposited, stored, or
otherwise located on, under, in or about the Property,
except for Hazardous Materials used by Meridian or tenants
of the Property in the ordinary course of business or as
part of their inventory; and (B) to Meridian's knowledge,
there is one (1) underground storage tank on the Property
used in connection with the HVAC Plant.
(xxvi) A schedule of the material items of
personal property owned by Meridian included in the sale
is attached hereto as EXHIBIT E, which Exhibit separately
identifies any leased personal property, the leases for
which are listed on EXHIBIT E-1 annexed hereto.
(xxvii) Meridian is not a party to, or otherwise
bound by, any union or collective bargaining agreement
that would be binding on Acquiror after the Closing.
(xxviii) There are no tax abatements or exemptions
affecting the Property and, within the thirty-six (36)
month period preceding the date of this Agreement, to
Meridian's knowledge, Meridian has not received any
written notice of any proposed public improvement
assessments.
(xxix) To Meridian's knowledge, except for the
property depicted on EXHIBIT DD and the Outlot Parcels,
there is no real property other than the
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Property that comprises the regional shopping center commonly
known as "Meridian Mall" located in the Meridian Township,
Michigan area and, except for the property depicted on EXHIBIT
DD and the Outlot Parcels, Meridian and Meridian Related
Parties do not own or lease any real property other than
the Property that is used in connection with the operation
of, or is located adjacent to, the Outlets of the
regional shopping center commonly known as "Meridian Mall"
located in the Meridian Township, Michigan area.
(xxx) True, complete and correct copies of the
financial statements identified on EXHIBIT D hereto have
previously been delivered to Acquiror and fairly and
accurately present the assets, liabilities, financial
position and condition, results or operations and changes
in financial positions of the subjects thereof as of the
dates thereof for the period referred to therein.
(xxxi) To Meridian's knowledge, within the
thirty-six (36) month period preceding the date of this
Agreement, Meridian has received no notice of outstanding
unpaid obligations to pay the cost of connection of any
utility lines, pipes or other equipment serving the
Property.
(xxxii) (A) To Meridian's knowledge, within the
thirty-six (36) month period preceding the date of this
Agreement, Meridian has not received any notice that
development, site assessment or other similar fees payable
in connection with the Property have not been paid, and
(B) to Meridian's knowledge, no such fees are payable
after the date hereof with respect to the Property as it
exists on the date hereof.
(xxxiii) Except for the REAs there are no
reciprocal easement agreements or similar agreements
affecting the Property.
(xxxiv) To Meridian's knowledge, within the
thirty-six (36) month period preceding the date of this
Agreement, Meridian has not received written notice from a
Governmental Authority that has not been cured or
corrected that the number of parking spaces at the
Property is required to be increased above the number of
parking spaces existing on the date hereof.
(xxxv) To Meridian's knowledge, within the
thirty-six (36) month period proceeding the day of this
Agreement, Meridian has not received written notice from
any Board of Fire Underwriters of any defect or inadequacy
in connection with the Property or its operation.
(xxxvi) Meridian is presently maintaining the
insurance policies and coverage set forth in the insurance
summary dated November 7, 1997 included in the Disclosure
Materials.
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(xxxvii) In the thirty-six (36) month period
preceding the date hereof, to Meridian's knowledge,
Meridian has not received any written notice of any
proposed (but not yet implemented) increase in the real
estate taxes or assessed valuation of the Property.
As used in this Agreement, "Leases" shall include the Hudson REA
and "tenants" shall include Dayton-Hudson Corporation. As used
herein, the term "Meridian's knowledge" or words of similar effect
shall mean and be limited to, the current actual knowledge of any of
Robert T. Samuels, Roger E. Benjamin, or Arthur Weisman as being the
persons having knowledge of the Property; provided, however, that
said individuals shall not be deemed to have personally made any
representations or warranties and shall not have any personal
liability therefor, and, provided, further that except as expressly
provided herein no independent investigation or study shall have been
performed for purposes of such representations and warranties. Each
such individual's knowledge shall not include information or material
which may be in the possession of any agent or employee of Meridian
or the named individuals, but of which the named individuals are not
actually aware. Meridian shall have no liability for the breach of
any representations or warranties absent a judicial finding that the
named individual(s) withheld material information known to such
individual from Acquiror with respect to the subject matter of the
representation or warranty or falsified information delivered to and
relied upon by Acquiror and that such action amounted to a violation
of a representation or warranty expressly set forth in this
Agreement. None of the named individuals, shall bear personal
responsibility for any breach of such representation or warranty.
Section 5.2 Meridian's Covenants. Meridian hereby
covenants, and agrees, as follows:
(a) During the Contract Period, Meridian will exercise
reasonable and good faith efforts to operate and maintain the
Property in the ordinary course of business and in a manner
consistent with current practices and as may be required by any
Lease, REA, Contract or applicable Legal Requirement and the
Meridian Loan Documents.
(b) During the Contract Period, Meridian will not sell or
otherwise dispose of any significant items of the Personal
Property unless replaced with an item of like value, quality and
utility.
(c) During the Contract Period, Meridian shall not enter
into or modify any Contracts relating to the operation or
maintenance of the Property, except for those entered into in
the ordinary course of business and which are cancelable upon
not more than thirty (30) days' prior notice (with any
cancellation fee being paid by Meridian) or those otherwise
approved by Acquiror, which approval shall not be unreasonably
withheld and shall be deemed given if Acquiror should fail to
approve or disapprove proposed Contract matters in writing
within five (5) Business Days following Acquiror's receipt of
Meridian's written request. At Acquiror's written
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request, Meridian shall deliver notice of termination on the
Closing Date as to any and all Contracts that Acquiror desires to
terminate, provided that such termination shall be effective
following any notice or waiting period for such termination
described in the Contract and that Meridian shall not be required
to bear any termination or cancellation fee or charge that may be
assessed under such Contract based upon an early termination. The
existing Management Agreement for the Property shall be
terminated as of the Closing Date and Meridian shall pay all
termination fees, if any, in connection therewith.
(d) Meridian shall terminate, or cause to be to be
terminated, (such termination to be effective as of 11:59 p.m.
on the day immediately preceding the Closing Date) all employees
of Meridian or the manager of the Property who are employed in
connection with the Property and shall pay, or cause to be paid,
when due all wages and other sums payable in connection with any
such terminations, including, without limitation, any and all
amounts due (i) for severance pay, (ii) on account of accrued
vacation, (iii) under any applicable union agreement or pension
plan by reason of withdrawal thereunder or otherwise, and (iv)
under the Workers Adjustment and Retraining Notification Act
("WARN Act").
(e) Meridian agrees to defend, indemnify and hold
harmless Acquiror and its agents from and against any and all
losses, claims, obligations, liabilities, and expenses
(including, without limitation attorneys' fees and
disbursements) of every kind and description, contingent or
otherwise, arising out of (i) any claims under the Workers
Adjustment and Retraining Notification Act and/or the
Comprehensive Omnibus Budget Reconciliation Act ("COBRA");
(ii) any claims asserted at any time by any person that was
employed at the Property at any time prior to the Closing to the
extent such claims are based on acts or omissions which occurred
prior to Closing; and/or (iii) Meridian's failure to comply with
its obligations under SECTION 5.2(D) immediately above.
(f) During the Contract Period, Meridian will not execute
or modify in any fashion any REAs or Leases (i) without promptly
notifying Acquiror of the proposed REA, lease or modification
and providing Acquiror with copies of the proposed REA, lease or
modification documents which shall be subject to Acquiror's
approval, which approval shall not be unreasonably withheld and
which shall be deemed given if Acquiror should fail to approve
or disapprove such proposed REA, lease or modification in
writing within five (5) Business Days following Acquiror's
receipt of Meridian's written request, (ii) as to any Lease or
REA termination, and (iii) as to any Lease or REA providing for
or creating an obligation for payment of any brokerage
commission irrespective of when due or providing for payment of
any tenant improvement allowance or other concession, or as to
any lease or REA (or modification of a Lease or REA) pertaining
to premises in excess of 10,000 rentable square feet, without
Acquiror's prior consent, which consent shall be deemed given as
to the leases set forth in EXHIBITS G, G-1 AND G-2 hereof
(provided that the same are
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entered into on substantially the terms set forth on such exhibits
and pursuant to documentation reasonably acceptable to Acquiror (with
the understanding that Acquiror shall grant its consent to leases of
a kind generally used by Meridian with respect to the type of tenant
in question), and which otherwise shall not be unreasonably withheld
and shall be deemed given if Acquiror should fail to approve or
disapprove proposed lease matters in writing within five (5) Business
Days following Acquiror's receipt of Meridian's written request.
(g) During the Contract Period, Meridian shall comply in
all material respects with the provisions of all of the Leases,
REAs and Contracts that survive the Closing.
(h) During the Contract Period, Meridian shall not
voluntarily create, consent to or acquiesce in the creation of
liens or exceptions to title other than the Permitted Exceptions
without Acquiror's prior written consent, provided that Acquiror
shall not unreasonably withhold or delay consent to any proposed
matters affecting title which Meridian would execute in the
ordinary course of business and are beneficial to the Property
and do not give rise to any monetary or other material
obligation extending beyond the Closing Date.
(i) During the Contract Period, Meridian shall maintain
policies of property casualty insurance and rental loss
insurance (if any) for the Improvements with coverage, terms,
conditions and deductible amounts substantially consistent with
Meridian's property casualty insurance policies currently in
effect.
(j) Intentionally Deleted.
(k) During the Contract Period, the business of Meridian
shall be conducted in the ordinary course and in a manner
consistent with past practice, and Meridian shall not, prior to
the Closing, except in connection with an assignment, transfer
or distribution to an assignee permitted by Section 8.3(b)
hereof, (i) sell, convey, assign, transfer or otherwise dispose
of any of its assets, except that Meridian may, from time to
time, sell or otherwise dispose of worn out or obsolete
Equipment in the normal course of its business, provided that
the same shall be replaced with equipment of at least equal
value and utility; (ii) enter into any agreement of merger or
consolidation with any other person; (iii) enter into any other
transaction which is not in the ordinary course of its business
either in nature or in the amount involved; (iv) liquidate or
make any distribution of the Property or any portion thereof; or
(v) modify the Operating Agreement.
(l) Intentionally Deleted.
(m) During the Contract Period, (i) Meridian shall comply
in all respects with the terms of the Ground Lease, (ii)
Meridian shall not cancel, amend or terminate the Ground Lease
and (iii) Meridian shall provide Acquiror with copies of any and
all notices delivered with respect to the Ground Lease.
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(n) During the Contract Period, Meridian shall not
initiate or settle any proceeding with respect to the reduction
of any Taxes.
(o) During the Contract Period, Meridian will notify
Acquiror of any of the following matters: (i) notices of
default given or received by Meridian with respect to any REA,
Lease or Contract surviving Closing, (ii) litigation commenced
by Meridian, or litigation for which Meridian has received
written notice commenced or threatened in writing against
Meridian with respect to the Property, (iii) notices received by
Meridian of condemnation proceedings commenced or directed
against all or any portion of the Property, (iv) casualty losses
to all or any portion of the Property, and (v) notice of any
Violation received by Meridian.
(p) Intentionally Deleted.
(q) Intentionally Deleted.
(r) Intentionally Deleted.
(s) Except to the extent arising from the acts or
omissions of Acquiror, its agents, employees or contractors,
Meridian agrees to defend, indemnify and hold harmless Acquiror
and its agents from and against any and all losses, claims,
obligations, liabilities and expenses arising out of any tort
claims (other than environmental claims) asserted against
Acquiror or Meridian or either of their agents arising out of
incidents or occurrences prior to the Closing Date, unless
covered by insurance; provided that the foregoing indemnity
shall not include attorneys fees incurred by Acquiror or its
agents in connection with defending Acquiror or its agents with
respect to such tort claims.
(t) Meridian agrees to defend, indemnify and hold
harmless Acquiror and its agents from and against any and all
losses, claims, obligations, liabilities and expenses arising
out of (i) any breaches prior to the Closing Date of any of the
Meridian Loan Documents or (ii) any breaches, at any time, of
any obligations with respect to the Meridian Loan Documents
other than the payment of the Loan Payoff Amount. Acquiror
shall notify Meridian of any alleged material breaches within
(30) days after it has knowledge of such claimed breach.
Section 5.3 Intentionally Deleted.
Section 5.4 Acquiror's Warranties and Representations.
Acquiror represents and warrants to Meridian and the OP Unit
Recipient that the following are true as of the date of this
Agreement:
(a) Acquiror is a duly formed and validly existing
limited partnership under the laws of the State of Delaware and
is in good standing under the laws of said State. Acquiror has
the full right, authority and power to enter into this
Agreement, to
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consummate the transactions contemplated herein
and to perform Acquiror's obligations hereunder and under those
documents and instruments to be executed by Acquiror on the
Closing Date, and each of the individuals executing this
Agreement on behalf of Acquiror is authorized to do so, and this
Agreement constitutes a valid and legally binding obligation of
Acquiror enforceable against Acquiror 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 principles of equity.
(b) Acquiror's execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and the
performance of Acquiror's obligations under the instruments
required to be delivered by Acquiror on the Closing Date, do not
and will not result in any violation of, or default under, any
term or provision of any agreement, instrument, mortgage, loan
agreement or similar document to which Acquiror is a party or by
which Acquiror is bound.
(c) There is no litigation, investigation or proceeding
pending or, to the best of Acquiror's knowledge, contemplated or
threatened in writing against Acquiror that would materially
impair or materially adversely affect Acquiror's ability to
perform its obligations under this Agreement or any other
instrument or document related hereto.
(d) Acquiror and, as applicable, its agents, have
complied fully with all terms and conditions of the
Confidentiality Agreement and have not communicated with any
tenant of the Property or any officers, managers, employees,
lawyers, accountants, consultants or agents of any such tenant,
in each case without prior consent of Meridian except to the
extent permitted in the Confidentiality Agreement.
(e) Acquiror's taxpayer identification number is 62-
1542285.
(f) The Acquiror and each of the existing Subsidiary
Partnerships qualifies as a partnership for federal income tax
purposes and is not treated as an association taxable as a
corporation under Section 7701 or Section 7704 of the Code or
any other provision.
(g) Neither the Acquiror nor any of the Subsidiary
Partnerships has any plan or intention to sell or dispose of the
Property or any substituted basis property (within the meaning
of Section 7701(a)(42) of the Code) with respect thereto for a
period of twelve (12) years other than in a nonrecognition
transaction in which no gain or loss is recognized (as described
in Treasury Regulation Section 1.704-3(a)(8)).
(h) Intentionally Deleted.
(i) (i) The execution of this Agreement and associated
documents and the transactions contemplated herein do not
conflict with the REIT's organizational
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documents or any shareholder or voting trust agreements applicable
to the REIT; (ii) the execution of this Agreement and the associated
documents and the transactions contemplated herein do not conflict
with any documents applicable to Acquiror or any partnership
interests in Acquiror; (iii) Acquiror is duly authorized to issue
the OP Units; (iv) no consents or approvals are necessary to issue
the OP Units or for the REIT to be bound by the Registration
Rights Agreement (except for such consents or approvals as shall
have been obtained); (v) upon issuance of the OP Units, the
OP Units will be validly issued, fully paid and, except as
provided by law, non-assessable and the OP Units are free
of liens (except for liens created by the acts of Meridian
or any OP Unit Recipient); (vi) there are no preemptive
or similar rights, options, warrants or convertible or
exchangeable securities (or instruments exchangeable or
convertible into any of the foregoing) or puts, calls,
commitments or agreements or arrangements or undertakings of any
kind to which the Acquiror or the REIT is bound; (vii) no
bankruptcy or reorganization filings have been made by or are
contemplated by or, to Acquiror's knowledge, against Acquiror or
the REIT; and (viii) the Informational Materials for the
Acquiror and the REIT do not contain any untrue statement of
material fact or omit any material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading.
(j) Intentionally Deleted.
(k) The REIT is a real estate investment trust within the
meaning of Section 856(a) of the Code.
(l) The REIT has no plan or intention to assume or
guarantee, or to allow any other partner (other than Meridian or
the OP Unit Recipients) to assume or guarantee, any debt to
which the Property is subject.
(m) The REIT is a duly formed and validly existing
corporation under the laws of the State of Delaware and is in
good standing under the laws of the State. The REIT has full
right, power, and authority to join in this Agreement for the
purposes set forth herein and each of the individuals executing
this Agreement on behalf of the REIT is authorized to do so.
(n) Acquiror has validly made an election under
Section 754 of the Code.
As used herein, the terms "Acquiror's knowledge" or words
of similar effect shall mean, and be limited to, the current actual
knowledge of Stephen Lebovitz, John Foy, Keith Honnold, H. Jay
Wiseman, Jr., or Mary Ann Sinnott as being the persons having
knowledge of the subject matter, provided, however, that said
individuals shall not be deemed to have personally made
representations or warranties and shall not have any personal
liability therefor. Each such individual's knowledge shall not
include information or material which may be in the possession of
Acquiror, but of which the named individuals are not actually
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aware. Acquiror shall have no liability for the breach of any
representations or warranties absent any arbitrated or judicial
finding that the named individual(s) failed to disclose material
information known to such individual to Meridian with respect to the
subject matter of the representations or warranty or falsified
information delivered to and relied upon by Meridian and that such
action amounted to a violation of representation or warranty
expressly set forth in this Agreement. None of the individuals
identified above shall bear personal responsibility for any breach of
such representation or warranty.
Section 5.5 Acquiror's Covenants. Acquiror hereby
covenants and agrees as follows, all of which covenants shall survive
the Closing of the transaction contemplated by this Agreement:
(a) Acquiror shall indemnify, protect, defend and hold
the Meridian Related Parties harmless from and against, any and
all claims, demands, losses, damages, liabilities, causes of
action, liens, costs and expenses (excluding punitive and
consequential damages) including, without limitation, reasonable
attorneys' fees and costs (to the extent permitted by law),
directly or indirectly related to, arising out of or in any
manner connected with (i) the Property to the extent that the
same directly or indirectly relates to, arises out of, or is in
any manner connected with any incidents or occurrences
occurring from and after the Closing Date and/or (ii) any
breaches of Acquiror's obligations under this Agreement or in
any instrument, document or agreement executed or delivered by
Acquiror in connection with the transaction contemplated by this
Agreement.
(b) For a period of twelve (12) years following the
Closing Date, the Acquiror will at all times qualify, and cause
each Subsidiary Partnership to qualify, as a partnership for
federal income tax purposes and not as an association taxable as
a corporation under Section 7701 or Section 7704 of the Code or
any other provision of the Code.
(c) Except to the extent permitted in SECTION 5.5(H), the
Acquiror shall not, and shall not permit the Subsidiary
Partnerships to, sell, transfer or otherwise dispose of the
Property or any substituted basis property (within the meaning
of Section 7701(a)(42) of the Code) with respect thereto for a
period of twelve (12) years following the Closing Date other
than in a nonrecognition transaction in which no gain or loss is
recognized (as described in Treasury Regulation Section 1.704-
3(a)(8)) (a "Nonrecognition Transaction").
(d) The Acquiror will allocate items of income, gain,
loss and deduction with respect to the Property using the
traditional method described in Treasury Regulation Section
1.704-3(b).
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(e) (i) Except to the extent permitted in SECTION
5.5(H), the Acquiror shall not, and shall not permit the
Subsidiary Partnerships, within the period of twelve (12) years
following the Closing Date, to reduce the aggregate principal
balance (other than through scheduled periodic amortization of
principal -- such amortization will be no more rapid than would
occur on a 25 year straight-line self-amortizing loan at the
then market interest rate -- or as required by law) of the
"nonrecourse liabilities" (as defined in Treasury Regulation
Section 1.752-1(a)(2)) allocable in the aggregate to Meridian
and the Meridian Related Parties, as the case may be, pursuant
to Treasury Regulation Section 1.752-3(a)(1) and (a)(2), as in
effect as of the date hereof, below the amount so allocable
immediately following Closing (but not taking into account the
effect of any refinancing). The share of liabilities
allocable to each Meridian and each Meridian Related Party
immediately following the Closing Date (but not taking into
account the effect of any refinancing) is hereinafter
referred to as the "Initial Tier Two Share" of Meridian and
each Meridian or Meridian Related Party, as the case may be.
For the avoidance of doubt, Acquiror's obligations under
this clause (i) shall be deemed satisfied if Acquiror causes
the Property to be encumbered by a mortgage loan in the
principal amount of at least $47 million and (w) such loan
is secured by the Property, (x) such loan is not secured by
any other assets of the Acquiror, (y) the lender has no
recourse to any assets of Acquiror other than the security
for the loan and no partner of Acquiror bears the economic
risk of loss for the loan (within the meaning of Treasury
Regulation Section 1.752-2), disregarding for this purpose any
rights of the lender and payment obligations of any person that
are disregarded under Treasury Regulation Section 1.752-2(b)(4)
and (z) CBL shall treat at least $47 million of such loan as
allocable to the Property. A loan (a "Nonrecourse First
Mortgage Loan") shall be treated as satisfying the
requirements of the preceding sentence (A) even if it is
secured by the Property and by other property (such as the
Outparcels), if the principal amount of the loan exceeds the
value of such other property by at least $47 million and (B)
even if the Property also secures another loan (a "Second
Mortgage Loan") which is recourse to the Acquiror or to a
partner of the Acquiror, but only if such Second Mortgage
Loan is subordinate to the First Mortgage Loan.
(ii) Acquiror may incur a Described Loan (defined
below) and secure it with a mortgage on the Property. In
that case, Acquiror will, except upon the occurrence of a
Change of Law (defined below), take the position for federal
and state income tax purposes that the Described Loan
(including any replacement debt that is a Described Loan) is
a nonrecourse loan that is properly allocable to the
Property pursuant to section 752 of the Code, and will use
its commercially reasonable best efforts to cause such
position to be sustained.
A Described Loan is a loan (i) that is secured by the
Property, (ii) for which no partner of Acquiror bears the
economic risk of loss (within the meaning of Treasury
Regulation Section 1.752-2), disregarding for this purpose any
rights of the lender and payment obligations of any person that
are disregarded under Treasury Regulation Section 1.752-2(b)(4),
and (iii) that gives the lender, upon default, the rights of
a general unsecured creditor against the assets of the
Acquiror (other than against the Property, with respect to
which the lender would be in a position of mortgagee). If a
Described
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Loan is secured both by the Property and by other
property (such as the Outparcels), the Described Loan shall
be treated as allocable to the Property only to the extent
of the excess of the principal amount of such loan over the
fair market value of the other property.
A Change of Law includes: (w) the enactment of legislation,
(x) the issuance of final or temporary regulations or the
issuance of proposed regulations (but only on or after the
later of (i) the adoption of such proposed regulations in
final form or (ii) 90 days prior to the proposed effective
date of such proposed regulations), (y) the publication by
the IRS of a revenue ruling or other formal written guidance
applicable to taxpayers generally, or (z) a final
determination by a court, in each case to the effect that a
Described Loan (or a substantially similar loan whether or
not issued by the Acquiror) is not properly treated for tax
purposes in the manner described in the first paragraph of
this clause (ii).
In the event of a Change of Law, Acquiror shall, as promptly
as practicable upon becoming aware of such Change of Law,
provide Meridian with a "Notice" containing the following
information: that a Change of Law has occurred, together
with a general description of the nature of the Change of
Law; the approximate amount of the "excess nonrecourse
liabilities" described in Treasury Regulation Section 1.752-
3(a)(3) allocable under the Code to Meridian as of the date
of the Notice, and an estimate of such amount as of a date
that is 60 days after the date of the Notice; and an
acknowledgment by Acquiror that it will provide Meridian
with an opportunity to execute Bottom Guaranties (defined
below) in an amount at least as great as the Initial Tier
Two Share of Meridian. Within 20 business days of receipt
of such Notice, Meridian may notify Acquiror that it desires
to execute a Bottom Guaranty. If Meridian so notifies
Acquiror, then, 10 business days after Acquiror provides
documents to Meridian for execution to effect such Bottom
Guaranties, or, if Meridian does not so notify Acquiror, 30
days after receipt of such Notice (the "Release Date"),
Acquiror's obligations under clause (i) hereof shall be
deemed satisfied so long as Acquiror maintains in place the
Described Loan with an outstanding principal balance of at
least $47 million. Alternatively, Acquiror may provide
documents to Meridian for execution to effect a Bottom
Guaranty at the time it provides the Notice to Meridian. In
that event, the Release Date shall occur 20 days after the
receipt of the Notice. In any event, however, Acquiror
shall be required to indemnify Meridian and each Meridian
and Meridian Related Party with respect to events (e.g.,
deemed distributions) occurring prior to the Release Date;
provided, however, that Acquiror's indemnification
obligation under clause (i) with respect to Meridian and
each Meridian Related Party arising out of events prior to
the Release Date shall be limited to the amount shown in
Exhibit EE plus interest at the underpayment rate imposed by
Section 6621 of the Code.
A Bottom Guaranty is a guaranty by Meridian or each Meridian
Related Party, as the case may be, that has all of the
following features: (A) The guaranteed loan is nonrecourse
against the assets of any partner of Acquiror (except that
other partners may also guarantee the debt, on a basis that
is pari passu with Meridian (a "Pari Passu Guaranty") to the
extent permitted below). (B) The loan to value ratio of the
guaranteed loan, together with any senior indebtedness
encumbering the collateral, at the time that the Bottom
Guaranty is put in place, must not exceed 60%. (C)
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The amount of the Bottom Guaranty, together with any Pari Passu
Guaranties, must not exceed 15% of the principal balance of
the guaranteed loan. (D) The lender is permitted to look to
the guarantor for payment only after first exhausting any
remedies against the collateral (e.g., foreclosure) and
against the other assets of the Acquiror as a general
unsecured creditor. (E) Any recovery by lender of amounts
owed to it, pursuant to its exercise of remedies in (D)
above against the collateral and the other assets of
Acquiror, shall be applied against any amounts otherwise
owing under a Bottom Guaranty and any Pari Passu Guaranty.
(F) The principal balance of the guaranteed loan must be at
least $10 million. (G) Acquiror must provide to Meridian,
at Acquiror's cost, an opinion, reasonably acceptable to
Meridian, to the effect that the guaranty is valid, binding
and enforceable under applicable law. Such opinion may
assume Meridian is duly organized, validly existing, in good
standing in its state of organization and has the power and
authority to execute and deliver the Bottom Guaranty. (H)
The Bottom Guaranty must generally have a term that does not
expire prior to the 12th anniversary of Closing Date or if
earlier, the maturity date of the guaranteed loan (which
shall in no event be earlier than two years after the date
of receipt of the Notice), provided, however, that the
Bottom Guaranty shall, by its terms, terminate at an earlier
date upon the occurrence of any of the following events:
(w) death of Meridian, (x) a disposition (if, at the time of
such disposition, the requirements of B hereof are
satisfied) by Meridian of its entire direct and indirect
interest in Acquiror in a transaction in which gain or loss,
if any, would be recognized for federal income tax purposes,
(y) any other transaction in which Meridian's tax basis in
its direct or indirect interest in Acquiror is adjusted to
its fair market value at such time (if, at the time of such
transaction, the requirements of (B) hereof are satisfied),
and (z) a disposition by the Acquiror of the property that
secures the loan. If the Bottom Guaranty expires, other
than by operation of (H) hereof, prior to the 12th
anniversary of the Closing Date, Acquiror shall be required
to offer Meridian and each Meridian Related Person executing
a Bottom Guaranty in accordance with this Section a
substitute Bottom Guaranty meeting the requirements of this
Section at least 60 days prior to the expiration of the
initial Bottom Guaranty. Prior to a disposition by Acquiror
of property that secures a loan on which there is a Bottom
Guaranty, or the repayment of such loan, Meridian shall
first be offered an opportunity to execute a substitute
Bottom Guaranty of a like amount.
Acquiror will not seek a private letter ruling from the IRS
with respect to the allocation of nonrecourse debt arising
out a Described Loan. If Acquiror seeks such a private
letter ruling with respect to any other indebtedness,
Acquiror will offer the agent for the Meridian Related
Parties the opportunity to have the private letter ruling
solicitation apply to the Described Loan.
For the avoidance of doubt, references contained in this Section
5.5(e) to Meridian shall be deemed to apply also to each
Meridian Related Party to the extent that such Meridian Related
Party then holds OP Units directly or indirectly (except to the
extent otherwise provided in Section 5.5(j) and shall cease to
refer to Meridian if, as and when Meridian ceases to hold OP
Units.
(f) Acquiror shall notify the Meridian Related Parties
not less than sixty (60) days (or, if Acquiror itself has less
than sixty (60) days prior notice, as promptly as practicable)
prior to any event that would result in a taxable distribution
(or deemed distribution) of cash in excess of the tax basis in
the OP Units held by any Meridian Related Party. To the extent
that it is affected by an event described in the preceding
sentence, any Meridian Related Party (an "Affected Party") may
inform the Acquiror of any action it desires to take in order to
increase its "economic risk of loss" within the
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meaning of Treasury Regulation Section 1.752-2 (each such action, an
"Incurrence") with respect to the liabilities of Acquiror or any
Subsidiary Partnership. Unless advised by counsel that no
reasonable basis exists for treating the proposed Incurrences in
the manner intended by the Affected Parties (in which event,
Acquiror shall promptly so inform the Affected Parties),
Acquiror shall cooperate in a commercially reasonable manner
with the Affected Parties in structuring the liabilities of
Acquiror and the Subsidiary Partnerships, and the guarantees
thereof, to facilitate the Incurrences in a manner that results
in the least amount of real economic risk being borne by each
Affected Party, provided, however, that Acquiror shall not be
required to incur any material expense or liability (other than
an expense or liability as to which the Affected Parties agree
to reimburse and indemnify Acquiror), and provided further that
in structuring any such arrangements, Acquiror shall not be
required to take or permit any action that would materially
adversely affect other holders of Common Units. Acquiror shall
be permitted to offer its other partners the opportunity to
enter into arrangements substantially equivalent to the
Incurrences at the time the Incurrences are structured.
Acquiror shall allocate to each Affected Party for federal and
state income tax purposes an additional amount of its
liabilities equal to the amount of any Incurrence and shall take
no position inconsistent therewith, unless advised by counsel
that as a result of a material change in circumstances (beyond
the control of Acquiror) or law occurring after implementation
of the Incurrence, no reasonable basis exists for such an
allocation. Notwithstanding the other provisions of this
subsection 5.5(f), if, in connection with notices given to the
Affected Parties under this subsection 5.5(f), the aggregate of
the additional liabilities to be allocated to the Affected
Parties as a result of the Incurrences (as determined
immediately after such Incurrences) does not exceed the amount
of the taxable distributions described in such notices by at
least the Materiality Threshold Amount, Acquiror shall not be
required to give subsequent notices under this subsection 5.5(f)
unless the aggregate taxable distributions that would be
described in such subsequent notices would equal or exceed the
Materiality Threshold Amount.
(g) Acquiror shall treat the transfer of the Property in
exchange for the Unit Consideration pursuant to this Agreement,
for purposes of all federal income tax returns, reports and
other filings, as a tax-free contribution of property to the
Acquiror by the OP Unit Recipients that is governed by the
provisions of Section 721 of the Code (except to the extent
resulting from the application of SECTION 7.4(B) hereof), and
shall take no position inconsistent therewith. Acquiror shall
similarly treat the transfer of the Property pursuant to this
Agreement for all state and local tax purposes.
(h) Notwithstanding SECTION 5.5(C) and 5.5(E), the
Acquiror may, and may permit the Subsidiary Partnerships, within
the period of (12) twelve years following the Closing Date, to
(i) sell, transfer or otherwise dispose of the Property, the
Membership Interests or any substituted basis property (within
the meaning of Section 7701(a)(42) of the Code) with respect
thereto in a transaction that is not a Nonrecognition
Transaction (a "Taxable Transaction") or (ii) act in a manner
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otherwise prohibited by SECTION 5.5(E), provided, however, that
in any case described in (i) or (ii) above, Acquiror shall pay,
indemnify and hold harmless each of the Meridian Related Parties
against its Tax Costs, within the meaning of SECTION 5.5(I), and
provided, further, that prior to the occurrence of any event
described in clauses (i) or (ii) of this SECTION 5.5(H), the
Acquiror shall first establish a security arrangement to the
reasonable satisfaction of eighty percent (80%) of the Meridian
Related Parties as measured on the basis of their respective
percentage interests in the Acquiror at such time.
Notwithstanding anything to the contrary in this Agreement
(including, without limitation, under SECTION 5.6(E)),
Acquiror's obligations under the previous sentence shall be the
Meridian Related Parties' sole and exclusive remedy with respect
to Acquiror's obligations under SECTIONS 5.5(C) AND (E).
(i) For purposes of SECTION 5.5(H), the Tax Cost of each
Meridian Related Party shall mean the sum of, (i) in the case of
(A) a Taxable Transaction described in SECTION 5.5(H)(I), any
liability for taxes arising in connection with such Taxable
Transaction and as a direct or indirect result of the operation
of Section 704(c) of the Code and the Treasury Regulations
promulgated thereunder (or any comparable state or local
provisions), (B) an event described in SECTION 5.5(H)(II), any
liability for federal, state or local taxes arising as a direct
or indirect result of such event, (ii) any costs and expenses
including, without limitation, interest, penalties, reasonable
attorneys' and accountants fees, and any other costs directly or
indirectly related to, arising out of or in any manner connected
with the payments described in this sentence, and (iii) any
additional liability for taxes associated with the receipt of
any payments of amounts described in clauses (i), (ii) and (iii)
of this SECTION 5.5(I). In determining such Tax Cost in the
case of any Meridian Related Party that holds its interest in
Acquiror through one or more related entities treated as
partnerships for federal income tax purposes and in making the
determination set forth in the last proviso of SECTION 5.5(J)
hereof, it shall be assumed that all such entities had in effect
a valid election under Section 754 of the Code for all periods
during which such Meridian Related Party held its interest in
Acquiror. Prior to engaging in a transaction described in
SECTION 5.5(H), Acquiror may require any or all of the Meridian
Related Parties to reasonably cooperate with it in estimating
the Tax Cost of such transaction within 60 days of such request,
provided, however, that Acquiror shall reimburse and indemnify
such Meridian Related Parties for any costs incurred in
connection with such request.
(j) Notwithstanding any other provision of this Agreement
to the contrary, the Acquiror's covenants and obligations
contained in SECTION 5.5(D), (F), (G), (H) AND (I) and Section
8.3(a) shall not terminate prior to the expiration of the
applicable statute of limitations for the assessment or
imposition of any tax upon a Meridian Related Party, as the case
may be, for any tax liability directly or indirectly related to,
arising out of or in any manner connected with a breach of any
such covenant or obligation; provided, further, however, that
the twelve (12) year period set forth in SECTION 5.5(C) AND (E)
hereof
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shall terminate with respect to a Meridian Related Party
if there has been a Basis Step-Up Transaction with respect to
all of such party's OP Units. For this purpose, a Basis Step-Up
Transaction with respect to an OP Unit shall mean a taxable sale
or other taxable disposition of an OP Unit, the death of an
individual Meridian Related Party or, in the case in which a
Meridian Related Party holds its interest in the OP Unit through
one or more entities treated as partnerships for federal income
tax purposes, a taxable sale or other disposition of such
Meridian Related Party's interest in the entity; provided,
however, in each case, that such Basis Step-Up Transaction
results in a full step-up of the basis of such OP Unit for
federal income tax purposes to its then fair market value and
provided further that a termination of the twelve year period as
described in this SECTION 5.4(J) shall be without prejudice to
any rights of a Meridian Related Party in respect of any breach,
occurring prior to the time of such termination by Acquiror or a
Subsidiary Partnership, of any obligation hereunder.
(k) Acquiror consents in advance to the admittance of the
OP Unit Recipients as limited partners of Acquiror.
(l) All OP Units shall be transferable in accordance with
the terms of the Partnership Agreement and this Agreement.
(m) Acquiror agrees that it shall cause the REIT to
reserve a sufficient quantity of authorized Stock at all times
to accommodate the immediate exchange of OP Units for Stock or
Acquiror shall pay in cash the market value of the Stock for
which the OP Units would have been exchanged.
Section 5.6 Survival/Limitations/Joinder.
(a) Subject to subsection (b) below, the parties agree
that, except for the Surviving Covenants, Meridian's
representations, warranties and covenants contained in this
Agreement and in any document executed by Meridian pursuant to
this Agreement shall terminate on the Closing Date, except that
(i) those representations, warranties and covenants contained in
SECTIONS 5.1(A)(I), (II) AND (III) 5.1(B)(III), (VIII), (XI),
(XII), (XIII), (XIV), (XV), (XVII), (XIX), (XX), (XXII),
(XXIII), CLAUSE (A) OF (XXV),
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(XXVI), (XXVII), (XXIX), (XXX), (XXXI), CLAUSE (A) OF (XXXII),
(XXXIV), (XXXV) AND (XXXVII) AND 5.2(K) AND (S), 6.2, 7.3 AND 7.4
shall terminate on the first anniversary of the Closing Date,
(ii) those covenants set forth in SECTION 5.2(D) AND 5.2(E)
shall terminate eighteen (18) months after the Closing Date,
(iii) those representations, warranties and covenants contained
in SECTIONS 5.1(A) (EXCEPT AS SET FORTH ABOVE), 7.5, AND 8.2
shall terminate on the sixth anniversary of the Closing Date
unless, in any event, a Claim Notice has been previously delivered,
in which event the representation, warranty or covenant in question
shall survive until the claim is resolved. Any such termination
shall apply to known as well as unknown breaches of such
representations, warranties or covenants. Subject to subsection
(b) below, Acquiror's waiver and release set forth in SECTION 3.1
shall apply fully to liabilities under such representations,
warranties and covenants. Acquiror specifically acknowledges
and agrees that such termination of liability represents a
material element of the consideration to Meridian.
(b) Any claim of Acquiror, based upon a breach of any
representation or warranty of Meridian or upon a breach of any
of the covenants of Meridian shall be expressed, if at all, in
writing delivered to Meridian promptly following Acquiror's
discovery of such breach, which writing shall set forth in
reasonable detail the basis and character of the claim ("Claim
Notice"). Notwithstanding the foregoing, subject to SECTION
6.2, (i) Acquiror shall not make any claim on account of a
breach of representations, warranties or covenants discovered
after the Closing Date unless and until (A) the aggregate
measure of such claims exceeds Three Hundred Sixty-Eight
Thousand Five Hundred Dollars ($368,500.00), and (B) the
aggregate measure of such Claims with respect to the Janesville
Transaction and this transaction exceeds Five Hundred Thousand
Dollars ($500,000.00), (ii) Meridian's aggregate liability for
all claims arising out of such representations, warranties or
covenants discovered after the Closing Date shall not exceed Two
Million Two Hundred Nine Thousand Five Hundred Dollars
($2,209,500.00), (iii) all claims for breach of representations,
warranties or covenants discovered prior to the Closing Date
shall be governed by the procedures set forth in SECTION 3.2
rather than this SECTION 5.6, and (iv) Acquiror shall not have
the right to deliver to Meridian Claim Notices with respect to
any breach of representation, warranty or covenants after the
expiration of the survival of the representation, warranty or
covenant in question..
(c) Intentionally Deleted.
(d) Meridian shall have a period of thirty (30) days
within which to cure any breach identified in a Claim Notice,
or, if such breach cannot reasonably be cured within such thirty
(30) days, an additional reasonable time period, so long as such
cure has been commenced within such thirty (30) days and is at
all times diligently pursued; provided, however, that such
additional reasonable period shall not extend beyond sixty (60)
days if Acquiror is incurring damages as a result of Meridian's
failure to cure
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such breach. If the breach is not cured after
actual written notice and within such cure period, Acquiror's
sole remedy shall be an action at law for damages against
Meridian, which must be commenced, if at all, within a period of
forty-five (45) days following the date of delivery of the Claim
Notice; provided, however, that if Meridian commences to cure
and thereafter terminates such cure effort without completing
such cure, then Acquiror shall have an additional thirty (30)
days from the date of written notice from Meridian of such
termination within which to commence an action at law for
damages as a consequence of the failure to cure.
(e) The parties agree that Acquiror's representations and
warranties contained in SECTION 5.4 and any representation made
in accordance with SECTION 8.3 of this Agreement and the
covenants set forth in SECTION 5.5 of this Agreement and in any
document executed by Acquiror pursuant to this Agreement shall
survive the Closing of this transaction.
(f) Acquiror and the REIT agree that, except as otherwise
provided in this Agreement, in the event of the breach of any
representation or warranty contained in SECTION 5.4 of this
Agreement and any representation made in accordance with
SECTION 8.3 of this Agreement and in any document executed by
Acquiror pursuant to this Agreement and any covenant set forth
in SECTION 5.5 which survives the Closing, Meridian and/or any
of the OP Unit Recipients shall have all remedies available at
law or in equity with respect to such breach, including, without
limitation, the right to injunctive relief to prevent any such
breach. Any provision of this Agreement to the contrary
notwithstanding, in no event or circumstance whatsoever shall
liability by asserted or recourse be had against any partner of
Acquiror, the REIT or its officers, directors, shareholders,
employees or agents as to any claim arising directly or
indirectly, in full or in part, pursuant to this Agreement;
provided, however, that the foregoing shall not preclude any
claim against the Acquiror, even if such claim is based upon the
covenants, warranties or representations of or with respect to
the REIT or the satisfaction of any judgment against the REIT,
as general partner of Acquiror.
(g) Meridian shall deposit with the Title Company
immediately after Closing cash and/or OP Units equal to Two
Million Two Hundred Nine Thousand Five Hundred Dollars
($2,209,500.00) (the "Claim Deposit") to secure any claims owed
by Meridian pursuant to this Agreement for breach by Meridian of
representations, warranties or covenants and not waived pursuant
to the provisions of this Agreement as of Closing. If Claim
Notices aggregating claims less than Two Million Two Hundred
Nine Thousand Five Hundred Dollars ($2,209,500.00) shall have
been delivered after Closing and prior to the first anniversary
of the Closing Date, subject to Meridian's right to contest, the
Title Company shall deliver to Meridian cash or OP Units equal
in amount to the difference between the amount of claims
specified in the Claim Notices and the amount of such Claim
Deposit. To the extent Claim Notices have been delivered to
Meridian, the Claim Deposit shall remain with the Title
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Company until such claims shall have been resolved; provided,
however, that as claims become resolved, the Title Company shall
deliver to Meridian or Acquiror, as the case may be, the amount
held for such claim upon written notice from Meridian's Agent and
Acquiror (acting reasonably) directing the Title Company to
release such amount to Meridian or Acquiror. The Title Company
shall invest the cash portion of the Claim Deposit in United
States Treasury bills or notes with a ninety day maturity. Any
dividends payable with respect to OP Units held in the Claim
Deposit shall belong to the OP Unit Recipients and interest on
the cash shall be allocated to the Sellers.
ARTICLE VI
DEFAULT
Section 6.1 Acquiror's Deposit and Default.
Contemporaneously with (i.e., within forty-eight (48) hours of) the
execution of this Agreement, Acquiror shall deliver to the Title
Company, as escrow agent, for deposit, an amount equal to One Million
Five Hundred Thousand Dollars ($1,500,000) (the "Deposit"), which
Deposit may, at Acquiror's sole election, be in the form of a Letter
of Credit. The Title Company shall invest any cash Deposit in United
States Treasury bills or notes with a ninety (90) day maturity. In
the event that this transaction is consummated as contemplated by
this Agreement, then the entire amount of the Deposit, together with
any interest accrued thereon, shall be returned to Acquiror at
Closing. The entire amount of the Deposit, together with any
interest accrued thereon, shall be returned immediately to Acquiror
and neither party shall have any further rights or obligations
hereunder except with respect to the Surviving Covenants (a) in the
event of a termination of this Agreement pursuant to SECTION 3.2 or
as the result of the failure of any of the conditions precedent set
forth in SECTION 4.1(A) above, (b) in the event that (i) the
conditions precedent set forth in SECTION 4.1(B) shall have been
satisfied or waived, (ii) Acquiror shall have performed fully or
tendered full performance of Acquiror's material Closing obligations
hereunder and (iii) Meridian shall fail to perform its material
Closing obligations under this Agreement, or (c) in the event that
this Agreement shall be terminated pursuant to the provisions of
SECTION 8.1 hereof. IN THE EVENT OF BREACH OF THIS AGREEMENT BY
ACQUIROR, THE ENTIRE AMOUNT OF THE DEPOSIT, PLUS ACCRUED INTEREST,
SHALL BE DELIVERED TO AND RETAINED BY MERIDIAN AS LIQUIDATED DAMAGES.
ACQUIROR AND MERIDIAN HEREBY ACKNOWLEDGE AND AGREE THAT MERIDIAN'S
DAMAGES IN THE EVENT OF SUCH A BREACH OF THIS AGREEMENT BY ACQUIROR
WOULD BE DIFFICULT OR IMPOSSIBLE TO DETERMINE, THAT THE AMOUNT OF THE
DEPOSIT PLUS ACCRUED INTEREST IS THE PARTIES' BEST AND MOST ACCURATE
ESTIMATE OF THE DAMAGES MERIDIAN WOULD SUFFER IN THE EVENT THE
TRANSACTION PROVIDED FOR IN THIS AGREEMENT FAILS TO CLOSE AND THAT
SUCH ESTIMATE IS REASONABLE UNDER THE CIRCUMSTANCES EXISTING ON THE
DATE OF THIS AGREEMENT. ACQUIROR AND MERIDIAN AGREE THAT MERIDIAN'S
RIGHT TO RETAIN THE DEPOSIT PLUS ACCRUED
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INTEREST SHALL BE THE SOLE REMEDY OF MERIDIAN IN THE EVENT OF A
BREACH OF THIS AGREEMENT BY ACQUIROR PRIOR TO CLOSING.
This SECTION 6.1 is intended only to liquidate and limit
Meridian's rights to damages arising due to Acquiror's failure to
purchase the Property and shall not limit the indemnification
obligations of Acquiror pursuant to (i) the Confidentiality
Agreement, (ii) any other documents delivered pursuant to this
Agreement or (iii) SECTIONS 3.1(B), 3.1(C), 3.1(D), 5.5, 5.6(E), 8.2,
8.9 AND 8.13 of this Agreement. In no event shall Acquiror or any
Acquiror Related Parties be liable to Meridian for any consequential
or punitive damages based upon a breach of this Agreement, including,
without limitation, breaches of representation, warranty or covenant.
Section 6.2 Default by Meridian (a) If (i) the conditions
precedent set forth in SECTION 4.1(B) shall have been satisfied or
waived, and (ii) Meridian shall fail to perform its material Closing
obligations under this Agreement and Acquiror shall not have
terminated this Agreement as permitted hereunder, then, in addition
to the return of the Deposit set forth in SECTION 6.1 Acquiror shall
have the right to recover its actual monetary damages from Meridian
up to an aggregate maximum amount equal to Two Million Two Hundred
Nine Thousand Five Hundred Dollars ($2,209,500.00) or, in the
alternative, to pursue an action for specific performance as its sole
remedy; provided, however, that upon the occurrence of an Intentional
Material Default (as hereinafter defined), Acquiror may seek damages
(not subject to any floor or cap) from Meridian provided that, solely
in the event of an Intentional Material Default described in Clauses
(i) and (ii) below, Acquiror has diligently in good faith sought and
been unable to obtain specific performance within six (6) months
after the occurrence of such Intentional Material Default.
"Intentional Material Default" means any of the following: (i) sale
directly or indirectly of all or any portion of the Property to a
person other than Acquiror or the execution of an agreement for the
same; (ii) effecting a financing encumbering all or any portion of
the Property or the execution of an agreement for the same;
(iii) material modification or termination after July 16, 1998, of
Leases aggregating in excess of 20,000 square feet, except in
accordance with this Agreement; and (iv) entering into any Contracts
after July 16, 1998, which are not cancelable at Closing and which
result in a material adverse economic impact on Acquiror or the
Property, except in accordance with this Agreement. Except as
expressly provided in this SECTION 6.2, Meridian's liabilities
relating to a breach of representation, warranty or covenant shall be
subject to the provisions of Section 5.6 and any additional
limitations set forth in this Agreement.
(b) Subject to the provisions of this SECTION 6.2, in no
event shall Meridian or any Meridian Related Parties be liable to
Acquiror for any consequential or punitive damages based upon any
breach of this Agreement, including, without limitation, breaches of
representation, warranty or covenant. Subject to the provisions of
this SECTION 6.2, Acquiror further agrees that recourse for any
liability of Meridian under this Agreement or any document or
instrument delivered simultaneously or in connection with or pursuant
to this Agreement shall be limited to Two Million Two Hundred Nine
Thousand Five Hundred
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Dollars ($2,209,500.00). Subject to applicable principles of fraudulent
conveyance, in no event shall Acquiror seek satisfaction for any
obligation from any partners, members, managers, shareholders, officers,
directors, employees, agents, legal representatives, successors or
assigns of Meridian, nor shall any of the foregoing have any personal
liability for any such obligations of Meridian.
ARTICLE VII
CLOSING
Section 7.1 Escrow Arrangements. An escrow for the
contribution and exchange contemplated by this Agreement has been
opened by Acquiror and Meridian with the Title Company as escrow
agent. On the Closing Date, Acquiror and Meridian shall each deliver
escrow instructions to Title Company consistent with this
ARTICLE VII, and designating the Title Company as the "Reporting
Person" for the transaction pursuant to Section 6045(e) of the Code.
In addition, the parties shall deposit in escrow with the Title
Company as escrow agent, on the Closing Date (unless otherwise
provided in this SECTION 7.1), the documents described below and
shall deposit on the Closing Date the funds described below:
(a) Meridian shall deposit (or cause to be deposited),
with respect to itself or the Property, the following:
(i) a duly executed and acknowledged Deed for the
Land;
(ii) four (4) counterparts of an assignment of the
Ground Lease in Form as set forth on Exhibit TT (the
"Assignment of Ground Lease");
(iii) a duly executed bill of sale pertaining to the
Personal Property in the form attached to this Agreement
as Exhibit PP (the "Bill of Sale");
(iv) four (4) duly executed counterparts of an
assignment pertaining to the Intangible Property in the
form attached to this Agreement as Exhibit QQ (the
"Assignment of Intangibles");
(v) four (4) duly executed counterparts of an
assignment and assumption pertaining to the Leases in the
form attached to this Agreement as Exhibit RR (the
"Assignment of Leases");
(vi) four (4) duly executed counterparts of an
assignment and assumption pertaining to any Contracts
being assumed by Acquiror, in the form attached to this
Agreement as Exhibit SS (the "Assignment of Contracts");
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(vii) four (4) duly executed counterparts of an
assignment and assumption pertaining to the REA's in the
form attached to this Agreement as Exhibit UU.
(viii) a certificate from Meridian certifying
that Meridian is not a "foreign person" as defined in
Section 1445(f)(3) of the Code ("FIRPTA Certificate");
(ix) a certificate from Meridian reaffirming, as of
the Closing Date, the representations and warranties made
in SECTION 5.1(A) in form as set forth on EXHIBIT GG;
(x) evidence reasonably required by Acquiror
demonstrating that (i) Meridian is an entity validly
existing and in good standing under the laws of Ohio and
Michigan or the jurisdiction in which it was formed, and
(ii) Meridian's execution and delivery of this Agreement
and the other documents delivered pursuant hereto and the
consummation of the transactions contemplated hereby have
been fully authorized, which evidence, if Meridian is a
corporation, or a partnership or limited liability company
in which any of the general partners or managers, as the
case may be, is a corporation, shall mean (x) certified
copies of corporate resolutions duly adopted by the board
of directors of Meridian (or its corporate general partner
or manager) approving Meridian's execution and delivery of
this Agreement and the other documents delivered pursuant
hereto and the consummation of the transactions
contemplated hereby, (y) certificates of incumbency and
(z) certificates of good standing;
(xi) the estoppels from the Majors, the other
tenants, the ground lessor under the Ground Lease, the
parties to the REA (other than Hudson's, which will be
required to provide an estoppel in the form to be provided
by the Majors) (which REA estoppels shall provide that
each REA is in full force and effect, that there is no
default beyond applicable cure period thereunder, and
there are no amounts required to be paid or work required
to be performed that have not been paid or performed to
date), and the Master Estoppel of Meridian pursuant to
SECTION 4.1(A)(IV) hereof;
(xii) the Registration Rights Agreement, dated as of
the Closing Date and duly executed by each OP Unit
Recipient; in form as set forth on EXHIBIT M hereof;
(xiii) the Acknowledgment, duly executed by each
OP Unit Recipient;
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(xiv) notices directing Tenants, among other things,
to make future payments to Acquiror, in form set forth on
EXHIBIT HH hereof;
(xv) any transfer tax forms, if applicable, and
other forms and documents reasonably required by the Title
Company;
(xvi) any and all other documents reasonably
requested or required in order to consummate the
transactions contemplated herein.
In addition, Meridian shall deliver to Acquiror on the Closing Date,
outside of escrow, the originals of all Leases, the Ground Lease,
Hudson's REA, the Contracts (if not terminated at or before Closing)
or copies thereof if originals are not available, tenant files, plans
of the Property, leasing brochures for the Property, and all keys to
the Property and all other property relating to the Property in the
possession or control of Meridian.
(b) Acquiror shall deposit:
(i) Immediately available funds in an amount equal
to the sum of (A) the Cash Consideration, plus (B) the
amount required to pay off the Meridian Indebtedness
immediately subsequent to Closing, plus (C) an amount
sufficient to pay Acquiror's share of all escrow costs and
Closing expenses;
(ii) four (4) duly executed counterparts for each
of the Assignment of Ground Lease, the Assignment of
Intangibles, Assignment of Leases, Assignment of Contracts
and Assignment of REA's;
(iii) a certificate duly executed by Acquiror in
favor of Meridian confirming the waivers and
acknowledgments set forth in SECTIONS 3.1 AND 5.6 above;
(iv) any and all other documents reasonably
requested or required in order to consummate the
transactions contemplated herein;
(v) evidence reasonably required by Meridian
demonstrating that (A) Acquiror is an entity in good
standing under the laws of the jurisdiction in which was
formed, and (B) Acquiror's execution and delivery of this
Agreement and the other documents delivered pursuant
hereto and the consummation of the transaction
contemplated hereby have been fully authorized, which
evidence shall mean (1) certified copies of corporate
resolutions duly adopted by the board of directors of the
REIT, as Acquiror's general partner, approving Acquiror's
execution and delivery of this Agreement and the other
documents delivered pursuant hereto and the consummation
of the transactions contemplated hereby, (2) certificates
of incumbency and (3) certificates of good standing;
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(vi) a certificate of Acquiror reaffirming as of
the Closing Date the representations and warranties made
by Acquiror in ARTICLE V.
(vii) the Acknowledgment, duly executed by the
general partner(s) of Acquiror with respect to each OP
Unit Recipient;
(viii) the Registration Rights Agreement dated as
of the Closing Date and duly executed by the general
partner of Acquiror.
(ix) a copy of the Partnership Agreement and all
organization documents of the REIT, duly certified by the
REIT as true, complete and correct, and a certified copy
of the Certificate of Limited Partnership of Acquiror from
the Secretary of State of the state of its formation,
dated not more than twenty (20) days before the Closing
Date;
(x) a copy, certified by the Secretary of State of
the REIT's state of incorporation, of the Articles of
Incorporation of the REIT and a good standing certificate
of the REIT;
(xi) an opinion by counsel for the REIT addressed
to each OP Unit Recipient stating that the Acquiror and
any existing Subsidiary Partnership each qualifies as a
partnership for federal income tax purposes and is not
treated as an association taxable as a corporation under
Section 7704 of the Code or any other provision, which
opinion shall be subject to such counsel's usual
assumptions and qualifications and reliance upon officer's
certificates in similar types of opinions previously given
by such counsel;
(xii) an opinion by counsel for the REIT addressed
to each OP Unit Recipient stating that the REIT is
qualified to operate, is currently operating as and its
proposed methods of operations will enable it to continue
to operate as a real estate investment trust within the
meaning of Section 856(a) of the Code, which opinion shall
be subject to such counsel's usual assumptions and
qualifications and reliance upon officer's certificates in
similar types of opinions previously given by such
counsel;
(xiii) an opinion by counsel for the REIT
addressed to each OP Unit Recipient stating that the
Acquiror and REIT, respectively, have been duly organized
and are in good standing, that the OP Units have been
issued in accordance with all applicable Legal
Requirements and the Partnership Agreement, that the OP
Unit Recipients are limited partners of Acquiror as of the
Closing, and that this transaction is exempt from pre-
closing approval requirements under the Hart-Scott-Rodino
Act which opinion shall be subject to such counsel's usual
assumptions and qualifications and reliance upon
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officer's certificates in similar types of opinions
previously given by such counsel; and
(xiv) any other forms or documents reasonably
requested by the Title Company.
Section 7.2 Closing. The Title Company shall Close the
transaction contemplated by this Agreement ("Closing") on the Closing
Date (as may be extended pursuant to the terms hereof) by:
(a) issuing the Title Policy to Acquiror;
(b) delivering to Acquiror the Bill of Sale, the FIRPTA
Certificates, and two (2) (fully executed in counterpart) of the
Assignment of Ground Lease, Assignment of Intangibles,
Assignment of Leases, Assignment of Contracts and Assignment of
REA's;
(c) delivering to Meridian (i) two (2) originals (fully
executed in counterpart) of the Assignment of Ground Lease, the
Assignment of Intangibles, Assignment of Leases, Assignment of
Contracts and Assignment of REA's and the Acknowledgment, (ii)
the certificate described in SECTION 7.1(B)(III) above, (iii)
the opinions of counsel to the REIT described in SECTIONS
7.1(B)(XI), 7.1(B)(XII) AND 7.1(B)(XIII), and (iv) the
Acknowledgment;
(d) returning the Deposit to Acquiror; and
(e) delivering to the parties designated therein any
other instruments delivered into escrow by Meridian pursuant to
SECTION 7.1(A) or Acquiror pursuant to SECTION 7.1(B).
Section 7.3 Prorations.
(a) Taxes. (i) Meridian shall be responsible for all
real estate taxes and assessments on the Property which are not
billed directly by the taxing authorities to tenants ("Taxes and
Assessments") through the Closing. At Closing the first portion
of Taxes and Assessments for the 1998 calendar year will have
been paid by Meridian with the last portion due in December
1998, so that there shall be deducted from the Gross
Consideration an amount equal to the proration of the Taxes and
Assessments payable in 1998 determined as follows:
(a) the total Taxes and Assessments payable
in 1998 will be divided by 365;
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(b) that quotient shall be multiplied by
the number of days beginning January 1, 1998
and ending on the day preceding the Closing
Date; and
(c) the amount of Tax and Assessments paid
by Meridian for the first portion of 1998
shall be subtracted from that product and
Acquiror shall get a credit against the Gross
Consideration in the amount of such balance.
(ii) Personal property taxes shall be prorated as of the
Closing Date.
(b) Prepaid Expenses. Acquiror shall be charged for
those prepaid expenses allocable to any period after the Closing
Date, including, without limitation, prepaid rents under any
personal property or ground leases, annual permit and
confirmation fees, fees for licenses and all security or other
deposits paid by Meridian to third parties.
(c) Intentionally Deleted.
(d) Property Income and Expense. The following
prorations and adjustments shall occur as of the Closing Date.
Meridian shall receive and retain all income arising from the
Property to the Closing Date and shall bear all expenses of the
operation of the Property to the Closing Date. Prior to the
Closing Date, Meridian shall provide all information to Acquiror
and the Title Company reasonably required to calculate such
prorations and adjustments and representatives of Acquiror and
Meridian shall together make such calculations (and shall
deliver such calculations to the Title Company at least one (l)
Business Day prior to Closing):
(i) General. (A) Subject to the specific
provisions of clause (ii) below, income and expense shall
be prorated on the basis of a thirty (30)-day month and on
a cash basis (except for items of income and expense that
are payable less frequently than monthly, which shall be
prorated on an accrual basis). All such items
attributable to the period on or prior to the Closing Date
shall be credited to Meridian; all such items attributable
to the period following the Closing Date shall be credited
to Acquiror. Acquiror shall be credited at Closing with
(1) any portion of security deposits made pursuant to the
Leases that are refundable to existing tenants and have
not been applied to outstanding tenant obligations in
accordance with the terms of the applicable Lease and (2)
rent from tenants prepaid beyond the Closing Date.
Acquiror shall not be entitled to any interest on Lease
deposits or prepaid rent accrued on or before the Closing
Date, except to the extent any such amount of interest is
required to be accrued and refunded or paid to any tenant
under a Lease. Meridian shall be credited with any
refundable deposits or bonds held by any utility,
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governmental agency or service contractor, to the extent
such deposits or bonds are assigned to Acquiror on the
Closing Date.
(B) Acquiror shall be credited at Closing with
any tenant allowances or other tenant inducements to be
paid in cash or cash equivalents (excluding rental
abatement) by Acquiror after the Closing Date with respect
to the current term of any Lease executed, or any
extension or expansion of premises option exercised, in
each case, prior to the date of this Agreement, and with
respect to the In-Negotiation Leases executed prior to the
Closing Date (but not for the Prospective Leases listed on
EXHIBIT G-1 and the Lease Extension Modifications listed
on EXHIBIT G-2). Meridian shall be responsible for the
payment of any leasing commissions with respect to the
current term of any lease executed, or any option to
extend or expand the leased premises which has been
exercised, in each case, prior to the date of this
Agreement and with respect to the In-Negotiation Leases
executed within six (6) months of the Closing (but not for
the Prospective Leases listed on EXHIBIT G-1 and the Lease
Extension Modifications listed on EXHIBIT G-2). With
respect to In-Negotiation Leases not executed on the
Closing Date, but which are executed within six (6) months
of the Closing Date, Meridian shall be responsible for the
payment of any leasing commissions and shall reimburse
Acquiror for any tenant allowances to be paid in cash
pursuant to the In-Negotiation Leases, within thirty (30)
days following receipt of an invoice which may be rendered
when the In-Negotiation Leases shall have been executed by
both parties and construction has been completed. In the
alternative, Acquiror shall have the right to deduct the
amount of the tenant allowances to be paid in cash from
the "In-Negotiation Lease Deposit" being held by the Title
Company pursuant to the provisions of SECTION 7.3(I)
hereof.
(C) Acquiror shall assume all obligations for
any leasing commissions, tenant improvements and other
allowances with respect to the Prospective Leases set
forth on EXHIBIT G-1 and Lease Extension Modifications set
forth on EXHIBIT G-2, executed not later than six (6)
months after the Closing. Meridian shall be credited at
Closing with any leasing commissions or allowances paid in
cash or incurred by Meridian to the extent such items
relate to Prospective Leases or Lease Extension
Modifications executed in accordance with the terms of
this Agreement prior to the Closing Date. Any amounts
payable to Meridian which are not credited at Closing to
Meridian and are due pursuant to this paragraph shall be
paid within thirty (30) days following receipt of an
invoice which may be rendered when the Prospective Lease
or Lease Extension Modification shall have been executed
by both parties.
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(D) All fixed rent currently paid or payable
under the Ground Lease shall be prorated between Meridian
and Acquiror as of the Closing Date. Percentage Rent
payable under the Ground Lease shall be prorated in the
same manner as set forth in SECTION 7.2(D)(II)(F), except
that the reference to "365" shall be changed to "182".
(ii) Rents.
(A) Fixed or minimum rents and Taxes and
Assessments (collectively referred to in this Section 7.2
(d)(ii)(A) as "Rents") payable by tenants under the Leases
shall be prorated as and when collected (whether such
collection occurs prior to, on, or after the Closing
Date). Acquiror shall receive a credit for the amounts
actually received by Meridian on or before the Closing
Date and which pertain to any period after the Closing
Date. Acquiror shall not receive a credit at the Closing
for any Rents for the month in which the Closing occurs
which are in arrears and have not then been received.
Notwithstanding any provision of this Agreement, Meridian
shall have the right, in its sole discretion prior to
Closing, to apply any security deposits held by Meridian
under any Leases to remedy any default or delinquencies
under such Leases in accordance with the terms thereof.
As to any tenants that are delinquent in the payment of
Rent on the Closing Date, Acquiror shall use reasonable
efforts (but shall not be required to commence legal
action) to collect or cause to be collected such
delinquent Rents for twelve (12) months following the
Closing Date. Any and all Rents so collected by Acquiror
following the Closing (less a deduction for all reasonable
collection costs and expenses incurred by Acquiror) shall
be successively applied to the payment of (1) Rent due and
payable in the month in which the Closing occurs, (2) Rent
due and payable in the months succeeding the month in
which the Closing occurs (up to and including the month in
which payment is made) and (3) Rent due and payable in the
months preceding the month in which the Closing occurs.
If all or part of any Rents or other charges received by
Acquiror following the Closing are allocable to Meridian
pursuant to the foregoing sentence, then such sums shall
be promptly paid to Meridian. Meridian reserves the right
to collect delinquent Rents owed to Meridian as of the
Closing Date and to pursue any damages remedy Meridian may
have against any tenant or former tenants with respect to
delinquent Rents, but shall have no right to exercise any
other remedy under the Lease (including, without
limitation, termination, eviction, or commencing
involuntary bankruptcy proceeding against tenants).
Meridian shall promptly pay to Acquiror amounts allocable
to Acquiror pursuant to this Section.
(B) Intentionally Deleted.
(C) With respect to the Promotion Fund - Media
Fund (the "PM Fund"), Meridian shall pay all invoices
received prior to the Closing Date and shall deliver to
Acquiror the funds therein that exist on the Closing Date.
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Acquiror shall pay all invoices related to the PM Fund
received by Acquiror or Meridian on or after the Closing
Date whether relating to periods before or after the
Closing Date. Meridian warrants that the amounts
remaining in the PM Fund as of the Closing Date will be
sufficient to satisfy all outstanding obligations with
respect to the PM Funds incurred prior to the Closing
Date. The provisions of the immediately preceding
sentence shall survive the Closing for one (1) year.
(D) With respect to the gift certificate
program, commencing on or about December 15, 1997 Landlord
has been under contract with Mid-America Money Order
Company ("Mid-America") to operate the gift certificate
program for the Property, so that Mid-America is
responsible for honoring any gift certificates redeemed by
customers of the Property sold while Mid-America's Gift
Certificate Trust Agreement has been in effect. Meridian
shall cause Mid-America to deliver an estoppel certificate
confirming the foregoing facts and stating the amounts of
gift certificates outstanding for which it is responsible.
Meridian will pay to Acquiror on the Closing Date an
amount equal to the unexpired gift certificates issued by
Meridian prior to the commencement of the program with
Mid-America as set forth on EXHIBIT JJ hereto, which
Meridian warrants to be true and complete. The provisions
of the immediately preceding sentence shall survive the
Closing for one (1) year.
(E) Any charges for common area, insurance
charges, operating and maintenance expenses, compactor
charges, escalation rents or charges, electricity charges,
HVAC charges, cost of living increases or any other
charges of a similar nature other than fixed or base rent
under the Leases (collectively, "Additional Rents") shall
be prorated as of the Closing Date between Acquiror and
Meridian on or before the date which is sixty (60) days
following the Closing Date, based on the actual amount
spent and received as of the Closing Date and the amount
that will be paid by tenants under their Leases for the
calendar year 1998. Meridian shall provide Acquiror with
information regarding Additional Rents which were received
by Meridian on or prior to Closing and the amount of
reimbursable expenses paid or incurred by Meridian on or
prior to Closing on before the date which is sixty (60)
days following the Closing ("Reconciliation"). Upon
reasonable notice and during normal business hours,
Meridian shall make available to the Acquiror all
information reasonably required to confirm the
Reconciliation. In the event of any overpayment of
Additional Rents by the tenants to Meridian, Meridian
shall promptly, but in no event later than thirty (30)
days after date of the Reconciliation, pay to Acquiror the
amount of such overpayment, or such amount may be taken
from the Claim Deposit, at Meridian's election. In the
event of an anticipated underpayment of Additional Rents
by the tenants to Meridian, Acquiror shall pay to
Meridian' Agent the amount of such
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underpayment within thirty (30) days following Acquiror's
receipt of such Reconciliation.
(F) With respect to percentage rents due from
tenants for lease years which end on or before the Closing
Date, Meridian shall be entitled to all such percentage
rents. With respect to percentage rents due from tenants
with lease years that end between the day after the
Closing Date and the first anniversary of the Closing
Date, Acquiror shall pay to Meridian the percentage rent
received by Acquiror for such lease year times a fraction
the numerator of which shall be the number of days between
the beginning of such lease year and including the Closing
Date, and the denominator of which shall be 365. Such
amount shall be paid within thirty (30) days after
Acquiror receives such percentage rents. Upon reasonable
notice and during normal business hours, Acquiror shall
make available to Meridian all information reasonably
required to reconcile the amounts payable hereunder with
respect to percentage rent. Acquiror shall deliver to
Meridian on a quarterly basis copies of all annual
statements of gross sales received by Acquiror with
respect to the period covered by the percentage rent
proration. In the event that Acquiror audits any tenant
paying percentage rent with respect to the period of the
proration or before, Acquiror shall deliver to Meridian a
copy of the results of such audit within thirty (30) days
following receipt and Meridian will be entitled to any
additional percentage rent for the period of the proration
and before. If any percentage rent has been collected by
Meridian before the Closing, the parties will adjust the
amounts owed hereunder to reflect such receipt of funds.
(G) With respect to HVAC charges, the monthly
billing paid by each tenant shall be prorated as of the
Closing Date in the same manner that fixed rents are
prorated and there will be no proration of the central
cooling system expenses. Meridian will bill for chilled
water at the end of calendar year 1998 and will reimburse
Meridian's Agent based upon a fraction of the chilled
water income times a fraction the numerator of which is
the number of days between the date that the chillers were
turned on in 1998, and the denominator of which is the
total number of days that the chillers were operating
during the calendar year 1998.
(f) Partnership Distributions - Dilution
Reduction. Distributions in respect of the OP Units
acquired by the OP Unit Recipients shall begin to accrue
from and after the Closing Date (notwithstanding the fact that
such date may not be the applicable Record Date under the
Partnership Agreement), and the amount of distributions paid or
to be paid to the OP Unit Recipients for the calendar
quarter in which the Closing Date occurs shall be prorated
accordingly. For example, if the Closing Date is August 1,
1998, the OP Unit Recipients shall be entitled to 61/92 of
the distribution to be made in respect of the OP Units for the
third quarter of 1998 when such distribution is paid with
respect to all Common Units of Acquiror. In
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addition, distributions to be paid to the OP Unit Recipients
for the one (1) year period following the Closing shall be
reduced to reflect the dilution resulting from this Transaction
in accordance with the Acknowledgment. The exact amount of
such dilution shall be calculated at Closing and reflected
in the Acknowledgment.
(g) Adjustments to Prorations. After the Closing, the
Meridian' Agent and Acquiror shall from time to time, as soon as
practicable after accurate information becomes available, and in
any event within three hundred sixty-five (365) days following
the Closing Date, recalculate and reapportion any of the items
subject to proration or apportionment (i) which were not
prorated and apportioned at the Closing because of the
unavailability of the information necessary to compute such
proration, or (ii) which were prorated or apportioned at the
Closing based upon estimated or incomplete information or (iii)
for which any errors or omissions in computing prorations at the
Closing are discovered subsequent thereto, and thereafter the
proper party shall be reimbursed based on the results of such
recalculation and reapportionment. Unless otherwise specified
herein, all such reimbursements shall be made on or before
thirty (30) days after receipt of notice of the amount due.
Any such reimbursements not timely paid shall bear interest at
the rate often percent (10%) per annum from the due date until
all such unpaid sums together with all interest accrued thereon
is paid.
(h) Rental Concessions. There shall be no proration or
reduction of the Gross Consideration with respect to any tenants
that have the right to abate rent or additional rent for a
period of time after the Closing; and there shall be no
proration or reduction in the Gross Consideration with respect
to signed leases for which rent shall not have commenced as a
result of a construction allowance, inducement payment or
otherwise.
(i) Pending Leases. With respect to any In-Negotiation
Leases which shall not have been signed on the Closing Date, on
the Closing Date Meridian shall deposit (the "In-Negotiation
Lease Deposit") with the Title Company an amount equal to one
year of Fixed Minimum Rent and CAM, Taxes and insurance charges
(based on 1998 estimates being charged to tenants) payable with
respect to such In-Negotiation Leases. The Title Company shall
invest the In-Negotiation Lease Deposit in United States
Treasury bills or notes with a ninety (90) day maturity. In the
event that any In-Negotiation Lease is not signed within six (6)
months following the Closing, the Title Company shall deliver to
Acquiror the portion of the In-Negotiation Deposit applicable to
such In-Negotiation Lease. If an In-Negotiation Lease shall be
executed within the six (6) month period following the Closing,
the Title Company shall deliver to Meridian the portion of the
In-Negotiation Deposit attributable to such In-Negotiation
Lease. Following the Closing Date, subject to Acquiror's
reasonable approval rights, Meridian or its designee shall
continue the negotiation in good faith and shall use reasonable
efforts to obtain the execution of the In-Negotiation Leases,
Prospective Leases, and Lease Extension Modifications during the
six-month period
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following the Closing Date and Acquiror shall
cooperate in that endeavor. With respect to payment of leasing
commissions relating to In-Negotiation Leases, Prospective
Leases and Lease Extension Modifications executed not later than
six (6) months after the Closing Date, Acquiror will pay
Meridian or its designated agents 50% of such commission on
signing and 50% of such commission on opening.
(j) Timing. Except as otherwise expressly set forth in
this Agreement, all prorations shall be made as of 11:59 p.m. on
the night before the Closing. Five (5) days prior to Closing,
Meridian and Acquiror shall agree upon the proration schedule
which will be used by the parties in determining the Net
Consideration to be received by Meridian at Closing, subject to
post-closing adjustments pursuant to the terms of this
Agreement.
Section 7.4 Other Closing Costs.
(a) Meridian shall be responsible for (i) one-half (1/2)
of any governmental documentary transfer or transaction taxes or
fees due on this transaction, (ii) one-half (1/2) of any escrow
fee to the Title Company, (iii) one-half (1/2) of the cost of
issuing the Title Report, and (iv) one-half (1/2) of any cost of
the ALTA/ACSM survey of the Property ("Survey") incurred by
Meridian in 1997 and 1998 and for all prior survey costs and
expenses.
(b) Acquiror shall be responsible for and pay (i) one-
half (1/2) of any governmental documentary transfer or
transaction taxes or fees due on this transaction, (ii) one-half
(1/2) of any escrow fee to the Title Company, (iii) one-half
(1/2) of the cost of issuing the Title Report, (iv) one-half
(1/2) of any cost of the Survey incurred by Meridian in 1997
and 1998, and (v) any title premium in connection with the
issuance of the Title Policies (including endorsements, standard
or extended coverage and any related survey update costs).
(c) Notwithstanding anything to the contrary set forth in
this Agreement, it is understood that any reference to amounts
to be "paid" by Meridian at the Closing shall mean that such
amounts shall be treated as an Adjustment to the Gross
Consideration and, consequently, Acquiror shall be responsible
for providing the cash to pay all amounts required to complete
the Closing. Any amounts to be paid by Acquiror to Meridian
after the Closing will be paid in cash.
Section 7.5 Further Documentation. At or following the
Closing, Acquiror, Meridian shall execute any certificate or other
instruments required by this Agreement, by law or local custom or
otherwise reasonably requested by the other party to effect the
transactions contemplated by this Agreement.
Section 7.6 Possession of the Properties. Meridian shall
grant and deliver to Acquiror on the Closing Date exclusive
possession of the Property, in the condition required
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by this Agreement, subject only to the Permitted Exceptions, free
and clear of all tenancies and rights of occupants other than
occupants and rights under the Leases.
Section 7.7 Escrow Instructions. The provisions of this
Agreement shall be deemed to be escrow instructions to the Title
Company, which the Title Company hereby accepts. The Title Company
shall have the right to require the parties to execute standard
escrow conditions, but in the event of any conflict between the
provisions of this Agreement and such standard escrow conditions, the
provisions of this Agreement shall control.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Damage or Destruction/Eminent Domain.
(a)(i) Acquiror shall be bound to acquire the
Property as required by the terms of this Agreement without
regard to the occurrence or effect of any damage to or
destruction of the Property or condemnation of any Property by
right of eminent domain, provided that the occurrence of any
damage or destruction to the Property involves repair costs
equal to or less than ten percent (10%) of the Gross
Consideration with respect to insured casualties and five
percent (5%) of the Gross Consideration with respect to
uninsured casualties ("Damage Threshold Amount"), and any
condemnation that does not materially and adversely affect the
use or value of the Property ("Immaterial Condemnation"). If
Acquiror is so bound to purchase the Property notwithstanding
the occurrence of damage, destruction or condemnation, or if
Acquiror elects not to terminate this Agreement pursuant to
SECTION 8.1(B), then upon the Closing in the event of damage
covered by insurance or an Immaterial Condemnation occurring
during the Contract Period, Acquiror shall receive a credit
against the Gross Consideration in the amount (net of collection
costs and costs of repair reasonably incurred by the Meridian
and not then reimbursed) of any insurance proceeds or
condemnation award collected and retained by Meridian as a
result of any such damage, destruction or condemnation, plus (in
the case of damage) the amount of the deductible portion of the
Meridian's insurance policy, and Meridian shall assign to
Acquiror all rights to such net insurance proceeds or
condemnation awards as shall not have been collected prior to
the Closing. In the event of damage not covered by insurance,
the amount of such damage shall be treated as an Adverse Matter
pursuant to SECTION 3.2.
(ii) In the event of any assignment of insurance
proceeds in accordance with this Section, Meridian shall notify
Acquiror of any disputes between Meridian and the insurance
carrier related to the claim giving rise to such proceeds.
Meridian will reasonably cooperate with Acquiror in attempting
to collect such proceeds from the insurance carrier and if, in
the reasonable judgment of Acquiror, a collection action is
necessary to obtain such proceeds, the reasonable costs of such
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collection action will be divided equally between Meridian and
Acquiror. The provisions of this SECTION 8.1(A) shall survive
the Closing.
(b) If, prior to the Closing Date, any Property suffers
damage or destruction that involves repair costs in excess of
the Damage Threshold Amount or condemnation that materially and
adversely affects the use and value of the Property, then
Acquiror may terminate this Agreement by giving written notice
to Meridian within five (5) Business Days after Acquiror
receives notice of the occurrence of such damage or
condemnation, in which event the Deposit shall be returned to
Acquiror. If the parties disagree as to whether or not Acquiror
is entitled to terminate this Agreement pursuant to this SECTION
8.1(B), then such disagreement shall be promptly submitted to
arbitration pursuant to SECTION 8.5.
Section 8.2 Fees and Commissions. Meridian represents and
warrants to Acquiror, and Acquiror represents and warrants to
Meridian, that no person or entity other than Salomon Smith Barney
can properly claim a right to a real estate broker's or investment
banker's commission, finder's fee, acquisition fee or other
brokerage-type compensation (collectively, "Real Estate
Compensation") with respect to the transaction contemplated by this
Agreement based upon the acts of the representing party. Meridian
shall be responsible for any Real Estate Compensation that may be due
to Salomon Smith Barney resulting from the transaction contemplated
by this Agreement. Meridian shall indemnify, protect, defend and
hold Acquiror harmless from and against, any and all claims, demands,
losses, damages, liabilities, causes of action, liens, costs and
expenses including, without limitation, reasonable attorneys' fees
and costs (to the extent permitted by law) and returned commissions,
directly or indirectly related to, arising out of or in any manner
connected with, in whole or in part, from any claim for Real Estate
Compensation by any person or entity with respect to the transaction
contemplated by this Agreement based upon the acts of Meridian.
Acquiror shall indemnify, protect, defend and hold each of Meridian
and the Meridian Related Parties harmless from and against, any and
all claims, demands, losses, damages, liabilities, causes of action,
liens, costs and expenses including, without limitation, reasonable
attorneys' fees and costs (to the extent permitted by law) and
returned commissions, directly or indirectly related to, arising out
of or in any manner connected with, in whole or in part, any claim
for Real Estate Compensation by any person or entity (other than
Salomon Smith Barney) with respect to the transaction contemplated by
this Agreement based upon the acts of the Acquiror.
Section 8.3 Successors and Assigns. (a) Acquiror may not
assign any of Acquiror's rights or duties hereunder without the prior
written consent of Meridian, which consent may be withheld by
Meridian in its absolute discretion.; provided, however, that
Acquiror may assign this Agreement to a wholly-owned affiliate of
Acquiror (an "Affiliate") without Meridian's consent (but with prior
notice to Meridian) provided that Acquiror (i) represents that such
Affiliate is, as of the Closing Date, an entity that is disregarded
as an entity separate from its owner for federal income tax purposes
(in accordance with Treasury Regulation Section 301.7701-3(b)(1)(ii))
and for applicable state income tax purposes ("Ignored"), and
(ii) agrees to pay, indemnify and hold harmless each of Meridian and
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the Meridian Related Parties against (A) any liability for federal,
state or local taxes arising as a direct or indirect result of any
failure of an Affiliate to be Ignored, as of the Closing Date,
(B) any costs and expenses including, without limitation, interest,
penalties, reasonable attorneys' and accounting fees, and any other
costs directly or indirectly related to, arising out of or in any
manner connected with the payments described in this sentence, and
(C) any additional liability for taxes associated with the receipt of
any payments of amounts described in clauses (A) and (B) of this
SECTION 8.3. Notwithstanding any such assignment, Acquiror agrees
that Acquiror shall remain primarily liable for all representations,
warranties and covenants by Acquiror set forth in this Agreement and
the OP Units shall be issued by Acquiror and the covenants of Section
5.4 shall continue as obligations of Acquiror.
(b) Meridian shall only be permitted to assign this
Agreement to an entity or entities to which title to the
Property has been transferred (or which entity has the right to
receive title) and which entity(ies) are comprised solely of
persons and/or entities that are members of Meridian as of the
date of this Agreement, and only if (A) such entities execute
and deliver to Acquiror an instrument pursuant to which the
assignee assumes this Agreement on a joint and several basis and
(B) Meridian agrees that Meridian shall remain primarily liable
for all representations, warranties and covenants by Meridian
set forth in this Agreement and shall not be released from any
of its obligations hereunder.
Section 8.4 Notices. All notices or other communications
required or provided to be sent by either party shall be in writing
and shall be sent by United States Postal Service, postage prepaid,
by certified mail, return receipt requested, or by any nationally
known overnight delivery service, or by courier hand delivery,
provided a receipt is obtained therefor, or by facsimile transmission
provided a confirmation is received therefor. All notices shall be
deemed to have been given forty-eight (48) hours following deposit in
the United States Postal Service or upon delivery if sent by
overnight delivery service, courier or facsimile. All notices shall
be addressed to the party at the address below:
To Meridian: Meridian Mall Associates Limited
LC
Attention: Arthur Weisman
17401 Aldersyde Drive
Shaker Heights, Ohio 44120
and: Robert T. Samuels
Samuels & Associates
433 South Main Street, Suite 110
West Hartford, Connecticut 06110
Telephone No: (860) 561-6764
Fax No: (860) 561-6768
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and: Roger E. Benjamin
Samuels & Associates
7589 Fairmont Court
Boca Raton, Florida 33496
and: William Heller
23611 Chagrin Boulevard
Beachwood, Ohio 44122
with a copy to: Gary W. Melsher, Esq.
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Telephone No: (216) 586-7274
Fax No: (216) 579-0212
and a copy to: John R. Herbert
Salomon Smith Barney
388 Greenwich Street
New York, New York 10013
Telephone No: (212) 816-7114
Fax No: (212) 816-7491
To Acquiror: CBL & Associates Limited Partnership
Attention: President
One Park Place
6148 Lee Highway
Chattanooga, Tennessee 37421
Telephone No: (423) 855-0001
Fax No: (423) 490-8390
(423) 490-8662
with a copy to: Keith L. Honnold
Watermill Center
800 South Street, Suite 395
Waltham, Massachusetts 02154-1439
Telephone No: (781) 647-3330
Fax No: (781) 647-1611
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with a copy to: Mary Ann Sinnott
CBL & Associates Properties, Inc.
One Park Place
6148 Lee Highway
Chattanooga, Tennessee 37421
Telephone No: (423) 490-8638
Fax No: (423) 490-8390
(423) 490-8662
with a copy to: Eugene A. Pinover
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019
Telephone: (212) 728-8254
Fax No.: (212) 728-8111
Any address or name specified above may be changed by notice given to
the addressee by the other party in accordance with this SECTION 8.4.
The inability to deliver because of a changed address of which no
notice was given, or rejection or other refusal to accept any notice,
shall be deemed to be the receipt of the notice as of the date of
such inability to deliver or rejection or refusal to accept.
Any notice required hereunder to a Meridian Related Party which holds
OP Units, shall be deemed given if sent to such party in the manner
set forth in Section 8.4 of the Agreement at the address set forth in
a letter given by Meridian and each OP Unit Recipient at the Closing
to Acquiror directing Acquiror to deliver the OP Units directly to
the Recipients or at such other address as to which an OP Unit
Recipient shall notify Acquiror pursuant to the provisions of
Section 8.4 hereof.
Section 8.5 Arbitration of Disputes.
(a) Controversies or claims to be submitted to
arbitration pursuant to SECTIONS 3.2, 3.3, 4.2 or 8.1(B) above
shall be resolved exclusively and solely by a "baseball-style"
arbitration conducted before a single Arbitrator selected under
the mutual-elimination procedures set forth in Section 13 of the
Commercial Rules of the American Arbitration Association ("AAA
Rules"). A "baseball-style" arbitration shall be one in which
each of Acquiror and Meridian makes its best case and the
Arbitrator selects which one of the two is more correct, without
averaging of the two positions of the parties. Arbitration
shall be conducted in Boston, Massachusetts and Acquiror
Meridian hereby consent to jurisdiction over their respective
persons before the American Arbitration Association in Boston
Massachusetts and before state and federal courts in Boston
Massachusetts for any proceedings to enforce an arbitration
award or decision rendered pursuant to this Agreement. Acquiror
and Meridian hereby agree that Boston, Massachusetts is a proper
venue for all of the foregoing proceedings. The Arbitrator(s)
shall give effect to statutes of limitation in determining any
claim. Any controversy concerning whether an issue is
arbitrable shall be determined by the Arbitrator(s). The
Arbitrator(s) shall use best efforts to conduct a hearing on the
merits within five (5) Business Days after the appointment of
the Arbitrator(s). The loser of the Arbitration shall pay all
costs in connection therewith. The instructions to the
Arbitrator shall state that the arbitration must be completed
within ten (10) Business Days, but neither party shall have the
right to terminate the
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Arbitration unless such Arbitrators' decision shall not be
rendered within sixty (60) days of the date of commencement
of the Arbitration proceeding. If such Arbitration is
terminated, the parties will immediately commence another
Arbitration to resolve the issue.
(b) Judgment upon the arbitration award may be entered in
any court of competent jurisdiction. The institution and
maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of
the right of any party, including the plaintiff, to submit the
controversy or claim to arbitration if any other party contests
such action for judicial relief.
(c) Notwithstanding anything to the contrary set forth
above, in the event that any arbitrable dispute involves the
environmental or physical condition of the Property, the matter
shall be submitted for decision to a single referee (the
"Referee"). The Referee shall be a person of recognized
expertise in the applicable discipline chosen by Acquiror from a
list of three (3) potential Referees presented by Meridian
within one (1) week following the demand for arbitration. The
Referee shall use his or her best efforts to conduct an informal
hearing on the matter in dispute within ten (10) days of
selection, and to render a decision within thirty (30) days of
selection. The losing party shall pay all costs, including the
fee of the Referee.
(d) Notwithstanding anything to the contrary set forth
above, in the event either party demands arbitration pursuant to
the provisions of this Agreement, except as otherwise expressly
provided hereunder, the Closing Date shall be deferred until the
matter is decided pursuant to the provisions of this SECTION
8.5, unless Meridian elects to complete the arbitration after
the Closing by delivering written notice to Acquiror within
three (3) Business Days following receipt or delivery of an
arbitration notice. In the event that Meridian elects to
complete the arbitration after the Closing, a portion of the Net
Consideration comprised of OP Units and cash (in the same
proportion as the allocation of the Net Consideration between
cash and OP Units) equal in value to the estimated amount in
dispute in excess of the Materiality Threshold Amount (as
reasonably determined by Acquiror) shall be held in escrow by
the Title Company following the Closing pending completion of
the arbitration. In the event that the Arbitrator's or
Referee's determination results in a reduction in the Net
Consideration pursuant to the terms of this Agreement, the Title
Company shall return to Acquiror OP Units and cash with a value
equal to the amount of such reduction and the balance of the OP
Units and cash held in escrow shall be released to for
allocation among the OP Unit Recipients. In the event that the
arbitration involves economic issues, such as, for example,
discrepancies between the rents reflected on the Tenant List
attached to this Agreement and the actual Leases, the parties
agree that the estimated amount held in escrow pursuant to this
SECTION 8.5(D) shall be determined by using a cap rate of eight
and 25/100 percent (8.25%).
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Section 8.6 Acquiror and Contributor Representatives.
(a) Acquiror shall be entitled to rely upon any notice,
approval or decision with respect to the Property, if the same
is given, made or expressed by the following individuals acting
on behalf of Meridian: Robert T. Samuels or Roger E. Benjamin.
(b) Meridian shall be entitled to rely upon any notice,
approval or decision given, made or expressed by the following
individuals acting on behalf of Acquiror: Stephen Lebovitz,
Keith L. Honnold or Mary Ann Sinnott.
Section 8.7 Time is of the Essence. Time is of the
essence of every provision contained in this Agreement.
Section 8.8 Incorporation by Reference. All of the
exhibits and schedules attached to this Agreement or referred to
herein and all documents in the nature of such exhibits, when
executed, are by this reference incorporated in and made a part of
this Agreement.
Section 8.9 Attorneys Fees. In the event any dispute
between Acquiror and Meridian should result in litigation, the
prevailing party shall be reimbursed for all reasonable costs
incurred in connection with such litigation including without
limitation, reasonable attorneys' fees and costs. Attorneys fees
shall be included in the cap on Meridian's exposure set forth in this
Agreement.
Section 8.10 Construction. The parties acknowledge that
each party and its counsel have reviewed and revised this Agreement
and that the normal rules of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not
be employed in the interpretation of this Agreement or any amendments
or exhibits hereto.
Section 8.11 Governing Law. This Agreement shall be
construed and interpreted in accordance with and shall be governed
and enforced in all respects according to the laws of the State of
Michigan (without giving effect to principles of conflicts of laws).
Section 8.12 Operating Records. At the Closing Meridian
agrees to deliver to Acquiror Meridian's unaudited monthly balance
sheets and income statements for the Property for the 1998 calendar
year through the last calendar quarter ended before the Closing Date
and for the comparable portion of the 1997 calendar year. Meridian
shall have reasonable access to the financial and all other records
delivered by Meridian to Acquiror.
Section 8.13 Confidentiality. (a) Acquiror and Meridian
acknowledge and agree that this Agreement and the terms and
conditions set forth are to be kept confidential and not disclosed to
any person or entity that is not a party to this Agreement or the
owner of an interest in the entities that are a party to this
Agreement, unless and until the Closing occurs in accordance with the
terms of this SECTION 8.13; provided, however, that in accordance
with the terms of the Confidentiality Agreement each party shall be
entitled to discuss and disclose
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the transaction with employees, agents, consultants, attorneys,
accountants, lenders, clients and representatives of such party that
are engaged in this transaction, subject to the requirement that each
of the foregoing shall also be bound by the terms of this SECTION 8.13.
Any public release of information with respect to the pendency or content
of the transaction shall be subject to the approval of Acquiror and
Meridian. Notwithstanding the foregoing, after the execution of this
Agreement, Acquiror shall be permitted to disclose any matter
relating to the contemplated transaction, the Property or its
operating or financial results as Acquiror may reasonably determine
is necessary or advisable in connection with fulfilling the
Acquiror's or the REIT's obligations under state and federal
securities laws or in connection with discussions with financial
analysts, provided that any such disclosures shall be limited to the
categories of information set forth on EXHIBIT LL, and provided
further that Acquiror shall deliver to Meridian prior to release any
proposed press release relating to the transaction and shall afford
Meridian reasonable opportunity to comment thereon. None of the
Meridian or the Meridian Related Parties shall have any
responsibility with respect to the timing or content of any such
disclosures whatsoever except to the extent of any disclosure
required by applicable law to be made by Meridian, and Acquiror shall
indemnify, protect, defend and hold the Meridian and the Meridian
Related Parties harmless from and against, any and all claims,
demands, losses, damages, liabilities, causes of action, liens, costs
and expenses including, without limitation, reasonable attorneys'
fees and costs (to the extent permitted by law), directly or
indirectly related to, arising out of or in any manner connected
with, in whole or in part, any inaccuracies in Acquiror's disclosures
pertaining to this Agreement or the contemplated transactions except
for inaccuracies based on information provided by Meridian to
Acquiror. Notwithstanding anything to the contrary contained herein,
neither party shall make any public announcement or filing with
respect to this transaction until the expiration of each party's
right to terminate this Agreement pursuant to Section 3.2(i) hereof.
(b) Notwithstanding the termination of this Agreement,
any disclosure of information permitted by Acquiror or the REIT under
paragraph (a) above shall not be deemed a breach or violation by such
Person of the provisions of the Confidentiality Agreement.
Section 8.14 Counterparts. This Agreement may be executed
in one or more identical counterparts. All counterparts so executed
shall constitute one contract, binding on all parties, even though
all parties are not signatory to the same counterpart.
Section 8.15 Entire Agreement. The Confidentiality
Agreement and this Agreement, and the attached exhibits, which are by
this reference incorporated herein, and all documents in the nature
of such exhibits and schedules when executed, contain the entire
understanding of the parties and supersede any and all other written
or oral understanding.
Section 8.16 Waiver of Jury Trial. Acquiror and Meridian
waive any right to trial by jury of any claim arising under or with
respect to this Agreement, whether now existing or hereafter arising.
Acquiror and Meridian hereby agree that, except as provided in
SECTION 8.5, any such claim shall be decided by a court trial without
a jury and that any party hereto may
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file an original counterpart or copy of this Section with any court as
written evidence of the consent of the other party hereto to the waiver
of its right of trial by jury.
Section 8.17 Binding Agreement. Subject to the provisions
of SECTION 8.3, the provisions of this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. All representations, warranties
and covenants shall not survive the Closing unless stated to the
contrary in this Agreement.
Section 8.18 Code or Treasury Regulation Reference. Any
reference in this Agreement to sections of the Code or Treasury
Regulations shall be deemed to include any successor provisions
thereto.
Section 8.19 OP Unit Recipient Third Party Beneficiaries.
Each OP Unit Recipient shall be deemed to be a third party
beneficiary of those provisions of this Agreement relating to OP
Units and shall have the right to institute any legal actions without
joining Meridian or any other OP Unit Recipient. No other party
shall be deemed to be a third party beneficiary of this Agreement.
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IN WITNESS WHEREOF, Acquiror and Meridian have executed this
Agreement as of the day and year first written above.
ACQUIROR:
CBL & ASSOCIATES LIMITED PARTNERSHIP,
a Delaware limited partnership
By: CBL & Associates Properties, Inc.
By: /s/ Stephen D. Lebovitz
---------------------------
Name: Stephen D. Lebovitz
Title: Executive Vice President
MERIDIAN:
MERIDIAN MALL ASSOCIATES LIMITED L.C.
an Ohio limited liability company
By: /s/ Robert T. Samuels
--------------------------
Robert T. Samuels, Member
