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MASTER CONTRIBUTION AGREEMENT
dated as of September 25, 2000
among
JACOBS REALTY INVESTORS LIMITED PARTNERSHIP,
RICHARD E. JACOBS, solely as Trustee for the
Richard E. Jacobs Revocable Living Trust,
RICHARD E. JACOBS, solely as Trustee for the
David H. Jacobs Marital Trust,
CBL & ASSOCIATES PROPERTIES, INC.
and
CBL & ASSOCIATES LIMITED PARTNERSHIP
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TABLE OF CONTENTS
Page
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ARTICLE I
CONTRIBUTIONS OF INTERESTS AND MERGERS
1.1 Contributions of Interests..............................................3
1.2 Excluded Outparcels.....................................................9
1.3 No Representations.....................................................12
1.4 Release................................................................14
ARTICLE II
CONSIDERATION
2.1 Consideration..........................................................16
ARTICLE III
TITLE AND OTHER PROPERTY RELATED MATTERS
3.1 Title to the Properties................................................22
3.2 Title Defects..........................................................24
3.3 Condemnation...........................................................27
3.4 Destruction or Damage..................................................28
3.5 Insurance..............................................................30
ARTICLE IV
COVENANTS
4.1 Agreement to Explore a Potential Alternate Transaction.................30
4.2 Amendment to the OP Partnership Agreement..............................30
4.3 Existence..............................................................30
4.4 Commercially Reasonable Efforts........................................31
4.5 HSR Act Filings........................................................31
4.6 Conduct of Business....................................................31
4.7 Registration Rights Agreement..........................................35
4.8 Voting and Standstill Agreement........................................35
4.9 Department Store Issues................................................35
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4.10 Amendment to Rights Agreement..........................................35
4.11 Jacobs Employees.......................................................36
4.12 Limitation on Actions by CBL...........................................37
4.13 Expenses...............................................................37
4.14 Partner Consents.......................................................38
4.15 Stockholder Approval...................................................39
4.16 Tax Treatment..........................................................41
4.17 Estoppel Certificates..................................................43
4.18 Reservation of REIT Stock..............................................44
4.19 Assumption of Guaranties...............................................44
4.20 Non-Competition Agreement..............................................45
4.21 Randolph Mall..........................................................45
4.22 Refinancings...........................................................45
4.23 Resignation of Officers................................................46
4.24 No Solicitation........................................................46
4.25 Transition Services Agreement..........................................47
4.26 Financial Statements...................................................47
4.27 Post-Closing Cooperation...............................................47
4.28 Environmental Insurance................................................47
4.29 Insurance Claims.......................................................48
4.30 Computer Leases........................................................48
4.31 Weston Management Options..............................................48
ARTICLE V
TAX PROTECTION
5.1 Section 704(c) Method..................................................48
5.2 Protection Period......................................................49
5.3 Certain Permitted Transactions.........................................49
5.4 Debt Protection Period.................................................50
5.5 Indemnity..............................................................53
5.6 Damages................................................................57
5.7 Towne Mall.............................................................57
5.8 Midland Mall...........................................................58
5.9 Initial Capital Accounts...............................................58
5.10 Third Party Beneficiaries..............................................58
5.11 Preservation of Tax Status.............................................59
5.12 Income Tax Reporting...................................................59
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ARTICLE VI
CLOSING
6.1 Closing................................................................60
6.2 Closing Deliveries by JRI..............................................63
6.3 Closing Deliveries by the Operating Partnership........................69
6.4 Deferred Closings......................................................73
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
7.1 Conditions Precedent to Obligation of the REIT and the Operating
Partnership............................................................75
7.2 Conditions Precedent to Obligations of the Jacobs Parties..............78
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 Representations and Warranties of CBL..................................80
8.2 Representations and Warranties of JRI..................................89
8.3 General Provisions....................................................102
8.4 Survival..............................................................105
ARTICLE IX
INDEMNIFICATION
9.1 Obligation of CBL to Indemnify........................................106
9.2 Obligation of JRI to Indemnify........................................106
9.3 Limitations on Recovery...............................................106
9.4 Indemnification for Certain Historical Liabilities....................109
9.5 Indemnification for Matters Relating to Weston Management and for
Certain Known Claims..................................................111
9.6 Covenant to Maintain Net Assets.......................................111
ARTICLE X
TERMINATION
10.1 Termination Rights....................................................111
10.2 Termination upon Default or a Failure of a Condition Precedent........113
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ARTICLE XI
MISCELLANEOUS
11.1 Broker................................................................114
11.2 Expenses..............................................................115
11.3 Further Assurances....................................................115
11.4 Payment of Expenses...................................................115
11.5 Notices...............................................................115
11.6 Assignment............................................................117
11.7 Waiver................................................................117
11.8 Incorporation of Recitals and Schedules...............................117
11.9 Confidentiality; Press Releases.......................................118
11.10 Merger................................................................119
11.11 GOVERNING LAW.........................................................119
11.12 Jurisdiction..........................................................119
11.13 Captions..............................................................119
11.14 Counterparts..........................................................119
11.15 Severability..........................................................120
11.16 Prior Negotiations; Construction......................................120
11.17 Litigation Expenses...................................................120
11.18 No Recordation........................................................120
11.19 Competitive Activities................................................120
11.20 No Obligations of Property Owners.....................................121
11.21 WAIVER OF TRIAL BY JURY...............................................121
11.22 Relationship of JRI to the Jacobs Parties.............................121
11.23 General Limitation on Liabilities.....................................121
EXHIBITS
--------
EXHIBIT A PROPERTIES AND PROPERTY OWNERS
EXHIBIT B INTERESTS AND OUTSIDE PARTNERS
EXHIBIT C-1A FORM OF INTEREST CONTRIBUTION AGREEMENT (WITHOUT OPTION)
EXHIBIT C-1B FORM OF INTEREST CONTRIBUTION AND OPTION AGREEMENT
EXHIBIT C-2 FORM OF DEED CONTRIBUTION AGREEMENT
EXHIBIT C-3 FORM OF CONTRIBUTION AGREEMENT (WESTON MANAGEMENT)
EXHIBIT D-1 FORM OF JRI OPTION AGREEMENT
EXHIBIT D-2 FORM OF OP OPTION AGREEMENT
EXHIBIT E FORM OF OPTION INTEREST VOTING AGREEMENT
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EXHIBIT F TITLE COMMITMENTS
EXHIBIT G FIRST AMENDMENT TO OP PARTNERSHIP AGREEMENT
EXHIBIT H-1 REGISTRATION RIGHTS AGREEMENT
EXHIBIT H-2 ADDENDUM TO REGISTRATION RIGHTS AGREEMENT
EXHIBIT I VOTING AND STANDSTILL AGREEMENT
EXHIBIT J FORM OF CONTINUING LOAN INDEMNITY AGREEMENT
EXHIBIT K NON-COMPETITION AGREEMENT
EXHIBIT L TRANSITION SERVICES AGREEMENT
EXHIBIT M REQUIRED DEBT ALLOCATIONS
EXHIBIT N FORM OF GUARANTY
EXHIBIT O FORM OF INDEMNIFICATION AGREEMENT
EXHIBIT P FORM OF OPINION OF COUNSEL TO JRI
EXHIBIT Q FORM OF LENDER CONSENTS
EXHIBIT R OUTSIDE PARTNER CONSENTS
EXHIBIT S-1 FORM OF OPINION OF COUNSEL TO CBL
EXHIBIT S-2 FORM OF TAX OPINION OF COUNSEL TO CBL
EXHIBIT T LEASE TERM SHEET
EXHIBIT U FORM OF RELEASE
EXHIBIT V ASSURANCE AGREEMENT
SCHEDULES
---------
SCHEDULE 1.2(a) EXCLUDED OUTPARCELS
SCHEDULE 2.1(a) RELEASE PRICING
SCHEDULE 2.1(b)(ii) OUTSIDE PARTNER INTERESTS
SCHEDULE 3.1(b)(i) INITIAL TITLE OBJECTIONS
SCHEDULE 3.1(b)(ii) DELIVERED SURVEYS
SCHEDULE 3.1(b)(v) RENT ROLLS
SCHEDULE 3.2(c) REMEDIAL ACTIONS
SCHEDULE 4.6(iii)(A) AMENDMENTS TO ORGANIZATIONAL DOCUMENTS
SCHEDULE 4.6(iii)(B) PERMITTED TRANSACTIONS
SCHEDULE 4.6(vi) APPROVED LEASES
SCHEDULE 4.9 DEPARTMENT STORE ISSUES
SCHEDULE 4.15(b)-1 SHARE OWNERSHIP LIMITATION AMENDMENT
SCHEDULE 4.15(b)-2 REIT BOARD RESOLUTION
SCHEDULE 4.15(b)-3 SHARE OWNERSHIP AGREEMENT
SCHEDULE 4.17-1 ANCHORS
SCHEDULE 4.17-2 FORM OF TENANT ESTOPPEL
SCHEDULE 4.17-3 GROUND LEASES
SCHEDULE 4.17-4 FORM OF GROUND LESSOR ESTOPPEL
SCHEDULE 4.17-5 REA PARTIES
SCHEDULE 4.17-6 FORM OF REA PARTY ESTOPPEL
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SCHEDULE 4.17-7 FORM OF LENDER ESTOPPEL
SCHEDULE 4.17-8 FORM OF OUTSIDE PARTNER ESTOPPEL
SCHEDULE 4.19 GUARANTIES AND INDEMNITIES
SCHEDULE 4.28 ENVIRONMENTAL INSURANCE
SCHEDULE 5.7 REPRESENTATIONS AND WARRANTIES (TOWNE MALL)
SCHEDULE 7.1(j) RELATED PARTY LOANS
SCHEDULE 8.1(c) OUTSTANDING SUBSCRIPTIONS
SCHEDULE 8.1(d) CONSENT, APPROVAL AND NOTICE REQUIREMENTS
SCHEDULE 8.1(g) GOVERNMENTAL CONSENTS
SCHEDULE 8.1(i) OTHER LIABILITIES
SCHEDULE 8.1(p) OTHER MERGER AGREEMENTS
SCHEDULE 8.2(a)(ii) JACOBS THIRD PARTY CONSENTS
SCHEDULE 8.2(b)(i) CONSENTS TO PLEDGES OF INTERESTS
SCHEDULE 8.2(b)(ii) JACOBS PARTIES' ORGANIZATIONAL DOCUMENTS
SCHEDULE 8.2(c) PENDING CLAIMS
SCHEDULE 8.2(d) NON-COMPLIANCE WITH LAWS
SCHEDULE 8.2(e) INTELLECTUAL PROPERTY OF JACOBS PARTIES
SCHEDULE 8.2(f) PENDING TAX AUDITS
SCHEDULE 8.2(i)(iv) FORMATION DOCUMENTS
SCHEDULE 8.2(i)(vii) PARTNER LOANS
SCHEDULE 8.2(i)(viii) MANAGEMENT AND LEASING CONTRACTS
SCHEDULE 8.2(i)(x) CURRENT WESTON MANAGED PROPERTIES
SCHEDULE 8.2(k) ANCHOR DOCUMENTS
SCHEDULE 8.2(l) LEASING COMMISSIONS AND FEES
SCHEDULE 8.2(m) OPERATING CONTRACTS
SCHEDULE 8.2(n) CONTINUING LOANS
SCHEDULE 8.2(o) ENVIRONMENTAL REPORTS
SCHEDULE 8.2(p) CASUALTY INSURANCE POLICIES
SCHEDULE 8.2(s) OTHER LIABILITIES
SCHEDULE 8.2(y) OWNERSHIP OF CORPORATIONS
SCHEDULE 9.5 NON-EXCLUDED ENVIRONMENTAL LIABILITIES
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<PAGE>
INDEX OF DEFINED TERMS
Defined Term Section
------------ -------
Additional Filings.......................................................4.15(a)
Affected Interests.....................................................5.5(d)(i)
Agreement...............................................................Preamble
Aggregate Excess Cure Amount...........................................8.3(c)(i)
Anchors.....................................................................4.17
Anchor Documents..........................................................8.2(k)
Associate Interests.....................................................Preamble
Associates..............................................................Preamble
Business Day..........................................................2.1(a)(ii)
Cary Note.............................................................1.1(a)(vi)
CBL.....................................................................Preamble
CBL Material Adverse Effect...............................................8.1(a)
CBL's Representatives.....................................................8.3(b)
CIGNA.................................................................4.22(a)(i)
Claims....................................................................1.4(a)
Closing...................................................................6.1(a)
Closing Date..............................................................6.1(a)
Code.........................................................................5.1
commercially reasonable efforts...........................................1.1(a)
Commission................................................................8.1(l)
Commitment................................................................3.1(a)
Common Units...........................................................8.1(c)(i)
Condemnation..............................................................3.3(a)
Consent Solicitation Documentation.......................................4.14(b)
Consideration.........................................................2.1(a)(ii)
Continuing Loan.......................................................1.1(b)(ii)
Continuing Loan Guaranty....................................................4.19
Contributed Assets...........................................................5.1
Contribution Agreement (Weston Management).............................1.1(a)(v)
Contributor Party.........................................................1.4(a)
Contributors............................................................Preamble
Core Properties...........................................................6.4(a)
Cure Amount...............................................................8.3(c)
Cure Cutoff Date..........................................................6.4(b)
Deed Contribution Agreement............................................1.1(a)(i)
Defaulting Party............................................................10.2
Deferred Closing..........................................................6.4(b)
Deferred Closing Date.....................................................6.4(b)
Delivered Surveys.....................................................3.1(b)(ii)
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INDEX OF DEFINED TERMS
Defined Term Section
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Delivery Date...............................................................5.12
De Minimis Cure Amount.................................................8.3(c)(i)
DHJ.....................................................................Preamble
Disposition..................................................................5.2
Encumbrance...............................................................3.2(a)
Environmental Law.........................................................8.2(o)
Environmental Reports.....................................................8.2(o)
Estoppel Certificate........................................................4.17
Excess Cure Amount.....................................................8.3(c)(i)
Exchange Act..............................................................8.1(l)
Exchange Rights..........................................................4.16(c)
Excluded Liability........................................................9.4(a)
Excluded Outparcels.......................................................1.2(a)
Excluded Property.........................................................6.4(a)
Excluded Property Manager...................................................4.31
Expense Reimbursement.......................................................10.1
Fee Owner.................................................................1.2(c)
Financial Statements......................................................8.2(r)
First Amendment..............................................................4.2
Foreign Owner.............................................................8.2(u)
Governmental Authority....................................................7.1(e)
Ground Lessor...............................................................4.17
Guarantor...................................................................4.19
Guaranty Opportunity......................................................5.4(c)
Hazardous Materials.......................................................1.4(a)
HSR Act...................................................................4.5(a)
ICOA Closing...........................................................2.1(c)(i)
ICOA Option Closing...................................................2.1(c)(ii)
ICOA Option Closing Date..............................................2.1(c)(ii)
Indemnitor................................................................5.4(d)
Individual Protected Party.............................................5.5(d)(i)
Initial Period...........................................................10.1(a)
Initial Scheduled Principal Closing Date..................................6.1(a)
Initial Title Objections...............................................3.1(b)(i)
Inquiry...................................................................9.3(b)
Interest Contribution Agreement.......................................1.1(a)(ii)
Interest Contribution Agreement (Without Option).......................1.1(a)(i)
Interest Contribution and Option Agreement............................1.1(a)(ii)
Interests...............................................................Preamble
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INDEX OF DEFINED TERMS
Defined Term Section
------------ -------
Jacobs Interests........................................................Preamble
Jacobs-Managed Property...................................................3.2(a)
Jacobs Parties..........................................................Preamble
Jacobs Third Party Consents...........................................8.2(a)(ii)
Jacobs Trusts...........................................................Preamble
JG Realty.............................................................6.2(f)(ii)
JRI.....................................................................Preamble
JRI Option Agreement......................................................1.2(a)
JRI Partnership Agreement.............................................8.2(b)(ii)
Lease Term Sheet.........................................................4.6(vi)
Leasing Contracts...................................................8.2(i)(viii)
Mall Employees..............................................................4.11
Management Contracts................................................8.2(i)(viii)
Maximum Financing Adjustment Amount...............................1.1(b)(iii)(E)
New Entity..............................................................Preamble
New Loan..............................................................1.1(b)(ii)
New Units................................................................4.16(c)
Non-Competition Agreement...................................................4.20
OP Option Agreement.......................................................1.2(b)
OP Partnership Agreement.....................................................4.2
OP Units..................................................................8.1(a)
Operating Contracts.......................................................8.2(m)
Operating Partnership...................................................Preamble
Opinion of Counsel.......................................................4.16(c)
Option Interest Voting Agreement.......................................2.1(c)(i)
Other Exceptions..........................................................3.2(a)
Outside Partners........................................................Preamble
Partial Properties......................................................Preamble
Partial Property Owners.................................................Preamble
Partner Consent..........................................................4.14(a)
Permitted Exceptions......................................................3.1(b)
Person....................................................................1.3(a)
Principal Closing.........................................................6.1(a)
Principal Closing Date....................................................6.1(a)
Property................................................................Preamble
Property Material Adverse Effect......................................8.2(a)(ii)
Property Owner..........................................................Preamble
Property-Specific Monetizable Claim.......................................8.3(c)
Protected Parties............................................................5.1
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INDEX OF DEFINED TERMS
Defined Term Section
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Protection Period............................................................5.2
Proxy Statement..........................................................4.15(a)
PTP......................................................................4.16(c)
Qualified Protection Opportunity..................................5.4(b), 5.4(c)
Ready to Mail Notice...................................................6.1(c)(i)
Registration Rights Agreement................................................4.7
REIT....................................................................Preamble
REIT Board Resolution....................................................4.15(b)
REIT Stock............................................................8.1(c)(ii)
REIT Stockholders Meeting................................................4.15(b)
REJ.....................................................................Preamble
Remaining Portfolio......................................................11.9(a)
Remove....................................................................3.2(b)
Rent Rolls................................................................8.2(j)
Response Period........................................................3.2(d)(i)
Richard Jacobs Group........................................................4.10
Rights...................................................................4.16(c)
Rights Agreement............................................................4.10
SCU Issuance Proposal....................................................4.15(b)
SCUs..................................................................2.1(a)(ii)
SEC Documents.............................................................8.1(l)
SEC Financial Statements..................................................8.1(l)
Securities Act.........................................................8.1(c)(i)
Share Ownership Limitation Amendments....................................4.15(b)
Subsequent Scheduled Principal Closing Date...............................6.1(b)
Subsequent Title Objections...............................................3.2(a)
Substantial Casualty......................................................3.4(a)
Substantial Condemnation..................................................3.3(a)
Tenant Note...............................................................6.2(s)
TIAA.....................................................................10.1(c)
Title Company.............................................................3.1(a)
Title Documents...........................................................3.1(a)
Title Objection...........................................................3.2(b)
Title Policies............................................................3.1(a)
Transfer..............................................................5.5(d)(ii)
Transferred Interest..................................................5.5(d)(ii)
Transferring Protected Party..........................................5.5(d)(ii)
Transition Services Agreement...............................................4.25
Unit Transfer............................................................4.16(c)
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INDEX OF DEFINED TERMS
Defined Term Section
------------ -------
Updated Survey............................................................3.2(c)
Voting and Standstill Agreement..............................................4.8
Weston Management.......................................................Preamble
100% Properties.........................................................Preamble
100% Property Owners....................................................Preamble
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<PAGE>
MASTER CONTRIBUTION AGREEMENT
THIS MASTER CONTRIBUTION AGREEMENT (this "Agreement") is made as of the
25th day of September, 2000, by and among JACOBS REALTY INVESTORS LIMITED
PARTNERSHIP, a Delaware limited partnership, having an address at 25425 Center
Ridge Road, Westlake, Ohio 44145 ("JRI"), Richard E. Jacobs, solely as Trustee
for the Richard E. Jacobs Revocable Living Trust (the "REJ"), Richard E. Jacobs,
solely as trustee for the David H. Jacobs Marital Trust (the "DHJ" and, together
with the REJ, the "Jacobs Trusts"; JRI and the Jacobs Trusts are referred to
herein collectively as the "Jacobs Parties"), CBL & ASSOCIATES PROPERTIES, INC.,
a Delaware corporation (the "REIT"), and CBL & ASSOCIATES LIMITED PARTNERSHIP, a
Delaware limited partnership (the "Operating Partnership"; the Operating
Partnership and the REIT are referred to herein collectively as "CBL"), each
having an address at One Park Place, 6148 Lee Highway, Suite 300, Chattanooga,
Tennessee 37421.
W I T N E S S E T H:
--------------------
WHEREAS, the Jacobs Parties, directly or through affiliates, own
partnership or limited liability company interests in the owners of the
twenty-one (21) regional mall shopping centers identified on Exhibit A (each, a
"Property", and collectively, the "Properties").
WHEREAS, with the exception of East Towne Mall and West Towne Mall (which
are owned by the same partnership) and Wausau Center (which is owned by two
partnerships), each of the Properties is owned by a separate partnership or
limited liability company (each, a "Property Owner", and collectively, the
"Property Owners") as identified on Exhibit A.
WHEREAS, the ownership interests in each of the Property Owners owned
directly or indirectly by the Jacobs Parties are referred to as the "Jacobs
Interests".
WHEREAS, certain current or former associates and/or partners of affiliates
of JRI identified on Exhibit B hereto (the "Associates") also own, directly
and/or indirectly, partnership or limited liability company interests in the
Property Owners as more fully set forth on Exhibit B (such interests,
collectively, the "Associate Interests"; the Associate Interests, together with
the Jacobs Interests, are referred to herein collectively as the "Interests").
WHEREAS, certain institutional investors and other outside partners who
have thus far not expressed a willingness to participate in the contribution
transactions contemplated by this Agreement (such Persons who are also
identified on Exhibit B, the
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"Outside Partners") also own interests in the Property Owners of certain of the
Properties as identified on Exhibit B (such Properties, the "Partial
Properties", and the Property Owners thereof, the "Partial Property Owners");
and the Property Owners of the remaining Properties are owned by some
combination of the Jacobs Parties and the Associates as identified on Exhibit B
(such Properties, the "100% Properties", and the Property Owners thereof, the
"100% Property Owners").
WHEREAS, the percentage interests of the Jacobs Parties, the Associates and
the Outside Partners in each of the Property Owners are as set forth on Exhibit
B.
WHEREAS, the Jacobs Trusts own directly and/or indirectly all of the
partnership interests in Weston Management Company Limited Partnership, a
Delaware limited partnership ("Weston Management"), which partnership, at the
Principal Closing, will own the management and leasing contracts applicable to
each of the Properties (other than Kentucky Oaks Mall) being contributed to the
Operating Partnership at the Principal Closing and will not own any other
material assets.
WHEREAS, prior to the applicable Closing, the Jacobs Parties have agreed to
use commercially reasonable efforts to cause the Associates who own direct
Interests in each of the 100% Property Owners to contribute their Interests in
each such Property Owner to a separate newly-formed limited liability company
(each, a "New Entity").
WHEREAS, at the applicable Closing, the Jacobs Parties (a) have agreed to
contribute and to use commercially reasonable efforts to cause the New Entities
to contribute the Interests in the 100% Property Owners to the Operating
Partnership (or, if so requested by the Operating Partnership, to one or more
entities wholly-owned by the Operating Partnership whose separate existence from
the Operating Partnership is disregarded for federal income tax purposes), or,
if any Associate is unwilling to contribute its direct Interests in any 100%
Property to a New Entity, to cause the 100% Property Owner of that 100% Property
to transfer the 100% Property in the form of an outright deed/leasehold interest
transfer in lieu of the Interest contributions described above for such
Property, (b) have agreed to contribute, and to seek to cause the Associates to
contribute, their respective direct and/or indirect interests in each of the
Partial Property Owners to the Operating Partnership (or, if so requested by the
Operating Partnership, to one or more entities wholly-owned by the Operating
Partnership and whose separate existence from the Operating Partnership is
disregarded for federal income tax purposes), (c) have agreed to approach each
of the Outside Partners identified on Schedule 2.1(b)(ii) to determine whether
they are interested in contributing their respective interests in the Partial
Property Owners to the Operating Partnership (it being understood that the
Jacobs Parties are under no obligation to cause any such contributions), and (d)
have agreed to contribute all of their direct and/or indirect interests in
Weston Management to the REIT and/or the Operating Partnership or an affiliate
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thereof, as requested by the Operating Partnership, in each case in exchange for
cash and special partnership interests in the Operating Partnership on the terms
set forth below.
WHEREAS, JRI, the New Entities, the Associates that own direct Interests in
the Partial Property Owners, the affiliates of the Jacobs Parties that own
Interests in the Property Owners, any Outside Partners that contribute interests
in any of the Partial Property Owners and any Property Owners that contribute
Properties pursuant to Deed Contribution Agreements are collectively referred to
herein as the "Contributors".
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants, conditions and agreements contained herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
CONTRIBUTIONS OF INTERESTS AND MERGERS
1.1 Contributions of Interests. (a) Subject to and on the terms and
conditions hereinafter set forth, on the date and at the time and place provided
for in Section 6.1 or Section 6.4:
(i) Each of the Jacobs Parties agrees (A) to contribute, transfer,
assign and deliver all of its right, title and interest in and to its
Interests in each 100% Property Owner, and to cause its affiliates to
contribute, transfer, assign and deliver all of their right, title and
interest in and to their Interests in each 100% Property Owner, to the
Operating Partnership (or, if so requested by the Operating Partnership, to
one or more entities wholly-owned by the Operating Partnership whose
separate existence from the Operating Partnership is disregarded for
federal income tax purposes) pursuant to an Interest Contribution Agreement
(Without Option) for that Property in the form attached as Exhibit C-1A
hereto (each such agreement, an "Interest Contribution Agreement (Without
Option)") and (B) to use commercially reasonable efforts to cause each of
the Associates that owns a direct Interest in a 100% Property Owner to
contribute, transfer, assign and deliver all of its right, title and
interest in and to the relevant Interest in each 100% Property Owner, to a
New Entity, and, subsequently, to use commercially reasonable efforts to
cause each New Entity to contribute, transfer, assign and deliver all of
its right, title and interest in and to the Interests in each 100% Property
Owner to the Operating Partnership (or, if so requested by the Operating
Partnership, to one or more entities wholly-owned by the Operating
Partnership whose separate existence from the Operating Partnership is
disregarded for federal income tax purposes) pursuant to an Interest
Contribution Agreement (Without Option) for that Property, provided,
however, that in the event that any Associate
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is unwilling to participate in the foregoing restructuring process, the
Jacobs Parties will, in lieu of such restructuring and contribution, cause
each 100% Property Owner in which such Associate holds any direct Interests
to transfer the relevant 100% Property in the form of an outright
deed/leasehold interest transfer to the Operating Partnership (or, if so
requested by the Operating Partnership, to one or more entities
wholly-owned by the Operating Partnership whose separate existence from the
Operating Partnership is disregarded for federal income tax purposes)
pursuant to a Deed Contribution Agreement for that 100% Property in the
form attached as Exhibit C-2 hereto (each such agreement, a "Deed
Contribution Agreement");
(ii) Each of the Jacobs Parties agrees to contribute all of its right,
title and interest in and to its Interests in each Partial Property Owner
to the Operating Partnership (or, if so requested by the Operating
Partnership, to one or more entities wholly-owned by the Operating
Partnership whose separate existence from the Operating Partnership is
disregarded for federal income tax purposes) pursuant to an Interest
Contribution Agreement (Without Option) or an Interest Contribution and
Option Agreement in the form of Exhibit C-1B hereto (each such agreement,
an "Interest Contribution and Option Agreement"; each Interest Contribution
Agreement (Without Option) and Interest Contribution and Option Agreement
is referred to herein as an "Interest Contribution Agreement") for that
Property;
(iii) JRI agrees to use commercially reasonable efforts to cause each
Associate that owns an Associate Interest in a Partial Property Owner to
enter into the Interest Contribution Agreement relating thereto and to
contribute the relevant Associate Interest to the Operating Partnership
(or, if so requested by the Operating Partnership, to one or more entities
wholly-owned by the Operating Partnership whose separate existence from the
Operating Partnership is disregarded for federal income tax purposes)
pursuant to the terms thereof;
(iv) JRI agrees to approach the Outside Partners identified on
Schedule 2.1(b)(ii) to determine whether any such Outside Partner is
interested in contributing its interests in any Property Owner that owns a
Property identified on such Schedule to the Operating Partnership (or, if
so requested by the Operating Partnership, to one or more entities
wholly-owned by the Operating Partnership and whose separate existence from
the Operating Partnership is disregarded for federal income tax purposes)
pursuant to an Interest Contribution Agreement for that Property, which
offer shall expire fifteen (15) days prior to the Principal Closing Date
(it being understood that the Jacobs Parties are under no obligation to
cause any of the Outside Partners to contribute their interests to the
Operating Partnership and that contributions by Outside Partners are not a
condition precedent to any Closing contemplated herein); and
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(v) Each of the Jacobs Parties agrees to contribute all of its right,
title and interest in and to the outstanding partnership interests in
Weston Management to the REIT and/or the Operating Partnership (or an
affiliate thereof) pursuant to a Contribution Agreement (Weston Management)
in the form attached hereto as Exhibit C-3 (the "Contribution Agreement
(Weston Management)").
(vi) At the Closing with respect to Cary Towne Center, JRI agrees to
cause JG Cary Joint Venture to contribute to the Operating Partnership (or,
if so requested by the Operating Partnership, to one or more entities
wholly-owned by the Operating Partnership and whose separate existence from
the Operating Partnership is disregarded for federal income tax purposes)
the promissory note evidencing the capital improvements loan in the
original principal amount of $27,801,293.53 made by it to Cary Venture
Limited Partnership (the "Cary Note").
For purposes of this Agreement, and without intending to expand the meaning of
the phrase "commercially reasonable efforts," the parties hereto acknowledge
that commercially reasonable efforts will not be interpreted as requiring the
initiation or settlement of litigation, disproportionate payouts to any
partners, the payment of money (other than usual and customary expenses
associated with negotiating and closing transactions of the nature set forth
herein) or reallocations of the Consideration or any component thereof among
Properties or Contributors.
(b) (i) JRI agrees to use commercially reasonable efforts to obtain the
Outside Partner, lender and other third-party consents and waivers necessary to
facilitate the contributions described in Section 1.1(a) above. JRI also agrees
to update CBL periodically upon CBL's request on the status of its efforts to
obtain the foregoing consents and waivers. In the event that JRI, after using
commercially reasonable efforts, is unable to obtain any such consent or waiver
on or before the date that is thirty (30) days prior to the Initial Scheduled
Principal Closing Date, CBL shall have the right, after consultation with JRI,
to approach any such third-party directly in an effort to help JRI obtain such
consent or waiver; if CBL exercises this right, it will provide JRI copies of
all correspondence to and from CBL and/or its agents relating thereto and will
advise JRI promptly of all actions taken by it and the results thereof.
(ii) If any lender with a loan secured by any Property, which loan is
expected to remain outstanding following the Closing with respect to such
Property (such loan, a "Continuing Loan"; the parties currently expect that the
loans set forth on Schedule 8.2(n) will be Continuing Loans), is unwilling to
grant its consent to the contribution of that Property, or the contribution of
the Interests in the Property Owner of that Property, to CBL as contemplated in
this Agreement, and a refinancing of that Continuing Loan on or before the
Closing Date with respect to that Property is not prohibited by the terms of the
related loan documents, CBL and JRI agree to use
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commercially reasonable efforts to refinance such Continuing Loan at or before
the Closing for that Property on terms that comply with the next sentence and
that will permit its contribution to CBL (any such replacement financing, a "New
Loan"). JRI agrees to use commercially reasonable efforts to obtain a New Loan
on terms (including rate, maturity, principal amount, escrows, reserves,
indemnities and other material terms) no less favorable to CBL than the terms of
the loan being refinanced thereby and in compliance with the terms of Section
1.1(b)(iii)(G) below. In addition, JRI will pay the prepayment penalty or
premium due to the prior lender, if any, in connection with any such
refinancing, as well as the legal, due diligence and other costs (including,
without limitation, points, fees, lender's title insurance premium and mortgage
recording taxes) incurred by the borrower and, to the extent required, by the
lender in connection with each such refinancing.
(iii) If it becomes necessary for JRI to replace any existing loan with a
New Loan as contemplated above and, despite its efforts, JRI is not able to
obtain a New Loan with terms that are comparable to the relevant existing loan,
the differences between the two financings will be accounted for as follows:
(A) If the interest rate payable on any New Loan exceeds the interest
rate on the related existing loan (it being understood that when comparing
the rates of any two loans the parties will make such adjustments as are
necessary to compare the "effective interest rates" (e.g, to take into
account the effect of up-front points or exit fees and differences in
method of calculation such as 12/30/360 vs. actual/365, and in the case of
any loan for which the borrower makes contingent interest payments, the
effective interest rate for such loan will be determined based on the
assumption that contingent interest payable for each remaining year of the
loan would have been equal to the aggregate actual contingent interest
payments made during the twelve months preceding the refinancing) so that
the comparison can be made on an economically equivalent basis), JRI will
reduce the effective interest rate of the New Loan to the interest rate of
the relevant existing loan by, at JRI's election, (1) paying the lender an
up-front payment, (2) purchasing an interest rate cap or swap from a
counterparty, and pursuant to such documents as are, acceptable to CBL
(which acceptance will not be unreasonably withheld, conditioned or
delayed) or (3) reducing the number of SCUs to be delivered by CBL at the
Closing for the relevant Property by the quotient of (I) the present value
(determined using the interest rate on the existing loan as the discount
rate) of the difference between (x) the aggregate of all scheduled interest
payments to be paid by the borrower pursuant to the terms of the New Loan
during the period from the Closing Date for the relevant Property through
the scheduled maturity of the New Loan (which will match the maturity of
the existing loan) and (y) the aggregate of all
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scheduled interest payments (as determined and adjusted, in each case, in
accordance with principles set forth above) to be made by the borrower
pursuant to the terms of the existing loan during the period from the
Closing Date for the relevant Property through the scheduled maturity of
the existing loan and (II) 32.25.
(B) If the effective interest rate payable on a New Loan secured by
Columbia Mall or Regency Mall is less than the interest rate on the related
existing loan, CBL will increase the effective interest rate of the New
Loan for the remainder of the term of the relevant existing loan to the
interest rate of the relevant existing loan by increasing the number of
SCUs to be delivered by CBL at the Closing for the relevant Property by the
quotient of (I) the present value (determined using the interest rate on
the existing loan as the discount rate) of the difference between (x) the
aggregate of all scheduled interest payments to be made by the borrower
pursuant to terms of the existing loan during the period from the Closing
Date for the relevant Property through the scheduled maturity of the
existing loan and (y) the aggregate of all scheduled interest payments to
be paid by the borrower pursuant to the terms of the New Loan during the
period from the Closing Date for the relevant Property through the
scheduled maturity of the New Loan (which will match the maturity of the
existing loan) and (II) 32.25.
(C) The principal balance of a New Loan may not exceed the principal
balance of the related existing loan without CBL's prior consent, which
consent may be withheld in CBL's sole discretion. If, with CBL's approval,
the principal balance of the New Loan exceeds the principal balance of the
existing loan, then at the Closing for the relevant Property there will be
no change in the Consideration payable in respect of that Property, but CBL
will be entitled to a credit in the closing adjustments for that Property
in an amount equal to the amount by which the principal balance of the New
Loan exceeds the principal balance of the existing loan. For the purposes
of this clause (C), the principal balance of an existing loan will be the
expected principal balance of such existing loan on the Closing Date for
such Property, taking into account all scheduled amortization payments with
respect to such loan whether or not such payments are actually made.
(D) If the principal balance of the New Loan is lower than the
principal balance of the existing loan, then at the Closing for the
relevant Property the SCU component of Consideration will be increased (and
the increase will be allocated to the contributors of the relevant
Property) by a number of SCUs equal to the quotient of (I) the amount by
which the
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principal balance of the existing loan exceeded the principal balance of
the New Loan and (II) 32.25. For the purposes of this clause (D), the
principal balance of an existing loan will be the expected principal
balance of such existing loan on the Closing Date for such Property, taking
into account all scheduled amortization payments with respect to such loan
whether or not such payments are actually made.
(E) The provisions of clauses (B) and (D) above are subject to the
limitation that if the sum of (x) the aggregate number of additional SCUs
that CBL would be required to deliver pursuant to those clauses in respect
of all New Loans plus (y) the aggregate number of additional SCUs that CBL
would be required to deliver pursuant to Section 4.22(b) exceeds 310,078
(such number, the "Maximum Financing Adjustment Amount"), then CBL may, in
its sole discretion, elect to cap the number of SCUs to be delivered in
respect of New Loans pursuant to clauses (B) and (D) above at the Maximum
Financing Adjustment Amount, and in that case, at the relevant Closing (or
Closings), CBL instead will be required to, or will cause the applicable
property owner (or, in the case of a Partial Property, the applicable CBL
entity receiving the Interests in the relevant Partial Property Owner) to,
deliver a promissory note to each Contributor whose aggregate number of
SCUs was limited by this clause (E). Any such promissory note will be
secured by a second mortgage on the applicable Property if permitted by the
lender of the New Loan, or, in the case of a Partial Property, a first
security interest in the interests in the applicable Property Owner
received by CBL pursuant to the terms of this Agreement, and will otherwise
be an unsecured obligation of the applicable Property Owner (or, in the
case of a Partial Property, the CBL entity receiving the related
Interests). The form of any such promissory notes will be mutually agreed
between CBL and JRI, each acting in a commercially reasonable manner, and
will incorporate the following terms: the principal amount will be the
product of 32.25 and the number of SCUs not delivered to the Contributor
beneficiary thereof because they exceed the Maximum Financing Adjustment
Amount, the scheduled maturity will be the scheduled maturity date of the
New Loan in respect of which the SCUs otherwise would have been delivered,
the interest rate will be the interest rate that was payable on the loan
that was refinanced and the covenants, defaults and other provisions of the
promissory note will be consistent with the terms of the New Loan insofar
as they relate to the maker of the note.
(F) If any substantive term or provision (other than the principal
amount or rate) of any New Loan differs from and is less favorable to the
borrower than the corresponding term or provision of the loan being
refinanced in any material respect, the less favorable term will be subject
to
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CBL's prior written approval, which approval will not be unreasonably
withheld, conditioned or delayed. For clarification, except as set forth in
clause (G) below, CBL will not be entitled to reject any such less
favorable term or provision if at the time of the refinancing the lender's
requirement of that term or provision is consistent with the practice of
lenders making loans of comparable size and with comparable security in the
mortgage financing market generally.
(G) No New Loan will be a "securitized" loan, although the terms and
conditions of a New Loan may include provisions customarily used by
securitization lenders if the maker of the New Loan so requires (and such
provisions are consistent with that lender's lending practice generally).
Each New Loan, if any, will be made by an institutional lender (i.e., a
bank, savings and loan association, commercial credit company, pension
fund, insurance company or another traditional whole-loan provider). In
addition, unless approved by CBL in its sole discretion, no New Loan will
require payment of contingent interest or any other similar participation
amounts, or any escrows, any debt service, leasing, capital expenditure or
other similar reserves or any escrow arrangements (other than reserves or
escrow arrangements for periodic payments such as insurance premiums and
real estate taxes or reserves or escrow arrangements comparable to those in
existence with respect to the related existing loan ) or any indemnities or
guaranties (other than indemnities/guaranties for fraud, misappropriation,
environmental matters and other traditional non-recourse carveouts) in
amounts in excess of the indemnities or guaranties supporting the related
existing loan.
(H) In the case of a Closing involving any Partial Property, the
adjustments described above for such Partial Property are subject to
further adjustment to account for the fact that less than all of the
outstanding interests in the Partial Property are being contributed to the
Operating Partnership in connection with the transactions contemplated
herein (i.e., the actual adjustment will be the product of the amount
described above and the aggregate percentage interests in the Partial
Property Owner that are being contributed to CBL in connection with the
transactions contemplated herein (assuming that all of the interests in
such Partial Property Owner that are subject to an Interest Contribution
Agreement are contributed)).
1.2 Excluded Outparcels. (a) The Properties and/or Interests to be
contributed to the Operating Partnership as contemplated in this Agreement do
not and will not include any of the parcels identified on Schedule 1.2(a) hereto
as an excluded parcel (such parcels, "Excluded Outparcels") unless, in the case
of any Excluded
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Outparcel, by the Closing in respect of the Property to which it relates, JRI
has been unable to obtain the consents or satisfy any of the other requirements
identified on Schedule 1.2(a) or Schedule 3.1(b)(i) for that Excluded Outparcel.
Accordingly, the Jacobs Parties will be entitled to take such actions, at their
sole cost and expense, as are necessary to transfer the Excluded Outparcels that
are currently owned by any Property Owner to a separate entity at or prior to
the Closing in respect of the Property to which it relates, including obtaining
subdivisions and releases of the relevant Excluded Outparcels from the documents
evidencing Continuing Loans and each of the required consents and satisfying the
other requirements identified on Schedule 1.2(a). If the Jacobs Parties are
unable to obtain the required consents or satisfy any of the other requirements
in respect of any Excluded Outparcel prior to the Closing for the Property to
which the Excluded Outparcel relates, the Excluded Outparcel will be included in
the assets contributed to the Operating Partnership at that Closing and CBL and
the applicable Property Owner will enter into an Option Agreement in favor of
JRI in the form of Exhibit D-1 hereto (each, a "JRI Option Agreement") by which
JRI will be entitled to require that the Property Owner distribute such Excluded
Outparcel to JRI (or its designee) upon request once JRI has obtained the
required consents and satisfied the other requirements for that Excluded
Outparcel identified on Schedule 1.2(a) and Schedule 3.1(b)(i). If the granting
or recording of a JRI Option Agreement is prohibited by the terms of the
relevant Continuing Loan or, in the case of a Partial Property, the terms of the
organizational documents of the Partial Property Owner, JRI will be responsible
for obtaining any required consent of the lender for that Continuing Loan or the
relevant Outside Partner, as the case may be, prior to the granting or recording
of such JRI Option Agreement, as applicable.
(b) For each Excluded Outparcel (other than (i) the Excluded Outparcels
identified on Schedule 1.2(a) hereto without an option price and (ii) in the
event that one or more of the potential transactions identified on Schedule
4.6(iii)(B) hereto closes, the Excluded Outparcels relating to such closed
transactions), at the Closing with respect to the Property to which it relates
(or, if applicable, upon the later distribution of such Excluded Outparcel to
JRI or its designee as contemplated above), the entity that will own that
Excluded Outparcel after such Closing (or, if applicable, after such later
distribution) and the Operating Partnership will enter into an Option Agreement
for such Excluded Outparcel in the form attached hereto as Exhibit D-2 (each, an
"OP Option Agreement") pursuant to which the JRI affiliate that owns the
Excluded Outparcel will grant the Operating Partnership (or its designee) an
option to purchase the relevant Excluded Outparcel for a stated price (as also
set forth in Schedule 1.2(a)) during the first year (or during the first three
(3) years with respect to the Dev. Add'l Parcel 1 at Hanes Mall and Dev. Add'l
Parcel 2 at Fashion Square Mall) following the Closing in respect of the
Property to which the Excluded Outparcel relates (or, if applicable, during the
first year (or the first three (3) years, as the case may be) following the
distribution of any such Excluded Outparcel to the Jacobs Parties or their
designee as contemplated above), and also will grant the Operating Partnership a
right of first offer on the Excluded Outparcel for an agreed period beyond the
first (or third, as the case may be) anniversary of Closing
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(or, if applicable, the first (or third, as the case may be) anniversary of the
distribution of such Excluded Outparcel to the Jacobs Parties or their designee
as contemplated above). Each such option will be senior to any encumbrance that
JRI or the optionee may place on the Excluded Outparcel.
(c) CBL and JRI confirm and agree that (x) with respect to each of the
Excluded Outparcels identified on Schedule 4.6(iii)(B), CBL has declined to
purchase such parcel on the terms available to JRI in the potential transaction
described on Schedule 4.6(iii)(B) for that parcel and that, notwithstanding the
provisions of the OP Option Agreement relating to that parcel, JRI will be
entitled to continue pursuing the transaction described on Schedule 4.6(iii)(B)
for that parcel for one (1) year from the date of this Agreement in the same
manner and on the same terms as would have applied if CBL or its designee had
declined to exercise its option pursuant to the relevant OP Option Agreement,
and (y) if any such proposed transaction has not been documented in a binding
purchase and sale agreement or has not closed by the time of the first Closing
that includes the Property to which that Excluded Outparcel relates, the OP
Option Agreement for that Excluded Outparcel shall include an express provision
confirming the rights described in this clause (c). In addition, if, at the
Closing for any Property for which there is a related Excluded Outparcel, JRI
has been unable to obtain all necessary consents or other items necessary to
exclude the Excluded Outparcel from the assets of the Property Owner the
Interests of which are being contributed to CBL, and at that time or at any time
during the two (2) years following that Closing JRI is able to negotiate a sale
of that Excluded Outparcel to another Person, (1) CBL agrees that it will
cooperate, and will cause the Property Owner of that Excluded Outparcel or any
other any entity designated by it to own the fee interest in the Excluded
Outparcel (as used herein, the "Fee Owner") to cooperate, with JRI in its
efforts to document and implement that sale, including providing potential
purchasers with access to the Excluded Outparcel, making any records in its
possession and relating to the Excluded Outparcel available to JRI and causing
the Fee Owner to execute such documents as JRI may reasonably request to
implement the proposed sale subject to JRI having obtained all of the consents
and approvals identified on Schedule 1.2(a) and Schedule 3.1(b)(i) relating to
such Excluded Outparcel, and that it will cause all proceeds from any such sale
to be delivered directly to JRI (for distribution by JRI to the relevant Persons
that owned interests in the Excluded Outparcel prior to the Closing for the
Property to which the Excluded Outparcel relates), and (2) JRI agrees that it
will be responsible for carrying out the negotiation and documentation of the
proposed sale, that it will reimburse CBL for all reasonable expenses incurred
by it directly or through the Property Owner or other owning entity in
connection with the proposed sale, and that it will indemnify and hold harmless
each of CBL and such Fee Owner from any and all costs and expenses incurred by
any of them in connection with the proposed sale and the documents signed by any
of them in connection therewith.
(d) The parties agree that, if the general partner of Kentucky Oaks Mall
Company elects to cause that entity to purchase the development parcel
identified on
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Schedule 1.2(a) as being in the vicinity of Kentucky Oaks Mall, that parcel will
be treated as an Excluded Outparcel and, at any time before the Closing with
respect to Kentucky Oaks Mall, that Property Owner will be entitled, in its
general partner's discretion, to transfer the parcel to an entity in which JRI
or one or more of its affiliates is an investor, and in the event of such a
transfer neither CBL nor any entity owned or controlled by CBL will be entitled
to participate in any proceeds from that transfer. Notwithstanding anything
herein to the contrary, if the requirements under Section 1.2(a) have not been
satisfied with respect to the Excluded Outparcels at Kentucky Oaks Mall by the
Closing in respect of Kentucky Oaks Mall, then such parcels shall not be
"Excluded Outparcels," and no JRI Option Agreement shall be entered into with
respect thereto.
1.3 No Representations. (a) EACH OF THE OPERATING PARTNERSHIP AND THE REIT
SPECIFICALLY ACKNOWLEDGES AND AGREES THAT (i) EXCEPT AS SET FORTH HEREIN OR IN
ANY INTEREST CONTRIBUTION AGREEMENT OR DEED CONTRIBUTION AGREEMENT, OR ANY
EXHIBIT OR SCHEDULE ATTACHED HERETO OR THERETO, OR ANY OTHER DOCUMENT REQUIRED
HEREIN OR THEREIN, THE JACOBS PARTIES AND THE OTHER CONTRIBUTORS ARE
CONTRIBUTING THE INTERESTS AND, INDIRECTLY, THE PROPERTIES "AS IS, WHERE IS AND
WITH ALL FAULTS" AND (ii) EXCEPT FOR THE REPRESENTATIONS EXPRESSLY SET FORTH
HEREIN AND IN THE INTEREST CONTRIBUTION AGREEMENTS OR DEED CONTRIBUTION
AGREEMENTS, IF APPLICABLE, NEITHER THE OPERATING PARTNERSHIP NOR THE REIT IS
RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, WHETHER
ORAL OR WRITTEN, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, FROM THE JACOBS
PARTIES OR ANY ASSOCIATE, OR ANY PARTNER, OFFICER, EMPLOYEE, AFFILIATE,
ATTORNEY, AGENT OR BROKER OF ANY OF THEM, AS TO ANY MATTER, CONCERNING THE
INTERESTS OR THE PROPERTIES, OR SET FORTH, CONTAINED OR ADDRESSED IN ANY DUE
DILIGENCE MATERIALS (INCLUDING WITHOUT LIMITATION, THE COMPLETENESS THEREOF),
INCLUDING WITHOUT LIMITATION: (i) the quality, nature, habitability,
merchantability, use, operation, value, marketability, adequacy or physical
condition of any Property or any aspect or portion thereof, including, without
limitation, structural elements, foundation, roof, appurtenances, access,
landscaping, parking facilities, electrical, mechanical, HVAC, plumbing, sewage,
water and utility systems, facilities and appliances, soils, geology and
groundwater, (ii) the dimensions or lot size of any Property or the square
footage of any of the improvements thereon or of any tenant space therein, (iii)
the development or income potential, or rights of or relating to, any Property,
or the fitness, suitability, value or adequacy of any Property for any
particular purpose, (iv) the zoning or other legal status of any Property or the
existence of any other public or private restrictions on the use of any
Property, (v) the compliance of any Property or its operation with any
applicable codes, laws, regulations, statutes, ordinances, covenants, conditions
and
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restrictions of any Governmental Authority or of any other person or entity
(including, without limitation, the Americans with Disabilities Act of 1990, as
amended), (vi) the ability of the Operating Partnership or the REIT or any
affiliate of either of them to obtain any necessary governmental approvals,
licenses or permits for the use or development of any Property, (vii) the
presence, absence, condition or compliance of any Hazardous Materials on, in,
under, above or about any Property or any adjoining or neighboring property,
(viii) the quality of any labor and materials used in any improvements at any
Property, (ix) the ownership of any Properties or Interests or any portion
thereof, (x) any leases, permits, warranties, service contracts or any other
agreements affecting any Property or the intentions of any party with respect to
the negotiation and/or execution of any lease or contract with respect to any
Property or (xi) the economics of, or the income and expenses, revenue or
expense projections or other financial matters, relating to the operation of,
any Property. Without limiting the generality of the foregoing, each of the
Operating Partnership and the REIT expressly acknowledges and agrees that,
except as set forth herein or in any Interest Contribution Agreement or Deed
Contribution Agreement, or any Exhibit or Schedule hereto or thereto, or any
other document required herein or therein, it is not relying on any
representation or warranty of the Jacobs Parties or any Associate, or any
partner, member, director, trustee, officer, employee, affiliate, attorney,
agent or broker of any of them, whether implied, presumed or expressly provided,
arising by virtue of any statute, regulation or common law right or remedy in
favor of either of them. Each of the Operating Partnership and the REIT further
acknowledges and agrees that none of the Jacobs Parties or any Associate or any
affiliate of any of them is under any duty to make any inquiry regarding any
matter that may or may not be known to any partner, officer, employee, attorney,
agent or broker of any of them. This Section shall survive the Principal Closing
and any Deferred Closing, or, if the Principal Closing does not occur, the
termination of this Agreement. In addition, each of the Operating Partnership
and the REIT acknowledges and agrees that no property (real, personal or
otherwise) owned by any tenant or any other Person is intended to be conveyed
hereunder unless said property is described and purported to be conveyed herein.
For the purposes of this Agreement, "Person" means any individual, corporation,
partnership, association, trust, limited liability company, or other entity or
organization.
(b) EACH OF THE OPERATING PARTNERSHIP AND THE REIT ACKNOWLEDGES AND AGREES
THAT ANY REPORTS OBTAINED BY IT OR ANY OF ITS AFFILIATES ARE THE SOLE
RESPONSIBILITY OF THE OPERATING PARTNERSHIP, AND, EXCEPT TO THE EXTENT EXPRESSLY
REQUIRED PURSUANT TO THIS AGREEMENT, NONE OF THE JACOBS PARTIES OR ANY ASSOCIATE
OR ANY OF THEIR RESPECTIVE AFFILIATES HAS ANY OBLIGATION TO MAKE ANY CHANGES,
ALTERATIONS OR REPAIRS TO ANY PROPERTY OR ANY PORTION THEREOF OR TO CURE ANY
VIOLATIONS OF LAW OR TO COMPLY WITH THE REQUIREMENTS OF ANY INSURER. EACH OF THE
OPERATING PARTNERSHIP AND THE REIT ACKNOWLEDGES AND AGREES THAT, EXCEPT AS
OTHERWISE EXPRESSLY
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PROVIDED IN THIS AGREEMENT, THE OPERATING PARTNERSHIP IS SOLELY RESPONSIBLE FOR
OBTAINING ANY APPROVAL OR PERMIT NECESSARY FOR ACCEPTANCE BY IT OF ANY
CONTRIBUTED INTEREST OR ANY PROPERTY DIRECTLY OR INDIRECTLY AND FOR ANY REPAIRS
OR ALTERATIONS NECESSARY TO OBTAIN THE SAME, ALL AT THE OPERATING PARTNERSHIP'S
SOLE COST AND EXPENSE.
1.4 Release. (a) Without limiting the provisions of Section 1.3, each of
the Operating Partnership and the REIT, for itself and any of its successors and
assigns and their affiliates, hereby irrevocably and absolutely waives its right
to recover from, and forever releases and discharges, and covenants not to file
or otherwise pursue any legal action against, any of the Jacobs Parties, New
Entities, New Entity Subsidiaries or Associates or other contributing Outside
Partners or their respective affiliates or any direct or indirect partner,
member, trustee, director, shareholder, controlling person, affiliate officer,
attorney, employee, agent or broker of any of the foregoing, and any of their
respective heirs, successors, personal representatives and assigns (each, a
"Contributor Party", and collectively, the "Contributor Parties") with respect
to any and all suits, actions, proceedings, investigations, demands, claims,
liabilities, fines, penalties, liens, judgments, losses, injuries, damages,
settlement expenses or costs of whatever kind or nature, whether direct or
indirect, known or unknown, contingent or otherwise (including any action or
proceeding brought or threatened or ordered by any Governmental Authority),
including, without limitation, attorneys' and experts' fees and expenses, and
investigation and remediation costs that may arise on account of or in any way
be connected with any Interest or any Property or any portion thereof
(collectively, "Claims"), including, without limitation, the physical,
environmental and structural condition of any Property or any law or regulation
applicable thereto, or any other matter relating to the use, presence, discharge
or release of Hazardous Materials on, under, in, above or about any of the
Properties; provided, however, that neither the Operating Partnership nor the
REIT waives its rights, if any, to recover from, or releases or discharges or
covenants not to bring any action against (i) any Contributor Party for any act
of that Contributor Party that constitutes fraud, (ii) JRI for any breach of the
representations or warranties set forth in Section 8.2, subject to the
limitations and conditions provided in Section 9.3, (iii) any Contributor for
any breach of representations or warranties set forth in any of the Interest
Contribution Agreements to which it is a party, subject to the limitations and
conditions provided therein, (iv) any 100% Property Owner for any breach of
representations or warranties set forth in any Deed Contribution Agreement to
which it is a party subject to the limitations and conditions provided therein
or (v) JRI for its obligations under Article IX hereof. In addition, CBL and its
successors and assigns covenant and agree to, and where applicable hereby do,
release, defend, indemnify and hold harmless each of the Contributor Parties and
their respective affiliates from and against any future Claims to the extent
relating to any Hazardous Materials that may be placed, located or released on
or at any Property after the Closing Date with respect to such Property. CBL's
indemnity set forth in the immediately preceding
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sentence will not require CBL, or its successors or assigns, to indemnify,
defend or hold harmless any Contributor Party from any claims arising out of or
related to any lawsuit or other proceeding or matter commenced against any
Contributor Party or any partners, beneficial owners, officers, directors,
employees or agents thereof by any other Person (including, without limitation,
any Governmental Authority) to the extent, if any, that such lawsuit or other
proceeding seeks recovery for harm suffered due to Hazardous Materials
contaminating or otherwise adversely affecting or migrating from any Property on
or before the Closing Date for such Property.
For purposes of the foregoing, the term "Hazardous Materials" means any
substance, chemical, compound, product, solid, gas, liquid, waste, byproduct,
pollutant, contaminant or other material that is hazardous, toxic, ignitable,
corrosive, carcinogenic or otherwise presents a risk of danger to human, plant
or animal life or the environment or that is defined, determined or identified
as such in any federal, state or local law, rule or regulation (whether now
existing or hereafter enacted or promulgated) and any judicial or administrative
order or judgment, in each case relating to the protection of human health,
safety and/or the environment, including, but not limited to, any materials,
wastes or substances that are included within the definition of (A) "hazardous
waste" in the federal Recourse Conservation and Recovery Act; (B) "hazardous
substances" in the federal Comprehensive Environmental Response, Comprehension
and Liability Act; (C) "pollutants" in the federal Clean Water Act; (D) "toxic
substances" in the federal Toxic Substances Control Act; and (E) "oil or
hazardous materials" in the laws or regulations of any State.
(b) In connection with this Section 1.4, each of the Operating Partnership
and the REIT expressly waives the benefits of any provision or principle of
federal or state law or regulation that may limit the scope or effect of the
foregoing waiver and release.
(c) This Section 1.4 shall survive the Principal Closing and any Deferred
Closing indefinitely.
ARTICLE II
CONSIDERATION
2.1 Consideration. (a) On the Principal Closing Date, assuming satisfaction
by JRI and/or waiver by CBL of all conditions set forth in Section 7.1 and
subject to Section 2.1(b), the Operating Partnership agrees to:
(i) deliver to the Jacobs Trusts and the Contributors One Hundred
Million Dollars ($100,000,000.00), payable in cash by wire transfer of
immediately
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available funds to the bank accounts designated by JRI in writing to the
Operating Partnership at least three (3) days prior to the Principal
Closing Date, and
(ii) admit the Contributors as additional limited partners of the
Operating Partnership and issue to them a total of 11,707,194 Series J
Special Common Units of the Operating Partnership ("SCUs") having the
rights and priorities set forth on Exhibit G hereto
(such cash and partnership interest consideration, as it may be adjusted as
provided for herein, the "Consideration"). Notwithstanding the foregoing, the
total Consideration (including the final number of SCUs deliverable in respect
of any Property) will be subject to increase or decrease in accordance with the
provisions of this Article II, and the provisions set forth in the Contribution
Agreement (Weston Management), the Interest Contribution Agreements and the Deed
Contribution Agreements, if applicable. The acquisition of Weston Management
shall be structured as an installment sale transaction, with the consideration
payable in cash. The Consideration allocated to and payable in respect of Weston
Management at each Closing will be determined as set forth in the Contribution
Agreement (Weston Management), and such amounts will be payable by CBL in
respect of Properties as they are contributed to CBL and regardless of whether
Weston Management exercises the purchase options referred to in Section 4.31
hereof. At the Principal Closing, the Consideration will be allocated among the
Properties and Weston Management in accordance with a schedule to be prepared by
JRI and delivered to CBL at least five (5) Business Days prior to the Principal
Closing and approved by CBL (such approval not to be unreasonably withheld,
conditioned or delayed). As used herein, the term "Business Day" means any day
of the year, other than a Saturday or Sunday or any other day that the Federal
Reserve Bank of New York recognizes as a federal holiday. If, at any Closing,
JRI has advised CBL in writing that JRI is prepared and able to Close on the
related Closing Date, and CBL wire transfers funds to or for the accounts
designated by JRI on that Closing Date, and the Closing fails to occur on that
Closing Date because of a failure by JRI to meet one or more conditions
precedent to CBL's obligation to close, JRI will reimburse CBL for the lost
interest on the funds so wired until the sooner of the date on which JRI returns
the funds to CBL or the relevant Closing occurs. The lost interest shall be
computed at the overnight funds rate then available to JRI for short term
deposits of that nature (and regardless of whether or not JRI actually earned
that rate on CBL's funds).
Notwithstanding the allocations referred to in the foregoing paragraph, if
less than all of the Properties is included in the Principal Closing, the
Consideration to be delivered by CBL at the Principal Closing will be reduced by
the sum of the amounts set forth on Schedule 2.1(a) hereto opposite the names of
the Excluded Properties (as defined below) or as otherwise agreed between JRI
and CBL, and preliminary allocations of that Consideration among the Properties
and the Interests to be contributed at the Principal Closing and Weston
Management, will be made in accordance with a schedule of
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preliminary allocations specified by JRI in writing no fewer than five (5)
Business Days before the Principal Closing and approved by CBL (such approval
not to be unreasonably withheld, conditioned or delayed). At each Deferred
Closing, if any, the total Consideration payable with respect to the Properties
being contributed at such Closing and the additional consideration payable in
respect of Weston Management will be the sum of the amounts set forth on
Schedule 2.1(a) with respect to those Properties (including both cash and SCUs)
or as otherwise agreed between JRI and CBL, and, notwithstanding the amounts on
Schedule 2.1(a), preliminary allocations of that Consideration among the
Properties and the Interests to be contributed at such Closing and Weston
Management will be made in accordance with a schedule of preliminary allocations
specified by JRI in writing no fewer than five (5) Business Days before the
applicable Closing and approved by CBL (such approval not to be unreasonably
withheld, conditioned or delayed). The parties acknowledge that the schedules of
preliminary allocations referred to in the preceding sentences with respect to
the Principal Closing and each Deferred Closing, if any, may be subject to
further adjustment or reallocation by JRI based on the aggregate Consideration
delivered by CBL with respect to all Closings and approved by CBL (such approval
not to be unreasonably withheld, conditioned or delayed). JRI agrees that it
will notify CBL of the final allocations in writing as promptly as practicable
after the last to occur of the Principal or Deferred Closings, as the case may
be, or the expiration of the dates by which such Closings are required to occur
as provided in this Agreement, and in no event later than November 30, 2001. In
no event shall the allocations or reallocations of the Consideration determined
by JRI among the Properties or the Interests affect the aggregate Consideration
to be paid by CBL hereunder or the stated amounts set forth in the Interest
Contribution Agreements, the Contribution Agreement (Weston Management) and the
Deed Contribution Agreements, if applicable.
(b) The Consideration allocated to any Property pursuant to a preliminary
schedule prepared by JRI in accordance with Section 2.1(a) will be adjusted in
each of the following circumstances and the total Consideration will be adjusted
accordingly:
(i) JRI, in its discretion, may elect to reallocate up to $10 million
in the aggregate for all Closings and ICOA Option Closings of the cash
component of Consideration to the SCU component of Consideration at a
conversion rate of one SCU for each $32.25 of cash so reallocated. JRI may
make this election by delivering written notice thereof to CBL at least
fifteen (15) days prior to the Closing to which the reallocation will
relate.
(ii) if any Outside Partner set forth on Schedule 2.1(b)(ii) hereto
elects to participate in the contribution transactions set forth herein
with respect to any Property identified on Schedule 2.1(b)(ii) in which it
has an ownership interest, the Consideration will be increased by the
number of
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SCUs set forth on Schedule 2.1(b)(ii) hereto for that Outside Partner or as
otherwise agreed between JRI and CBL.
(iii) if it becomes necessary for JRI to arrange the refinancing of
any Continuing Loan as set forth in Section 1.1(b), the SCU component of
the Consideration allocable to the related Property may be adjusted as
provided in Section 1.1(b)(iii).
(iv) if any capital expenditure scheduled on the 2000 or 2001 business
plan to be completed prior to the Closing Date with respect to any Property
is not completed by such Closing Date, the total Consideration payable in
respect of that Property will be reduced as set forth in Section 4.6(i).
(v) the aggregate Consideration will be increased by increasing the
SCU component of the Consideration payable in respect of any Property to
account for any regular scheduled amortization payments actually made in
respect of any related Continuing Loan and/or New Loans for such Property
during the period after December 31, 2000 through and including the Closing
Date (or the ICOA Closing Date, if applicable, for such Property), in which
case the number of SCUs will be increased at the rate of one SCU for each
$32.25 of amortization payments made during such period, provided, however,
that if such adjustment is being made with respect to a Partial Property,
the total number of SCUs will be increased by an amount equal to the
quotient of (x) the product of (A) the total amortization payments made
during such period with respect to such Partial Property and (B) the
percentage of the total interests in the Partial Property Owner of that
Partial Property being contributed to the Operating Partnership in
connection with the transactions contemplated herein (assuming that all of
the interests in such Partial Property Owner that are subject to an
Interest Contribution Agreement are contributed) divided by (y) 32.25.
(vi) if Cary Towne Center is included in the relevant Closing, the
aggregate Consideration will be increased by increasing the cash component
of the Consideration payable at that Closing by an amount equal to twenty
percent (20%) of the then-outstanding principal balance of the Cary Note,
provided, however, that if the cash payable with respect to the Cary Note
would cause the cash component of the aggregate Consideration to exceed
$100 million, the portion in excess of $100 million will be payable in SCUs
instead of cash at a rate of one SCU for each $32.25 of such excess amount.
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(c) The parties agree that the contributions by the Jacobs Parties and the
Associates (and any Outside Partners electing to participate in the contribution
transactions contemplated herein) of the interests in each Partial Property
Owner (other than the owner of Kentucky Oaks Mall and Midland Mall, unless the
percentage interest to be transferred hereunder exceeds 49%, or unless there
have been transfers of other interests in the owner of Kentucky Oaks Mall or
Midland Mall within twelve (12) months prior to the Closing with respect to
either such Property and the other interests transferred, when taken together
with the interests of the Jacobs Parties and the Associates (and any Outside
Partners electing to participate in the contribution transactions contemplated
herein) in such Partial Property Owner, represent in the aggregate a greater
than 49% capital and profits interest in such Partial Property Owner for federal
income tax purposes, in which case that Property also will be included in the
foregoing list), will occur in multiple contributions (the contributions after
the first contribution being contingent on exercise of one or more of the
options described in clauses (ii) and (iii) below) as set forth below:
(i) ICOA Closing: At the first Closing with respect to any Partial
Property (the "ICOA Closing"), the Associates will contribute all of the
Associate Interests, if any, in the Partial Property Owner, the Outside
Partner(s) for such Partial Property participating in the Closing, if any,
will contribute their interests in the Partial Property Owner and the
Contributors controlled by any of the Jacobs Parties will contribute a
portion of the Jacobs Interests in the Partial Property Owner, so that in
the aggregate the Associate Interests, the Outside Partner Interests and
such portion of the Jacobs Interests then contributed represent 48% of the
total ownership interests in such Partial Property Owner (or such lesser
percentage (rounded down to the nearest full percent) of the total
partnership interests in the Partial Property Owner as may be transferred
without causing a termination of the Partial Property Owner pursuant to
Section 708(b) of the Code), to the Operating Partnership (or, if so
requested by the Operating Partnership, to one or more entities
wholly-owned by the Operating Partnership whose separate existence from the
Operating Partnership is disregarded for federal income tax purposes), and
the Operating Partnership will deliver to those Contributors an appropriate
portion of the total Consideration allocated to that Partial Property given
the interests actually contributed (as determined between JRI and CBL) in
accordance with the Interest Contribution and Option Agreement for that
Partial Property. At each ICOA Closing, the contributing partners or
members of the relevant Partial Property Owner that continue to own
interests in such Partial Property Owner after such ICOA Closing will enter
into a voting agreement with the Operating Partnership in the form of
Exhibit E hereto (an "Option Interest Voting Agreement") with respect to
the interests in that Partial Property Owner that are subject to an option.
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(ii) ICOA Option Closings: Each Interest Contribution and Option
Agreement will grant each of CBL and JRI an option to cause the other to
require the Contributors of interests in the relevant Partial Property
Owner controlled by any of the Jacobs Parties, to contribute the remaining
Interests in the Partial Property Owner to which the agreement relates (or
such lesser portion of the remaining Interests in the Partial Property
Owner to which the agreement relates as may be transferred on the date of
the ICOA Option Closing without causing a termination of the Partial
Property Owner pursuant to Section 708(b) of the Code (rounding down to the
nearest full percent)) to the Operating Partnership (or, if so requested by
the Operating Partnership, to one or more entities wholly-owned by the
Operating Partnership whose separate existence from the Operating
Partnership is disregarded for federal income tax purposes) at a date not
less than thirteen (13) months after the ICOA Closing, and, assuming that
the relevant representations and warranties of the relevant Contributors in
that Interest Contribution and Option Agreement are true and correct in all
material respects as of such date, the Operating Partnership will accept
the contributions and deliver to the Contributors the SCUs and cash in
amounts determined after taking into account amounts paid pursuant to (i)
above, as determined by CBL and JRI. CBL will be entitled to exercise the
foregoing option at any time during the first fourteen (14) days of the
thirteenth (13th) calendar month following the month in which the related
ICOA Closing occurred by written notice to JRI, and JRI will be entitled to
exercise the foregoing option at any time during the first fourteen (14)
days of the fourteenth (14th) calendar month following the month in which
the related ICOA Closing occurred by written notice to CBL. If either party
exercises its option with respect to any Property, the closing with respect
to the contribution of such interests will take place on the first Business
Day of the fifteenth (15th) calendar month following the month in which the
related ICOA Closing occurred in accordance with and subject to the
conditions set forth in the applicable Interest Contribution and Option
Agreement. The closing with respect to the contribution of interests in any
Partial Property Owner pursuant to this Section 2.1(c)(ii) or Section
2.1(c)(iii) below is referred to herein as an "ICOA Option Closing"; and
the date on which an ICOA Option Closing is to occur is referred to herein
as an "ICOA Option Closing Date").
(iii) If less than all of the remaining interests in a Partial
Property Owner are transferred in an ICOA Option Closing, then the Interest
Contribution and Option Agreement will grant each of CBL and JRI options to
cause the other to require the Contributors of interests in the relevant
Partial Property Owner controlled by any of the Jacobs Parties to
contribute the remaining Interests in the Partial Property Owner (or such
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lesser portion of the remaining Interests in the Partial Property Owner to
which the agreement relates as may be transferred on the ICOA Option
Closing Date without causing a termination of the Partial Property Owner
pursuant to Section 708(b) of the Code (rounding down to the nearest full
percent)) to the Operating Partnership (or, if so requested by the
Operating Partnership, to one or more entities wholly-owned by the
Operating Partnership whose separate existence from the Operating
Partnership is disregarded for federal income tax purposes), and, assuming
that the relevant representations and warranties of the relevant
Contributors in that Interest Contribution and Option Agreement are true
and correct in all material respects on such date, the Operating
Partnership will accept the contributions and deliver to the Contributors
the SCUs and cash in amounts determined after taking into account amounts
paid pursuant to clauses (i), (ii) and (iii) of this Section 2.1(c), as
determined by CBL and JRI. CBL will be entitled to exercise the foregoing
option at any time during the first fourteen (14) days of the thirteenth
(13th) calendar month following the month in which the most recent related
ICOA Option Closing occurred by written notice to JRI, and JRI will be
entitled to exercise the foregoing option at any time during the first
fourteen (14) days of the fourteenth (14th) calendar month in which the
most recent related ICOA Option Closing occurred by written notice to CBL.
If either party exercises its option with respect to any Property, the
closing with respect to the contribution of such interests will take place
on the first Business Day of the fifteenth (15th) calendar month following
the calendar month in which the most recent related ICOA Option Closing
occurred, all in accordance with and subject to the conditions set forth in
the applicable Interest Contribution and Option Agreement.
ARTICLE III
TITLE AND OTHER PROPERTY RELATED MATTERS
3.1 Title to the Properties. (a) JRI has caused Chicago Title Insurance
Company (the "Title Company") to prepare and deliver to CBL, and CBL hereby
acknowledges receipt of (i) the title commitments attached as Exhibit F hereto
(each a "Commitment" and, collectively, the "Commitments"), pursuant to which
the Title Company agrees to issue ALTA title insurance policies (collectively,
the "Title Policies") for each of the Properties with the endorsements and
affirmative coverages referenced therein, which Title Policies shall name, as
the insured, the entity to which (x) the Interests are to be transferred
pursuant to an Interest Contribution Agreement for such Property (i.e., a
partner or member of the applicable Property Owner) or (y) the Property is to be
transferred pursuant to a Deed Contribution Agreement (i.e., a Property
transferee) and shall insure the applicable Property Owner's (or Property
transferee's, if applicable) fee
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simple (and, in the case of Eastgate Mall and Wausau Center, its leasehold)
title to its respective Property to be good and indefeasible, subject only to
the Permitted Exceptions and the other terms set forth therein and (ii)
photocopies of the documents (the "Title Documents") evidencing or describing
all title exceptions shown on the Commitments.
(b) As used herein, the term "Permitted Exceptions" means, with respect to
each Property:
(i) Each of the title matters set forth in the Commitment for that
Property and any additional liens or related title exceptions securing or
relating to indebtedness incurred by the applicable Property Owner after
the date of the relevant Commitment and in accordance with the terms of
this Agreement, but excluding those exceptions to title described in
Schedule 3.1(b)(i), the items marked "omit" on the Commitments
(collectively, the "Initial Title Objections") and any exceptions in the
Commitments that evidence or relate to indebtedness that has been repaid at
or prior to the Closing with respect to such Property, which exceptions JRI
agrees to use commercially reasonable efforts to Remove (as defined below)
prior to or concurrently with, and as a condition to, the Closing under the
Interest Contribution Agreement or Deed Contribution Agreement, as
applicable, with respect to such Property;
(ii) The state of facts set forth in the land survey of such Property
described on Schedule 3.1(b)(ii) (such surveys for the Properties,
collectively, the "Delivered Surveys") but excluding any items shown on the
Delivered Surveys that also are identified as Initial Title Objections, and
the state of facts set forth in the Updated Survey for such Property and
not objected to by CBL as provided in Section 3.2;
(iii) All laws, regulations and ordinances including, without
limitation, all environmental, building and zoning restrictions affecting
the Property or the ownership, use or operation thereof adopted by any
Governmental Authority having jurisdiction over the Property or the
ownership, use or operation thereof, and all amendments or additions
thereto now in effect or which may be in force and effect on the Closing
Date with respect to such Property;
(iv) All unpaid personal property, real estate and excise taxes, and
all water, sewer, utility, trash and other similar charges, in each case
that are not yet due and payable as of the Closing with respect to such
Property but may become or give rise to a lien on all or any portion of the
Property (it being understood that such items may be subject to
apportionment at such Closing as provided in the relevant Interest
Contribution Agreement or Deed Contribution Agreement);
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(v) Each lease and other agreement for the present or future use or
occupancy of any space in the Property listed on the rent roll for the
Property attached hereto as Schedule 3.1(b)(v), as such Schedule may be
amended, supplemented or otherwise modified from time to time through the
Closing Date with respect to such Property to reflect additional leases
entered into by the Property Owner and not prohibited by Section 4.6
hereof;
(vi) Each of the equipment leases by which the related Property Owner
holds the right to possess and use any of the equipment, furniture,
machinery, furnishings, tools, spare parts, supplies and other articles of
personal property located on or in the Property that is used by the
Property Owner in the ordinary course of business;
(vii) Each and every Encumbrance of the type referred to in Section
3.2 below identified to CBL prior to the Closing with respect to such
Property as contemplated therein and not objected to by CBL in writing
within the time allowed in that Section or otherwise waived by CBL as
provided in Section 3.2;
(viii) Any public record filings by mechanics and other workmen
employed by any tenant at its own expense to provide services at the
Property (to the extent, if any, that such filings constitute an
Encumbrance), so long as they are omitted from the relevant Title Policy
(provided, however, that if the aggregate of all such liens exceeds $5
million, JRI has bonded over the portion of such liens that exceeds $5
million with security acceptable to CBL acting reasonably); and
(ix) Any liens, encumbrances or other defects or exceptions to title
insurance coverage caused by CBL, by any of its affiliates, by any of their
respective agents, employees or other representatives or by any of the
Jacobs Parties or any of their respective agents, employees or other
representatives at CBL's prior written request.
3.2 Title Defects.
(a) Certain Exceptions to Title. If any update of a Commitment or any
Updated Survey for a Property other than Kentucky Oaks Mall (each, a
"Jacobs-Managed Property") discloses any new mortgage, lien, restriction,
option, conditional sales agreement, pledge, security interest, or other
encumbrance, adversely affecting the relevant Property in any material respect
(each, an "Encumbrance") or any encroachment, change in the boundary of a
Property (as compared to the boundary shown on the Delivered Survey) or other
survey defect, in either case that is not a Permitted Exception and that
adversely affects in any material respect (i) the applicable Property Owner's
title to such Property or (ii) the current or future use of any portion of such
Property in a
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manner consistent with such Property Owner's use of such Property as of the date
of this Agreement (all such Encumbrances and other new encroachments, changes
and other survey defects are collectively referred to herein as "Other
Exceptions"), then within ten (10) Business Days after CBL first receives notice
thereof or such lesser time as remains between such receipt and the Closing Date
with respect to such Property, CBL will have the right to object in writing to
such Other Exception. Unless CBL notifies JRI in writing that it objects to an
Other Exception with respect to a Jacobs-Managed Property within the foregoing
time period, each such Other Exception automatically will constitute an
additional Permitted Exception. Other Exceptions to which CBL timely objects (in
the case of Jacobs-Managed Properties within the time-frame set forth in this
Section 3.2(a) and in the case of Kentucky Oaks Mall within the time-frame set
forth in Section 3.2(d)(i)) are collectively referred to herein as "Subsequent
Title Objections".
(b) Discharge of Title Objections. At or prior to the Closing Date with
respect to such Property, as the same may be extended as permitted herein, JRI
agrees to Remove or cause the applicable Property Owner to Remove any and all
Title Objections. As used in this Agreement the term "Title Objection" refers to
and includes any Initial Title Objection and any Subsequent Title Objection, and
the term "Remove" means that JRI in its discretion and at its sole cost and
expense will either (a) take such actions as are necessary to eliminate (of
record or otherwise, as appropriate) the Title Objection, (b) cause the Title
Company to remove the Title Objection as an exception to title in the Title
Policy and affirmatively insure against the same, in each case without any
additional cost to CBL, whether such insurance is made available in
consideration of payment, bonding, indemnity of JRI or otherwise, provided that
this clause (b) will only be available to remove mechanics' liens for claims
that do not exceed $5 million in the aggregate, or (c) deliver its own funds to
the Title Company with instructions for the Title Company to apply such funds to
discharge fully the Title Objection, together with such instruments, in
recordable form, as are necessary to enable the Title Company to discharge the
Title Objection of record and funds necessary to cover the fees and expenses of
the Title Company for discharging the claim and recording or filing such
instruments. In addition, to Remove a Subsequent Title Objection relating to an
Updated Survey, the applicable Survey must be revised to indicate the Removal if
the same is of a nature that is capable of being reflected on a survey and is of
a type that customarily would be so reflected. Notwithstanding anything herein
to the contrary, any Title Objection that arises because of an incorrect or
over-inclusive tax lot or block designation or a need to subdivide any parcel or
property from any other property must be Removed in accordance with all legal
requirements for obtaining a proper tax lot designation or subdivision, as
applicable.
(c) Updated Surveys. CBL acknowledges that it has received and reviewed
each of the Delivered Surveys and hereby confirms that, except to the extent of
items that are identified as Initial Title Objections on Schedule 3.1(b)(i), the
conditions shown on the Delivered Surveys are acceptable to CBL. Notwithstanding
the foregoing, JRI agrees that it will use commercially reasonable efforts to
take the remedial actions
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outlined on Schedule 3.2(c) in respect of the Delivered Surveys and, where
relevant, to obtain revised surveys reflecting such actions, although the
parties also agree that completion of the actions outlined on Schedule 3.2(c)
are not conditions precedent to Closing with respect to any of the Properties.
Within seventy-five (75) days of the date of this Agreement, JRI shall deliver
to CBL for its review an updated survey for each of Columbia Mall, Randolph Mall
and Parkdale Mall (each, an "Updated Survey"). Subject to clause (iii) below,
CBL will have the right to object to new matters set forth in any Updated Survey
or any revised survey delivered in connection with, or otherwise relating to the
process of, confirming completion of an item identified on Schedule 3.2(c) or
required by the Title Company as a condition to the issuance of the applicable
Title Policy, in each case in accordance with the provisions of Section 3.2(a)
above, except that CBL will not have the right to object to any new matters
unless they constitute Other Exceptions and were not set forth in the Delivered
Surveys.
(d) Special Provisions Relating to Kentucky Oaks Mall. (i) Notwithstanding
the foregoing, JRI agrees to use commercially reasonable efforts to obtain and
deliver to CBL a current survey for Kentucky Oaks Mall as soon as practical and
in any event within forty-five (45) days of the date of this Agreement. Upon
receipt of the current survey, CBL will have up to ten (10) days but in any
event, no later than the fiftieth (50th) day following the date of this
Agreement if the survey is delivered to CBL by the forty-fifth (45th) day
following the date of this Agreement and, if the survey is delivered to CBL
after the forty-fifth (45th) day following the date of this Agreement, CBL will
have five (5) days (such period, the "Response Period") to notify JRI in writing
of any Other Exception shown on or otherwise arising from the new survey of
Kentucky Oaks Mall. If CBL does not deliver written notice of any such Other
Exception within the Response Period, CBL will be deemed to have accepted the
new survey and each such Other Exception automatically will constitute an
additional Permitted Exception. If CBL notifies JRI in writing of any such Other
Exception, JRI will have five (5) days from receipt of the notice to determine
whether it is willing and able to Remove the Other Exception and, if JRI
determines that it is unwilling or unable to Remove any such Other Exception as
a condition to Closing on Kentucky Oaks Mall, JRI will notify CBL of that
determination in writing. If JRI does not notify CBL of such a determination
within the allotted five (5) days, the Other Exception will constitute a
Subsequent Title Objection. If, on the other hand, JRI notifies CBL of its
determination within the allotted five (5) days, CBL will have three (3)
Business Days from receipt of the notice to respond in writing withdrawing the
Other Exception (in which case the other exception will become an additional
Permitted Exception). If CBL does not withdraw the Other Exception within that
three (3) Business Day period, then JRI will be entitled to terminate this
Agreement by delivering to CBL a written notice of termination within three (3)
Business Days from the expiry of the CBL withdrawal period. If JRI does not
exercise the foregoing termination right, the Other Exception will constitute a
Subsequent Title Exception. If JRI exercises the foregoing termination right,
neither party will be required to pay the other any Expense Reimbursement or
other amount, and thereafter no party to
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this Agreement will have any further rights or obligations hereunder except
pursuant to those provisions of this Agreement that provide, by their terms,
that they survive termination.
(ii) At the earlier to occur of (A) such time as JRI has Removed all Title
Objections with respect to Kentucky Oaks Mall and has delivered a current survey
of Kentucky Oaks Mall as required above and CBL has confirmed to JRI in writing
that all of the items identified on that survey constitute Permitted Exceptions
and JRI has confirmed to CBL that it has obtained all consents with respect to
Kentucky Oaks Mall identified on Exhibit R and (B) November 30, 2000, CBL will
have the right to approach the general partner of Kentucky Oaks Mall Company to
request that (x) it deliver to JRI and CBL an estoppel certificate with respect
to Kentucky Oaks Mall and (y) CBL be permitted to solicit estoppel certificates
from the tenants at Kentucky Oaks Mall, provided, that, CBL agrees that it will
not make any such approach to the general partner or any person on its behalf
until the earlier of (A) such time as CBL has delivered the written confirmation
required above and JRI has confirmed that it has obtained the consents and
amendments identified on Exhibit R and (B) November 30, 2000.
(iii) In addition, the parties agree that (x) JRI will only be responsible
for Removing the Initial Title Objections with respect to Kentucky Oaks Mall and
exceptions to title identified by CBL to JRI in writing during the forty-five
(45) day period following the date hereof as described in (i) above, (y) CBL
will not be entitled to raise any further or additional objections to title
after the expiration of the initial forty-five (45) day period, and (z) any
objections first identified to JRI after the initial forty-five (45) day period
will be disregarded in determining whether JRI has satisfied the conditions
precedent to CBL's obligation to acquire interests in Kentucky Oaks Mall
Company.
(iv) JRI agrees that, from the date hereof until the Closing Date with
respect to Kentucky Oaks Mall, it will not cause or permit Paducah Development
Company to affirmatively consent to any matter regarding which Paducah
Development Company's consent is required pursuant to the organizational
documents of Kentucky Oaks Mall Company, without CBL's prior written consent
(which consent will not be unreasonably withheld, conditioned or delayed).
3.3 Condemnation. (ai Right to Terminate. In the event that any
Governmental Authority commences any condemnation action or any taking by power
of eminent domain (such action, a "Condemnation") against any Property or
threatens in writing to do so prior to the Closing with respect to that Property
(or the ICOA Closing with respect to any Partial Property subject to Section
2.1(c)), JRI agrees to notify the Operating Partnership of such action or
threatened action promptly upon obtaining knowledge thereof. If any Property or
portion thereof is taken in a Condemnation or a transfer in lieu thereof and the
action (i) deprives the Property Owner of 20% or more of the gross leasable area
owned and/or ground leased by the Property Owner at the
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Property, (ii) deprives the affected Property of access to public roads in a
manner that materially and adversely affects the value of the Property taken as
a whole, (iii) permits any Anchor at that Property to terminate its operating
covenant with respect to that Property under the applicable Anchor Documents and
the Anchor does not affirmatively waive its right to terminate the operating
covenant, (iv) constitutes or causes an event of default under the terms of the
mortgage loan then encumbering the Property which the applicable lender is
unwilling to waive or (v) deprives the Property of parking area such that the
Property is no longer in compliance with the parking count requirements of any
of the Anchor Documents in force at the Property or any applicable laws (any
such Condemnation, a "Substantial Condemnation"), and following such occurrence
the Jacobs Parties and the relevant Property Owner are unwilling or unable to
restore the Property to at least as good a condition (including leasable square
footage) as existed on the date of this Agreement (or, in the case of a
reduction in parking area, to at least as good a condition and number of spaces
as is required by the relevant Anchor Documents and applicable law) by the
Principal Closing Date, the Operating Partnership will have the right to decline
to include that Property in the Principal Closing as contemplated in, and
subject to JRI's cure obligations as set forth in Section 6.4 below. If any
Condemnation does not constitute a Substantial Condemnation, then this Agreement
will remain in full force and effect with respect to the affected Property, and
the Operating Partnership will acquire the Interests (or fee and/or leasehold
interests) in that Property on the terms and conditions set forth in this
Agreement and the related Interest Contribution Agreement or Deed Contribution
Agreement, as applicable. If any Condemnation occurs with respect to any
Property and this Agreement is not terminated with respect to that Property, JRI
agrees that it will allow CBL to participate in the negotiations regarding the
settlement of any claim for proceeds resulting from that Condemnation and will
not settle any such claim without obtaining CBL's prior consent, which consent
will not be unreasonably withheld, conditioned or delayed. In addition, JRI
agrees that, without obtaining CBL's prior consent, which consent will not be
unreasonably withheld, conditioned or delayed, it will not make any repairs to,
or otherwise restore, any Property subject to a Condemnation, other than repairs
required to protect the health or safety of any person or property at the
Property and except as required by the terms of any lease, reciprocal easement
or other Anchor agreement, loan document or other agreement to which the
relevant Property Owner is a party or which is otherwise applicable to the
affected Property.
(b) Credit for Distributed Proceeds. If a Condemnation occurs with respect
to a Property and (i) the Condemnation constitutes a Substantial Condemnation
but the Operating Partnership does not decline to accept the Property as
permitted in Section 6.4 or (ii) the Condemnation does not constitute a
Substantial Condemnation, then in either case the Operating Partnership will
acquire the Interests (or, if applicable, the fee and/or leasehold interests) in
that Property on the terms and conditions set forth herein, provided, that, at
the Closing with respect to that Property (or if the Property is a Partial
Property subject to Section 2.1(c), at the ICOA Closing for that Property), the
Operating Partnership will be entitled to a credit against the Consideration
allocable to that Property
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in an amount equal to the Condemnation proceeds, if any, received by the
Property Owner and distributed to the partners or members owning interests in
that Property Owner after the date of this Agreement and prior to that Closing,
and the proceeds of any rent insurance paid in respect of the Condemnation will
be apportioned between the Operating Partnership and the Contributors of that
Property as if the same were rent, as and when received. If the proceeds of any
Condemnation award in respect of any Property are paid directly to any Jacobs
Party or any entity controlled by a Jacobs Party (other than or in addition to
the relevant Property Owner), the Jacobs Party will deliver the proceeds or
cause the proceeds to be delivered (in each case net of any costs of collection)
to the relevant Property Owner for adjustment as contemplated above and in the
relevant Interest Contribution Agreement or Deed Contribution Agreement. The
provisions of this Section 3.3(b) shall survive the Closing with respect to that
Property.
3.4 Destruction or Damage. (a) If any Property or portion thereof is
destroyed or damaged by any casualty in a manner that: (i) deprives the Property
Owner of 20% or more of the gross leasable area owned and/or ground leased by
the Property Owner at the Property, (ii) deprives the affected Property of
access to public roads in a manner that materially and adversely affects the
value of the Property taken as a whole, (iii) permits any Anchor at that
Property to terminate its operating covenant with respect to that Property under
the applicable Anchor Documents and the Anchor does not affirmatively waive its
right to terminate the operating covenant, (iv) constitutes or causes an event
of default under the terms of the mortgage loan then encumbering the Property
which the applicable lender is unwilling to waive or (v) deprives the Property
of parking area such that the Property is no longer in compliance with the
parking count requirements of any of the Anchor Documents in force at the
Property or any applicable laws (any such casualty, a "Substantial Casualty"),
and following such occurrence the Jacobs Parties and the relevant Property Owner
are unwilling or unable to restore the Property to at least as good a condition
(including leasable square footage) as existed on the date of this Agreement
(or, in the case of a reduction in parking area, to at least as good a condition
and number of spaces as is required by the relevant Anchor Documents and
applicable law) by the Principal Closing Date, the Operating Partnership will
have the right to decline to include that Property in the Principal Closing as
contemplated in, and subject to JRI's cure obligations as set forth in Section
6.4 below. If any Substantial Casualty (or any other casualty in respect of
which settlement of the related insurance claim requires a lender's consent)
occurs with respect to any Property and this Agreement is not terminated with
respect to that Property, JRI agrees that it will allow CBL to participate in
the negotiations regarding the settlement of any claim for insurance proceeds
payable in respect of that casualty and will not compromise or settle any such
claim without obtaining CBL's prior consent, which consent will not be
unreasonably withheld, conditioned or delayed. In addition, JRI agrees that,
without obtaining CBL's prior consent, which consent will not be unreasonably
withheld, conditioned or delayed, JRI will not make any repairs to, or otherwise
restore, any Property subject to a casualty described in the immediately
preceding sentence, other than repairs required to protect the health or
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safety of any person or property at the Property and except as required by the
terms of any lease, reciprocal easement or other Anchor agreement, loan document
or other agreement to which the relevant Property Owner is a party or which is
otherwise applicable to the affected Property.
(b) Credit for Distributed Proceeds. If (i) any Substantial Casualty occurs
at a Property and the Operating Partnership does not elect to exclude the
affected Property from the Principal Closing as contemplated in Section 6.4
below, or (ii) damage or destruction occurs at a Property that does not
constitute a Substantial Casualty, then in either case the Operating Partnership
will acquire the Interests (or, if applicable, the fee and/or leasehold
interests) in that Property on the terms and conditions set forth herein,
provided, that, at the Closing with respect to that Property (or, if the
Property is a Partial Property subject to Section 2.1(c), at the ICOA Closing
for that Property), the Operating Partnership will be entitled to a credit
against the Consideration allocable to that Property in an amount equal to the
insurance proceeds, if any, received by the Property Owner and distributed to
the partners or members owning interests in that Property Owner after the date
of this Agreement and prior to that Closing, and the proceeds of any rent
insurance paid in respect of the casualty will be apportioned between the
Operating Partnership and the Contributors of that Property as if the same were
rent, as and when received. If the proceeds of any casualty insurance claim in
respect of any Property are paid directly to any Jacobs Party or any entity
controlled by a Jacobs Party (other than and instead of the relevant Property
Owner), the Jacobs Party will deliver the proceeds or cause the proceeds to be
delivered (in either case net of costs of collection) to the relevant Property
Owner for adjustment as contemplated above and in the relevant Interest
Contribution Agreement or Deed Contribution Agreement and will reimburse CBL, or
cause CBL to be reimbursed, for the amount of any deductibles. The provisions of
this Section 3.4(b) shall survive the Closing with respect to that Property.
3.5 Insurance. JRI shall cause each Property Owner (other than the owner of
Kentucky Oaks Mall, regarding which JRI will use commercially reasonable efforts
to cause the Property Owner) to maintain, or, if applicable, to renew or replace
with comparable coverage, the insurance coverages currently in effect for itself
and its Property through the Closing with respect to such Property (or, if the
Property is a Partial Property subject to Section 2.1(c), the ICOA Closing with
respect to that Property) and will cause Weston Management to maintain, or, if
applicable, to renew or replace with comparable coverage, the insurance
coverages currently in effect with respect to Weston Management through the
Principal Closing.
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ARTICLE IV
COVENANTS
4.1 Agreement to Explore a Potential Alternate Transaction. Notwithstanding
the provisions of Article II above, CBL agrees to cooperate with the Jacobs
Parties in good faith to explore a variation of the transaction contemplated
herein whereby the Operating Partnership would deliver community centers to one
or more of the Property Owners (or their designees) in a tax-free exchange as
part of the Consideration and in lieu of a number of SCUs having equivalent
value; provided, however, that the Operating Partnership will not be required to
participate in any such transaction unless the price for its community centers
and other terms of its involvement are satisfactory to CBL in its sole
discretion, and consummation of such a transaction is not a condition to Closing
(or any ICOA Option Closing). Notwithstanding the foregoing, the Jacobs Parties
acknowledge and agree that CBL also may undertake transactions of the type
contemplated by this Section 4.1 or other transactions with respect to its
community centers with parties other than the Jacobs Parties.
4.2 Amendment to the OP Partnership Agreement. At the Principal Closing,
the Operating Partnership agrees to amend the Operating Partnership's Second
Amended and Restated Agreement of Limited Partnership, dated as of July 30, 1998
(the "OP Partnership Agreement") in the form of the amendment (such amendment,
the "First Amendment"). At each Deferred Closing, the Operating Partnership
agrees to amend the OP Partnership Agreement in a form of amendment to be agreed
between CBL and JRI, acting reasonably.
4.3 Existence. At all times prior to December 1, 2002, each of the REIT and
the Operating Partnership agrees to take all steps within its power to preserve
and continue the corporate existence of the REIT and the partnership existence
of the Operating Partnership.
4.4 Commercially Reasonable Efforts. Each of CBL and each of the Jacobs
Parties agrees to use commercially reasonable efforts to take or cause to be
taken all actions and to do or cause to be done all things necessary or
appropriate to consummate and make effective the transactions contemplated by
this Agreement, the Interest Contribution Agreements, the Deed Contribution
Agreements, if any, and the other agreements being signed concurrently herewith
or pursuant hereto. Each of the Jacobs Parties agrees to use commercially
reasonable efforts to help the Operating Partnership obtain any approvals,
licenses or permits necessary for the acceptance by the Operating Partnership of
the Interests and directly or indirectly the Properties, all at the Operating
Partnership's sole cost and expense.
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4.5 HSR Act Filings. (a) As soon as practicable after the date hereof, CBL
and JRI agree to make such filings, if any, and use commercially reasonable
efforts to obtain such requisite approvals as may be required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
with respect to the consummation of the transactions contemplated by this
Agreement, and shall thereafter file or cause to be filed as promptly as
practicable with the United States Federal Trade Commission and the United
States Department of Justice any supplemental information which may be requested
pursuant to the HSR Act and/or to secure the expiration or early termination of
applicable waiting periods under the HSR Act. Each of JRI and CBL will cause any
filings referred to in this Section 4.5 to comply in all material respects with
the requirements of the respective laws pursuant to which they are made.
(b) Without limiting the generality or effect of Section 4.5(a), if such an
HSR Act filing is required, each of CBL and JRI agrees to (a) use its
commercially reasonable efforts to comply as expeditiously as possible with all
lawful requests of Governmental Authorities for additional information and
documents pursuant to the HSR Act, (b) not extend any waiting period under the
HSR Act or enter into any agreement with any Governmental Authority not to
consummate the transactions contemplated by this Agreement, except with the
prior consent of the other party (or parties) hereto, and (c) cooperate with the
other and use commercially reasonable efforts to cause the lifting or removal of
any temporary restraining order, preliminary injunction or other judicial or
administrative order which may be entered into in connection with the
transactions contemplated by this Agreement, provided, that, neither party shall
be required to divest itself of any assets, and, prior to or after the Principal
Closing, pursue the underlying litigation or administrative proceeding
diligently and in good faith.
4.6 Conduct of Business. (a) With respect to each Jacobs-Managed Property
and its related Property Owner, the Jacobs Parties agree that during the period
from the date hereof to the Closing Date with respect to such Property to the
extent within their control they will:
(i) cause the Property Owner to operate its Property in the ordinary
course and in a manner consistent with its prior practice and in accordance
with the year 2000 business plan for that Property that JRI previously
provided to CBL, as the same may be modified by JRI with CBL's written
consent, which consent will not be unreasonably withheld, conditioned or
delayed (including, without limitation, to continue to perform and complete
the capital expenditures that have been budgeted and scheduled in such
business plan and conduct customary repairs and maintenance) and, in the
case of operations in 2001, in accordance with the year 2001 business plan
for that Property developed by JRI, which 2001 business plan will be
developed as follows: (1) on or before November 15, 2000, JRI will submit
to CBL for approval, which approval will not be unreasonably withheld,
conditioned or delayed, a proposed 2001 business plan
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for each Jacobs-Managed Property prepared in a format and with a level of
detail comparable to the year 2000 business plan referred to above, (2) if
CBL objects to any proposed business plan it will notify JRI of the
objection in writing including an explanation in reasonable detail of each
line item to which it is objecting within thirty (30) days of the date on
which JRI delivers the proposed business plan to CBL (and if CBL fails to
deliver any such objection notice within that period the proposed business
plan will be deemed approved), (3) if CBL delivers an objection notice
meeting the requirements described above, JRI and CBL will cooperate in
good faith to resolve the source of the objection before the end of 2000,
(4) if, despite good faith efforts, JRI and CBL are unable to resolve a
dispute with respect to one or more items in a proposed 2001 business plan,
the Property Owner will operate the Property in accordance with the 2000
business plan and will not make any capital expenditures, other than
capital expenditures required to protect the health or safety of any person
or property at the Property and except as required by the terms of any
lease, reciprocal easement or other Anchor agreement, loan document or
other agreement to which the Property Owner is a party or which is
otherwise applicable to the Property, until the capital expenditure
component of the 2001 business plan or the specific capital expenditure
line item has been approved and (5) if any capital expenditure scheduled on
the 2000 or 2001 business plan to be completed prior to the Closing Date
with respect to the Property is not completed by such Closing Date, the
total Consideration payable by CBL in respect of that Property will be
reduced by an amount equal to the product of (x) the remaining cost to
complete the capital expenditure multiplied by (y) the percentage of the
total interests in the Property Owner being contributed to the Operating
Partnership in connection with the transactions contemplated herein
(assuming that all of the options with respect to the Interests in such
Partial Property Owner are exercised), which reduction will be allocated
between the SCU and cash components of the Consideration as determined by
JRI;
(ii) use commercially reasonable efforts to maintain, for the benefit
of the Operating Partnership following the Closing with respect to such
Property, the goodwill of the Outside Partners and other Persons having
business relations with such Property Owner that could reasonably be
expected to continue following the Closing with respect to that Property;
and
(iii) not (A) modify, amend or supplement any loan documents with
respect to any Continuing Loan (except as permitted or required in this
Agreement), any ground lease with respect to such Property or any
organizational documents of such Property Owner, or authorize or cause such
Property Owner to issue additional interests in such Property Owner, to the
extent it has any control over such actions (except, in the case of such
organizational documents, as may be outlined on Schedule 4.6(iii)(A) or
otherwise necessary in order to implement the transactions contemplated
herein or in the Interest Contribution Agreements or
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Deed Contribution Agreements, if applicable), (B), except as set forth on
Schedule 4.6(iii)(B), sell, transfer, assign, groundlease or otherwise
dispose of, or grant any right or interest in, the Property (other than the
Excluded Outparcels, if any, relating to such Property and other than
leasing activity in the ordinary course of business and in compliance with
the restrictions described below in this Section 4.6) or the Interests in
such Property Owner, or (C) except as set forth on Schedule 4.6(iii)(B),
sell, transfer, assign, groundlease or otherwise dispose of or grant any
right or interest in an Excluded Outparcel for which an option price is
provided on Schedule 1.2(a) hereto, unless JRI first offers CBL the
opportunity to purchase such Excluded Outparcel in the same manner and on
the same terms as would have applied if such Excluded Outparcel were
subject to an OP Option Agreement with the Closing to be conditioned on and
occur concurrently with the Closing (or, if applicable, the ICOA Closing)
for the related Property, and if the Master Contribution Agreement is
terminated with respect to such related Property then CBL's right and
obligation to buy such Excluded Outparcel shall also terminate without
penalty, and provided that CBL shall not be obligated for any expenses with
respect to such Excluded Outparcel prior to the Closing Date with respect
to such Excluded Outparcel;
(iv) not (x) authorize or cause the related Property Owner to incur
any additional indebtedness for borrowed money, (y) grant any additional
liens on the Property or Interests in the related Property Owner that will
encumber the Property or the Interests in such Property Owner following the
Closing with respect to such Property (other than Permitted Exceptions) or
(z) authorize or cause such Property Owner to enter into any equipment
lease that will continue to encumber the Property following the Closing
with respect to such Property (unless the equipment lease is on
commercially reasonable terms and either (1) will not require total
payments in excess of $150,000 per annum and is terminable by the Property
Owner without penalty on one year's notice or less or (2) is terminable by
the Property Owner without penalty on ninety (90) days' notice or less), in
each case except as permitted by Sections 1.1(b) and 4.22 hereof;
(v) not, in each case without the prior written consent of the
Operating Partnership, which consent will not be unreasonably withheld,
conditioned or delayed and will be deemed to have been given if the
Operating Partnership fails to approve or disapprove any such action within
three (3) Business Days following JRI's written request therefor: (1) enter
into any new Anchor Document, (2) amend, modify, or cancel any lease or
Anchor Document, (3) grant any consents under, or waive any provisions of,
any lease or Anchor Document or (4) institute litigation or eviction
proceedings against any Anchor;
(vi) not authorize, cause or permit the Property Owner of such
Property to enter into any lease except pursuant to the following
procedures:
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(1) before finalizing any lease, JRI will submit a Jacobs Group Lease Deal
Sheet for the lease in the form attached hereto as Exhibit T (a "Lease Term
Sheet"), containing the terms of the lease to CBL for its approval, which
approval will not be unreasonably withheld, conditioned or delayed, (2)
upon receipt of the completed Lease Term Sheet for a proposed lease, CBL
will notify JRI promptly and in any event within three (3) Business Days of
receipt thereof (or, in the event that CBL requests additional information
of a commercially reasonable nature regarding a proposed lease during that
initial period, within three (3) Business Days of receipt by CBL of such
additional information) of any objection CBL may have to any of the terms
of the lease (and any failure to respond in writing within such three (3)
Business Day period will be deemed approval) and (3) once CBL has approved
or been deemed to have approved the Lease Term Sheet for a proposed lease,
the Jacobs Parties will be fully entitled to cause the relevant Property
Owner to enter into the proposed lease on the terms outlined in the
approved Lease Term Sheet, provided, that, except as outlined in the Lease
Term Sheet the lease will be on the standard form then being used by that
Property Owner (or such alternative standard form as was included with the
Lease Term Sheet submitted to CBL as described above); CBL hereby confirms
that it has already approved the Lease Term Sheets for the potential leases
listed on Schedule 4.6(vi);
(vii) not authorize, cause or permit the related Property Owner to
enter into (1) any contract or other agreement with any of its affiliates
that is not on arms' length terms, (2) any employment agreement or (3) any
other contract or agreement (including a renewal of an existing agreement)
unless that contract or agreement (x) will not require total payments in
excess of $150,000 per annum and is terminable by the Property Owner
without penalty on one year's notice or less or (y) is terminable by the
Property Owner without penalty on ninety (90) days' notice or less (or
unless it is an agreement implementing the transactions contemplated by
this Agreement, an agreement that will expire or be terminated at or before
the Closing with respect to the applicable Property or an agreement
consented to by CBL in writing);
(viii) cause the related Property Owner to allow CBL's representatives
to be present at such entity's weekly internal leasing meetings so that CBL
can stay abreast of that entity's leasing activity, maintain an open line
of communication between CBL and JRI and facilitate and expedite JRI's
ability to obtain any approvals or consents from CBL contemplated in this
Agreement. CBL and JRI also agree to establish transition teams that will
begin meeting as soon as possible to coordinate CBL's efforts to develop
the necessary personnel, policies and procedures it will need to assume
full operation of each of the Properties and to identify and resolve any
administrative issues that may arise in the transition process.
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(b) The parties hereby agree that the REIT and JRI may mutually agree to
modify the terms of Section 4.6(a), and that any such modification shall be
effective against all parties if evidenced in writing signed by both the REIT
and JRI.
4.7 Registration Rights Agreement. At the Principal Closing, the REIT
agrees to enter into and deliver a registration rights agreement, in the form
attached hereto as Exhibit H-1 (the "Registration Rights Agreement") with and
for the benefit of each of the Persons receiving or entitled to receive any SCUs
as a result of the contributions contemplated by this Agreement, the Interest
Contribution Agreements and any Deed Contribution Agreements. At each Deferred
Closing the REIT will enter into and deliver an addendum to the Registration
Rights Agreement in the form attached hereto as Exhibit H-2.
4.8 Voting and Standstill Agreement. Concurrently with the execution of
this Agreement, CBL and the Jacobs Parties agree to execute the Voting and
Standstill Agreement in the form attached hereto as Exhibit I (the "Voting and
Standstill Agreement"), CBL agrees to cause each of the CBL Principals (as
defined in the Voting and Standstill Agreement) to execute the Voting and
Standstill Agreement and JRI agrees to cause Martin J. Cleary to execute the
Voting and Standstill Agreement.
4.9 Department Store Issues. JRI agrees to use commercially reasonable
efforts to accomplish the actions outlined on Schedule 4.9 with respect to the
Properties and Anchors identified on such schedule; provided, that, JRI's
ability to accomplish the foregoing actions will not be a condition precedent to
CBL's obligations to close with respect to such Properties.
4.10 Amendment to Rights Agreement. At or prior to the Principal Closing
Date, the REIT agrees to amend the Rights Agreement dated April 30, 1999 between
the REIT and SunTrust Bank, as successor to BankBoston, N.A. (the "Rights
Agreement") in form and substance reasonably acceptable to JRI to provide that
the term "Acquiring Person" as defined therein does not include the Jacobs Group
or any of its members unless such Person Beneficially Owns or Constructively
Owns REIT Stock in excess of the Jacobs Permitted Ownership Amount (as defined
in the Share Ownership Agreement to be entered into at such Closing as
contemplated in Section 4.15 and Schedule 4.15(b)-1 or Schedule 4.15(b)-2, as
applicable). The REIT agrees that, until termination of the Share Ownership
Agreement in accordance with Article VIII thereof, the Rights Agreement will not
be further amended in any manner that would impair the benefit to the Jacobs
Group and any of its members of the amendment required in the immediately
preceding sentence without, in any such case, the prior written consent of JRI
on behalf of the Jacobs Group and its members. For purposes of this Section and
the amendment to the Rights Agreement, the terms "Beneficially Own,"
Constructively Own" and "Share Ownership Agreement" shall be as defined in
accordance with the definitions in Schedule 4.15(b)-1 and/or Schedule 4.15(b)-2,
as applicable. For purposes of this
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Section and the amendment to the Rights Agreement, the term "Jacobs Group" shall
be defined in accordance with the definitions in Schedules 4.15(b)-1 and/or
4.15(b)-2, as applicable, except that such term shall not be deemed to include
any entity unless (i) at least 51% of the economic interests in such entity are
beneficially owned (as that term is defined in Rule 13d-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934) by
one or more Jacobs Family Members, and (ii) such entity is controlled
exclusively by one or more Jacobs Family Members, provided, however, that each
of the Richard E. Jacobs Revocable Living Trust and the David H. Jacobs Marital
Trust shall be deemed to be a member of the Jacobs Group so long as it satisfies
the conditions of clause (i) above regardless of how it is controlled. For
purposes of this Section, the term "Jacobs Family Member" shall mean each of
Richard E. Jacobs, any spouse or lineal descendant of Richard E. Jacobs or David
H. Jacobs, and any spouse or lineal descendant of any of the foregoing.
4.11 Jacobs Employees. At and effective as of the Closing with respect to
any Property, the Jacobs Parties agree to cause the Property Owner of each 100%
Property and each Partial Property controlled by any of them to terminate all
mall managers, leasing directors and other employees located at the Property or
Properties owned by it (such persons, the "Mall Employees") and JRI will pay all
severance payments, if any, due in connection with the employee terminations
referred to in this Section. At the Closing with respect to any Property, the
Operating Partnership agrees that it will offer employment to substantially all
of the Mall Employees who are managers, assistant managers and/or marketing
directors for base salaries and benefits comparable to the base salaries and
benefits being earned by persons employed by CBL and/or its affiliates in
comparable positions at regional malls owned directly or indirectly by CBL in
comparable markets. The foregoing covenant is made to and solely for the benefit
of the Jacobs Parties, and no Mall Employee is entitled or shall be deemed to be
entitled to make any claim against CBL or any of its affiliates, or any other
Person based on this paragraph or any other provision of this Agreement.
4.12 Limitation on Actions by CBL. During the period from the date hereof
to the Principal Closing, without JRI's prior written consent each of the REIT
and the Operating Partnership agrees that it will not participate in any merger
or other business combination in which it is not the surviving entity, and the
REIT and the Operating Partnership together agree that, except as necessary to
consummate the transactions contemplated in this Agreement (it being agreed that
the value of any securities issued to raise funding to effect the transactions
contemplated by this Agreement, including, without limitation, the SCUs to be
issued to the Contributors, will be excluded when determining compliance with
this Section 4.12), they will refrain from acquiring or selling, or committing
to acquire or sell, assets (including by merger or other business combination)
having gross value of $750 million or more or net value of $375 million or more,
or issuing preferred equity and/or incurring any additional indebtedness
(excluding any refinancing of existing debt to the extent that the refinancing
proceeds do not exceed the
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principal amount being refinanced) in excess of $375 million in the aggregate;
provided, however, that if JRI is unwilling to consent to any such prohibited
transaction, CBL will notify JRI of its determination to proceed and the reasons
therefor and, upon receipt of such notice, JRI will have the right to either
waive its initial objection or terminate this Agreement (together with its
rights and obligations under any of the other agreements or other documents
relating to this Agreement) by delivering written notice of termination to CBL.
If JRI exercises this right to terminate, CBL agrees that it will pay JRI an
Expense Reimbursement in the same amount that CBL would have been required to
pay to JRI if at that time CBL were electing to terminate the Agreement pursuant
to Section 10.1. This Section 4.12 shall not be deemed to limit in any way the
issuance by the REIT of common stock upon the exercise by any holder of Common
Units of its exchange rights pursuant to the OP Partnership Agreement. In
addition, during the period from the date hereof through the Principal Closing
Date, the Operating Partnership will not, in any transaction involving assets
with a net value of $100 million or more, issue or sell any Common Units or any
instrument convertible into Common Units for consideration less than the fair
value of such Common Units, with matters of value being determined in each such
case by the board of directors of the REIT, in consultation with the Operating
Partnership's professional advisers, and under no circumstances will the
Operating Partnership declare any Common Unit dividend, Common Unit split,
Common Unit distribution or the like unless fair and equitable arrangements are
provided, to the extent necessary, to fully adjust, and to avoid any dilution
in, the rights or value of the SCUs to be delivered as part of the
Consideration.
4.13 Expenses. Each party agrees to pay its own expenses (including the
fees and expenses of its own attorneys, accountants and other advisers) in
connection with its due diligence activities, negotiating this Agreement and any
related agreements, obtaining any required approvals and otherwise preparing for
the Principal Closing, any Deferred Closing or any ICOA Option Closing. In
addition, CBL agrees to reimburse the Jacobs Parties in an amount equal to the
lesser of (x) $1 million and (y) 50% of the aggregate transfer and recording
taxes, title insurance premiums, survey costs, filing fees (including any filing
fees incurred in connection with any filings made pursuant to the HSR Act) and
expenses, and other similar closing expenses arising in connection with the
contributions contemplated by this Agreement (other than expenses relating to
the items described in the next sentence), it being understood that (i) the
costs and expenses arising in connection with any ICOA Option Closing or
Deferred Closing will be viewed on a cumulative basis for determining the amount
CBL is required to pay pursuant to this sentence and (ii) JRI will pay the
remainder of any such expenses. Notwithstanding the foregoing, CBL shall
reimburse the Jacobs Parties for 100% of the costs of any endorsements,
affirmative coverages and reinsurance agreements (other than endorsements or
affirmative coverages that are obtained by JRI to Remove any Subsequent Title
Objections, the cost of which shall be included in clause (y) of the preceding
sentence) that CBL may request and that are not provided for in the Commitments,
and none of the Jacobs Parties shall be responsible for any portion of such
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expenses; it being understood that any amounts required to be paid by CBL
pursuant to this sentence shall be in addition to any amounts required to be
paid by CBL pursuant to the preceding sentence. The parties agree to cooperate
with one another to prepare and file with the relevant authorities all transfer
tax returns, affidavits and other similar instruments, if any, required in
connection with the payment of the foregoing expenses.
4.14 Partner Consents. (a) JRI agrees to use commercially reasonable
efforts to obtain, prior to the Closing with respect to any Property, each of
the Outside Partner consents with respect to such Property set forth on Exhibit
R (each, a "Partner Consent").
(b) As soon as practicable after the date hereof, JRI and CBL agree to
cooperate and prepare the documentation for use by JRI in soliciting the
Associates and Outside Partners to contribute their respective Interests as
contemplated in this Agreement, which documentation shall be mutually agreed to
by CBL and JRI, such approval not to be unreasonably withheld by either party
(such documentation, as amended from time to time as necessary or appropriate,
the "Consent Solicitation Documentation"); JRI agrees to use commercially
reasonable efforts to deliver or cause to be delivered such Consent Solicitation
Documentation to the Associates and to the Outside Partners set forth on
Schedule 2.1(b)(ii) hereto desiring to participate in the transactions described
herein, with respect to the Properties identified on such schedule. Each of JRI,
on the one hand, and CBL, on the other hand, represents that the information
provided by it for inclusion in the Consent Solicitation Documentation and each
amendment or supplement thereto, at the time of transmittal thereof to an
Associate or Outside Partner, will not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. JRI and CBL agree to cooperate to cause the
Consent Solicitation Documentation to comply in all material respects with all
applicable requirements of law including applicable securities laws. Whenever
JRI or CBL becomes aware that an event has occurred that is required to be set
forth in an amendment or supplement to the Consent Solicitation Documentation,
JRI on the one hand, and CBL on the other hand, shall promptly inform the other
of the occurrence of such event, and thereafter they will cooperate in causing
the delivery to the Associates and Outside Partners desiring to participate in
the transactions described herein, the required amendment or supplement. In the
Consent Solicitation Documentation, JRI will (i) disclose that it (and not CBL)
determined the allocation of the Consideration among the various Properties and
Weston Management as well as among the partners or members of each Property
Owner, (ii) state that in its opinion the price and terms of the proposed
transaction are fair to the Associates with respect to each Property and the
management and leasing activities relating thereto and (iii) recommend that each
Associate consent to the proposed transaction and agree to contribute its
Interests to a New Entity or the Operating Partnership (or its designee), as
applicable.
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4.15 Stockholder Approval. (a) As soon as practicable after the date
hereof, CBL and JRI agree to cooperate to prepare (and JRI agrees to provide to
CBL the information regarding the Properties and Weston Management required to
be included therein) and CBL agrees that it will file with the SEC a proxy
statement with respect to the meeting of the stockholders of the REIT in
connection with the issuance of the SCUs as contemplated herein (the "Proxy
Statement"), which shall be mutually agreed to by CBL and JRI, such approval not
to be unreasonably withheld by either party. The parties agree to cooperate and
promptly prepare and file with the SEC as soon as practicable any other filings
required under the Exchange Act (the "Additional Filings") to facilitate
obtaining the consents sought in the Proxy Statement. Each of JRI, on the one
hand, and CBL, on the other hand, agrees that the information provided by it for
inclusion in the Proxy Statement, the Additional Filings, and each amendment or
supplement thereto, at the time of filing and mailing thereof and at the time of
the REIT Stockholders Meeting in respect of the matters addressed in the Proxy
Statement, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. CBL will use commercially reasonable efforts, and JRI will
cooperate with CBL in that regard, to (i) file a preliminary Proxy Statement
with the SEC and (ii) cause the Proxy Statement to be mailed to the REIT's
stockholders, in each case, as promptly as practicable (including clearing the
Proxy Statement with the SEC); provided, however, that CBL will not be required
to mail the Proxy Statement to the REIT's stockholders until the later of (x)
expiry of the Initial Period and (y) JRI has advised CBL in writing that JRI has
received consent from TIAA to the transactions contemplated by this Agreement.
CBL will notify JRI promptly of the receipt of any comments from the SEC and of
any request by the SEC for amendments or supplements to the Proxy Statement or
the Additional Filings or for additional information and will supply JRI with
copies of all correspondence between such party or any of its representatives
and the SEC, with respect to the Proxy Statement or the Additional Filings. CBL
and JRI agree to cooperate to cause the Proxy Statement and any Additional
Filings to comply in all material respects with all applicable requirements of
law. Whenever any event has occurred that is required to be set forth in an
amendment or supplement to the Proxy Statement or the Additional Filings, CBL on
the one hand, and JRI on the other hand, will promptly inform the other of such
occurrence and thereafter the parties will cooperate in filing with the SEC
and/or mailing to the stockholders of the REIT such amendment or supplement to
the Proxy Statement and/or the Additional Filing.
(b) The REIT agrees to duly call, give notice of, convene and hold a
meeting of its stockholders (the "REIT Stockholders Meeting"), such meeting to
be held at the REIT's election, but in any event no sooner than twenty (20)
Business Days nor later than forty-five (45) days following the date the Proxy
Statement is mailed to the REIT's stockholders, for the purpose of obtaining the
approval of the REIT's stockholders to (i) the issuance of the SCUs as
contemplated in this Agreement (the "SCU Issuance Proposal"), and (ii) the
amendments to the REIT's certificate of incorporation set
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forth on Schedule 4.15(b)-1 (the "Share Ownership Limitation Amendments"). The
REIT covenants and agrees to affirmatively recommend that its stockholders
approve the SCU Issuance Proposal and the Share Ownership Limitation Amendments
and provide any other approvals necessary to facilitate the transactions
contemplated herein, all in accordance with the terms of the Voting and
Standstill Agreement being entered into concurrently herewith. For the avoidance
of doubt, if the REIT or its board of directors does not affirmatively recommend
the SCU Issuance Proposal or the Share Ownership Limitation Amendments to its
stockholders in the Proxy Statement and at the REIT Stockholders Meeting, or if
at any time the REIT or its board of directors withdraws that recommendation or
recommends against either such proposal, whether for reasons of fiduciary duty
or otherwise, the same will constitute a material default by CBL under this
Agreement and will entitle JRI to terminate this Agreement and receive the $15
million Expense Reimbursement as provided in Section 10.2. The REIT agrees to
use commercially reasonable efforts (including the retention of proxy
solicitors) to ensure that all such approvals are obtained at the REIT
Stockholders Meeting. The REIT further agrees that if the REIT's stockholders
approve the SCU Issuance Proposal, but do not approve the Share Ownership
Limitation Amendments at the REIT Stockholders Meeting, then at or before the
Principal Closing the REIT's board of directors will instead adopt the
resolution set forth on Schedule 4.15(b)-2 (the "REIT Board Resolution") and
will make such corresponding modifications to the Ownership Limits (as defined
in the REIT's certificate of incorporation) as are necessary to implement the
provisions set forth in the REIT Board Resolution. In addition, in such event
the REIT agrees that it will, through its board of directors, re-submit and
recommend the Share Ownership Limitation Amendments to its stockholders for
approval at each of the next three annual meetings of the REIT's stockholders
following the REIT Stockholders Meeting, and will in each such instance use
commercially reasonable efforts (including the retention of proxy solicitors) to
obtain the requisite shareholder vote to approve the Share Ownership Limitation
Amendments.
(c) If, on the date for the REIT Stockholders Meeting established pursuant
to Section 4.15(b), the REIT has not received duly executed proxies which, when
added to the number of votes represented in person at the meeting by Persons who
intend to vote in favor of the SCU Issuance Proposal, will constitute a
sufficient number of votes to adopt such proposal (but less than a majority of
the outstanding REIT Stock have indicated their intention to vote against, or
have submitted duly executed proxies voting against, each such proposal), then
the REIT agrees to recommend the adjournment of the REIT Stockholders Meeting
until the date not more than ten (10) days after the originally scheduled date
of the REIT Stockholders Meeting to enable the REIT to take further action to
solicit the proxies and affirmative votes required for approval of such
proposal.
4.16 Tax Treatment. (a) Each of the REIT and the Operating Partnership
agrees to cooperate with, and to use commercially reasonable efforts to assist,
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the Contributors to ensure that the contributions of Interests and/or the
Properties to the Operating Partnership (whether by contribution, merger or
otherwise) do not result in the recognition of any taxable income or gain, or in
tax terminations under Section 708(b)(1)(B) of the Code or other adverse
consequences, for federal income tax purposes to the direct and indirect
contributors thereof. Each of the REIT and the Operating Partnership covenants
that any entity other than the Operating Partnership to which the Operating
Partnership requests contributions be made pursuant to the provisions of Section
1.1 hereof (other than contributions with respect to interests in Weston
Management) will be an entity whose separate existence from the Operating
Partnership is disregarded for federal income tax purposes at the time of the
relevant contribution.
(b) The REIT and the Operating Partnership agree that they will act for
federal and state income tax purposes, including with respect to filing tax
returns or taking other actions relating to tax matters in a manner consistent
with (i) the allocation of Consideration among the direct and indirect interests
in the Properties, the Cary Note and Weston Management established pursuant to
Section 2.1(a) hereof, (ii) the treatment of the portion of the cash
Consideration so designated by JRI as reimbursements of preformation
expenditures within the meaning of Treasury Regulations Section 1.707-4(d),
(iii) the treatment of the assets of Weston Management as goodwill for federal
income tax purposes and (iv) the allocation of depreciation or amortization
attributable to an adjustment to the fair market value under Section 743 of the
Code of the federal income tax basis of the Operating Partnership assets
(including adjustments made prior to the contribution of the relevant assets to
the Operating Partnership) to the direct or indirect partner, or such partner's
successor, the transfer of whose direct or indirect interest gave rise to the
adjustments, except to the extent that such allocations would not be valid as a
result of a change in tax law occurring after the date hereof. The REIT and the
Operating Partnership agree that for tax purposes they will treat the Operating
Partnership as not having acquired beneficial ownership of, and as having
acquired only the legal title to, any direct or indirect interest in any
Excluded Outparcel subject to a JRI Option Agreement as to which JRI exercises
the rights provided in the JRI Option Agreement.
(c) The REIT and the Operating Partnership agree that throughout the
Protection Period (i) they will take all commercially reasonable efforts to
ensure that the Operating Partnership is not treated, as a "publicly traded
partnership" as that term is used in Section 7704(b) of the Code (a "PTP"), (ii)
the "Rights" (as that term is defined in the OP Partnership Agreement)
associated with the OP Units outstanding as of the date of this Agreement will
not be amended unless the REIT and the Operating Partnership receive an opinion
of nationally recognized independent tax counsel (an "Opinion of Counsel") to
the effect that exercises of the Rights as amended will not cause the Operating
Partnership to be treated as a PTP, (iii) OP Units issued by the Operating
Partnership after the date of this Agreement other than in connection with the
transactions provided for in this Agreement ("New Units") will not have terms
with respect to exchanges for REIT shares
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or cash ("Exchange Rights") that differ from the terms associated with the OP
Units outstanding as of the date of this Agreement unless the REIT and the
Operating Partnership have received an Opinion of Counsel to the effect that the
exercise of the exchange features of the New Units by holders thereof will not
cause the Operating Partnership to be treated as a PTP, (iv) neither the REIT
nor the Operating Partnership will waive any restrictions with respect to the
exercise of any Right or Exchange Right unless the waiver is with respect to
either (a) a transaction that qualifies as a "private transfer" described in
Treasury Regulations ss. 1.7704-1(e), or (b) a transaction with respect to which
the REIT and the Operating Partnership have received an Opinion of Counsel
concluding that the transaction will not cause the Operating Partnership to be
treated as a PTP, (v) the Operating Partnership will not allow a transfer of OP
Units other than pursuant to an exercise of Rights or Exchange Rights (a "Unit
Transfer") unless either (a) the Unit Transfer qualifies as a "private transfer"
described in Treasury Regulations ss. 1.7704-1(e), (b) the REIT and the
Operating Partnership have received an Opinion of Counsel to the effect that the
Unit Transfer will not cause the Operating Partnership to be treated as a PTP or
(c) the transfer occurs within twelve (12) months of the death of a person that
held a direct or indirect interest in the OP Units at the time of death,
provided that the transferor may not make more than two transfers under this
clause (c) that are not described in clause (a) during such twelve (12) month
period and (vi) to the extent that an Opinion of Counsel received by the
Operating Partnership in connection with the requirements of this Section
4.16(c) is based upon assumptions regarding subsequent transfers of interests in
the Operating Partnership, whether pursuant to Rights, Exchange Rights or
otherwise, the Operating Partnership will not permit transfers other than in
accordance with such assumptions unless the Operating Partnership obtains a new
Opinion of Counsel to the same effect as the original Opinion of Counsel, taking
into account the variations from such assumptions.
4.17 Estoppel Certificates. Commencing promptly after the date hereof, JRI
agrees to prepare and deliver to (i) each major department store or other
so-called "anchor" listed on Schedule 4.17-1 (the "Anchors") at each
Jacobs-Managed Property, an estoppel certificate in the form attached hereto as
Schedule 4.17-2 and/or Schedule 4.17-6, as applicable, or with respect to any
Anchor such other form as is currently in use by the Anchor in other similar
circumstances, (ii) each tenant at each Jacobs-Managed Property that is a party
to a lease conveying the right to occupy more than 2,000 square feet of gross
leasable area, an estoppel certificate in the appropriate form attached hereto
as Schedule 4.17-2, (iii) each landlord under a ground lease pursuant to which
any Property Owner has access to space at any Property that is listed on
Schedule 4.17-3 (each such landlord, a "Ground Lessor"), an estoppel certificate
in the form attached hereto as Schedule 4.17-4, or, with respect to any
particular Ground Lessor, such other form as is currently in use by the Ground
Lessor in other similar circumstances (so long as the form is adequate to enable
the Title Company to deliver the coverage contemplated in the Commitments), (iv)
to the extent not covered above, each entity identified on Schedule 4.17-5 that
is a party to a so-called "reciprocal easement agreement" encumbering and or
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benefitting any Jacobs-Managed Property, an estoppel certificate in the form
attached hereto as Schedule 4.17-6 or in the form as is currently in use by such
entity in other similar circumstances, (v) each lender of a Continuing Loan
secured by a Jacobs-Managed Property, an estoppel certificate in the form
attached hereto as Schedule 4.17-7, and (vi) each Outside Partner that owns an
interest in the Property Owner of a Jacobs-Managed Property, an estoppel
certificate in the form attached hereto as Schedule 4.17-8, (each such estoppel
certificate, an "Estoppel Certificate"), in each case completed to reflect the
relevant terms of the lease, ground lease, reciprocal easement agreement, loan
documents or organizational documents to which it relates. JRI agrees to use
commercially reasonable efforts, but without being required to incur any
material expense (other than the administrative expense customarily incurred in
preparing, distributing and collecting such certificates), to obtain signed
Estoppel Certificates from each of the above-referenced tenants, landlords,
parties, lenders and partners on or before the applicable Closing Dates;
provided, however, that, in the case of the Ground Lessor estoppels, if a
different form of estoppel certificate is attached to or otherwise prescribed in
a particular ground lease document or is currently in use by the Ground Lessor
in other similar circumstances that form will be deemed to be acceptable to CBL
in the event that any Ground Lessor is unwilling to sign the relevant Estoppel
Certificate in the form attached hereto, so long as, in either case, the form is
adequate to enable the Title Company to deliver the coverage contemplated in the
Commitments; and provided, further, that JRI will not be required to deliver an
Estoppel Certificate to (a) any lender until JRI has received a consent from
such lender in substantially the form of Exhibit Q hereto and (b) any Outside
Partner until JRI has received the consents outlined on Exhibit R from such
Outside Partner. CBL acknowledges that (i) JRI's only obligations under the
foregoing provisions of this Section 4.17 are to prepare and deliver the
Estoppel Certificates as described above, to employ commercially reasonable
efforts as described above, and to obtain a completed Estoppel Certificate from
each Ground Lessor, (ii) except as set forth in clause (i) above with respect to
the Ground Lessor estoppels, the failure to obtain any completed Estoppel
Certificates will not give rise to a failure of a condition precedent to Closing
and (iii) no new information revealed in any such Estoppel Certificate will give
CBL any right of termination hereunder or other rights hereunder except as
specifically set forth in Article VII hereof. JRI hereby agrees to give CBL such
information from JRI's database as is necessary to enable CBL to prepare and
deliver Estoppel Certificates in the form attached hereto as Schedule 4.17-2 to
each tenant at the Jacobs-Managed Properties that is a party to a lease
conveying the right to occupy 2,000 or fewer square feet of gross leasable area
and to cooperate with CBL in processing the same.
4.18 Reservation of REIT Stock.The REIT agrees that commencing on or prior
to the Principal Closing and at all times thereafter it will reserve and keep
available, free from preemptive rights, out of its authorized but unissued
common stock, solely for the purpose of issuance upon conversion or exchange of
SCUs or Common Units received upon exchange of the SCUs, the full number of
shares of REIT Stock then
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deliverable upon conversion or exchange of all of the SCUs (and Common Units
received upon exchange of the SCUs, if any) then outstanding. The REIT covenants
and agrees that at or prior to the Principal Closing it will obtain all
consents, approvals, authorizations, orders, registrations, clearances and
qualifications of any Governmental Authority or body or stock exchange
authorities for the issuance of the REIT Stock issuable upon conversion of the
SCUs and that it will maintain all such consents, approvals, authorizations,
orders registrations, clearances and qualifications for the issuance of the REIT
Stock issuable upon conversion or exchange of the SCUs.
4.19 Assumption of Guaranties. At the Closing with respect to any Property,
the Operating Partnership agrees to assume all obligations of each of the Jacobs
Parties, each Associate, each Outside Partner that contributes interests in any
Property Owner to the Operating Partnership, and any affiliates of any of the
foregoing (each such Person, a "Guarantor") accruing from and after such Closing
Date pursuant to each guaranty and other indemnity agreement identified on
Schedule 4.19 with respect to such Property and each other guaranty and/or
indemnity agreement entered into by any of them in connection with any New Loan
entered into as contemplated, and subject to the limitations, in Section 1.1(b),
to the extent the same do not constitute Excluded Liabilities (each, a
"Continuing Loan Guaranty") on such terms and pursuant to such documentation as
the lender or other beneficiary thereof may reasonably require. CBL also agrees
to use commercially reasonable efforts to cooperate with the efforts of the
Jacobs Parties to cause the lender of each Continuing Loan and each New Loan to
fully release and discharge each Guarantor from all obligations under each
Continuing Loan Guaranty to which it is a party or by which it is bound,
including by executing documents reasonably requested by the lenders, so long as
the same do not expand the scope of CBL's obligations under this Agreement or
expand CBL's obligations under such Continuing Loan Guaranty beyond those of the
Guarantor, and, if any lender is unwilling to release and discharge any
Guarantor from any Continuing Loan Guaranty, CBL agrees to indemnify the
Guarantor against any liability under that Continuing Loan Guaranty based on a
matter accruing from and after such Closing Date pursuant to an indemnity
agreement in the form of Exhibit J hereto. CBL and JRI agree to cooperate and
use commercially reasonable efforts to include in the terms of any assumption of
a Continuing Loan Guaranty a provision to the effect that the general partner of
the Operating Partnership is expressly exculpated from any liability under any
such Continuing Loan Guaranty.
4.20 Non-Competition Agreement. At the Principal Closing, JRI agrees to
cause Richard E. Jacobs to enter into and deliver a non-competition agreement in
the form attached hereto as Exhibit K (the "Non-Competition Agreement") with and
for the benefit of the Operating Partnership.
4.21 Randolph Mall. JRI agrees to take such steps as are commercially
reasonable to cause the Property Owner of Randolph Mall to defease the principal
balance
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of the Capital America financing secured by Randolph Mall. In addition, if,
following such defeasance, JRI is unable to transfer responsibility for the
defeased loan to another JRI affiliate in a manner that terminates the loan as a
liability of JG Randolph LLC or any then owner of Randolph Mall (including,
without limitation, for purposes of GAAP as determined by CBL's independent
auditors, acting reasonably), then JRI will cause JG Randolph LLC to contribute
its interests in Randolph Mall to the Operating Partnership by way of a deed
transfer pursuant to a Deed Contribution Agreement in the same manner as
contemplated in Section 1.1(a)(i) above.
4.22 Refinancings. (a) JRI agrees to use commercially reasonable efforts to
(i) cause the mortgage encumbering Cary Towne Center to be refinanced prior to
the Closing with respect to Cary Towne Center on the terms set forth in the term
sheet with CIGNA Investments, Inc. ("CIGNA") dated May 9, 2000, (ii) obtain
CIGNA's consent to the transactions contemplated by this Agreement and (iii)
obtain Belk's consent to the related mortgage in favor of CIGNA to the extent
that it encumbers the fee interest under Belk's leasehold interest. JRI will pay
all of its own, the borrowing Property Owner's and, to the extent required, the
lender's costs incurred in connection with the refinancing described in this
Section 4.22(a).
(b) JRI agrees to use commercially reasonable efforts, and CBL agrees to
cooperate with and to use commercially reasonably efforts to assist Jacobs in
its efforts, to extend the maturity date of the existing loan secured by Fayette
Mall to a date that is at least ninety (90) days and not more than one hundred
and eighty (180) days following the last permitted Subsequent Scheduled
Principal Closing Date (as provided in Section 6.1(b)) without any other
material change in the terms of the loan and to extend the maturity date of the
existing loan secured by Eastgate Mall to a date that is at least ninety (90)
and not more than one hundred and eighty (180) days following the Closing Date
for that Property. In the event that JRI is unable to obtain either such
extension, JRI will be responsible for refinancing the indebtedness presently
secured by Fayette Mall or Eastgate Mall, as applicable. Any such refinancing
will be on a short-term basis and the principal economic terms and the other
terms and conditions (including without limitation the transfer restrictions,
recourse provisions and financial covenants) of any such refinancing will be
consistent with the requirements of a New Loan as described in clause (G) of
Section 1.1(b)(iii) and will be subject to CBL's prior written consent, which
consent will not be unreasonably withheld, conditioned or delayed. For
clarification, CBL will not be entitled to disapprove any such term or condition
if at the time of the refinancing the lender's requirement of that term or
condition is consistent with the practice of lenders making loans of comparable
size and with comparable security in the mortgage financing market generally.
JRI will pay all of its own, the borrowing Property Owner's and, to the extent
required, the lender's costs in connection with extending or refinancing the
loans secured by Eastgate Mall and Fayette Mall as described above. In the event
that the Closing with respect to either such Property occurs before the closing
of such extension or refinancing, JRI will make arrangements for such extension
or refinancing to be made
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available to CBL. If the interest rate for any such refinancing for either of
Fayette Mall or Eastgate Mall differs from the rate for the financings presently
secured by these Properties, the change will not result in any change to the
Consideration payable in respect of that Property. In addition, if the net
refinancing proceeds from either Property exceeds or is less than the principal
amount of the financing presently secured by that Property, the Consideration
payable in respect of that Property will be adjusted as set forth in clauses
(C), (D) and (E) of Section 1.1(b)(iii), except that if the net reduction in
principal balance after these two refinancings below the combined principal
balance of the loans securing Eastgate Mall and Fayette Mall just before the
refinancings is more than $5 million, the excess above $5 million will be paid
by CBL in the form of a promissory note in the manner described in clause (E) of
Section 1.1(b)(iii).
4.23 Resignation of Officers. At or prior to the Closing with respect to
any Property being contributed by means of an interest transfer, JRI agrees to
cause (i) Richard E. Jacobs to resign as manager from the related Property Owner
if he currently serves as manager of such Property Owner, (ii) Richard E.
Jacobs, each affiliate or family member of Richard E. Jacobs and each Associate
or affiliate of an Associate that is then an officer of the related Property
Owner to resign from such position, and (iii) the related Property Owner, if it
is controlled by the Jacobs Parties, to change the signatories on such Property
Owner's bank accounts to such individuals as may be so designated in writing by
CBL.
4.24 No Solicitation. Each Jacobs Party agrees that it will not, directly
or indirectly, and it will not authorize or direct any of its representatives
to, solicit or negotiate to sell or otherwise dispose of, or deliver non-public
information designed to facilitate a potential bid to acquire, any Property or
any direct or indirect interest in any Property in any transaction except as
contemplated in this Agreement without CBL's prior written consent until such
time, if ever, as this Agreement has been terminated with respect to that
Property. Each Jacobs Party agrees to notify CBL in writing promptly upon
receipt by such Jacobs Party of any offer or proposal to acquire any Property or
any direct or indirect equity interest in any Property (including the terms and
conditions thereof and the identity of the person making the offer or proposal).
4.25 Transition Services Agreement. At the Principal Closing, JRI and CBL
will enter into and deliver a transition services agreement in the form attached
hereto as Exhibit L (the "Transition Services Agreement").
4.26 Financial Statements. JRI agrees that, as soon as CBL has executed and
delivered the engagement letter required by Deloitte & Touche LLP in connection
therewith, JRI, at CBL's expense, will commission and provide CBL with (i) a
combined statement of operations that will include the operations of each
Property Owner for the year ended December 31, 1999, audited by Deloitte &
Touche LLP, (ii) a combined statement of operations that will include the
operations of each Property Owner
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for (x) the years ended December 31, 1995, 1996, 1997 and 1998 and (y) the six
(6) months ended June 30, 1999 and June 30, 2000 (or alternatively, if required,
the nine (9) months ended September 30, 1999 and September 30, 2000) (it being
understood that such six or nine month statements will have been reviewed by
Deloitte & Touche LLP), and (iii) a "management's discussion and analysis"
comparing and explaining specific line items in the foregoing statements. The
foregoing statements and analysis will be delivered in a form and format that
will facilitate their inclusion in the Proxy Statement.
4.27 Post-Closing Cooperation. JRI agrees that, to the extent it has
persons available with such information, it will cooperate with CBL for a
reasonable period after each Closing by, where practical, providing CBL with
information that JRI, its affiliates or their officers, directors or employees
may have with respect to circumstances and the current status of litigation and
insurance claims relating to the Properties included in that Closing to the
extent the litigations or underlying circumstances arose prior to that Closing.
4.28 Environmental Insurance. CBL agrees that, concurrently with the
Principal Closing or earlier, CBL will acquire environmental hazard insurance on
the terms outlined on Schedule 4.28. JRI agrees to contribute $160,000 toward
the cost of such insurance, and CBL agrees to provide JRI with an opportunity to
review the terms of the policies before they are issued and agrees to cooperate
with JRI to ensure that the policies are issued in a form and to such
beneficiaries as are reasonably requested by JRI.
4.29 Insurance Claims. The Jacobs Parties confirm to CBL that it is their
intention, and CBL hereby agrees that a Property Owner, the Interests of which
have been contributed to CBL as contemplated in this Agreement, will continue to
be entitled to make claims in respect of the insurance policies identified on
Schedule 8.2(p) (as renewed as required pursuant to this Agreement) applicable
to itself and its Property following the Closing with respect to such Property
if, and to the extent that, the claims accrued prior to such Closing. Although
the parties fully expect that the Property Owners will be entitled to continue
making the above-referenced insurance claims without any further assistance from
JRI or any other Person, JRI also agrees to cooperate with CBL, and to use
commercially reasonable efforts to assist CBL, to enforce any such Property
Owner's right to make and recover in respect of any such claims.
4.30 Computer Leases. JRI agrees to use commercially reasonable efforts to
cause Ameritech Corp. or SBC Communications Inc. to consent to the assumption by
CBL or its designee of the rights and obligations of The Richard E. Jacobs
Group, Inc. pursuant to such of those leases of on-site computer equipment at
each Property as are requested by CBL, provided, however, that CBL's obligation
to accept the contribution of the Interests in any Property Owner (or the deed
to any Property) will not be conditioned upon JRI's ability to obtain any of the
foregoing consents.
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4.31 Weston Management Options. At the Principal Closing, JRI shall have
caused each of the entities (each, an "Excluded Property Manager") then managing
and or leasing each of the Excluded Properties, if any, other than Kentucky Oaks
Mall, and their related Property Owners to have entered into an option
agreement, in form and substance acceptable to CBL, acting reasonably, granting
Weston Management the option to purchase all of the Excluded Property Manager's
rights and privileges under the leasing and management agreements by which that
Excluded Property Manager is servicing the Excluded Property. Each such option
will only be exercisable at the first Closing in which the related Excluded
Property is contributed to CBL, and the option exercise price with respect to
each such leasing and management agreement will be $1.00 and will be payable at
such first Closing.
ARTICLE V
TAX PROTECTION
5.1 Section 704(c) Method. For the benefit of the direct and indirect
beneficial owners of the SCUs issued at the Principal Closing, any Deferred
Closing or any ICOA Option Closing and their successors and assigns (the
"Protected Parties"), CBL agrees that the Operating Partnership and any entity
in which the Operating Partnership holds a direct or indirect interest, other
than Kentucky Oaks Mall Company, shall, with respect to the Interests
contributed to the Operating Partnership pursuant to this Agreement and the
Properties (the "Contributed Assets"), use the "traditional method" under
Section 704(c) of the Internal Revenue Code of 1986, as amended (the "Code") and
the regulations thereunder with no curative or remedial allocations under
Section 704(c) of the Code other than, to the extent permitted under Treasury
Regulations Section 1.704-3(c), curative allocations of gain recognized on a
disposition of an interest in a Contributed Asset. CBL agrees to cause any
entity that is treated as a partnership for federal income tax purposes to which
any of the Contributed Assets are transferred in a transaction that is wholly or
partially nontaxable (a) to use the traditional method without curative
allocations or remedial allocations, other than the curative allocations of gain
described above, under Section 704(c) of the Code with respect to such
Contributed Asset and (b) to agree, for the benefit of the Protected Parties, to
be bound by the provisions of this Section 5.1 as though such entity were CBL.
5.2 Protection Period. CBL agrees with the Jacobs Parties (for their own
benefit and also for the benefit of each of the other Protected Parties), that
neither the Operating Partnership nor any entity in which the Operating
Partnership holds a direct or indirect interest will, directly or indirectly,
sell, transfer or otherwise dispose of any of the Contributed Assets or any
direct or indirect interest therein (a "Disposition") prior to the twelfth
(12th) anniversary of the Principal Closing Date (the period from the Principal
Closing Date through such anniversary, the "Protection Period"). For the
avoidance of doubt, any transaction or event (other than an action by a
Protected Party, which for these
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purposes will not include the REIT or any entity in which the REIT holds a
direct or indirect interest) which would cause any Protected Party to recognize
or be allocated gain (including gain subject to the recapture provisions of the
Code) for federal income tax purposes with respect to any of the Contributed
Assets or a direct or indirect interest therein will be treated as a Disposition
by the Operating Partnership for purposes of this Section 5.2. Replacement
Assets (as defined below) received in connection with a transaction described in
Section 5.3 hereof and any other assets received as "substituted basis property"
(as such term is used in Section 7701(a)(42) of the Code) with respect to a
Contributed Asset shall be treated as Contributed Assets for purposes of the
provisions of this Article V.
5.3 Certain Permitted Transactions. The restrictions set forth in Section
5.2 hereof shall not apply to a transaction involving a Contributed Asset to the
extent (i) that such transaction qualifies as a like-kind exchange under Section
1031 of the Code in which no income or gain is recognized by or allocated to any
of the Protected Parties as a result of the exchange (including as a result of
Section 1031(f) of the Code or any successor provision) provided that all of the
requirements of Section 1031(f), including the two-year period of Section
1031(f)(1)(c) of the Code or any successor provision are satisfied, (ii)(A) the
transaction is treated for federal income tax purposes as either (x) a transfer
to an entity whose separate existence from the Operating Partnership is
disregarded for federal income tax purposes or (y) a transfer to an entity that
is treated as a partnership for federal income tax purposes, and (B) no gain is
recognized by or allocable to the Operating Partnership or any or the Protected
Parties as a result of the transaction or (iii) such transaction is a
nonrecognition transaction giving rise to no recognition of income or loss for
federal income tax purposes. The property or interests in a transferee received
by the Operating Partnership or any entity in which the Operating Partnership
holds a direct or indirect interest in exchange for the Contributed Asset is
referred to herein as the Replacement Asset.
5.4 Debt Protection Period.
(a) (1) CBL covenants and agrees to and for the benefit of the Jacobs
Parties, each of the Associates, each of the Outside Partners that contributes
any interests to the Operating Partnership as contemplated herein, their
respective permitted successors and assigns and each other Protected Party, that
at all times during the Protection Period (and for so long thereafter as is
reasonably possible) the Operating Partnership will maintain, and will cause
each entity in which the Operating Partnership holds a direct or indirect
interest to maintain, sufficient nonrecourse indebtedness so that the
liabilities of the Operating Partnership that are allocated under Treasury
Regulations Section 1.752-3(a)(1), (2) and (3) to the entities indicated on
Exhibit M (or their successors or assigns), together with allocations of
Operating Partnership liabilities resulting from guaranty opportunities
previously provided pursuant to this Article V, shall be in each case not less
than the amounts specified on Exhibit M. For the avoidance of doubt, the parties
agree
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that the Operating Partnership's obligations under this Article V to provide
sufficient allocations of indebtedness and guaranty opportunities shall continue
through the Protection Period and for so long thereafter as is reasonably
possible.
(2) The parties acknowledge and agree that prior to the delivery by JRI of
final required debt allocations for Exhibit M, the amounts set forth in Exhibit
M shall be an estimate only of the required debt allocations, and during the
period described in the next sentence, the Operating Partnership shall be
responsible for maintaining, and causing the entities in which the Operating
Partnership holds a direct or indirect interest to maintain, sufficient
nonrecourse indebtedness so that the liabilities of the Operating Partnership
that are allocated under Treasury Regulations Section 1.752-3(a)(1), (2) and (3)
and as a result of Qualified Protection Opportunities offered pursuant to this
Article V to the entities indicated on Exhibit M (or their successors or
assigns) shall be, in each case, not less than 110% of the amounts specified in
the estimates specified on Exhibit M. JRI will be required to provide the final
required debt allocations with respect to a Property within (i) ninety (90) days
of the date of the Closing with respect to that Property and (ii) in the case of
a Property that is subject to the multiple stage closing mechanics described in
Section 2.1, ninety (90) days of the date of the final ICOA Option Closing.
(3) The parties further agree that the aggregate final required debt
allocations provided by JRI may not exceed the aggregate estimated required debt
allocations included in Exhibit M by more than 10%.
(b) An event or transaction, including, without limitation, a refinancing,
any debt reduction, a like-kind exchange described in Section 5.3 hereof or an
amortization payment on outstanding indebtedness shall not cause CBL to be in
breach of Section 5.4(a) hereof if the Operating Partnership provides, in
accordance with the requirements described in Section 5.4(c), each of the
applicable entities indicated on Exhibit M (and their successors and assigns)
with a "Qualified Protection Opportunity" to guaranty, indemnify or enter into
other contractual arrangements that have an effect that is similar to a guaranty
for purposes of Section 752 of the Code and the Treasury Regulations thereunder
(with the choice between using a guaranty, indemnity or other contractual
arrangement to be made by the entities indicated on Exhibit M (and their
successors or assigns)) with respect to a sufficient portion of the Operating
Partnership's nonrecourse indebtedness so that, after such event or transaction
and assuming that each such entity provides a guaranty, indemnity or enters into
such other contractual arrangements, pursuant to the guaranty opportunity, the
aggregate amount of the Operating Partnership indebtedness allocated to each of
the applicable entities indicated on Exhibit M (and their successors and
assigns, as appropriate) as a result of the guaranty, indemnity or other
contractual arrangement and as a result of allocations of nonrecourse
liabilities of the Operating Partnership under Treasury Regulations Section
1.752-3(a)(1), (2) and (3) shall be not less than the amounts specified on
Exhibit M. Offers to guaranty the Operating Partnership indebtedness, provide
indemnities or enter into other similar
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contractual arrangements that are not Qualified Protection Opportunities shall
be disregarded in determining whether there has been a breach of the
requirements of Section 5.4(a).
(c) A guaranty opportunity, indemnification opportunity or opportunity to
enter into other similar contractual arrangements (a "Guaranty Opportunity")
will be treated as a "Qualified Protection Opportunity" only if the requirements
set forth in clauses (1), (2) and (3) below are satisfied.
(1) A written notice regarding the Guaranty Opportunity must be provided to
the entities listed on Exhibit M (and their successors and assigns as
appropriate) that would, upon the occurrence of the relevant transaction or
event in the absence of a guaranty, be allocated an amount of the Operating
Partnership liabilities that is less than the amount specified for the relevant
entity on Exhibit M. Such notice must (i) be sent at least sixty (60) days prior
to the occurrence of the relevant transaction or event, (ii) specify the
transaction or event that would cause the amount of the Operating Partnership
indebtedness allocated to the recipient of the notice under Treasury Regulations
Section 1.752-3(a)(1), (2) and (3), and as a result of guaranties provided by
such recipient, to fall below the amount specified on Exhibit M and (iii)
specify, with respect to each entity or its successor, the amount by which such
entity's allocation of the Operating Partnership nonrecourse indebtedness under
Treasury Regulations Section 1.752-3(a)(1), (2) and (3) and Operating
Partnership indebtedness with respect to which such entity has previously
provided a guaranty would be less than the amount specified on Exhibit M
following the event or transaction. The notice must include all transactions or
events which are expected to occur within one hundred eighty (180) days of the
date on which the notice is sent which would have the consequences described in
the first sentence of this Section 5.4(c)(l). Each party provided a Guaranty
Opportunity shall use commercially reasonable efforts to inform CBL within fifty
(50) days after receipt of written notice thereof whether it is willing to enter
into the guaranty; provided, that, failure to so advise CBL within such fifty
(50) day period will not be deemed to be a refusal to enter into such guaranty
so long as the party delivers its signed guaranty at least 5 days before the
closing of the related financing or the occurrence of such other event as gave
rise to the Guaranty Opportunity.
(2) The Guaranty Opportunity must be with respect to indebtedness of the
Operating Partnership that is treated as a "nonrecourse liability" for purposes
of Section 752 of the Code and the Treasury Regulations thereunder. The guaranty
must be a "bottom-tier" guaranty or, at the option of the entity being provided
the Guaranty Opportunity, an indemnity agreement, in substantially the form
attached as Exhibit N or Exhibit O, respectively. If an indemnity agreement is
used, the amount of the indemnity obligation will be adjusted to reflect the
entity's ownership interest in the Operating Partnership and any pari passu
indemnity obligations entered into pursuant to this Article V. If an entity
being provided with a Guaranty Opportunity chooses to enter
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into an indemnity agreement in the form attached as Exhibit O (as opposed to a
guaranty) with respect to such opportunity, then, provided that the requirements
of Section 5.4(d) are satisfied with respect to the indemnified indebtedness,
such entity shall bear the risk that such indemnity agreement is not effective
to cause an allocation for federal income tax purposes of Operating Partnership
indebtedness to such entity in an amount equal to the indemnified amount. If the
guarantied indebtedness is secured by any property or other asset, the guaranty
must be a guaranty of the most senior indebtedness secured by that property or
asset and the property securing the indebtedness with respect to which the
opportunity is offered must have a fair market value, at the time that the
Guaranty Opportunity is offered, at least equal to (i) 333% of the aggregate
amount of the guaranty and (ii) 133% of the aggregate amount of all indebtedness
secured by such property. In addition, there can be no guaranties that are prior
to the guaranty.
(3) A Guaranty Opportunity will not be a Qualified Protection Opportunity
to the extent that the amount of the Guaranty Opportunity together with all
other guaranty opportunities in the aggregate provided pursuant to the
provisions of this Article V, exceeds 50% of the aggregate final required debt
allocations provided by JRI pursuant to Section 5.4(a) hereof. Only the
aggregate final required debt allocations for the Properties with respect to
which Closings occur are to be taken into account for purposes of the preceding
sentence. A Guaranty Opportunity will not be a Qualified Protection Opportunity
unless CBL has given the proposed guarantors at least sixty (60) days' advance
written notice of the closing of the transaction or occurrence of the event to
which such Guaranty Opportunity relates.
(4) A Guaranty Opportunity will not be a Qualified Protection Opportunity
to the extent that the opportunity would not have been required to be provided
pursuant to this Article V had the Operating Partnership allocated its "excess
nonrecourse liabilities" under Treasury Regulations Section 1.752-3(a)(3), or
any successor provision, pursuant to a method that allocates, in the aggregate,
to the entities indicated on Exhibit M (or their successors or assigns) an
amount of such "excess nonrecourse liabilities" that is equal to the aggregate
amount of such excess nonrecourse liabilities those entities would have been
allocated had the Operating Partnership allocated its "excess nonrecourse
liabilities" pro rata among the holders of SCUs and Common Units (treating
holders of SCUs as holding the number of Common Units into which their SCUs can
be converted or redeemed). A Guaranty Opportunity will not be a Qualified
Protection Opportunity unless the Operating Partnership, in the written notice
provided pursuant to Section 5.4(c)(3) hereof, represents, for the benefit of
the Protected Parties, that the amount of the Guaranty Opportunity has been
determined by taking into account allocations of the Operating Partnership's
"excess nonrecourse liabilities" pursuant to a method that satisfies the
requirements for a Qualified Protection Opportunity described in the immediately
preceding sentence.
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(d) The Operating Partnership shall be responsible for ensuring that only
entities providing guaranties (or entering into other contractual arrangements,
as described above) pursuant to this Section 5.4 bear the "risk of loss" (as
such term is used for purposes of the regulations under Section 752 of the Code)
with respect to the guarantied portion of the indebtedness and, in the case of
other contractual arrangements, the indebtedness subject to such other
arrangements; provided, however, that the Operating Partnership shall be
entitled to assume that the entity (the "Indemnitor") providing the guaranty or
indemnity or entering into the contractual arrangements and the affiliates of
the Indemnitor (not including, for this purpose, the REIT, any entity in which
the REIT holds a direct or indirect interest or any shareholder of the REIT or
partner in the Operating Partnership that is not otherwise affiliated with the
Indemnitor) have not entered into any arrangement that would reduce or eliminate
the risk of loss (as determined under Treasury Regulations Section 1.752-2) that
such entity would have absent such arrangement.
(e) The Operating Partnership, to the extent reasonably possible, will
provide any of the entities specified on Exhibit M (or their successors and
assigns) that so requests with the opportunity to enter at the end of the
Protection Period into indemnity agreements in the form attached as Exhibit O.
The entities specified on Exhibit M (and their successors and assigns) will not
be obligated to enter into such an agreement and, if they choose to enter into
such an agreement, may set the amount of the indemnification at any amount not
in excess of the amount specified for such entity (or its predecessor) on
Exhibit M.
5.5 Indemnity. (a) Sections 5.1, 5.2 and 5.4 hereof shall not apply to any
transaction or event if (x) in the case of the use of any allocation method
other than permitted by Section 5.1 hereof, concurrently with the consummation
of such transaction or the occurrence of such event, the Operating Partnership
pays to each of the Protected Parties an amount equal to the aggregate federal,
state and local income taxes payable by such Protected Party as a result of, or
in connection with, the use of such allocation method (including, for the
avoidance of doubt, all taxes imposed in respect of items allocated to Protected
Parties as a result of curative allocations not permitted by Section 5.1,
allocations of remedial items or similar allocations by the Operating
Partnership or an entity in which the Operating Partnership owns a direct or
indirect interest) plus an amount equal to the aggregate federal, state and
local income taxes payable by the Protected Parties as a result of the receipt
of the payments required by this Section 5.5 (including for this purpose all
taxes on payments hereunder intended to compensate or indemnify the recipient
hereof for tax liability); (y) in the case of a transaction or event that would
otherwise have been prohibited by Section 5.2 hereof, concurrently with the
consummation of such transaction or the occurrence of such event, the Operating
Partnership pays to each of the Protected Parties an amount equal to the lesser
of (i) the aggregate federal, state and local income taxes payable by such
Protected Party as a result of, or in connection with, such transaction or
event, and (ii) the aggregate
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federal, state and local income taxes that would have been payable by such
Protected Party if the Contributed Assets that are the direct or indirect
subject of the disposition had been sold on the Closing Date with respect to
such Contributed Assets for their fair market value determined in a manner
consistent with the final allocations of Consideration made pursuant to Section
2.1 hereof; plus, in the case of both (i) and (ii), an amount equal to the
aggregate federal, state and local income taxes payable by the Protected Party
as a result of the receipt of the payments required by this Section 5.5
(including for this purpose all taxes on payments hereunder intended to
compensate or indemnify the recipient thereof for tax liability) and (z) in the
case of any transaction or event that would otherwise have been prohibited by
Section 5.4 hereof or constitutes a breach of Section 5.11 hereof, concurrently
with the consummation of such transaction or the occurrence of such event, the
Operating Partnership pays to each of the Protected Parties an amount equal to
the aggregate federal, state and local taxes payable by such Protected Party as
a result of such transaction or event plus an amount equal to the aggregate
federal, state and local income taxes payable by the Protected Party as a result
of the receipt of the payments required by this Section 5.5 (including for this
purpose all taxes on payments hereunder intended to compensate or indemnify the
recipient thereof for tax liability). For purposes of the preceding sentence,
(a) all income arising from the transaction or event that is treated as ordinary
income under the applicable provisions of the Code and all payments provided for
in this Section 5.5 shall be treated as subject to federal, state and local
income tax at the effective tax rate imposed on ordinary income of individuals
residing in Cleveland, Ohio, determined using the maximum federal, Ohio and
Cleveland rates on ordinary income then in effect, (b) all other income arising
from the transaction or event shall be treated as subject to federal, state and
local income tax at the effective tax rate imposed on long-term capital gains of
individuals residing in Cleveland, Ohio, determined using the maximum federal,
Ohio and Cleveland rates on long-term capital gains then in effect, (c) any
amounts payable pursuant to the indemnity provided for in this Section will be
determined assuming that the transaction or event giving rise to CBL's
indemnification obligation was the only transaction or event reported on the
Protected Party's tax return (and, for clarity, without giving effect to any
loss carry forwards or other deductions available to the Protected Party) and
(d) any amounts payable under the indemnity with respect to state and local
income taxes shall be assumed to be deductible for federal income tax purposes.
(b) Notwithstanding the foregoing, the Operating Partnership shall not be
required to indemnify any Protected Party pursuant to Section 5.5(a) hereof, and
shall not be liable for damages for a breach of Section 5.2 hereof, as a result
of the occurrence of any transaction or event prohibited by Section 5.2 hereof
with respect to a Partial Property at any time if, based on the terms of the
organizational documents for the relevant Property Owner in force on the date
hereof or, if more favorable to CBL (i.e., giving more control to CBL), the
organizational documents in force at that time, the action is one that cannot
ultimately be prevented directly or indirectly by the Operating Partnership (or
any successor to the Operating Partnership's indirect interest in a Partial
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Property); provided, however, that the Operating Partnership (and any such
successor) shall have used commercially reasonable efforts to prevent the
occurrence of such transaction or event by exercising all of its rights under
the organizational documents for such Partial Property Owner to block such
transaction or event; it being understood that, in the event that the
organizational documents for such Property Owner provide for a buy-sell right,
right of first refusal or right of first offer, the Operating Partnership (and
any such successor) shall not be required pursuant to this Section 5.5(b) to
initiate any buy-sell proceedings or purchase the interests in question, but, in
the event that it does not want to purchase such interests, the Operating
Partnership (and any such successor) shall be required to offer the opportunity
to purchase such interests to JRI, either directly or through back-to-back
transactions, in order for the Operating Partnership's failure to purchase the
interests in question to not be treated as a failure to use commercially
reasonable efforts to prevent the occurrence of the relevant transaction or
event.
(c) Notwithstanding the foregoing, the Operating Partnership shall not be
required to indemnify any Protected Party under Section 5.5(a) hereof, and shall
not be liable for a breach of Section 5.2 hereof, as a result of a casualty to
or condemnation of a Contributed Asset where (i) the lender with respect to
indebtedness secured by that Contributed Asset does not allow the proceeds from
the casualty or condemnation to be used for repair of or improvements to the
Contributed Asset or acquisition of a replacement asset and (ii) the Operating
Partnership uses commercially reasonable efforts to qualify to the greatest
extent consistent with such efforts for nonrecognition of gain for federal
income tax purposes with respect to the casualty or condemnation.
(d) (i) If a Protected Party (the "Individual Protected Party") dies, then
any subsequent owner of the direct or indirect interests in the Operating
Partnership owned (or treated as owned for federal income tax purposes) by the
Individual Protected Party (the "Affected Interests") and each Protected Party
through which the Individual Protected Party owned (or was treated as owning for
federal income tax purposes) an indirect interest in the Operating Partnership
at death will not, with respect to the Affected Interests, be eligible with
respect to events occurring subsequent to such death to receive an indemnity
payment under Section 5.5(a) hereof, or to recover damages for a breach of
Section 5.2 or 5.4 hereof, unless (x) the Operating Partnership or an entity
treated as a partnership for federal income tax purposes in which the Operating
Partnership holds a direct or indirect interest was not able (whether as a
result of a failure to make a Section 754 election or otherwise) as a result of
the death to adjust to fair market value under Section 754 of the Code the
federal income tax basis of the portion of the Operating Partnership's or such
entity's assets corresponding to the Affected Interests and (y) the Operating
Partnership's or such other entity's failure to be able to make such adjustment
was not solely the result of either (I) the failure of a Protected Party through
which the Individual Protected Party owned an indirect interest in the Operating
Partnership at death to make a Section 754 election that such Protected Party
was eligible to make or (II) a Protected Party through which the Individual
Protected Party owned an indirect interest in
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the Operating Partnership being ineligible to make a Section 754 election where
(i) the indirect interest was not owned through such Protected Party immediately
following the transactions provided for in this Agreement and (ii) such
Protected Party was not eligible to make a Section 754 election at the time that
the indirect interest in the Operating Partnership came to be owned through such
Protected Party.
(ii) If a Protected Party (the "Transferring Protected Party") transfers
(the "Transfer") a direct or indirect interest in the Operating Partnership (the
"Transferred Interest") in a transaction that is fully taxable for federal
income tax purposes, then any subsequent owner of the Transferred Interests and
each Protected Party through which the Transferring Protected Party owned (or
was treated as owning for federal income tax purposes) the Transferred Interest
will not, with respect to the Transferred Interests, be eligible with respect to
events occurring subsequent to the Transfer to receive an indemnity payment
under Section 5.5(a) hereof, or to recover damages for a breach of Section 5.2
or 5.4 hereof, unless (x) the Operating Partnership or an entity treated as a
partnership for federal income tax purposes in which the Operating Partnership
holds a direct or indirect interest was not able (whether as a result of a
failure to make a Section 754 election or otherwise) to adjust to fair market
value under Section 754 of the Code the federal income tax basis of the portion
of the Operating Partnership's or such other entity's assets corresponding to
the Transferred Interests as a result of the Transfer and (y) the Operating
Partnership's or such other entity's failure to be able to make such adjustment
was not solely the result of either (I) the failure of a Protected Party through
which the Transferring Protected Party owned an indirect interest in the
Operating Partnership to make a Section 754 election that such Protected Party
was eligible to make or (II) the fact that a Protected Party through which the
Transferring Protected Party owned an indirect interest in the Operating
Partnership was not eligible to make a Section 754 election where (i) the
indirect interest was not owned through such Protected Party immediately
following the transactions provided for in this Agreement and (ii) such
Protected Party was not eligible to make Section 754 election at the time that
the indirect interest in the Operating Partnership came to be owned through such
Protected Party.
(iii) An indemnity payment will not be required to be made pursuant to this
Section 5.5 to the extent that, given Sections 5.5(d)(i) and (ii) hereof, the
requirement that such payment be made would be inconsistent with 53% of the SCUs
having been held, immediately following the transactions provided for in this
Agreement pursuant to which such SCUs were issued (and assuming that all of the
contributions and transfers provided for in this Agreement occur), under
arrangements such that the Protected Parties holding such SCUs, as of such
date(s) and under the law in effect on the date hereof, would be eligible to
make a Section 754 election.
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5.6 Damages. CBL acknowledges and agrees that damages for a breach of
Section 5.1, 5.2, 5.4 or 5.11 will be determined in accordance with the
provisions of Section 5.5 hereof.
5.7 Towne Mall. Notwithstanding any provision of Article V to the contrary,
the provisions of Sections 5.2 and 5.4 hereof shall not apply with respect to
any transfer or other disposition to the lender or its designee following, and
in connection with, a willful default by the Operating Partnership in the
payment of interest or principal when due on the indebtedness secured by Towne
Mall as of the Closing Date with respect to such Property, and the Operating
Partnership will not be required to indemnify the Protected Parties pursuant to
Section 5.5(a) hereof with respect to such transfer or other disposition, so
long as the Operating Partnership has, at least sixty (60) and not more than
ninety (90) days prior to such transfer or other disposition, provided JRI (or
its designee, it being understood that references in this Section to JRI shall
be deemed to include any such designee) a meaningful and unconditional
opportunity outlined in a specific written notice to JRI to purchase Towne Mall
for nominal consideration and on the other terms set forth below. In order to
qualify for the foregoing exception from its general indemnity obligation, (a)
the Operating Partnership shall have given JRI at least thirty (30) days'
advance notice prior to any willful default on the indebtedness, adequate access
to information about Towne Mall and the Property's status vis-a-vis the lender,
and an opportunity to participate in any negotiations or other substantive
discussions between the Operating Partnership and its affiliates and their
advisers, on the one hand, and the lender, on the other hand, about the
indebtedness and/or the default thereon, (b) the Operating Partnership shall
have used commercially reasonable efforts to obtain all lender and other third
party consents necessary to facilitate the transfer of Towne Mall to JRI, and
(c) upon the transfer of Towne Mall to JRI, the Operating Partnership and the
then-owner of the Property, shall have made to JRI (or, if JRI declines to
accept the proposed transfer, shall have been willing and able to have made)
each of the representations and warranties set forth on Schedule 5.7 hereto and
given indemnification comparable in scope and duration to the indemnity given by
JRI in Sections 9.2 and 9.4, provided, however, that claims based thereon will
be subject to limitations comparable in duration and amount to those provided in
Sections 9.3 and 9.4 as applicable. Notwithstanding anything herein to the
contrary, once JRI receives an unconditional written offer to purchase Towne
Mall it shall, within forty-five (45) days of its receipt of the offer, (a)
accept the offer in writing in which event JRI agrees to pay and indemnify CBL
for (i) the net carrying costs of the Property from such date until closing or,
if earlier, termination by JRI of the proposed purchase and (ii) all transfer
costs (other than CBL's attorneys' fees) or (b) decline the offer. In the event
that JRI does not accept the offer within the forty-five (45) day period, JRI
shall be deemed to have declined the offer. If JRI declines or is deemed to have
declined the foregoing offer within the forty-five (45) day period, the
provisions of Section 5.2 and 5.4 hereof will not apply with respect to any
transfer or other disposition to the lender or its designee following, and in
connection with, the willful default referred to in the first sentence of this
Section 5.7 that gave rise to the offer, and the Operating
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Partnership will not be required to indemnify the Protected Parties pursuant to
Section 5.5(a) with respect to such transfer or other disposition (it being
understood, however, that if CBL does not so dispose of Towne Mall as a result
of the default, but instead is able to refinance the defaulted indebtedness or
otherwise negotiate a settlement with the lender that does not involve a
transfer of Towne Mall, the Protected Parties will continue to be fully entitled
to the benefits of this Article V with respect to Towne Mall). If JRI accepts
the foregoing offer, at closing of the transfer back to JRI, JRI or its
designated transferee shall assume and indemnify CBL against any and all
liabilities first accruing from and after the date of such transfer pursuant to
any Continuing Loan Guaranties that CBL assumed at the Closing for Towne Mall.
5.8 Midland Mall. In the event that JRI is not able to cause Frankel
Midland Limited Partnership to contribute its 40% interest in the Property Owner
of Midland Mall to the Operating Partnership, the parties agree that the
provisions of Section 5.7 applicable to Towne Mall also will be applicable with
respect to Midland Mall, mutatis mutandis, except that the transfer to a JRI
designee, if any, shall be of the interests in the entity that then owns Midland
Mall that correspond to the Interests that were contributed to CBL in respect of
Midland Mall as contemplated herein, and not of the fee interests in Midland
Mall.
5.9 Initial Capital Accounts. CBL agrees that the initial capital accounts
of the Contributors in the Operating Partnership shall be determined based on a
valuation of $32.25 per SCU.
5.10 Third Party Beneficiaries. CBL acknowledges, agrees and confirms that
each of the Protected Parties is an intended third party beneficiary of the
provisions of this Article V and that the provisions of this Article V are
enforceable by any of them.
5.11 Preservation of Tax Status. CBL agrees with the Jacobs Parties (for
their own benefit and also for the benefit of each of the other Protected
Parties) that (i) at no time during the Protection Period will the REIT or the
Operating Partnership take any action that would cause the Operating Partnership
to be treated as a corporation for federal income tax purposes and (ii) during
the Protection Period the REIT and the Operating Partnership will use
commercially reasonable efforts to maintain the REIT's REIT status, provided
that the REIT may voluntarily terminate its REIT status if such action is taken
with the affirmative consent of 75% or more of the members of the REIT's Board
of Directors.
5.12 Income Tax Reporting. (a)Except as otherwise provided in the next
sentence, from and after the Principal Closing, and continuing for so long as
JRI or any of its affiliates owns any SCUs, CBL will cause its accountants to
prepare and submit to JRI for review as soon as reasonably possible, but, in the
case of items described in clause (i) below, in no event later than July 1 of
each year, and, in the case of items
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described in clause (ii) below, in no event later than August 1 of each year:
(i) draft K-1s (and corresponding state tax documents) for the Operating
Partnership and state tax apportionment information for the Operating
Partnership and (ii) federal and state tax returns for the Operating Partnership
and each Partial Property Owner as to which an option remained outstanding under
an Interest Contribution and Option Agreement at any point during the preceding
tax year. In the case of Partial Property Owners described in the preceding
sentence where the Partial Property Owner's partnership agreement requires that
partners receive a copy of the Partial Property Owner's tax return or K-1 on a
date (the "Delivery Date") prior to September 1, references to August 1 in the
preceding sentence shall be deemed to be references to the date that is thirty
(30) days prior to the Delivery Date. If JRI determines that any modifications
to the tax returns of the Operating Partnership or any Partial Property
Partnership should be considered, JRI will, within fifteen (15) Business Days
following receipt of such tax returns from CBL or the Operating Partnership's
accountants, indicate to the accountants or to the Operating Partnership to
advise the Partial Property Partnership's accountants of the suggested revisions
to the tax returns, which returns will be resubmitted to JRI for its further
review (but not approval). JRI will complete its review of the resubmitted
returns within ten (10) days after receipt thereof from the accountants or CBL.
CBL will consult in good faith with JRI regarding any proposed modifications to
the tax returns of the Operating Partnership or any Partial Property
Partnership.
(b) The Operating Partnership agrees to (i) consult in good faith with JRI
regarding the filing of a Code Section 6227(b) administrative adjustment request
with respect to the Operating Partnership or any property directly or indirectly
owned by it before filing such request, (ii) consult in good faith with JRI
regarding the filing of a petition for judicial review of an administrative
adjustment request under Section 6228 of the Code, or a petition for judicial
review of a final partnership administrative judgment under Section 6226 of the
Code relating to the Operating Partnership before filing such petition, (iii)
give JRI prompt notice of the receipt of any written notice that the Internal
Revenue Service or any state or local taxing authority intends to examine income
tax returns of the Operating Partnership or any subsidiary for any year, receipt
of written notice of the beginning of an administrative proceeding at the
Operating Partnership level relating to the Operating Partnership under Section
6223 of the Code, receipt of written notice of the final partnership
administrative adjustment relating to the Operating Partnership pursuant to
Section 6223 of the Code, and receipt of any request from the Internal Revenue
Service for waiver of any applicable statute of limitations with respect to the
filing of any tax return by the Operating Partnership or any subsidiary, and
(iv) notify JRI if the Operating Partnership does not intend to file for
judicial review with respect to the Operating Partnership. In addition, the
Operating Partnership agrees to afford JRI the same rights with respect to any
Property Partnership tax matters as are afforded to JRI under this paragraph
with respect to the Operating Partnership.
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(c) CBL agrees to provide the entities described on Exhibit M hereto (and
their successors or assigns) with such information as is reasonably available to
CBL regarding allocations of the Operating Partnership's indebtedness under
Section 752 of the Code and the Treasury Regulations thereunder, as such
entities may reasonably request.
(d) JRI agrees that, upon request by CBL and upon being furnished by CBL
with a description of a proposed transaction that would require a payment under
Section 5.5 hereof, JRI will work in good faith with CBL to prepare an estimate
of the amounts that would be payable under Section 5.5 hereof in connection with
such transaction based on such information as is then reasonably available to
JRI. The parties acknowledge and agree that JRI shall have no liability with
respect to any such estimate and that no payment required under Section 5.5
hereof will be limited by any such estimate.
ARTICLE VI
CLOSING
6.1 Closing. (a) Subject to the terms and conditions of this Agreement, the
Principal Closing shall take place at the office of Sullivan & Cromwell, 125
Broad Street, New York, New York 10004, at and as of 9:00 A.M., E.S.T. on the
earlier of the tenth (10th) Business Day following the date on which the REIT's
stockholders vote to approve the issuance of the SCU's as contemplated in this
Agreement and January 31, 2001, or at such other place, time and date as may
hereafter be mutually agreed between JRI and CBL (the "Initial Scheduled
Principal Closing Date"). As used in this Agreement, the term "Principal
Closing" means the transfer and assignment of the Interests with respect to,
and/or the contribution to the Operating Partnership of, each of the Core
Properties and at least nine (9) other Properties, the transfer and assignment
of the partnership interests in Weston Management to the Operating Partnership
and the performance by each party hereto of the obligations on its part then to
be performed under and in accordance with this Agreement, and the term
"Principal Closing Date" means the date on which the Principal Closing is to
occur as provided in the preceding sentences, as the same may be extended by JRI
or CBL pursuant to this Agreement. JRI and CBL will conduct a "pre-closing"
commencing on the third (3rd) Business Day preceding the Principal Closing Date,
and will use commercially reasonable efforts to finalize the closing statement
for the Principal Closing at least forty-eight (48) hours prior to the Principal
Closing Date. As used in this Agreement, the term "Closing" means the transfer
and assignment of the Interests with respect to and/or the contribution of, one
or more Properties to the Operating Partnership and the performance by each
party of the obligations on its part then to be performed under and in
accordance with this Agreement (including, in the case of a transfer of
Interests with respect to a Property that is to occur in stages as set forth in
Section 2.1(c) hereof, the first stage of such transfer and not any ICOA Option
Closing), and the term "Closing Date" means the date on which
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the Closing with respect to any Property or Properties is to occur as the same
may be extended by JRI or CBL pursuant to this Agreement.
(b) JRI Extension Rights. JRI shall have the right, exercisable in one or
more increments by delivering written notice to CBL as soon as practical, but in
no event less than five (5) Business Days prior to the Initial Scheduled
Principal Closing Date (or, in the event of a prior extension by virtue of this
Section, five (5) Business Days prior to the then applicable Subsequent
Scheduled Principal Closing Date), to extend or adjourn the Principal Closing
Date to a date (the "Subsequent Scheduled Principal Closing Date") not later
than April 30, 2001 if JRI determines in its good faith judgment that such
adjournment is reasonably necessary to enable the Jacobs Parties to satisfy the
conditions to Closing set forth in Section 7.1, and the Interest Contribution
Agreements and Deed Contribution Agreements, if applicable, with respect to each
of the Core Properties and at least nine (9) other Properties (and CBL has not
waived the failed conditions and proceeded to Closing with the Core Properties
and at least nine (9) other Properties), such right being in addition to any
other adjournment right provided for in this Agreement. On or before the
twentieth (20th) day preceding the Initial Scheduled Principal Closing Date, JRI
agrees to provide CBL with a good faith assessment of whether the Jacobs Parties
will be unable to satisfy any of the conditions to Closing set forth in Section
7.1 and the Interest Contribution Agreement or Deed Contribution Agreement with
respect to any Property, and the circumstances surrounding such potential
inability; provided, however, that JRI's estimate shall not in any way impair
JRI's right to close on the Initial Scheduled Principal Closing Date or to
extend or adjourn the Principal Closing beyond the Initial Scheduled Principal
Closing Date. If JRI extends the Principal Closing Date as permitted above, JRI
will advise CBL on a regular basis of its progress in satisfying the yet unmet
conditions to the Principal Closing. In addition, if thereafter JRI determines
in good faith that it can satisfy the conditions to the Principal Closing as set
forth in Section 7.1 or CBL has waived all unmet conditions and is willing to
proceed, evidenced by written notice to JRI, with respect to each of the Core
Properties and at least nine (9) other Properties sooner than the Subsequent
Scheduled Principal Closing Date, JRI agrees to notify CBL of that determination
in writing and to cooperate with CBL to schedule the Principal Closing on the
earlier of the Subsequent Scheduled Principal Closing Date and the date that is
thirty (30) days following the day on which JRI first determined that it could
satisfy the conditions precedent to the Principal Closing (or, if such thirtieth
(30th) day is not a Business Day, the next succeeding Business Day thereafter).
The foregoing will not be interpreted as imposing any obligation on JRI to
schedule the Principal Closing Date or to participate in the Principal Closing
if for any reason CBL is unwilling to accept the contribution of each of the
Core Properties and at least nine (9) other Properties. The parties agree that
time is of the essence with respect to the dates and time periods referred to in
this paragraph (b) and in paragraph (c) below.
(c) CBL Extension Rights. (i) If after expiration of the Initial Period (as
hereinafter defined) CBL delivers written notice to JRI that it is ready
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and able to mail the Proxy Statement and related materials to the REIT's
stockholders as contemplated in Section 4.15 (such notice, the "Ready to Mail
Notice"), and at that time JRI has not yet obtained the lender consent from TIAA
as required by Section 4.14(a), then at the time JRI first notifies CBL in
writing that it has obtained the requisite consent from TIAA, CBL will have an
option, exercisable by delivering written notice to JRI within ten (10) Business
Days of receipt of the foregoing notice from JRI, to extend the Principal
Closing Date one day for each day beyond the date on which JRI received the
Ready to Mail Notice; provided, that, if CBL does not exercise the foregoing
option within that time period it will expire.
(ii) If, despite commercially reasonable efforts, CBL is unable to hold the
REIT Stockholders' Meeting on or before January 20, 2001 because it was unable
to obtain approval from the SEC to mail the Proxy Statement and related
materials to the REIT's stockholders as contemplated in Section 4.15 on or
before December 1, 2000, then CBL will have the right, exercisable by delivering
notice to JRI as soon as practical, but in no event later than January 10, 2001,
to extend the Principal Closing Date to a date not later than the earlier of (x)
the sixtieth (60th) day after the date on which CBL actually mails the Proxy
Statement to the REIT's stockholders (or, if such day is not a Business Day, the
next succeeding Business Day) and (y) April 30, 2001.
(iii) In addition, CBL shall have the right, exercisable by delivering
written notice to JRI as soon as practical but in no event less than two (2)
Business Days prior to the Initial Scheduled Principal Closing Date or any
Subsequent Scheduled Principal Closing Date, if applicable, to extend the
applicable Closing Date to a date not later than thirty (30) days after the
Initial Scheduled Principal Closing Date or Subsequent Scheduled Principal
Closing Date, as applicable, if CBL determines in its good faith judgment that
such adjournment is reasonably necessary to enable CBL to satisfy the conditions
to Closing set forth in Section 7.2 and the Interest Contribution Agreements and
Deed Contribution Agreements, if applicable (and JRI has not waived any of the
conditions in issue), such right being in addition to any other adjournment
right provided for in this Agreement.
(d) Staggered Contributions. JRI and CBL agree that if, with respect to any
Closing, JRI so requests, the contributions of Interests and/or Properties to be
included in that Closing or any portion of such contributions specified by JRI
will be staggered in time by fifteen (15) minutes. In the event that JRI
requests staggered contributions for any Closing, the Closing Deliveries
relating to that Closing will be delivered into escrow with the Title Company,
or another escrow agent acceptable to both CBL and JRI, and will only be
released from the escrow on terms consistent with this Agreement and the
Interest Contribution Agreements and Deed Contribution Agreements,
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if applicable, and as otherwise agreed between JRI and CBL, each acting
reasonably. At the relevant Closing, the escrow agent will deliver the Interests
relating to each Property being included in that Closing to the Operating
Partnership and will deliver the Consideration relating to such Interests in
fifteen (15) minute increments, and will date and time stamp the instruments of
transfer to verify the timing and sequence of the deliveries.
6.2 Closing Deliveries by JRI. At the Principal Closing and at each
Deferred Closing, the Jacobs Parties will execute, acknowledge where appropriate
and deliver, or cause to be delivered, each of the following instruments and
documents:
(a) Interest Contribution Agreements. (i) For each Property with respect to
which Interests are being contributed to the Operating Partnership, if any, an
Interest Contribution Agreement in substantially the form attached as Exhibit
C-1A or Exhibit C-1B and providing for the contribution of each of the Interests
in the related Property Owner, (ii) for each Property the fee and/or leasehold
interests of which are being contributed, if any, a Deed Contribution Agreement
in substantially the form attached as Exhibit C-2 hereto and providing for the
contribution of the interests in that Property, (iii) in the case of the
Principal Closing, for Weston Management, a Contribution Agreement (Weston
Management) in substantially the form attached as Exhibit C-3 and providing for
the contribution of all of the outstanding interests in Weston Management, and,
in each of the foregoing instances, all certificates, agreements and other
documents required to be delivered thereunder, each duly executed by the
Contributors identified therein.
(b) First Amendment to OP Partnership Agreement. In the case of the
Principal Closing, the First Amendment to the OP Partnership Agreement in the
form attached hereto as Exhibit G, or, in the case of a Deferred Closing, an
amendment to the OP Partnership Agreement in form and substance to be agreed
between CBL and JRI, acting reasonably.
(c) Registration Rights Agreement. In the case of the Principal Closing,
the Registration Rights Agreement, in the form attached hereto as Exhibit H-1,
duly executed by each of the Persons to be a recipient of any SCUs on the
Principal Closing Date (or, if authorized, by JRI on its behalf), or, in the
case of a Deferred Closing, an addendum to the Registration Rights Agreement in
the form attached hereto as Exhibit H-2, duly executed by each of the Persons to
be a recipient of any SCUs on such Closing Date (or, if authorized, by JRI on
its behalf).
(d) Voting Agreement for Option Interests. In the case of an ICOA Closing
with respect to one or more Partial Properties subject to Section
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2.1(c), an Option Interest Voting Agreement in substantially the form attached
hereto as Exhibit E for each such Partial Property, duly executed by each
Contributor identified in the Interest Contribution and Option Agreement
relating thereto.
(e) Assignment of Management Agreements. In the case of any Deferred
Closing, an assignment of the management and leasing agreements in form and
substance reasonably acceptable to CBL with respect to the Properties that are
the subject of such Deferred Closing to the entity designated by Weston
Management, duly executed by the property manager(s) of such Properties on such
Closing Date.
(f) Certificates.
(i) A certificate, issued by the Secretary of State of the State of
Delaware and dated not earlier than thirty (30) Business Days prior to such
Closing Date, certifying as to the good standing of JRI under the laws of
Delaware.
(ii) A duly executed certificate of JG Realty Investors Corp., a
general partner of JRI ("JG Realty"), dated as of such Closing Date,
certifying:
(A) that the board of directors of JG Realty, in its capacity as
a general partner of JRI, has adopted resolutions approving the
transactions contemplated hereunder and authorizing JG Realty to
execute and deliver, for and on behalf of JRI this Agreement, the
Interest Contribution Agreements and each other agreement and other
instrument necessary for the consummation of the transactions
contemplated by this Agreement and the Interest Contribution
Agreements and Deed Contribution Agreements, if applicable, (which
resolutions shall be attached to or incorporated in such certificate),
that such action by such board of directors and JG Realty constitutes
the only authorization required for such execution, delivery and
consummation by JG Realty, and it has not been revoked or otherwise
withdrawn and remains in full force and effect.
(B) as to a true and complete copy of JRI's partnership agreement
and certificate of limited partnership, that the same have not been
amended (except as noted
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therein) and that they are in full force and effect as of such Closing
Date, and also certifying as to the incumbency of the officers of JG
Realty executing and delivering this Agreement and the other documents
and instruments provided herein to be executed and delivered by JRI.
(iii) A duly executed certificate of JRI, dated as of such Closing
Date, certifying that each of the representations and warranties of JRI
contained in this Agreement is true and correct in all material respects as
if remade on and as of such Closing Date (with appropriate modifications of
those representations and warranties to reflect actions taken by or on
behalf of JRI in accordance with the provisions of Article IV or
identifying any representation or warranty which is not or no longer is
true and correct and explaining the state of facts giving rise to the
change); provided, however, that to the extent that the representations and
warranties in Section 8.2 relate to Interests, Properties or Property
Owners, for purposes of the certificate referred to above those references
will be deemed to be references only to the Interests, Properties and
Property Owners being included in the Closing at hand, and those
representations and warranties specifically need not be remade at such
Closing with respect to any Interest, Property or Property Owner that is
not being included in such Closing as permitted or required by the terms of
Section 6.4. In no event shall JRI be deemed to be in default hereunder by
reason of any breach of representation or warranty that results from any
exception that is identified in reasonable detail on the certificate
described in this Subsection 6.2(f)(iii) and arose by virtue of actions on
JRI's or the Operating Partnership's part that were taken or not taken in
accordance with the provisions of Article IV or was not caused by any
voluntary and direct action by JRI in violation of JRI's covenants in
Article IV; provided, however, that the occurrence of any such change that
does not result in a JRI default, if sufficiently adverse to the Operating
Partnership, may constitute the non-fulfillment of the condition set forth
in Section 7.1(b) and give rise to a claim by the Operating Partnership
pursuant to Article IX. JRI's liability under such certificate shall be
subject to the limitations and time restraints set forth in Section 8.3 and
in Article IX.
(iv) A duly executed certificate of JRI, dated as of such Closing Date
certifying:
(A) as to a true and complete copy of the organizational
documents (including all documents filed of record in the jurisdiction
of organization, if any, certified by the appropriate authority in
such jurisdiction, if available) of
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each Property Owner that is being included in such Closing, that the
same have not been amended (except as noted therein) and that they are
in full force and effect as of such Closing Date.
(B) in the case of the Principal Closing, as to a true and
complete copy of Weston Management's partnership agreement and
certificate of limited partnership (certified by the appropriate
authority in the jurisdiction of its organization, if available), that
the same have not been amended (except as noted therein) and that they
are in full force and effect as of such Closing.
(g) Estoppels. A completed Estoppel Certificate dated not earlier than
ninety (90) days prior to the applicable Closing from each Ground Lessor, if
any, in respect of each Property being contributed to the Operating Partnership
on such Closing Date and each of the other Estoppel Certificates sent out as
required in Section 4.17 and received back by JRI from the related Anchor,
tenant, party to a reciprocal easement agreement, lender or Outside Partner,
prior to such Closing Date (to the extent not previously delivered to CBL). In
the event that JRI is unable to deliver a Ground Lessor Estoppel Certificate
dated not earlier than thirty (30) days prior to the applicable Closing Date,
JRI also will supplement the certificate being delivered by it at that Closing
pursuant to Section 6.2(f)(iii) to include a representation, made as of such
Closing Date, as to each of the statements made by the Ground Lessor in the
Estoppel Certificate being delivered pursuant to this Section 6.2(g), with such
changes as are necessary to reflect the fact that the certificate is being
delivered on a later date than the date of the Ground Lessor Estoppel
Certificate being delivered therewith.
(h) Opinions. An opinion of counsel to JRI as to the matters identified on
Exhibit P attached hereto.
(i) Lender Consents. The consent of each lender of a Continuing Loan in
respect of each Property being contributed to the Operating Partnership on such
Closing Date, which consents will be in substantially the form of Exhibit Q
hereto or as otherwise acceptable to CBL acting reasonably.
(j) Outside Partner Consents. The consents and amendments to the
organizational documents of the Property Owners outlined on Exhibit R attached
hereto, in respect of each Property being contributed to the Operating
Partnership on such Closing Date, which consents will be in substantially the
form of Exhibit R hereto or as otherwise acceptable to CBL acting reasonably.
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(k) Excluded Outparcels. The approvals, consents and other documentation
outlined on Schedule 1.2(a) hereof for each of the Excluded Outparcels that
relates to any Property being contributed to the Operating Partnership on such
Closing Date.
(l) OP Option Agreement. An OP Option Agreement for each Excluded Outparcel
subject to Section 1.2(b) hereof that is retained by a Jacobs Party or an
affiliate thereof and relates to a Property being contributed to the Operating
Partnership on such Closing Date, duly executed by the owner of such Excluded
Outparcel.
(m) Non-Competition Agreement. The Non-Competition Agreement in the form
attached hereto as Exhibit K, duly executed by Richard E. Jacobs.
(n) Weston Management Releases. A Release in substantially the form
attached as Exhibit U hereto executed by each entity identified on Schedule
8.2(i)(x) and covering each of the properties identified on that schedule as
being managed or previously managed by Weston Management for that entity.
(o) Transition Services Agreement. The Transition Services Agreement in
substantially the form attached hereto as Exhibit L, duly executed by JRI.
(p) Assignment of Interest Rate Cap. If JRI has purchased an interest rate
cap or swap agreement as contemplated in Section 1.1(b)(iii)(A)(2) above with
respect to a New Loan secured by any of the Properties to be included in that
Closing, and the interest rate protection was purchased in the name of any
Person other than the relevant Property Owner (or if the protection was
purchased in the name of the Property Owner, but the Property Owner is
transferring the related Property to CBL pursuant to a Deed Contribution
Agreement), then, for each such interest rate cap or swap, an assignment of
interest rate protection agreement, in form and substance reasonably acceptable
to CBL, by which the owner of that interest rate protection assigns all of its
rights thereunder to CBL or its designee (and, if required by the terms of the
interest rate protection agreement, confirmation that the counterparty thereto
has consented to the transfer).
(q) Assurance Agreement. The Assurance Agreement in the form attached
hereto as Exhibit V, duly executed by Richard E. Jacobs, on his own behalf and
as trustee of each of the Jacobs Trusts.
(r) Cary Note. In the case of the Closing with respect to Cary Towne
Center, (i) the original Cary Note, (ii) an allonge evidencing the assignment
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of such note to CBL or its designee and (iii) a certificate of JG Cary Joint
Venture certifying as to the outstanding principal balance of the Cary Note and
the date through which interest has been paid as of such Closing Date.
(s) Tenant Notes. In the case of the Closing with respect to any Property
whose Property Owner is the holder of one or more promissory notes (each, a
"Tenant Note") made by one or more tenants at such Property in favor of the
Property Owner, (i) the original of each Tenant Note held by such Property
Owner, if available or a copy of such note and a lost note affidavit and (ii)
the addition to the bring-down certificate to be delivered by JRI at that
Closing of an additional paragraph with respect to each such Tenant Note
certifying as of the date thereof, (A) as to the outstanding principal balance
of the Tenant Note as of such Closing Date and the date through which interest
has been paid, (B) that there is no default with respect to the indebtedness
evidenced by the Tenant Note, (C) that it owns the Tenant Note free and clear of
all rights, liens, claims and encumbrances and (D) that there is no undisclosed
agreement or document that modifies the terms or provisions of the indebtedness
evidenced by the Tenant Note (it being understood that such certification will
be subject to the limitations in Section 9.3).
(t) Share Ownership Agreement. In the case of the Principal Closing, the
Share Ownership Agreement, in the form attached hereto as Schedule 4.15(b)-3,
duly executed by the Jacobs Parties.
(u) Other Documents, etc. All other instruments and documents, if any,
required to be executed, acknowledged and/or delivered by JRI to the Operating
Partnership and/or the REIT pursuant to and in accordance with any of the other
provisions of this Agreement or the Interest Contribution Agreements or Deed
Contribution Agreements, if applicable, and such other documents or instruments
as the Operating Partnership or the REIT may reasonably request to effect the
transactions contemplated in this Agreement and the Interest Contribution
Agreements and Deed Contribution Agreements, if applicable.
6.3 Closing Deliveries by the Operating Partnership. At the Principal
Closing and at each Deferred Closing, CBL will execute, acknowledge where
appropriate and deliver, or cause to be delivered, each of the following
instruments, documents and payments:
(a) Consideration. The Consideration or portion thereof allocated to the
Properties being contributed at such Closing as provided for in Section 2.1 of
this Agreement, in the case of the Principal Closing, the portion of the
Consideration allocated to Weston Management and, in the case of the Closing
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with respect to Cary Towne Center, the portion of the Consideration allocated to
the Cary Note, each as set forth on the closing statement for such Closing to be
prepared by JRI and delivered to CBL at least forty-eight (48) hours prior to
such Closing.
(b) Interest Contribution Agreements. Counterparts of the Interest
Contribution Agreements and Deed Contribution Agreements, if applicable, and any
other instrument, agreement and/or certificate required to be delivered by the
Operating Partnership under the Interest Contribution Agreements or Deed
Contribution Agreements, each duly executed by the Operating Partnership and, if
applicable, the REIT; and, in the case of the Principal Closing, counterparts of
the Contribution Agreement (Weston Management) for the interests in Weston
Management, and any other instrument, agreement and/or certificate required to
be delivered by the Jacobs Trusts under the Contribution Agreement (Weston
Management) for interests in Weston Management, each duly executed by the
Operating Partnership (and its designee, if applicable).
(c) First Amendment to OP Partnership Agreement. In the case of the
Principal Closing, the First Amendment to the OP Partnership Agreement in the
form attached hereto as Exhibit G, or, in the case of a Deferred Closing, an
amendment to the OP Partnership Agreement, in form and substance to be agreed
between CBL and JRI, acting reasonably, duly executed by CBL Holdings I, Inc.
and the REIT and any limited partners whose consents are required by the terms
of the OP Partnership Agreement.
(d) Registration Rights Agreement. In the case of the Principal Closing,
the Registration Rights Agreement in the form attached hereto as Exhibit H-1,
or, in the case of a Deferred Closing, an addendum to the Registration Rights
Agreement in the form attached hereto as Exhibit H-2, duly executed by the REIT
and the Operating Partnership granting registration rights to the SCU holders.
(e) Amendment to Rights Agreement. An amendment to the Rights Agreement
executed by each of the REIT and SunTrust Bank, implementing the changes
required in Section 4.10.
(f) Share Ownership Limitation Amendments. If the REIT's stockholders have
approved the Share Ownership Limitation Amendments, a certificate of amendment
to the REIT's certificate of incorporation setting forth the Share Ownership
Limitation Amendments, and, if the REIT's stockholders have not approved the
Share Ownership Limitation Amendments, a certified copy of the REIT Board
Resolution contemplated in Section 4.15(b).
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(g) Transition Services Agreement. The Transition Services Agreement in
substantially the form attached hereto as Exhibit L, duly executed by the REIT
and the Operating Partnership.
(h) Assumption of Management Agreements. In the case of any Deferred
Closing, an assumption of the management and leasing agreements (in a form
reasonably acceptable to CBL) with respect to the Properties that are the
subject of such Deferred Closing, duly executed by Weston Management or its
designee.
(i) Certificates.
(i) A certificate issued by the Secretary of State of the State of
Delaware and dated not earlier than thirty (30) days prior to such Closing
Date, certifying as to the good standing of the REIT and the Operating
Partnership under the laws of the State of Delaware.
(ii) A duly executed certificate of the Secretary of CBL Holdings I,
Inc., dated as of such Closing Date, certifying:
(A) that the board of directors of CBL Holdings I, Inc. has
adopted resolutions approving the transactions contemplated hereunder
and authorizing CBL Holdings I, Inc. on its own behalf and as general
partner of the Operating Partnership to execute and deliver this
Agreement, the Interest Contribution Agreements, any Deed Contribution
Agreement and each other agreement and other instrument necessary for
the consummation of the transactions contemplated by this Agreement
and the Interest Contribution Agreements and Deed Contribution
Agreements, if applicable (which resolutions shall be attached to or
incorporated in such certificate), that such action by CBL Holdings I,
Inc.'s board of directors, together with any other authorization as
set out in such certificate, constitutes the only authorization
required for such execution, delivery and consummation by the
Operating Partnership, and it has not been revoked or otherwise
withdrawn and remains in full force and effect.
(B) as to a true and complete copy of the OP Partnership
Agreement, the certificate of limited partnership of the Operating
Partnership and the certificate of incorporation and by-laws of CBL
Holdings I, Inc. and that
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each of the same has not been amended (except as noted therein) and is
in full force and effect as of such Closing Date, and also certifying
as to the incumbency of the officers of CBL executing and delivering
this Agreement, the Interest Contribution Agreements and Deed
Contribution Agreements, if applicable, and the other documents and
instruments provided herein to be executed and delivered by the
Operating Partnership.
(iii) A duly executed certificate by the Secretary of the REIT, dated
as of such Closing Date, certifying:
(A) that the board of directors of the REIT has adopted
resolutions approving the transactions contemplated hereunder,
authorizing and implementing the Share Ownership Limitation
Amendments, in the event that the stockholders of the REIT vote to
approve such amendments or adopting the REIT Board Resolution, in the
event that the stockholders of the REIT do not approve the Share
Ownership Limitation Amendments and, in either case, authorizing the
REIT to execute and deliver this Agreement, and each other agreement
and other instrument necessary for the consummation of the
transactions contemplated by this Agreement and the Interest
Contribution Agreements and Deed Contribution Agreements, if
applicable (which resolutions, including the REIT Board Resolution, if
applicable, shall be attached to or incorporated in such certificate),
that such action by the REIT's Board of Directors, together with any
other authorization as set out in such certificate, constitutes the
only authorization required for such execution, delivery and
consummation by the REIT, and it has not been revoked or otherwise
withdrawn and remains in full force and effect.
(B) as to a true and complete copy of the certificate of
incorporation and by-laws of the REIT and that each of the same has
not been amended (except as noted therein) and is in full force and
effect as of such Closing Date, and also certifying as to the
incumbency of the officers of the REIT executing and delivering this
Agreement, and the other documents and instruments provided herein to
be executed and delivered by the REIT.
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(iv) A duly executed certificate of the Operating Partnership, dated
as of such Closing Date, certifying that each of the representations and
warranties of the Operating Partnership contained in this Agreement and the
Interest Contribution Agreements and Deed Contribution Agreements, if
applicable, is true and correct in all material respects as if remade on
and as of such Closing Date.
(v) A duly executed certificate of the REIT, dated as of such Closing
Date, certifying that each of the representations and warranties of the
REIT contained in this Agreement is true and correct in all material
respects as if remade on and as of such Closing Date.
(j) Opinions. An opinion of counsel to CBL as to the matters identified on
Exhibit S-1 hereto and an opinion in substantially the form attached as Exhibit
S-2 regarding the REIT's status as a real estate investment trust, the Operating
Partnership's status as a partnership and not a publicly-traded partnership and
the status of each entity other than the Operating Partnership to which direct
or indirect interests in the Properties are transferred pursuant to Section 1.1
or 2.1 hereof as an entity whose separate existence from the Operating
Partnership is disregarded for federal income tax purposes.
(k) JRI Option Agreement. A JRI Option Agreement for each Excluded
Outparcel being contributed to the Operating Partnership on such Closing Date,
duly executed by the Operating Partnership and the applicable Property Owner (or
in the case of a deed transfer, the CBL entity taking title to the Excluded
Outparcel).
(l) Share Ownership Agreement. In the case of the Principal Closing, the
Share Ownership Agreement, in the form attached hereto as Schedule 4.15(b)-3
duly executed by the REIT, CBL & Associates, Inc., Charles B. Lebovitz and
Stephen D. Lebovitz.
(m) Other Documents, Etc. All other instruments and documents, if any,
required to be executed, acknowledged and/or delivered by the Operating
Partnership and/or the REIT to JRI pursuant to and in accordance with any of the
other provisions of this Agreement or the Interest Contribution Agreements or
the Deed Contribution Agreements, if applicable, and such other documents or
instruments as JRI may reasonably request to effect the transactions
contemplated in this Agreement and the Interest Contribution Agreements and Deed
Contribution Agreements, if applicable.
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6.4 Deferred Closings.
(a) Property Removal. If, at the Principal Closing,
(1) the Jacobs Parties have been unable to obtain the lender
consents required by Section 6.2(i), the Outside Partner consents
required by Section 6.2(j) or any other third party consents necessary
for the contribution of any Property or the Interests in any Property
Owner, or JRI has not been able to cause each Associate that owns an
Associate Interest in a Partial Property Owner to enter into an
Interest Contribution Agreement with respect to that Partial Property,
(2) JRI is no longer able to make one or more of the
representations or warranties contained in Section 8.2 with respect to
any Property in the manner that such representation or warranty is
being made concurrently herewith,
(3) any Property has been the subject of a Substantial Casualty
or Substantial Condemnation and JRI has been unable to restore the
Property to at least as good a condition as existed on the date of
this Agreement,
(4) JRI has been unable to Remove a Title Objection affecting any
Property as required by Section 3.2(b), or
(5) JRI is otherwise unable to satisfy the conditions precedent
to Closing with respect to any Property,
and, in any such case, CBL is not willing to waive the foregoing condition or
circumstance for the Property in question and include that Property in the
Principal Closing (any such Property, an "Excluded Property"), then, so long as
JRI can still satisfy the conditions or circumstances described in Section
7.1(d) (i.e., it is able to contribute and is contributing each of Hanes Mall,
Fayette Mall, West Towne Mall, Brookfield Mall and Cary Towne Center
(collectively, the "Core Properties") and at least nine (9) of the remaining
Properties by the latest date permitted pursuant to Section 6.1(b)), each of JRI
and CBL will have the right to remove each Excluded Property from the Properties
being delivered at the Principal Closing and require the other to proceed with
the Principal Closing with the remainder of the Properties on the terms set
forth herein.
(b) Jacobs Obligation to Cure. Following the Principal Closing, the Jacobs
Parties will use commercially reasonable efforts to cure the condition or
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circumstance that caused any Property to be an Excluded Property and if, on or
before July 31, 2001, in the case of a Property that is an Excluded Property
because of a circumstance described in clause (1) above, or October 31, 2001, in
the case of a Property that is an Excluded Property because of a circumstance
described in clause (2), (3), (4) or (5) above that is not also described in
clause (1) above (such date, as applicable, the "Cure Cutoff Date"), the Jacobs
Parties have caused the condition to be cured such that the Property would have
qualified to have been included in the Principal Closing, each of JRI and CBL
will be entitled to require the other to close with respect to such Excluded
Property and the management and leasing contracts in respect thereof pursuant to
the terms and conditions of this Agreement and the applicable Interest
Contribution Agreement or Deed Contribution Agreement in a separate Closing to
be held at a date to be mutually agreed between JRI and CBL, but not later than
thirty (30) days after the relevant Cure Cutoff Date (any such separate Closing,
or with respect to a Partial Property subject to Section 2.1(c) hereof, any such
separate ICOA Closing, a "Deferred Closing"; and the date on which a Deferred
Closing is to occur is referred to herein as a "Deferred Closing Date") at a
price determined pursuant to Section 2.1(a) above. If any Property is excluded
from the Principal Closing as permitted above, JRI will advise CBL on a regular
basis of its progress in satisfying the yet unmet conditions to the Deferred
Closing for that Excluded Property. In addition, if thereafter but prior to the
applicable Cure Cutoff Date JRI determines in good faith that it can satisfy the
conditions to the Deferred Closing as set forth in Section 7.1 with respect to
any Excluded Property, JRI agrees to notify CBL of that determination in writing
and to cooperate with CBL to schedule a Deferred Closing Date for that Excluded
Property on the date that is thirty (30) days following the day on which JRI
first determined that it could satisfy the conditions precedent to the Deferred
Closing (or, if the thirtieth (30th) day is not a Business Day, the next
succeeding Business Day thereafter). Similarly, if at any time prior to the
applicable Cure Cutoff Date, CBL determines that it is willing to waive any
condition or circumstance giving rise to a failure of condition precedent to the
Deferred Closing for any Excluded Property, CBL will notify JRI of that
determination and the parties will cooperate to schedule a Deferred Closing for
that Excluded Property on the date that is thirty (30) days following the date
on which CBL delivers the notice of waiver to JRI (or if the thirtieth (30th)
day is not a Business Day, the next succeeding Business Day thereafter). The
parties agree that time is of the essence with respect to the dates and time
periods referred to in this paragraph (b) and in paragraph (c) below.
Notwithstanding the foregoing, in the event that JRI determines in its judgment
exercised in good faith that it will not be able to cure any condition or
circumstance that caused a Property to be an Excluded Property, the Jacobs
Parties may notify CBL in writing of such determination and, unless CBL notifies
JRI in writing within ten (10) days of its receipt of JRI's notice that it has
elected to waive such circumstance or condition (it being understood that CBL
will not be entitled to waive the failure to obtain any required third-party
consents) and to close on the Excluded Property, this Agreement automatically
will terminate with respect to that Excluded Property and neither CBL nor the
Jacobs Parties will have any further obligation hereunder in respect of that
Excluded Property.
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(c) CBL Extension Right. CBL shall have the right, exercisable by
delivering written notice to JRI as soon as practical but in no event less than
two (2) Business Days prior to a scheduled Deferred Closing Date, to extend the
applicable Closing Date to a date not later than thirty (30) days after the
scheduled Deferred Closing Date if CBL determines in its good faith judgment
that such adjournment is reasonably necessary to enable CBL to satisfy the
conditions to Closing set forth in Section 7.2 and the Interest Contribution
Agreements and Deed Contribution Agreements, if applicable, with respect to the
Properties in such Deferred Closing (and JRI has not waived any of the
conditions in issue).
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
7.1 Conditions Precedent to Obligation of the REIT and the Operating
Partnership. The obligation of the REIT and the Operating Partnership to
consummate the transactions contemplated herein shall be subject to the
fulfillment on or before the Principal Closing Date or any Deferred Closing
Date, as applicable, of all of the following conditions, any or all of which may
be waived by the REIT and/or the Operating Partnership in their sole discretion:
(a) Delivery of Documents. The Jacobs Parties shall have delivered all of
the items required to be delivered to CBL pursuant to Section 6.2 for such
Closing (other than the items described in Section 6.2(k) which are governed by
Section 1.2).
(b) Accuracy of Representations and Warranties. Subject to Section 8.3(c),
the representations and warranties of JRI in Section 8.2 of this Agreement shall
be true and correct in all material respects as originally made and, if
applicable, as remade on and as of the Closing Date (or, if made as of a
specified date, as of such date), with appropriate modifications of those
representations and warranties to reflect actions taken or not taken by or on
behalf of JRI in accordance with the provisions of Article IV; provided,
however, that to the extent that the representations and warranties in Section
8.2 relate to Interests, Properties or Property Owners, for purposes of this
condition precedent to Closing, those references will be deemed to be references
only to the Interests, Properties and Property Owners being included at the
Closing at hand, and those representations and warranties specifically need not
be true and correct as originally made with respect to any Interest, Property or
Property Owner that is not being included in such Closing as permitted or
required by the terms of Section 6.4. Each of the Operating Partnership and the
REIT covenants and agrees that it will advise JRI of any respect in which it
believes any of JRI's representations and warranties is or becomes incorrect in
any material respect promptly after it first learns thereof.
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(c) Observance of Covenants. The Jacobs Parties shall have performed and
observed, in all material respects, all covenants and agreements in this
Agreement to be performed and observed by the Jacobs Parties as of the
applicable Closing Date.
(d) Closing Under the Interest Contribution Agreements. In the case of the
Principal Closing, the conditions precedent to be satisfied by the Contributors
under the Interest Contribution Agreements or of the applicable Property Owners
under the Deed Contribution Agreements, if applicable, with respect to each of
the Core Properties and at least nine (9) of the other Properties shall have
been satisfied or waived and all instruments, agreements, documents and
certificates required to be delivered by JRI and any other party thereunder
shall have been duly executed and delivered by JRI and any other party thereto
and, in the case of a Deferred Closing, the conditions precedent of the
Contributors under the Interest Contribution Agreements or of the applicable
Property Owners under the Deed Contribution Agreements, if applicable, with
respect to each of the Properties being contributed on such Closing Date shall
have been satisfied or waived and all instruments, agreements, documents and
certificates required to be delivered by JRI and any other party thereunder
shall have been duly executed and delivered by JRI and any other party thereto.
(e) No Injunction. No action, suit or legal or administrative proceedings
shall have been instituted by or before any agency, bureau, commission, court,
department, official, political subdivision, tribunal or other instrumentality
of any government, whether federal, state or local, domestic or foreign
(referred to herein as "Governmental Authority"), seeking to enjoin the
transactions contemplated by this Agreement and intended to occur at the related
Closing, other than any such proceeding initiated by or on behalf of CBL or any
of its affiliates.
(f) Transactions Not Prohibited. No statute, rule, regulation, temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation by the Jacobs Parties or any of the Property Owners
or holders of Interests therein of the transactions contemplated by this
Agreement and the Interest Contribution Agreements and Deed Contribution
Agreements, if applicable, to occur at the related Closing shall be in effect
or, if applicable, have been threatened by any Governmental Authority or any
third party, other than any such order or other legal restraint or prohibition
or threat thereof obtained or instituted by or on behalf of CBL or any of its
affiliates.
(g) CBL Stockholder Approval. The SCU Issuance Proposal shall have been
submitted for stockholder approval and approved by the holders of
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a majority of the shares of the REIT voted thereon in a meeting at which votes
are cast by holders of more than 50% of all outstanding shares entitled to vote
thereon.
(h) HSR Act. JRI and CBL shall have mutually concluded that no filing under
the HSR Act is required with respect to the transactions contemplated hereby,
or, if applicable, any waiting period applicable to the consummation of the
transactions contemplated hereby under the HSR Act shall have expired or been
terminated, and no action shall have been instituted by the United States
Department of Justice or the United States Federal Trade Commission challenging
or seeking to enjoin the consummation of the transactions contemplated hereby,
which action shall not have been withdrawn or terminated.
(i) Voting and Standstill Agreement. Each of the Jacobs Parties and Martin
J. Cleary shall have performed and observed, in all material respects, all
covenants and agreements to be performed and observed by them pursuant to the
Voting and Standstill Agreement as of the applicable Closing Date.
(j) Related Party Loans. JRI shall have provided CBL with written
confirmation from the lender of each related party loan or other obligation
(other than the Cary Note) identified on the financial statements for the six
(6) month period ended June 30, 2000 of any Property Owner being included in the
relevant Closing confirming that each such related party loan or other
obligation has been repaid in full or is being repaid in full at that Closing
from the cash portion of the Consideration being delivered by CBL at that
Closing.
(k) Refinancings. With respect to a Closing that involves any of Cary Towne
Center, Eastgate Mall or Fayette Mall, JRI shall have taken the actions and
received the consents outlined in Section 4.22 with respect to that Property.
7.2 Conditions Precedent to Obligations of the Jacobs Parties. The
obligation of the Jacobs Parties to consummate the transactions contemplated
herein shall be subject to the fulfillment on or before the Principal Closing
Date and each Deferred Closing Date of all of the following conditions, any or
all of which may be waived by the Jacobs Parties in their sole discretion:
(a) Receipt of Consideration. CBL shall have delivered the Consideration,
as adjusted pursuant to and payable in the manner provided for in this Agreement
and the Interest Contribution Agreements and Deed Contribution Agreements, if
applicable.
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(b) Delivery of Documents. CBL shall have delivered all of the items
required to be delivered to the Jacobs Parties pursuant to Section 6.3.
(c) Accuracy of Representations and Warranties. The representations and
warranties of CBL contained in Section 8.1 of this Agreement shall be true and
correct in all material respects as originally made and as remade on and as of
such Closing Date (or, if made as of a specified date, as of that date) as the
same may be modified to reflect any actions taken by or on behalf of CBL as
permitted herein.
(d) Observance of Covenants. CBL shall have performed and observed, in all
material respects, all covenants and agreements in this Agreement to be
performed and observed by CBL as of such Closing Date.
(e) Closing Under Interest Contribution Agreements. The conditions
precedent to be satisfied by the Operating Partnership in the Interest
Contribution Agreements and Deed Contribution Agreements, if applicable, with
respect to each of the Properties being contributed on such Closing Date shall
have been satisfied or waived and all instruments, agreements, documents and
certificates required to be delivered by the Operating Partnership thereunder
shall have been duly executed and delivered by the Operating Partnership.
(f) No Injunction. No action, suit or legal or administrative proceedings
shall have been instituted by or before any court or Governmental Authority
seeking to enjoin the transactions contemplated by this Agreement and intended
to occur at the related Closing, other than any such proceeding initiated by or
on behalf of the Jacobs Parties or any of their affiliates.
(g) Transactions Not Prohibited. No statute, rule, regulation, temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation by CBL of the transactions contemplated by this
Agreement to occur at the related Closing shall be in effect, or, if applicable,
have been threatened by any Governmental Authority or by any third party, other
than any such order or other legal restraint or prohibition or threat thereof
obtained or initiated by or on behalf of the Jacobs Parties or any of their
affiliates.
(h) CBL Approval. The board of directors of the REIT and the board of
directors of CBL Holdings I, Inc., as general partner of the Operating
Partnership, shall have duly and validly authorized each of the REIT and the
Operating Partnership to deliver the Consideration required hereunder and to
consummate each of the transactions contemplated hereby to occur at the related
Closing and such authorization shall not have been revoked or withdrawn.
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(i) CBL Stockholder Approval. The SCU Issuance Proposal shall have been
submitted for stockholder approval and approved by the holders of a majority of
the outstanding shares of the REIT voted thereon in a meeting at which votes are
cast by holders of more than 50% of all outstanding shares entitled to vote
thereon.
(j) REIT Stock. The board of directors of the REIT shall have reserved for
issuance and made available, free from preemptive rights, out of the REIT's
authorized but unissued common stock, solely for the purpose of issuance upon
conversion or exchange of the SCUs or the Common Units received upon exchange of
the SCUs into REIT Stock, the full number of shares of REIT Stock deliverable
upon conversion or exchange of all of the SCUs or the Common Units received upon
exchange of the SCUs and caused the REIT to pay any and all franchise tax with
respect thereto; and the REIT Stock issuable upon conversion of the SCUs shall
have been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(k) HSR Act. JRI and CBL shall have mutually concluded that no filing under
the HSR Act is required with respect to the transactions contemplated hereby,
or, if applicable, any waiting period applicable to the consummation of the
transactions contemplated hereby under the HSR Act shall have expired or been
terminated, and no action shall have been instituted by the United States
Department of Justice or the United States Federal Trade Commission challenging
or seeking to enjoin the consummation of the transactions contemplated hereby,
which action shall not have been withdrawn or terminated.
(l) REIT Qualification. At the time of such Closing, (i) the REIT shall not
have revoked its prior election pursuant to Section 856(c)(1) of the Code to be
taxed as a real estate investment trust, and shall be in compliance with all
applicable federal income tax laws, rules and regulations, including the Code,
necessary to permit it to be taxed as a real estate investment trust, (ii) the
REIT shall not have taken any action or have failed to take any action which,
alone or in conjunction with other factors, would reasonably be expected to
result in the loss of its status as a real estate investment trust for federal
income tax purposes, and (iii) neither the REIT nor the Operating Partnership
shall have taken any action or have failed to take any action which, alone or in
conjunction with other factors, would reasonably be expected to result in (A)
the loss of the Operating Partnership's treatment as a partnership for federal
income tax purposes, (B) the Operating Partnership being treated as a "publicly
traded partnership" within the meaning of such term as used in Section 7704(b)
of the Code or (C) the failure of any entity other than the Operating
Partnership to which direct or indirect interests in the Properties are
transferred pursuant to Section 1.1 or 2.1 hereof to be treated
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for federal income tax purposes as an entity whose separate existence from the
Operating Partnership is disregarded at the time of the relevant transfer.
(m) Voting and Standstill Agreement. Each of the CBL Principals (as defined
in the Voting and Standstill Agreement), the REIT and the Operating Partnership
shall have performed and observed, in all material respects, all covenants and
agreements to be performed and observed by it pursuant to the Voting and
Standstill Agreement as of the applicable Closing Date.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 Representations and Warranties of CBL. In order to induce the Jacobs
Parties, the Associates and the participating Outside Partners, and their
respective affiliates, to carry out the transactions contemplated by this
Agreement, as of the date of this Agreement, each of the REIT and the Operating
Partnership, jointly and severally, represents and warrants to, and agrees with,
each of the Jacobs Parties, for their own benefit and for the benefit of each of
the other contributing entities, as follows:
(a) Organization, Good Standing and Authority. The Operating Partnership is
a limited partnership and the REIT is a corporation, each of which is duly
organized, validly existing and in good standing under the laws of the State of
Delaware, is duly qualified to do business in all jurisdictions where such
qualification is necessary to carry on its business as now conducted, except
where failure to do so would not interfere in any material respect with CBL's
ability to complete any of the transactions contemplated in this agreement or
otherwise have a material adverse effect on all of the following collectively
taken as a whole: the assets, liabilities, financial condition, earnings,
operations and prospects of the REIT, the Operating Partnership and their
respective subsidiaries, or the OP Units of the Operating Partnership (the "OP
Units") and the capital stock of the REIT, determined either (i) without giving
effect in whole or in part to the transactions contemplated herein, or (ii)
after giving such effect (any such interference or adverse effect, a "CBL
Material Adverse Effect"), and/or each of Operating Partnership's designees, as
applicable, is or will be prior to the applicable Closing duly qualified to
conduct business in the respective states in which such designee is acquiring a
Property except where failure to do so would not have a CBL Material Adverse
Effect, and each of the Operating Partnership and the REIT is authorized to
consummate the transactions contemplated hereby and to fulfill all of its
respective obligations hereunder and under all documents contemplated hereunder
to be executed by the Operating Partnership and/or the REIT, and has all
necessary power to execute and deliver this Agreement and all documents
contemplated hereunder to be executed by the Operating Partnership and/or the
REIT including,
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without limitation, the Interest Contribution Agreements and Deed Contribution
Agreements, if applicable, and to perform all of its respective obligations
hereunder and thereunder. CBL has delivered to JRI true, correct and complete
copies of the OP Partnership Agreement as currently in effect, the certificate
of limited partnership of the Operating Partnership, the certificate of
incorporation of the REIT and the bylaws of the REIT.
(b) CBL's Authorization and Binding Effect. This Agreement has, and all
documents contemplated hereunder to be executed by the Operating Partnership
and/or the REIT including, without limitation, the Interest Contribution
Agreements and Deed Contribution Agreements, if applicable, when executed and
delivered will have been duly authorized by all requisite partnership or
corporate action on the part of the Operating Partnership and the REIT and each
is, or will be, upon execution and delivery, as applicable, the valid and
legally binding obligation of the Operating Partnership and the REIT, as the
case may be, enforceable in accordance with its respective terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
generally and to general principles of equity (including concepts of
materiality, reasonableness, good faith and fair dealing), regardless of whether
considered in a proceeding in equity or at law. Neither the execution and
delivery of this Agreement and all documents contemplated hereunder to be
executed by the Operating Partnership or the REIT, nor the performance of the
obligations of the Operating Partnership or the REIT hereunder or thereunder
will result in the violation of any provision of the OP Partnership Agreement,
the certificate of limited partnership of the Operating Partnership or the
certificate of incorporation or bylaws of the REIT, or will conflict with any
order or decree of any court or governmental instrumentality of any nature by
which the Operating Partnership or the REIT is bound or to which it is subject.
(c) Capitalization.
(i) OP Units. The capitalization of the Operating Partnership is as
set forth in Exhibit A of the OP Partnership Agreement. As of the date
hereof, an aggregate of 39,857,984 OP Units are issued and outstanding, of
which 2,875,000 are 9.0% Series A Cumulative Redeemable Preferred Units and
36,982,984 are common units (the common units of the Operating Partnership
are referred to herein as "Common Units"). There are no restrictions on the
transfer of the SCUs to be issued hereunder other than those contained in
the OP Partnership Agreement or the First Amendment, and those arising from
federal and applicable state securities laws. All currently issued and
outstanding OP Units were, and all of the SCUs to be issued in connection
with the transactions contemplated herein and all of the Common Units
issuable upon exchange of the
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SCUs issued hereunder or under the Interest Contribution Agreements or Deed
Contribution Agreements, if applicable, will be, duly authorized and
validly issued in accordance with the terms of the OP Partnership Agreement
and in compliance with federal and applicable state securities laws, and,
are, or will be in connection with the transactions contemplated herein, as
the case may be, fully paid and non-assessable with no pre-emptive rights
and the SCUs to be issued in connection with the transactions contemplated
herein will be issued upon the terms provided in the OP Partnership
Agreement, as the same is to be amended as permitted or required hereunder.
Except as set forth on Schedule 8.1(c) and in the SEC Documents and except
as created by this Agreement, as of the date hereof, there are no
outstanding subscriptions, options, warrants, preemptive or other rights or
other arrangements or commitments obligating the Operating Partnership to
issue any OP Units. At each Closing (or ICOA Option Closing), upon receipt
of the Interests or Properties being contributed in exchange for SCUs, the
Operating Partnership will issue the SCUs to be issued hereunder free and
clear of all liens other than those suffered or permitted or granted by the
Contributors and, as of such Closing, each of the Contributors or its
respective partners and shareholders, as the case may be, will be admitted
as a limited partner of the Operating Partnership. The issuance of the SCUs
to the Contributors at each Closing (or ICOA Option Closing) will not
require any approval or consent of any Person except any such approval as
shall have been obtained on or prior to the Principal Closing Date.
Assuming each of the Contributors, or its respective partners and
shareholders, as the case may be, is either an "accredited investor" as
defined in Rule 501 under the Securities Act of 1933, as amended (the
"Securities Act"), or a person who is not an accredited investor but was
advised by a qualified purchaser's representative (and there are no more
than thirty-five (35) such non-accredited investors), the issuance of the
SCUs hereunder is exempt from registration under the Securities Act and the
applicable state securities laws. The issuance of Common Units upon the
exchange of the SCUs delivered under this Agreement or under the Interest
Contribution Agreements or Deed Contribution Agreements, if applicable, (a)
will be free and clear of all liens other than those suffered or permitted
or granted by the Contributors, as the case may be, (b) will not require
any approval or consent of any Person except any such approval or consent
that shall have been obtained on or prior to the Principal Closing Date,
and (c) assuming each of the Contributors, or its respective partners and
shareholders, as the case may be, is either an "accredited investor" as
defined in Rule 501 under the Securities Act or a person who is not an
accredited investor but was advised by a qualified purchaser's
representative (and there are no more than thirty-five (35) such
non-accredited investors), will be exempt from registration under the
Securities Act and applicable state securities laws.
(ii) Stock. Schedule 8.1(c) and the SEC Documents set forth as of
August 31, 2000 (i) the authorized capital stock of the REIT, (ii) the
total
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number of shares of such capital stock outstanding, which number is
27,875,307, of which 2,875,000 are preferred shares and 25,000,307 are
common shares (the common shares of the REIT are referred to herein as the
"REIT Stock") and (iii) for each class and series of capital stock of the
REIT, the total number of options and warrants to acquire such capital
stock and any commitments to issue or grant any of the foregoing. All of
the outstanding shares of REIT Stock are duly and validly issued, fully
paid and non-assessable and not subject to any preemptive rights. If and
when issued, the REIT Stock issuable upon exchange of the SCUs delivered
under this Agreement or under the Interest Contribution Agreements or Deed
Contribution Agreements, if applicable, pursuant to the OP Partnership
Agreement will be duly authorized, validly issued, fully paid and
non-assessable and not subject to any preemptive rights. The issuance of
REIT Stock upon exchange of the SCUs delivered under this Agreement or
under the Interest Contribution Agreements or Deed Contribution Agreements,
if applicable, (a) will be free and clear of all liens and other claims
other than those suffered or permitted or granted by the Contributors
(including, for example, the potential restrictions contained in the OP
Partnership Agreement and the Voting and Standstill Agreement), as the case
may be, (b) will not require any approval or consent of any Person except
any such approval or consent that shall have been obtained on or prior to
the Principal Closing Date, and (c) assuming each of the Contributors, or
its respective partners and shareholders, as the case may be, is either an
"accredited investor" as defined in Rule 501 under the Securities Act or a
person who was advised by a qualified purchaser's representative (and there
are no more than 35 of such non-accredited investors), will be exempt from
registration under the Securities Act and applicable state securities laws.
(d) Conflicting Agreements and Other Matters. None of the REIT, the
Operating Partnership or any of their affiliates is a party to any contract or
agreement or subject to any articles of incorporation or other corporate
restriction compliance which could reasonably be expected to have a CBL Material
Adverse Effect. Neither the execution and delivery of the documents relating to
the transactions contemplated herein nor fulfillment of nor compliance with the
terms and provisions thereof, nor the issuance of the SCUs to be issued to the
Contributors pursuant to this Agreement and the Interest Contribution Agreements
and Deed Contribution Agreements, if applicable, will (i) violate any provision
of any law presently in effect having applicability to the REIT or the Operating
Partnership or any of their properties, except such violations as could not
reasonably be expected to have a CBL Material Adverse Effect, (ii) except for
the First Amendment contemplated in this Agreement, conflict with or result in a
breach of or constitute a default under the OP Partnership Agreement, charter or
bylaws or any other organizational document of either the REIT or the Operating
Partnership, (iii) except as set forth in Schedule 8.1(d), require any consent,
approval or notice under, or conflict with or result in a breach of, constitute
a
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default or accelerate any right under, any note, bond, mortgage, license,
indenture or loan or credit agreement, or any other agreement or instrument, to
which the REIT or the Operating Partnership is a party or by which any of its
respective properties is bound, except such consents, approvals, notices,
conflicts, breaches or defaults as could not reasonably be expected to have a
CBL Material Adverse Effect or impair or interfere with consummation of the
transactions contemplated herein, or (iv) result in, or require the creation or
imposition of, any lien upon or with respect to any of the properties now owned
or hereafter acquired by the REIT or the Operating Partnership. In addition,
neither the REIT nor the Operating Partnership has any knowledge of any facts or
circumstances that, individually or in the aggregate, could reasonably be
expected to have a CBL Material Adverse Effect or to impair or interfere with
consummation of the transactions contemplated herein.
(e) Litigation; Proceeding, Etc. Except as set forth in the SEC Documents,
there is no action, suit, notice of violation, proceeding or investigation
pending or, to the best knowledge of the REIT and the Operating Partnership,
threatened against or affecting the REIT or the Operating Partnership or any of
their respective properties before or by any Governmental Authority which (i)
challenges the legality, validity or enforceability of the transactions
contemplated herein or of any of the documents relating to the transactions
contemplated herein or (ii) could (individually or in the aggregate) reasonably
be expected to have a CBL Material Adverse Effect or (iii) would (individually
or in the aggregate) impair the ability of either the REIT or the Operating
Partnership to perform fully on a timely basis any obligations which it has
under any of the documents relating to the transactions contemplated herein.
(f) No Default or Violation. Except as set forth in the SEC Documents,
neither the Operating Partnership nor the REIT has received written notice that
it is (i) in default under or in violation of any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound, except such defaults or violations
as could not reasonably be expected to have a CBL Material Adverse Effect, (ii)
in violation of any order of any Governmental Authority, which could reasonably
be expected to have a CBL Material Adverse Effect or (iii) in violation of any
law which could reasonably be expected to (A) adversely affect the legality,
validity or enforceability of the documents relating to the transactions
contemplated herein, (B) have a CBL Material Adverse Effect, or (C) adversely
impair either the REIT's or the Operating Partnership's ability or obligation to
perform fully on a timely basis any obligation which it has under any of the
documents relating to the transactions contemplated herein.
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(g) Governmental Consents, Etc. Except as may be required under any federal
or applicable state securities laws in connection with the performance by CBL of
its obligations under the OP Partnership Agreement with respect to certain
registration rights granted thereunder and assuming the accuracy of the
representations and warranties of, and the performance of the agreements of, the
Contributors set forth herein and under the applicable Interest Contribution
Agreement or Deed Contribution Agreement, no authorization, consent, approval,
waiver, license, qualification or formal exemption from, nor any filing,
declaration, qualification or registration with, any Governmental Authority or
any securities exchange is required in connection with (a) the execution,
delivery or performance by CBL of this Agreement, (b) the issuance of the SCUs
pursuant to this Agreement and the Interest Contribution Agreements and Deed
Contribution Agreements, if applicable, or (c) the issuance of REIT Stock or
Common Units upon the exchange of any such SCUs, except for those that (i) have
been made or obtained by CBL as of the date hereof or (ii) are set forth in
Schedule 8.1(g) and by the Principal Closing shall be made or received by CBL.
At the Principal Closing Date, CBL will have made all filings and given all
notices to Governmental Authorities and obtained all necessary registrations,
declarations, approvals, orders, consents, qualifications, franchises,
certificates, permits and authorizations from any Governmental Authorities, to
own or lease its properties and to conduct its businesses as currently owned,
leased or conducted, except where failure to do so could not reasonably be
expected to have a CBL Material Adverse Effect. Assuming that the SCU Issuance
Proposal is approved by the REIT's stockholders, at the Principal Closing Date,
all such registrations, declarations, approvals, orders, consents,
qualifications, franchises, certificates, permits and authorizations, the
failure of which to file, give notice of or obtain could reasonably be expected
to have a CBL Material Adverse Effect or to impair or interfere with the
consummation of the transactions contemplated herein, will have been filed,
notified or obtained and, to the extent applicable, will be in full force and
effect.
(h) Private Offering. Neither the Operating Partnership nor the REIT nor
any person acting on their behalf has taken or will take any action (including,
without limitation, any offering of any securities of the Operating Partnership
or the REIT under circumstances which would require the integration of such
offering with the issuance of the SCUs under the Securities Act) which might
subject the SCUs or the issuance of REIT Stock or Common Units, in exchange for,
or upon redemption of, any such SCUs to the registration requirements of Section
5 of the Securities Act.
(i) No Other Liabilities. Neither the REIT nor any of its subsidiaries or
affiliates (including the Operating Partnership) has any material liability,
whether absolute, accrued, contingent or otherwise, except liabilities
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(i) reflected on the consolidated balance sheet of the REIT as of June 30, 2000
or in the SEC Documents, or (ii) that (A) were incurred by the REIT or its
subsidiaries or affiliates after June 30, 2000 in the ordinary course of their
business and in compliance with Section 4.12 hereof or (B) were incurred before
June 30, 2000, but are not required by generally accepted accounting principles
consistently applied to be reflected on such balance sheet and (C) in either
event, could not reasonably be expected to have a CBL Material Adverse Effect.
(j) Status of OP Partnership Agreement; Taxes and REIT Status. The OP
Partnership Agreement is in full force and effect; a true, complete and correct
copy thereof has been delivered to JRI; and there are no dissolution,
termination or liquidation proceedings pending or contemplated with respect to
the REIT or the Operating Partnership. The Operating Partnership is, and has
been since the date of its formation, taxable as a "partnership" as defined in
Section 7701(a) of the Code and is not, and has not been since the date of its
formation, a "publicly traded partnership" within the meaning of such term as
used in Section 7704(b) of the Code. The Operating Partnership intends to
continue to operate in a manner that does not cause it to be treated as a
publicly traded partnership within the meaning of Section 7704(b) of the Code.
Each of the entities to which direct or indirect interests in the Properties
will be transferred pursuant to Section 1.1 or 2.1 hereof will be, as of the
date of the relevant Closing, an entity whose separate existence from the
Operating Partnership is disregarded for federal income tax purposes. Each of
the Operating Partnership and the REIT has filed all tax returns that are
required to be filed with any Governmental Authority (or has obtained valid
extensions of the filing deadlines therefor which extensions have not yet
expired) and has paid all taxes due pursuant to the tax returns or any
assessment received by it or otherwise required to be paid, except taxes being
contested in good faith by appropriate proceedings and for which adequate
reserves or other provisions are maintained, and except for the filing of tax
returns as to which the failure to file could not, individually or in the
aggregate, have a CBL Material Adverse Effect. The REIT (i) has elected to be
taxed as a REIT commencing with its taxable year ending December 31, 1993 and
such election has not been terminated or revoked, (ii) qualified for federal
income taxation as a REIT for the year ended December 31, 1999, and will
continue to so qualify for its current taxable year, (iii) operates, and intends
to continue to operate, in a manner so as to qualify as a REIT, and (iv) has not
sold or otherwise disposed of any assets which could give rise to a material
amount of tax pursuant to any election made by the REIT under Notice 88-19,
1988-1 CB 486 and does not expect to effect any such sale or other disposition.
(k) Compliance with Laws. To the knowledge of CBL, neither the Operating
Partnership nor the REIT has been in or is in, and neither of them has received
written notice of, violation of or default with respect to any law or
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any decision, ruling, order or award of any arbitrator applicable to it or its
business, properties or operations, except for violations or defaults that,
individually or in the aggregate, could not reasonably be expected to have a CBL
Material Adverse Effect or impair or interfere with the consummation of the
transactions contemplated herein.
(l) SEC Documents. The REIT has filed with the Securities and Exchange
Commission (the "Commission") all reports, schedules, forms, statements and
other documents required by the Securities Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act") or the rules or regulations promulgated
thereunder to be filed by the REIT in each case in the form and with the
substance prescribed by either such Act or such rules or regulations
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the "SEC Documents") including,
without limitation, proxy information and solicitation materials, in each case
in the form and with the substance prescribed by either such Act or such rules
or regulations. CBL has delivered or made available to JRI all SEC Documents. As
of their respective filing dates (or if amended, revised or superseded by a
subsequent filing with the Commission then on the date of such subsequent
filing), the SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the Commission promulgated thereunder and other
federal, state and local laws, rules and regulations applicable to the SEC
Documents and none of the SEC Documents (including any and all financial
statements included therein) as of such dates contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The consolidated
financial statements of the REIT, the Operating Partnership and, if any, all
affiliates of CBL included in all SEC Documents, including any amendments
thereto (the "SEC Financial Statements"), complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto and, as at the dates as of
which the same were prepared and for the periods then ended, fairly presented
the financial condition and results of operations of CBL and its affiliates on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied throughout all such periods.
(m) No Material Adverse Change. Since December 31, 1999, no CBL Material
Adverse Effect has occurred or exists except as may be disclosed in any SEC
Documents filed subsequent to such date.
(n) No Undisclosed Events or Circumstances. No event or circumstance has
occurred or exists with respect to the REIT, the Operating
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Partnership or their subsidiaries or affiliates or their respective businesses,
properties, prospects, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or announcement
prior to the date hereof by CBL but which has not been so publicly announced or
disclosed.
(o) Material Contracts. The SEC Documents include a correct and complete
list of the following with respect to the Operating Partnership and the REIT
which are required to be disclosed in the SEC Documents: (1) voting or other
agreements with any unit holder or shareholder having beneficial ownership of 5%
or more of the OP Units of the Operating Partnership or of the shares of REIT
Stock issued and outstanding prior to the transactions contemplated by this
Agreement or with any director or officer of the Operating Partnership or the
REIT or of any material subsidiary or affiliate thereof and all shareholders'
agreements and voting trusts; and (2) agreements not made in the ordinary course
of business which would reasonably be expected to result in a CBL Material
Adverse Effect.
(p) No Merger Agreements. As of the date hereof, except as set forth in
Schedule 8.1(p), neither the REIT nor the Operating Partnership has entered into
any agreement with any person or Governmental Authority, which has not been
terminated as of the date of this Agreement and under which there remains any
material liability or obligation thereof with respect to a merger or
consolidation with either the REIT or the Operating Partnership, or any other
acquisition of a substantial amount of the assets of the REIT or the Operating
Partnership, which would reasonably be expected to result in a CBL Material
Adverse Effect.
(q) Certain Actions by CBL. None of the Operating Partnership, the REIT or
any material subsidiary or affiliate thereof has (i) made a general assignment
for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or
suffered the filing of any involuntary petition by such entity's creditors,
(iii) suffered the appointment of a receiver to take possession of all or
substantially all of such entity's assets, (iv) suffered the attachment or other
judicial seizure of all, or substantially all, of such entity's assets, (v)
admitted in writing CBL's inability to pay its debts as they come due, or (vi)
made an offer of settlement, extension, or composition to its creditors
generally.
(r) CBL's Knowledge. As used in this Agreement, the words "to the knowledge
of CBL" and other words of similar tenor mean only the current, actual,
conscious (and not constructive, imputed or implied) knowledge of the following
designees of CBL, without having made a review of files or other inquiry:
Charles B. Lebovitz, Stephen D. Lebovitz, John N. Foy and Keith Honnold.
Anything herein to the contrary notwithstanding, no such designee shall
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have any personal liability or obligation whatsoever with respect to any of the
matters set forth in this Agreement, the Interest Contribution Agreements, the
Deed Contribution Agreements, and any other agreements, documents related
thereto or contemplated hereunder or thereunder or any of the representations
made by CBL being or becoming untrue, inaccurate or incomplete in any respect.
(s) CBL's Acknowledgment. Each of the REIT and the Operating Partnership
fully understands the nature and significance of the transactions provided for
in this Agreement and the limitations provided in Section 1.3 and elsewhere
herein.
8.2 Representations and Warranties of JRI. In order to induce CBL to carry
out the transactions contemplated by this Agreement, as of the date of this
Agreement, JRI represents and warrants to and agrees with CBL, as follows:
(a) Organization, Good Standing and Authority; Binding Effect.
(i) JRI is a limited partnership duly organized, validly existing and
in good standing under the laws of the State of Delaware, and is duly
qualified to do business in all jurisdictions where such qualification is
necessary to carry on its business as now conducted, except where failure
to do so would not have a material adverse effect on the ability of JRI to
fulfill its responsibilities under this Agreement. Each of the Jacobs
Trusts is a trust, duly organized, validly existing and in good standing
under the laws of the state of its organization, and is duly qualified to
do business in all jurisdictions where such qualification is necessary to
carry on its business as now conducted, except where failure to do so would
not have an adverse effect on the trust's ability to fulfill its
responsibilities under this Agreement. Each of the Jacobs Parties has full
power and authority to enter into this Agreement and all documents
contemplated hereunder to be executed by the Jacobs Parties, to consummate
the transactions contemplated hereby and thereby and to fulfill all of its
obligations hereunder and the documents contemplated hereunder to be
executed by the Jacobs Parties. This Agreement has been, and all documents
contemplated hereunder to be executed by the Jacobs Parties, including,
without limitation, the Interest Contribution Agreements, when executed and
delivered will have been, duly authorized and approved by all necessary
action of the Jacobs Parties, has been or will be upon execution and
delivery duly executed and delivered by each of the Jacobs Parties and
constitutes, or will, upon execution and delivery, constitute a legal,
valid and binding obligation of each such Jacobs
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Party, enforceable against each of the Jacobs Parties in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws relating to or
affecting creditors' rights generally from time to time in effect and to
general principles of equity (including concepts of materiality,
reasonableness, good faith and fair dealing), regardless whether considered
in a proceeding in equity or at law.
(ii) The execution, delivery, and performance by each of the Jacobs
Parties of this Agreement and the consummation of the transactions
contemplated hereby (including the transfer of the Interests to the
Operating Partnership) will not (A) subject to clause (B), violate any
provision of the governing documents of any of the Jacobs Parties; (B)
require any of the Jacobs Parties to obtain any consent, approval, or
action of, or make any filing with or give any notice to, any Governmental
Authority or any other Person except the consents set forth on Schedule
8.2(a)(ii) attached hereto (the "Jacobs Third Party Consents") and filings
under the HSR Act; (C) subject to clause (B), conflict with, result in the
breach of or constitute a default under any lease, note, mortgage, or other
binding agreement to which any of the Jacobs Parties is a party or by or to
which any of the Jacobs Parties or any Property Owners or Properties may be
bound; (D) violate any order or decree of any court, arbitrator or other
Governmental Authority against or binding upon any of the Jacobs Parties or
any of the Property Owners or Properties; (E) violate any law or regulation
of any Governmental Authority to which any of the Jacobs Parties or any of
the Interests or Properties is subject; or (F) result in, or require the
creation or imposition of, any lien upon or with respect to any of the
Properties or Interests, other than as contemplated herein; except, in the
case of the preceding clauses (B), (C), (D) and (E), where the failure to
obtain a consent, approval or action or where the occurrence of such a
conflict, breach, default or violation, individually or in the aggregate,
would not have a material adverse effect on the business, results of
operations or financial operation of a Property Owner and/or its related
Property (a "Property Material Adverse Effect") or impair or interfere in
any material respect with the consummation of the transactions contemplated
herein. In addition, to JRI's knowledge, no facts or circumstances exist
that, individually or in the aggregate, could reasonably be expected to
have a Property Material Adverse Effect or impair or interfere in any
material respect with the consummation of the transactions contemplated
herein.
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(b) Title to Interests and Interests in Weston Management.
(i) The Interests have been duly authorized and validly issued in
accordance with the constituent organizational documents of the issuers
thereof and applicable law. To JRI's knowledge, the Contributors,
immediately preceding each Closing, will own 100% of the Interests to be
contributed to the Operating Partnership in such Closing (and, in the case
of an ICOA Closing, will own 100% of the Interests to be contributed to the
Operating Partnership in such Closing and in the related ICOA Option
Closing(s)), free and clear of all rights, liens, claims and encumbrances
other than claims or encumbrances arising pursuant to the organizational
documents of the relevant issuer of those Interests and claims arising
pursuant to this Agreement, and subject to restrictions on transfer under
federal and state securities laws. Except as set forth on Schedule
8.2(b)(i), none of the Jacobs Parties or the Property Owners controlled
directly or indirectly by any of the Jacobs Parties has pledged its
Interests or consented to the pledge or encumbrance of any of the
Interests. The outstanding partnership interests in Weston Management have
been duly authorized and validly issued in accordance with the certificate
of limited partnership and partnership agreement of Weston Management and
applicable law. The Jacobs Trusts, immediately preceding the Principal
Closing, will own directly or indirectly all of the outstanding partnership
interests in Weston Management, free and clear of all rights, liens, claims
and encumbrances other than claims or encumbrances arising pursuant to the
certificate of limited partnership or partnership agreement of Weston
Management and applicable law and pursuant to this Agreement and
restrictions on transfer under federal and state securities laws.
(ii) All documents comprising the partnership agreement of JRI
(including, without limitation, all amendments, supplements and
modifications thereof and all assignments with respect thereto, the "JRI
Partnership Agreement") and all documents comprising the constituent
organizational documents of each of the other Jacobs Parties (including,
without limitation, all amendments, supplements and modifications thereof
and all assignments with respect thereto) are described on Schedule
8.2(b)(ii) attached hereto, and, prior to the date hereof, a true, correct
and complete copy of the JRI Partnership Agreement has been delivered to
the Operating Partnership or its counsel. The JRI Partnership Agreement and
each of the constituent organizational documents of the other
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Jacobs Parties identified on Schedule 8.2(b)(ii) is in full force and
effect.
(c) Adverse Claims, Litigation and Proceedings. Except as set forth on
Schedule 8.2(c) hereto or on any other disclosure schedules heretofore delivered
to the Operating Partnership, there are, to JRI's knowledge, no actions, claims,
suits, investigations, arbitrations or other proceedings pending or threatened
against or affecting any of the Jacobs Parties, the Property Owners, Weston
Management or any of the Properties other than those which, individually or in
the aggregate with other such actions, claims, suits, investigations and
proceedings not disclosed, would not impair or interfere in any material respect
with the consummation of the transactions contemplated herein or have a Property
Material Adverse Effect. JRI has received no written notice that it is (i) in
default under or in violation of any indenture, loan or credit agreement or any
other agreement or instrument to which it or any Property Owner is a party or by
which it, any Property Owner or any Property is bound, (ii) in violation of any
order of any Governmental Authority, or (iii) in violation of any law which
could reasonably be expected to (A) adversely affect the legality, validity or
enforceability of the documents relating to the transactions contemplated
herein, or (B) adversely impair any of the Jacobs Parties' ability or obligation
to perform fully on a timely basis any obligation which it has under the
documents relating to the transactions contemplated herein. To JRI's knowledge,
(x) none of the Property Owners is in breach of, or default under, any
indenture, loan or credit agreement or any other material agreement or
instrument to which such Property Owner is a party or by which it or its
respective Property is bound and (y) no event has occurred that, with the giving
of notice or the passage of time, or both, would constitute a default under any
such agreement or instrument.
(d) Compliance with Laws.
(i) To the knowledge of JRI, none of the Jacobs Parties or Property
Owners is in violation of any material law, regulation, order or decree of
any Governmental Authority, court order, decision, ruling, order or award
of any arbitration other than a violation which, individually or in the
aggregate with other such violations, would not impair or interfere in any
material respect with the consummation by it of the transactions
contemplated herein or have a Property Material Adverse Effect. Except as
set forth on Schedule 8.2(d) hereto, JRI has not received any notice of
violation or claimed violation of any such law, regulation or decree, or
pending regulatory proceeding, action or investigation with respect
thereto, or any threat by any Governmental Authority to take regulatory
action against JRI or any of the Properties by reason of any such violation
or claimed violation other than such of the foregoing as, individually or
in the aggregate, would not impair or interfere in any material respect
with the consummation of the transactions contemplated herein or have a
Property
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Material Adverse Effect. To JRI's knowledge, except as set forth on
Schedule 8.2(d), no Property Owner has received any written notice, within
the twelve (12) months preceding the date hereof, from any Governmental
Authority having jurisdiction over such Property Owner or its Property,
asserting that such Property Owner or Property or any part thereof is in
violation of any law, ordinance or regulation applicable to such Property,
which individually or in the aggregate would have a Property Material
Adverse Effect.
(ii) Except as set forth on Schedule 8.2(d) hereto or on any other
disclosure schedules heretofore delivered to the Operating Partnership, JRI
has not received any written or other actual notice within the past twelve
(12) months from any Governmental Authority having jurisdiction over any of
the Jacobs Parties or the Property Owners of any violation of any
employment or other regulatory law, order, regulation or requirement
relating to the management of the Properties that remains uncured and
which, individually or in the aggregate with other such violations which
remain uncured, would impair or interfere in any material respect with the
consummation of the transactions contemplated herein or have a Property
Material Adverse Effect.
(e) Intellectual Property of Jacobs Parties. Except as set forth in
Schedule 8.2(e), to the knowledge of JRI, none of the Jacobs Parties or the
Property Owners is infringing upon any intellectual property rights of any other
Person nor, to the knowledge of JRI, is any other Person infringing on any of
the Jacobs Parties' or any Property Owner's rights in respect of the
intellectual property owned and used by any of such entities.
(f) Taxes.
(i) To the knowledge of JRI, except for such matters as, individually
or in the aggregate with other such matters, would not have a Property
Material Adverse Effect, (A) all tax returns required to be filed on or
before the date hereof (including any valid extensions of time to file such
tax returns) by or on behalf of each Property Owner have been filed through
the date hereof or will be filed on or before the Closing Date with respect
to its related Property in accordance with all applicable laws; (B) except
as set forth on Schedule 8.2(f), there is no action, suit or proceeding
pending against, or with respect to, any of the Property Owners for any
taxes, nor has any claim for additional taxes been asserted by any such
authority; and (C) all taxes reflected upon or required to be reflected
upon a tax return so filed or so to be filed on or before the applicable
Closing Date have been paid or will be paid on or before such Closing
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Date, unless such taxes are being contested in good faith and adequate
reserves for the payment of such taxes have been established by the
applicable Property Owner.
(ii) As of the date hereof, and except as set forth on Schedule 8.2(f)
hereto or any other disclosure schedules heretofore delivered to the
Operating Partnership, there is no pending or, to JRI's knowledge,
threatened tax audit of any tax return filed by or on behalf of any
Property Owner or with respect to any of any Property Owner's income,
operations, properties or assets or any tax return by or on behalf of any
other Person as to which any Property Owner may have liability for any such
Person's taxes (whether by operation of law or by contract).
(g) Permits. To the knowledge of JRI, each of the Property Owners and
Weston Management has all permits that are necessary for the ownership, use,
operation and licensing of the management of its Properties (or, in the case of
Weston Management, the Properties) and is not in violation of any such permit,
except to the extent the failure to possess or the violation of such permit
would not, individually or in the aggregate, have a Property Material Adverse
Effect or prevent the transactions contemplated herein.
(h) Insolvency. There are no attachments, executions or assignments for the
benefit of creditors, or voluntary or involuntary proceedings in bankruptcy, or
under any other debtor relief laws, contemplated by or pending or, to the
knowledge of JRI, threatened against any of the Jacobs Parties or the Property
Owners or Weston Management.
(i) Property Owners and Weston Management.
(i) Each of the Property Owners and Weston Management is duly
organized and validly existing under the laws of its jurisdiction of
organization and has the power and authority to carry on its business as
now being conducted;
(ii) each Property Owner and Weston Management is duly qualified to do
business and is in good standing in each jurisdiction in which the nature
of its business or the ownership and/or leasing of its properties makes
such qualification necessary, other than in such jurisdictions where the
failure to be so qualified or licensed, individually or in the aggregate,
could not reasonably be expected to have a material adverse effect on the
entity's business or operations as currently conducted;
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(iii) none of the Property Owners has conducted or currently conducts
any business or has owned or owns any assets other than cash and investment
securities and direct or indirect interests in a Property and assets
relating thereto;
(iv) Schedule 8.2(i)(iv) attached hereto identifies for each Property
Owner and Weston Management the relevant certificate of limited partnership
or certificate of formation, as applicable, the relevant partnership or
operating agreement, as applicable, and in each case all amendments thereto
through the date of this Agreement, and JRI has delivered to the Operating
Partnership complete and correct copies of each of such instruments,
agreements and amendments;
(v) to JRI's knowledge, none of the Property Owners is in breach of,
or default under, the constituent organizational documents of such Property
Owner, no partner or member of any Property Owner is in breach of, or
default under, the organizational documents of such Property Owner and no
event has occurred that, with the giving of notice or the passage of time,
or both, would constitute a default under the constituent organizational
documents of any of the Property Owners;
(vi) Exhibit B sets forth the name and percentage interest of each of
the partners or members, as applicable, in each of the Property Owners as
of the date of this Agreement;
(vii) Except as identified on Schedule 8.2(i)(vii) or Schedule 7.1(j),
no partner or member or other affiliate of any of the Property Owners has
made a loan to such Property Owner that is still outstanding on the date
hereof and none of the Contributors has any outstanding capital commitments
to any of the Property Owners;
(viii) Schedule 8.2(i)(viii) attached hereto identifies the management
contracts (the "Management Contracts") and the leasing contracts (the
"Leasing Contracts") related to each of the Properties, and in each case
all amendments thereto through the date of this Agreement, and JRI has
delivered to the Operating Partnership complete and correct copies of each
of such agreements and amendments;
(ix) the Management Contracts and the Leasing Contracts comprise all
of the management and leasing agreements between the Property Owners and
any other Persons, and other than the parties to the Management Contracts
and the Leasing Contracts, there is no property
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manager, leasing manager, developer or entity engaged in a similar capacity
with respect to any Property Owner;
(x) Schedule 8.2(i)(x) attached hereto identifies each Person for whom
Weston Management is presently performing or has previously performed
management and/or leasing services and the property or properties to which
those services relate;
(xi) immediately before the Principal Closing, the Management
Contracts and Leasing Contracts with respect to each of the Properties
being included in the Principal Closing will be owned by Weston Management
free and clear of all liens, claims, rights or encumbrances of any kind,
and at or prior to the Principal Closing JRI will cause Weston Management
to terminate or assign to another Person any management and/or leasing
contracts to which Weston Management is a party that do not relate to the
Properties being contributed at the Principal Closing, so that at the
Principal Closing the management and leasing contracts with respect to the
Properties being included in the Principal Closing will be the only
material assets, other than working capital and assets relating to the
fulfillment of its responsibilities pursuant to such management contracts
and leasing contracts, owned by Weston Management; and
(xii) to JRI's knowledge, none of the Property Owners or Weston
Management is in default under, or in breach of, any of the Management
Contracts or Leasing Contracts, and no event has occurred which, with the
giving of notice or the passage of time or both, would constitute a default
under any of the Management Contracts of Leasing Contracts.
(j) Rent Roll. To JRI's knowledge, the rent rolls for the Properties
attached hereto as Schedule 3.1(b)(v) (the "Rent Rolls") are true, correct and
complete as of the date of such Rent Rolls, which date is not more than thirty
(30) days prior to the date hereof, except to the extent the omission of a lease
on such Rent Rolls could not, individually or in the aggregate, have a Property
Material Adverse Effect, and there are no renewal and extension options other
than those indicated on such Rent Rolls, except in each case to the extent any
inaccuracies would not, individually or in the aggregate, have a Property
Material Adverse Effect. The parties hereto acknowledge that such Rent Rolls may
not list (and, to the extent that such Rent Rolls do not list, JRI makes no
representation with respect to) subleases, concessions, or license agreements
which may have been entered into by tenants or subtenants, or license or
concession agreements that have terms not in excess of sixty (60) days or are
terminable by the landlord without penalty, or kiosks or pushcarts occupied
under agreements that are terminable by the landlord without penalty upon not
more than thirty (30) days' notice.
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(k) Anchors. Attached hereto as Schedule 8.2(k) is a true, correct and
complete list of the leases/reciprocal easement agreements, all amendments
thereto and all material agreements currently in effect between the relevant
Property Owners and each Anchor with respect to each Property (collectively, the
"Anchor Documents"), and true, correct and complete copies of each Anchor
Document have been delivered or made available to CBL. To JRI's knowledge, each
Anchor Document is in full force and effect. Except as set forth on Schedule
8.2(k), JRI is not aware that any of the Property Owners has received any
written notice that such Property Owner is in material breach or default under
any Anchor Document to which it is a party, which breach or default remains
uncured on the date hereof. Within the twelve (12) month period preceding the
date hereof, no Property Owner has sent any written notice to any of its
respective Anchors asserting that such Anchor is in material breach or default
under any Anchor Document to which it is a party, which breach or default
remains uncured on the date hereof.
(l) Leasing Commissions, Fees and Tenant Improvement Allowances. To JRI's
knowledge, all leasing commissions, fees and tenant improvement allowances due
with respect to the current unexpired term of each lease listed on Schedule
3.1(b)(v) have been paid in full except as set forth on Schedule 8.2(l).
Schedule 8.2(l) contains a true and complete list of all leasing commissions,
fees and tenant improvement allowances that may become due under any lease
listed on Schedule 3.1(b)(v) upon a renewal, extension, expansion or early
termination of such lease.
(m) Operating Contracts. To JRI's knowledge, except as set forth on
Schedule 8.2(m) ("Operating Contracts"), and other than the leases listed on
Schedule 3.1(b)(v) and Permitted Exceptions, there are no management, service,
operating, listing, brokerage, supply and maintenance agreements, equipment
leases, or other contracts or agreements between any Property Owner or any of
its affiliates and any other party relating to operations at the Property owned
by it as of the date hereof, other than those that (i) involve total payment of
no more than $150,000 per annum and are terminable by the relevant Property
Owner without penalty upon one (1) year's prior written notice or less or (ii)
are terminable by the relevant Property Owner without penalty upon the sale of
the Property or upon ninety (90) days' prior written notice or less. To JRI's
knowledge, each of the Operating Contracts is in full force and effect and,
except as set forth on Schedule 8.2 (m), has not been amended, modified or
supplemented. JRI will not cause any Property Owner to modify, terminate or
accept early surrender of any of the Operating Contracts, except as set forth on
Schedule 8.2 (m), without the prior written consent of the Operating
Partnership, which consent shall not be unreasonably withheld, conditioned or
delayed, and JRI will not cause any Property Owner to enter into a new service
contract for such Property Owner's Property or any portion thereof without the
prior written consent of the Operating Partnership (which consent will not be
unreasonably withheld, conditioned or delayed), if such contract would be
prohibited by Section 4.6(vii).
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(n) Continuing Loans. Attached hereto as Schedule 8.2(n) is a true, correct
and complete list of the material loan documents relating to each of the
Continuing Loans and all amendments thereto through the date of this Agreement,
and JRI has delivered or otherwise made available to the Operating Partnership
complete and correct copies of each of such documents and amendments. The
applicable Property Owners are current in all payments of principal and interest
due under each Continuing Loan through the most recent scheduled payment date.
Schedule 8.2(n) accurately sets forth the unpaid principal balance of the
Continuing Loans as of the most recent scheduled payment date, and the principal
amount of any deposits or escrows held or established in connection therewith as
of the most recent scheduled payment date.
(o) Environmental Reports. Schedule 8.2(o) contains a list of certain
environmental and hazardous waste reports relating to the Properties
(collectively, the "Environmental Reports"). A true, correct and complete copy
of each Environmental Report (other than the reports identified under the
caption "CBL Reports" which were commissioned by CBL) has been delivered or made
available to CBL. To JRI's knowledge, except as disclosed in the Environmental
Reports, and other than (i) cleaning fluids and other similar substances used by
any tenant or Property Owner in the routine use, operation or maintenance of any
of the Properties in compliance with the applicable laws, regulations, codes,
licenses, permits, orders, judgments, decrees or injunctions promulgated by any
Governmental Authority for the protection of the environment (including air,
water, soil and natural resources) (the "Environmental Law") and (ii)
asbestos-containing building materials previously removed from any Property in
compliance with Environmental Law, no hazardous materials have been used or
stored at any Property, and to JRI's knowledge there has been no material
release of Hazardous Materials in, on or under any Property. Except as set forth
in the Environmental Reports, no Property Owner has received any written notice
from any Governmental Authority asserting that a condition exists at the
Property that constitutes or has resulted in a violation of any Environmental
Law, or that any claim is being asserted against such Property Owner by reason
of any such violation. Except as set forth in the Environmental Reports, Weston
Management has not received any written notice from any Governmental Authority
asserting that a condition exists at any property that was at the time or at any
prior time to which such notice relates managed by Weston Management that
constitutes or has resulted in a violation of any Environmental Law, or that any
claim is being asserted against Weston Management by reason of any such
violation.
(p) Insurance. Schedule 8.2(p) contains a true, correct and complete list
of all casualty, commercial liability, employment, professional liability and
crime insurance policies maintained by the Jacobs-Managed Property Owners with
respect to the Properties and all such insurance policies maintained by Weston
Management with respect to any properties managed by it. To the knowledge of
JRI, these policies are in full force and effect.
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(q) Purchase Options. Except as set forth in the Anchor Documents, and
except for the Permitted Exceptions, no Property Owner has granted any existing
options to purchase any of its Properties.
(r) Financial Statements. The financial statements for each Property Owner
as of and for the year ended December 31, 1999, and as of and for the six-month
period ended June 30, 2000 (the "Financial Statements"), which were previously
made available to CBL, were prepared in accordance with generally accepted
accounting principles, consistently applied, and fairly present in all material
respects and in accordance with applicable accounting principles the financial
position and results of operations of such Property Owner at or as of the date
or period specified therein. Since June 30, 2000, each Property Owner has, to
JRI's knowledge, conducted its business in the ordinary course consistent in all
material respects with past practice. The financial statements for Weston
Management as of and for the year ended December 31, 1999, which were previously
made available to CBL, were prepared in accordance with generally accepted
accounting principles, consistently applied, and fairly present in all material
respects and in accordance with applicable accounting principles the financial
position and results of operations of Weston Management at or as of the date or
period specified therein. Since December 31, 1999, Weston Management has
conducted its business in the ordinary course consistent in all material
respects with past practice.
(s) No Other Liabilities. None of the Property Owners has incurred any
material liability, whether absolute, accrued, contingent or otherwise, except
(i) liabilities reflected in the Financial Statements or separately disclosed on
Schedule 8.2(s) or elsewhere in the Schedules to this Agreement and (ii)
liabilities that were incurred by a Property Owner after June 30, 2000 in the
ordinary course of business or were incurred before June 30, 2000, but are not
required by generally accepted accounting principles to be reflected on such
statements and, in either event, could not reasonably be expected to have a
Property Material Adverse Effect. Except as set forth in Schedule 8.2(s) and
other than pursuant to the Management Contracts and the Leasing Contracts,
Weston Management is not subject to any material liability, whether absolute,
accrued, contingent or otherwise, except as set forth in the financial
statements for Weston Management, which were previously made available to CBL,
and except for liabilities incurred in the ordinary course of business or that
are not required by generally accepted accounting principles consistently
applied to be reflected on such financial statements.
(t) Employees. None of Weston Management or any Property Owner has any
employees or maintains any "employee benefit plan" as that term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended,
none of the Property Owners has ever had any employees or maintained any
"employee benefit plan" as so defined, and Weston Management has had no
employees since January 1, 1997.
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(u) No Foreign Owners. None of the Jacobs Parties or New Entities or New
Entity Subsidiaries is or will become, directly or indirectly, a Foreign Owner
(as hereinafter defined) in the Operating Partnership as a result of the
transactions contemplated by this Agreement. "Foreign Owner" as used herein,
means a foreign person or a person that is directly or indirectly owned, in
whole or in part, by a foreign person as determined in accordance with Section
897(h)(4) of the Code and the regulations promulgated thereunder.
(v) Section 708(b)(1)(B) Terminations. The transfers of the interests in
the Partial Properties described in Section 2.1(c) hereof will not, taking into
account solely transfers to be made pursuant to Section 2.1(c) hereof, result in
a termination of the Partial Property Owners under Section 708(b)(1)(B) of the
Code for federal income tax purposes.
(w) No Private Restrictions on Use. Other than Permitted Exceptions, there
are no unrecorded agreements restricting the use of any Property as a regional
shopping center in a manner that could reasonably be expected to have a Property
Material Adverse Effect.
(x) Private Offering. None of the Jacobs Parties nor any person acting on
their behalf has taken, or will prior to the applicable Closing Date take, any
action that could reasonably be expected to subject the SCUs issued on such
Closing Date, or the issuance of REIT Stock or Common Units in exchange for any
such SCUs, to the registration requirements of Section 5 of the Securities Act.
(y) Partnership Status; Ownership of Corporations. All of the Property
Owners are treated as partnerships for federal income tax purposes. Except as
separately disclosed on Schedule 8.2(y), none of the Property Owners owns any of
the stock of any entity that is treated as a corporation or an association taxed
as a corporation for federal income tax purposes. The stock described in
Schedule 8.2(y), if any, does not represent more than 9.9% of the voting power
or value of the outstanding stock of any issuer of stock described in Schedule
8.2(y). The parties agree that this representation shall not be treated as
breached or having been breached if any listing of additional stock is added to
Schedule 8.2(y) after the date of signing of this document, so long as the stock
described in Schedule 8.2(y) at Closing does not represent, at the time of
Closing, more than 9.9% of the voting power or value of the outstanding stock of
any issuer of stock described in Schedule 8.2(y).
(z) Cary Note. Other than the Cary Note itself and the First Amended and
Restated Cary Venture Limited Partnership Agreement of Limited Partnership,
dated March 11, 1993, true, correct and complete copies of which have previously
been delivered to CBL, there is no agreement to which the Property Owner of Cary
Towne Center or any Jacobs Party is a party modifying or supplementing the terms
of the
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indebtedness evidenced by the Cary Note. The original principal balance of the
Cary Note was $27,801,293.53, of which $6,114,942.84 remained outstanding as of
August 31, 2000. As of the date hereof neither Cary Venture Limited Partnership
nor JG Cary Joint Venture is in default with respect to the indebtedness
evidenced by the Cary Note. JG Cary Joint Venture owns the Cary Note free and
clear of all rights, liens, claims and encumbrances.
(aa) Disclaimer; Limitation on Scope of Representations Relating to
Kentucky Oaks Mall. No Jacobs Party directly or indirectly manages or controls
Kentucky Oaks Mall Company, the owner of Kentucky Oaks Mall, and accordingly,
except for the representation in Section 8.2(b)(i) with respect to the ownership
by the Contributors of the Interests in Kentucky Oaks Mall Company and the
representation in the last sentence of this Section 8.2(aa), JRI is not making
any representation or warranty about Kentucky Oaks Mall or Kentucky Oaks Mall
Company in this Agreement. In furtherance of the foregoing, as used in this
Section 8.2, the terms Property and Partial Property are specially defined to
exclude Kentucky Oaks Mall and the terms Property Owner and Partial Property
Owner are specially defined to exclude Kentucky Oaks Mall Company.
Notwithstanding the foregoing, JRI represents to CBL that to its knowledge no
circumstances exist that would cause any of the foregoing representations and
warranties to be incorrect with respect to Kentucky Oaks Mall or Kentucky Oaks
Mall Company if the foregoing exclusions had not been made to this Section 8.2.
The parties agree that if JRI is unable to remake the foregoing representation
at the Closing in which Kentucky Oaks Mall is proposed for inclusion (other than
(1) because JRI had actual knowledge as of the date hereof that such
representation was not accurate and failed to disclose the inaccuracy to CBL or
(2) because of an affirmative action taken by JRI in contravention of its
obligations pursuant to this Agreement that caused the representation to no
longer be accurate), JRI's inability will not constitute a basis for a failure
of a condition precedent to CBL's obligation to accept the Interests in Kentucky
Oaks Mall.
(bb) JRI's Knowledge. As used in this Agreement, the words "to the
knowledge of JRI", "to JRI's knowledge", and other words of similar tenor mean
only the current, actual, conscious (and not constructive, imputed or implied)
knowledge of the following designees of JRI, without having made a review of
files or other inquiry: Richard E. Jacobs, Martin Cleary, Anthony Weigand,
Judson Smith and David Pancoast. Anything herein to the contrary
notwithstanding, no such designee shall have any personal liability or
obligation whatsoever with respect to any of the matters set forth in this
Agreement, the Interest Contribution Agreements, the Deed Contribution
Agreements, and any other agreements, documents or instruments related thereto
or contemplated hereunder or thereunder or any of the representations made by
JRI being or becoming untrue, inaccurate or incomplete in any respect.
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8.3 General Provisions.
(a) JRI's Right to Amend Representations. JRI shall have the right from
time to time prior to the Principal Closing or any Deferred Closing by notice to
the Operating Partnership, and without liability therefor, to amend or
supplement its qualifications to the representations and warranties in Section
8.2, by amendment of the Schedules hereto or otherwise, to reflect changes in
facts or to correct any immaterial factual inaccuracies; provided, however, that
any such amendment or supplement, taken alone or together with all other
amendments or supplements, if sufficiently adverse to the Operating Partnership,
may constitute the nonfulfillment of the condition set forth in Section 7.1(b).
(b) Contributor's Representations Deemed Modified. To the extent that CBL
actually knows at or prior to the Principal Closing or any Deferred Closing that
any of JRI's or the Contributors' representations and warranties that are
required to be made on such Closing Date are inaccurate, untrue or incorrect in
any way, such representations and warranties shall be deemed modified to reflect
CBL's knowledge; provided, however, that any such modification, taken alone or
together with all other amendments, supplements or modifications, if
sufficiently adverse to the Operating Partnership, may constitute the
nonfulfillment of the condition set forth in Section 7.1(b). Except with respect
to Property-Specific Monetizable Claims, which are addressed in Section 8.3(c)
below, JRI shall not have any liability for a breach of representation or
warranty pursuant to Section 9.2 by reason of any inaccuracy of a representation
or warranty if and to the extent that such inaccuracy has been identified by JRI
to CBL in writing or otherwise is actually known by CBL at the time of the
applicable Closing and CBL elects, nevertheless, to consummate such Closing. For
purposes of this Agreement, CBL shall be deemed to actually know that a
representation or warranty is untrue, inaccurate or incorrect if and to the
extent that this Agreement, any exhibit or Schedule attached hereto, any
estoppel certificate executed by any tenant of the Property and delivered to
CBL, or any study, test, report, or analyses delivered to or prepared by or for
CBL or any of its employees, agents, representatives or attorneys (all of the
foregoing being herein collectively called the "CBL's Representatives") or
otherwise obtained by CBL or CBL's Representatives contains information which is
inconsistent with such representation or warranty.
(c) Notice of Breach; JRI's Right to Cure; Survival of Claims for
Property-Specific Monetizable Claims . If, after the date hereof and prior to
the Principal Closing or any Deferred Closing, CBL becomes aware or is deemed to
know that any of the representations or warranties made herein by JRI and
required to be made again by JRI at such Closing are untrue, inaccurate or
incorrect in any material respect (other than as a result of receipt of written
notice thereof from JRI pursuant to the requirement of the next sentence), CBL
shall give JRI written notice thereof promptly after obtaining such knowledge.
If, at or prior to the Principal Closing or any Deferred Closing, JRI actually
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knows that any of the representations or warranties made herein by JRI and
required to be made again by JRI at such Closing is untrue, inaccurate or
incorrect in any material respect, JRI will give CBL written notice thereof
promptly after obtaining such knowledge. In either such event, if such breach or
inaccuracy arising out of facts or circumstances relating to any Property Owner
or the related Property, and all other breaches or inaccuracies relating to such
Property Owner and/or Property, can be cured or corrected by payment in the
aggregate of $50,000 or less, then all such breaches and/or inaccuracies shall
be deemed to have been waived and the provisions of Section 7.1(b) shall be
deemed to have been satisfied without the payment by the Jacobs Parties of any
such amounts, provided, that, if the aggregate amount waived pursuant to this
sentence in respect of such breaches and inaccuracies for all Properties exceeds
$500,000, CBL will be entitled to bring post-closing claims against JRI for the
breaches relating to the amounts that exceed $500,000 pursuant to Section 9.2.
In the event that any such breaches or inaccuracies are not deemed immaterial
and therefore are not waived by operation of the preceding sentence, JRI will
have the right to cure or correct the underlying circumstances as necessary to
eliminate the adverse effect on CBL of the breaches and/or inaccuracies. JRI
agrees to notify CBL in writing within ten (10) Business Days after JRI's or
CBL's receipt of a notice of such breach or inaccuracy pursuant to this Section
8.3 or sooner if the relevant Closing is scheduled to occur sooner whether or
not JRI intends to cure or correct the circumstances giving rise thereto, and
JRI's failure to provide such notice will be deemed notice to CBL that JRI does
not intend to attempt any cure.
Notwithstanding the foregoing or any other provisions of this Agreement or any
Interest Contribution Agreement or Deed Contribution Agreement to the contrary,
if any of the representations or warranties made by JRI in Section 8.2 with
respect to any particular Property is determined to have been inaccurate in any
material respect (either when made or when remade at a Closing) and the
inaccuracy is of a nature that it can be cured by the payment of money in an
amount that is readily determinable (any such claim, a "Property-Specific
Monetizable Claim", and the dollar amount that would be necessary to cure, the
"Cure Amount"), and either:
(i) the total Cure Amount for all Property-Specific Monetizable Claims
relating to that Property exceeds $50,000 (the first $50,000 of any such
Cure Amount, the "De Minimis Cure Amount", and the excess Cure Amount above
$50,000, if any, the "Excess Cure Amount") but the sum of (1) the Excess
Cure Amount for that Property and all other Excess Cure Amounts arising in
connection with the other Properties to be included in that Closing and not
cured by JRI at or prior to the Closing, (2) the aggregate of any uncured
Excess Cure Amounts relating to any Properties that were subject to prior
Closings and (3) the excess of (I) the aggregate of all De Minimis Cure
Amounts not cured by JRI at or prior to the Closing
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in question and all prior Closings over (II) $500,000 (such sum, the
"Aggregate Excess Cure Amount"), does not exceed $3 million, or
(ii) the De Minimis Cure Amount for the Property Specific Monetizable
Claims at that Property and the other Properties to be included in the
Closing in question, when taken together with all De Minimis Cure Amounts
not cured by JRI in connection with all prior Closings, exceeds $500,000,
but the Aggregate Excess Cure Amount, does not exceed $3 million,
then, in either case, the existence of the Property-Specific Monetizable Claims
in respect of that Property will not entitle CBL to raise the Property-Specific
Monetizable Claims relating to that Property as a failure of any condition
precedent to CBL's obligation to accept the contribution of the affected
Property, but instead CBL will be entitled to bring a post-Closing claim against
JRI pursuant to Section 9.2 (and subject to the limitations in Section 9.3) for
the aggregate Excess Cure Amount for that Property and/or for the portion of the
De Minimis Cure Amount for that Property in excess of the $500,000 maximum
aggregate De Minimis Cure Amount.
If, on the other hand, either (A) the Cure Amount for the Property-Specific
Monetizable Claims at any Property proposed for inclusion in a particular
Closing exceeds $50,000 and the Aggregate Excess Cure Amount exceeds $3 million
or (B) the De Minimis Cure Amount for the Property Specific Monetizable Claims
at that Property, when taken together with all De Minimis Cure Amounts not cured
by JRI and relating to the Properties that have been the subject of a prior
Closing and the Properties proposed for inclusion in the Closing in question
exceeds $500,000 and the Aggregate Cure Amount exceeds $3 million, then, in
either case, the existence of the Property-Specific Monetizable Claim for that
Property, if not cured by JRI, will constitute a failure of a condition
precedent to CBL's obligation to accept the contribution of that Property at the
Closing in question.
(d) CBL's Right to Amend Representations. CBL shall have the right from
time to time prior to the Principal Closing or any Deferred Closing by notice to
JRI, and without liability therefor, to amend or supplement its qualifications
to the representations and warranties in Section 8.1, by amendment of the
Schedules hereto or otherwise, to reflect changes in facts or to correct any
immaterial factual inaccuracies; provided, however, that any such amendment or
supplement, taken alone or together with all other amendments or supplements, if
sufficiently adverse to the Jacobs Parties, may constitute the nonfulfillment of
the condition set forth in Section 7.2(c).
(e) CBL's Representations Deemed Modified. To the extent that JRI actually
knows at or prior to the Principal Closing or any Deferred Closing that any of
CBL's representations and warranties that are required to be made on such
Closing Date
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are inaccurate, untrue or incorrect in any way, such representations and
warranties shall be deemed modified to reflect JRI's knowledge. CBL shall not
have any liability in connection with this Agreement by reason of any inaccuracy
of a representation or warranty if and to the extent that such inaccuracy has
been identified by CBL to JRI in writing or otherwise is actually known by JRI
at the time of the applicable Closing and JRI elects, nevertheless, to
consummate such Closing. For purposes of this Agreement, JRI shall be deemed to
actually know that a representation or warranty is untrue, inaccurate or
incorrect if and to the extent that this Agreement or any Exhibit or Schedule
attached hereto contains information that is inconsistent with such
representation or warranty.
8.4 Survival. The representations and warranties in this Article VIII shall
survive the applicable Closing, subject to the limitations set forth in Article
IX.
ARTICLE IX
INDEMNIFICATION
9.1 Obligation of CBL to Indemnify. CBL hereby agrees to indemnify, defend
and hold harmless each of the Jacobs Parties and each of the other Contributors
and their respective affiliates from and against all costs, damages, liabilities
and expenses (including, without limitation, reasonable attorneys' fees and
disbursements but excluding consequential and other indirect damages) imposed
upon, incurred by (whether by way of judgment, award, decree, settlement payment
or otherwise) or suffered by any of them by reason of any (i) breach or
inaccuracy of any representation or warranty of CBL contained in Section 8.1, as
such representation or warranty may have been modified or deemed modified by
Section 8.3(e) or in any certificate delivered pursuant to Section 6.3 or (ii)
breach of any covenant of CBL contained herein or in any Interest Contribution
Agreement or Deed Contribution Agreement, if applicable. The Jacobs Parties
acknowledge that the indemnification provisions in this Section 9.1 are the sole
and exclusive remedies available to them with respect to any and all claims
arising from any breach of any representation or warranty in Section 8.1 of this
Agreement; provided, that, the foregoing limitation will not be interpreted as
interfering with either party's right to recover the Expense Reimbursement
following a termination as provided in Article X.
9.2 Obligation of JRI to Indemnify. JRI hereby agrees to indemnify, defend
and hold harmless CBL from and against all costs, liabilities, damages and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements but excluding consequential and other indirect damages) imposed
upon, incurred by (whether by way of judgment, award, decree, settlement payment
or otherwise) or suffered by CBL by reason of any (i) breach or inaccuracy of
any representation or warranty of JRI contained in Section 8.2, as such
representation or warranty may have been modified or deemed modified by Section
8.3(b) or in any certificate delivered by JRI pursuant to Section 6.2, or (ii)
breach of any covenant of JRI contained herein which covenant is required to be
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performed or observed after the Principal Closing or any Deferred Closing, as
applicable. CBL acknowledges that the indemnification and other provisions in
this Section 9.2 are the sole and exclusive remedies available to CBL with
respect to any and all claims arising from any breach of any representation or
warranty in Section 8.2 of this Agreement; provided, that, the foregoing
limitation will not be interpreted as interfering with either party's right to
recover the Expense Reimbursement following a termination as provided in Article
X.
9.3 Limitations on Recovery. (a) Notwithstanding anything to the contrary
in this Article IX, it is expressly understood and agreed by the parties that,
without limiting or affecting any other obligation of either party to defend and
indemnify contained in this Article IX or otherwise in this Agreement, CBL shall
not be entitled to any claim for indemnification pursuant to Section 9.2(i), (x)
if the breach or inaccuracy of representation or warranty in question results
from or is based on a condition, state of facts or other matter that was
actually known to CBL prior to the applicable Closing, except in the case of a
Property-Specific Monetizable Claim to the extent provided in Section 8.3(c)
hereof, (y) unless the valid claims of CBL for all such breaches collectively
aggregate more than $200,000, it being understood and agreed that CBL shall only
be entitled to indemnification for amounts in excess of the foregoing threshold,
and (z) unless CBL has given JRI written notice of such claim (stating the
representation or warranty alleged to have been breached, an explanation in
reasonable detail of the circumstances giving rise to the claim, and CBL's good
faith estimate of the total dollar amount of the harm suffered and likely to be
suffered as a result of the alleged breach) on or prior to the 270th day
following the Principal Closing Date (or, if the claim in question relates to
the Interests in a Property Owner or the related Property that were included in
a Deferred Closing, the 270th day following the Deferred Closing Date relating
thereto), it being understood and agreed that JRI shall have no further
liability under or in respect of such warranties and representations after the
270th day following the applicable Closing Date, except to the extent of any
breach thereof of which CBL gives JRI written notice on or prior to such 270th
day. Accordingly, on the 271st day following the applicable Closing Date, JRI
shall be fully discharged and released (without the need for any separate
release or other documentation) from any and all liability or obligation to CBL
or any successor or assign with respect to Claims arising out of JRI's
representations and warranties, except solely for those matters that are then
the subject of a pending notice of claim delivered by CBL to JRI on or prior to
such date. Any claim that CBL may have at any time against JRI for a breach of
any representation or warranty, whether known or unknown, with respect to which
a notice of claim has been delivered to JRI within the applicable survival
period established above may only be the subject of subsequent litigation
brought by CBL against JRI if such litigation is commenced against JRI on or
prior to the last Business Day of the 18th calendar month following the
applicable Closing Date. Accordingly, on the day following the last Business Day
of the 18th calendar month following the applicable Closing Date, JRI shall be
fully discharged and released (without the need for separate releases or other
documentation) from any liability or obligation to
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CBL and/or its successors and assigns with respect to any Claims CBL may have
against JRI for a breach of any representation or warranty contained herein or
in any certificate delivered by JRI at the relevant Closing pursuant to Section
6.2, except solely for those matters that are the subject of a litigation by CBL
(or its successor or assign) against JRI that is pending on the last Business
Day of the 18th calendar month following the applicable Closing Date.
Notwithstanding anything to the contrary contained herein, in no event shall JRI
be liable under Section 9.2 for any amount in excess of $3,000,000 in the
aggregate for all claims for indemnification thereunder.
(b) In the case of any claim asserted by a third party against CBL,
including without limitation, any claim by a Governmental Authority and any
request by such Governmental Authority to audit or otherwise inquire into or
examine (an "Inquiry") any matters as to which a claim might arise hereunder,
CBL shall notify JRI for the purpose of representing their collective interests
in the event of a claim against CBL promptly after CBL has actual knowledge of
any claim as to which indemnity may be sought or as to any such Inquiry, and CBL
shall permit JRI to assume the defense of any claim or any litigation resulting
therefrom or administer such Inquiry, provided, that, (i) counsel to JRI, who
shall conduct the defense of such claim or litigation or the administration of
such Inquiry, shall be reasonably satisfactory to CBL, and CBL may participate
in such defense at CBL's expense, and (ii) the omission by CBL to give notice as
provided herein shall not relieve JRI of its indemnification obligation under
this Agreement except to the extent that such omission results in a failure of
actual notice to JRI and JRI is materially damaged as a result of such failure
to give notice. JRI, in the defense of any such claim or litigation, shall not,
except with the consent of CBL (x) consent to entry of any judgment or enter
into any settlement that provides for injunctive or other non-monetary relief
affecting CBL or that does not include as a term thereof the giving by the
claimant or plaintiff to CBL of an unconditional release from all liability with
respect to such claim or litigation or (y) pursue any course of defense of any
claim subject to indemnification hereunder, if CBL shall reasonably and in good
faith determine that the conduct of such defense might be expected to affect
adversely CBL's tax liability or ability to conduct its business or adversely
affect the use of the Properties in any material respect. In the event that CBL
shall reasonably and in good faith determine that any proposed settlement of any
claim subject to indemnification hereunder by JRI might be expected to affect
adversely CBL's tax liability or ability to conduct its business or that CBL may
have available to it one or more defenses or counterclaims that are inconsistent
with one or more of those that may be available to JRI in respect of such claims
or litigation relating thereto, CBL shall have the right at all times to take
over and assume control over the settlement, negotiations and litigation
relating to any such claim at the sole cost of JRI, provided, that, if CBL does
so take over and assume control, CBL shall not settle such claim or litigation
without the written consent of JRI, such consent not to be unreasonably
withheld, and the liability of JRI with respect to such claim or litigation
shall in no event exceed the amount JRI would have paid in settlement thereof,
and provided, further, that the provisions of clause (x) above shall control
with respect to
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the defense of any claim arising out of any tax audit or assessment. In the
event that JRI does not accept the defense of any matter as above provided, CBL
shall have the full right to defend against any such claim or demand, and shall
be entitled to settle or agree to pay in full such claim or demand, in its sole
discretion. In any event, JRI and CBL shall cooperate in the defense of any
action or claim subject to this Agreement and the records of each shall be
available to the other with respect to such defense. Acceptance of the defense
of any claim or litigation or of the administration of any Inquiry by JRI shall
be without prejudice to JRI's right to assert at any time before or after
accepting such defense or administration that they are not obligated to provide
indemnity, either in whole or in part, with respect to such claim or litigation
for which such defense is accepted or which might subsequently arise from such
Inquiry.
9.4 Indemnification for Certain Historical Liabilities. (a) In addition to
the foregoing, JRI agrees to indemnify, defend and save harmless CBL from and
against all direct costs, liabilities, damages and expenses (including, without
limitation, reasonable attorneys' fees and disbursements but excluding
consequential and other indirect damages) imposed upon, incurred by (whether by
way of judgment, award, decree, settlement payment or otherwise) or suffered by
CBL as a result of: (i) any entity-level liability (including, without
limitation, liabilities of the types identified in sub-clauses (1) through (4)
of clause (ii) below), other than an Excluded Liability, that accrued to a
Property Owner the Interests of which were contributed to CBL as contemplated in
Article I above prior to the Closing at which the Interests in that Property
Owner were contributed to CBL (i.e., where the specific event or circumstances
upon which the claim is based occurred prior to that Closing), whether arising
from the Property owned by that Property Owner or from any other assets or
activities of that Property Owner (but expressly excluding any portion of such
costs, liabilities, damages or expenses that are incurred or suffered by CBL in
respect of interests in any Partial Property Owner or Partial Property acquired
pursuant to any transactions other than the transactions contemplated in this
Agreement) and (ii) in the case of any Property that is contributed to CBL by
way of a Deed Contribution Agreement, any liabilities that accrued in respect of
that Property prior to the applicable Closing in the nature of any of the
following (to the extent not accounted for in the post-Closing apportionment
process): (1) percentage rent overcharges or common area maintenance
overcharges, (2) claims by tenants, Anchors or other Persons set forth in any
estoppel certificates obtained in connection with the transactions contemplated
in this Agreement that the contributing Property Owner breached any contractual
obligations relating to the Property, (3) contingent interests that accrued on
any Continuing Loans or New Loans prior to the applicable Closing and (4)
entity-level liabilities (including, without limitation, any litigation or
claims pending and any tax liabilities) that accrued to the contributing
Property Owner prior to the applicable Closing. The indemnification set forth in
this clause (a) is in addition to the indemnification set forth in Section 9.2
and is not subject to the limitations set forth in Section 9.3. In lieu of the
limitations in Section 9.3, however, CBL agrees that the indemnity is subject to
the limitations in Section 9.4(c), that the indemnity is being given only on a
Property-by-
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Property basis and that in no event will JRI be liable pursuant to this
indemnification for any amounts in excess of $3 million in the aggregate with
respect to any one Property and its related Property Owner. As used herein, the
term "Excluded Liability" means any cost, liability, damage or expense
(including, without limitation, any attorneys' fees or expenses) owing by any
Property Owner, Weston Management or any affiliate of any of the foregoing
consisting of, arising out of or relating to (i) any environmental matter
(including, without limitation, any liabilities or obligations relating to
Hazardous Materials located at, on, under, in or adjacent to any Property or
migrating from any Property) (it being understood that JRI is providing separate
indemnification for certain such matters, to the extent they constitute a breach
of a representation by JRI, in Section 9.2 above, and for the matters identified
on Schedule 9.5 hereof in Section 9.5 below), (ii) any leasing fees or
commissions owed by any Property Owner to Weston Management and (iii) any
transfer, recording or other taxes (including state and local taxes) owing as a
result of the transactions contemplated in this Agreement (it being understood
that such taxes are to be paid as described in Section 4.13).
(b) In addition to the foregoing, JRI agrees to indemnify, defend and save
harmless CBL from and against all direct costs, liabilities, damages and
expenses (including without limitation, reasonable attorneys' fees and
disbursements but excluding consequential and other indirect damages) imposed
upon, incurred by (whether by way of judgment award, decree, settlement payment
or otherwise) or suffered by CBL, (1) with respect to any Property or related
Property Owner, as a result of any claim by any Associate or Outside Partner
against CBL arising out of the Consent Solicitation Documentation relating
thereto or the Jacobs Parties' handling of the consent solicitation process
relating thereto as contemplated in Section 4.14(b), other than any such claim
based on an action taken by CBL or an allegation that information provided by
CBL for inclusion therein included any untrue statement of a material fact or
omitted to state a material fact required to be stated therein to make the
statement therein, in the light of the circumstances under which they were made,
not misleading and (2) as a result of the improper discharge, if any, of
perchloroethylene or any Hazardous Material currently or historically used in
dry cleaning processes, including, without limitation, perchloroethylene, and
any compound resulting from the degradation thereof, by Burnette's Cleaners or
any predecessor or successor in interest thereto on or under the real property
comprising Columbia Mall. The indemnification set forth in this clause (b) is in
addition to the indemnification set forth in Section 9.2 and is not subject to
the limitations set forth in Section 9.3. In lieu of the limitations in Section
9.3, however, CBL agrees that the indemnity is subject to the limitations in
Section 9.4(c).
(c) The indemnity in clauses (a) and (b) above will only survive the
Principal Closing until the fifth (5th) anniversary of the Principal Closing
Date and, with respect to any written claim delivered to JRI within such five
(5) year period, until final unappealable adjudication or settlement thereof,
provided litigation is, or adjudication proceedings are, instituted within six
(6) months following JRI's receipt of CBL's written
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notice of the claim under this indemnity. In addition, it is expressly agreed
that (x) CBL shall not be entitled to any claim for indemnification pursuant to
Section 9.4(b)(2) unless the aggregate of all valid claims under that clause
collectively exceed $25,000, it being understood and agreed that CBL will only
be entitled to indemnification for amounts collectively in excess of $25,000,
and (y) in no event shall JRI be liable pursuant to Section 9.5(b)(2) for any
amounts collectively in excess of $475,000. For the avoidance of doubt, on the
day following the fifth (5th) anniversary of the Principal Closing Date JRI will
be fully discharged and released (without the need for any separate release or
other documentation) from any and all liability or obligation to CBL and any
other Person with respect to claims arising out of the foregoing indemnity,
whether known or unknown, with respect to which a notice of claim was not
delivered to JRI on or before that date. Any claim that CBL may have at any time
against JRI arising out of the foregoing indemnity with respect to which notice
of claim under this indemnity has been delivered to JRI on or before the fifth
(5th) anniversary of the Principal Closing Date may only be subject to
subsequent litigation or other adjudication proceedings by CBL against JRI if
the litigation or other proceeding is commenced against JRI on or prior to the
last Business Day of the sixth (6th) month following the fifth (5th) anniversary
of the Principal Closing Date. All of the provisions of Section 9.3(b) of this
Agreement apply equally to the indemnity provided in this Section 9.4.
9.5 Indemnification for Matters Relating to Weston Management and for
Certain Known Claims. In addition to the foregoing, JRI agrees to indemnify,
defend and save harmless CBL from and against all costs, liabilities, damages
and expenses (including, without limitation, reasonable attorneys' fees and
disbursements but excluding consequential and other indirect damages) imposed
upon, incurred by (whether by way of judgment, award, decree, settlement payment
or otherwise) or suffered by CBL or any entity in which it holds any direct or
indirect ownership interest (i) as a result of the existence of any entity-level
liability whatsoever that accrued to Weston Management prior to the Principal
Closing Date (i.e., where the specific event or circumstances upon which the
claim is based occurred prior to that Closing) and was not taken into account in
the closing apportionments relating to the contributions of the partnership
interests in Weston Management or the apportionments relating to any contributed
Property, (ii) resulting from or otherwise relating to any of the pending
actions or claims described on Schedule 9.5 hereto or the underlying subject
matter of any such actions or claims or (iii) as a result of the failure by
Weston Management or any Property Owner the Interests of which were contributed
to CBL, prior to the Closing in which such Interests were contributed to CBL, to
have filed any tax returns or made any payments in respect of outstanding tax
liabilities when due. JRI further agrees that the foregoing indemnity obligation
is not subject to any limitation in amount or duration set forth in this Article
IX or elsewhere in this Agreement.
9.6 Covenant to Maintain Net Assets. JRI covenants to CBL that from the
Principal Closing Date through the fifth (5th) anniversary thereof it will at
all times
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maintain consolidated net worth (determined by taking into account the current
market values of its assets at the time of any determination of its net worth)
of at least $25 million.
ARTICLE X
TERMINATION
10.1 Termination Rights. JRI will be entitled to terminate this Agreement
pursuant to the terms of Section 3.2(d) above. In addition, each of CBL and JRI
may terminate this Agreement by paying the other party a non-accountable expense
reimbursement payment (such payment, the "Expense Reimbursement") and thereafter
no party to this Agreement shall have any further rights or obligations
hereunder except pursuant to those provisions of this Agreement that provide, by
their terms, that they survive termination. The amount of the Expense
Reimbursement payable will be determined as follows:
(a) General Termination Right. If the terminating party gives notice of
termination at any time during (x) the first 45 days following the date of this
Agreement or (y) such shorter period of at least 14 days from the date of this
Agreement as JRI shall elect in its sole and absolute discretion by delivering
written notice of such election to CBL (the "Initial Period"), the Expense
Reimbursement will be $2.5 million. If the termination occurs after the Initial
Period but before the Principal Closing, the Expense Reimbursement will be $15
million, unless the circumstances set forth in either of clauses (b) or (c)
below exist. If the termination occurs after the Principal Closing, the Expense
Reimbursement will be $25 million minus the product of (x) $1,428,571.43
multiplied by (y) the sum of (i) the number of Properties in excess of fourteen
(14) contributed to CBL at the Principal Closing and (ii) the number of Excluded
Properties that have been contributed to CBL through the date of determination.
If the Expense Reimbursement is payable to CBL, it shall be payable over a
period not to exceed five (5) years as follows: the portion payable each year
shall equal the amount that CBL may receive without violating the REIT
requirements set forth in Section 856 of the Code, less $1 million. On December
20 of each year in such five (5) year period, CBL's independent public
accountants shall certify to JRI the amount payable for such year, and JRI shall
pay such amount to CBL by December 31 of such year. Any portion of the Expense
Reimbursement not paid by the end of the fifth (5th) year shall be forfeited and
JRI will have no further obligation to pay such Expense Reimbursement.
(b) Negative Shareholder Vote. Notwithstanding the provisions of clause (a)
above, if despite the REIT and its board of directors having (w) fulfilled their
obligations under Section 4.15 hereof and (x) convened a meeting of the
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REIT's stockholders to consider the SCU Issuance Proposal and the Share
Ownership Limitation Amendments, and (y) achieved participation at that meeting
by proxy and/or in person by a sufficient number of stockholders to constitute a
quorum, a majority of the shares of the REIT voted against the issuance of the
SCUs comprising the SCU component of the Consideration or the REIT was unable to
obtain the affirmative vote of the holders of at least a majority of the shares
of stock represented at that meeting, then either of JRI or CBL will be entitled
to terminate this Agreement by written notice to the other and upon such
termination CBL will only be required to pay the Jacobs Parties an Expense
Reimbursement of $2.5 million.
(c) TIAA's Consent. Notwithstanding the provisions of clause (a) above, if
CBL has given JRI the Ready to Mail Notice and, on or before the forty-fifth
(45th) day following the date JRI receives CBL's notice, JRI has not received
the consent from Teachers Insurance and Annuity Association of America ("TIAA")
to the transactions contemplated by this Agreement and JRI has used its
commercially reasonable efforts to obtain the same as required under this
Agreement, then CBL will have the right, exercisable by delivering written
notice to JRI at any time following that forty-fifth (45th) day, to terminate
this Agreement and upon such termination JRI will only be required to pay CBL an
Expense Reimbursement of $2.5 million.
10.2 Termination upon Default or a Failure of a Condition Precedent. (a) In
addition to and without limiting the termination rights set forth in Section
10.1, if either CBL, on the one hand, or any of the Jacobs Parties, on the other
hand (such party, the "Defaulting Party"), has defaulted in any material respect
in the fulfilment of any of its covenant obligations herein or has not satisfied
all of the conditions precedent to the other party's obligation to participate
in the Principal Closing on or before the Initial Scheduled Principal Closing
Date (or, if either of CBL or JRI has exercised an extension right as permitted
in Section 6.1, the Subsequent Scheduled Principal Closing Date established as a
result of such exercise) and the non-defaulting party is unwilling to waive the
default or unmet conditions, the non-defaulting party's sole and exclusive
remedy will be to terminate this Agreement, and upon such termination JRI (if
any Jacobs Party is the Defaulting Party) or the Operating Partnership (if CBL
is the Defaulting Party) will be required to pay the non-defaulting party the
Expense Reimbursement of $15 million, and thereafter no party to this Agreement
will have any further rights or obligations hereunder other than any arising
under any section herein that expressly provides that it survives the
termination of this Agreement. Notwithstanding the foregoing, (x) if CBL elects
to terminate this Agreement pursuant to the preceding sentence of this Section
10.2(a), and the CBL termination right arises because, among other things,
despite commercially reasonable efforts JRI was not able to obtain TIAA's
consent to one or more of the transactions contemplated by this Agreement, then
the Expense Reimbursement payable by JRI will only be $2.5 million, and (y) if
both of CBL
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and the Jacobs Parties have defaulted in any material respect in the fulfilment
of covenant obligations in this Agreement or have not satisfied all of the
conditions precedent to the other's obligation to participate in the Principal
Closing on or before April 30, 2001, or any combination of the foregoing, and
either of them is unwilling to waive the other's defaults and unmet conditions,
then each of them will be entitled to terminate this Agreement, and upon such
termination neither party will be required to pay the other any Expense
Reimbursement.
(b) In addition, if a Defaulting Party has defaulted in any material
respect in the fulfillment of any of its covenant obligations herein or has not
satisfied all of the Closing conditions precedent to the other party's
obligation to participate in a Deferred Closing on or prior to the applicable
Cure Cutoff Date, then the Defaulting Party shall pay the non-Defaulting Party
an Expense Reimbursement in the amount of $25 million minus the product of (x)
$1,428,571.43 multiplied by (y) the sum of (i) the number of Properties in
excess of fourteen (14) contributed to CBL at the Principal Closing and (ii) the
number of Excluded Properties that have been contributed to CBL through the date
of determination; provided, however, that if, after using commercially
reasonable efforts, JRI fails to obtain or cure any of items (1) through (4) set
forth in Section 6.4(a) with respect to any Excluded Property, JRI shall not be
required to pay the Expense Reimbursement to CBL for failing to satisfy all of
the conditions precedent to CBL's obligation to participate in a Deferred
Closing with respect to such Excluded Property. Notwithstanding anything herein
to the contrary, no party hereunder shall be required to pay an Expense
Reimbursement more than once.
(c) For certainty, each of CBL and each Jacobs Party agrees that the
foregoing provisions (a) and (b) set forth the only remedy available for default
under this Agreement prior to the Principal Closing and any Deferred Closing and
more particularly that, except as necessary to enforce its right to collect the
applicable Expense Reimbursement as set forth above, no party shall be entitled
to bring any claim for damages or specific performance or any other remedy at
law or in equity against the other for any breach or violation of this
agreement. Each of CBL, on the one hand, and the Jacobs Parties, on the other
hand, confirms that it was represented by counsel that explained, at the time
this Agreement was made, the consequences of the liquidated damages provisions
contained in this Article X.
(d) Notwithstanding anything herein to the contrary, if a Defaulting Party
has defaulted in any material respect in the fulfillment of any of its covenant
obligations for an ICOA Option Closing contained in any Interest Contribution
and Option Agreement or has not satisfied all of the closing conditions
precedent to the other Party's obligations to participate in an ICOA Option
Closing on or prior to the applicable ICOA Option Closing Date, the
non-Defaulting Party shall be entitled to sue for specific performance and, if
for any reason specific performance is not available to such non-
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Defaulting Party, the Defaulting Party shall pay the non-Defaulting Party an
Expense Reimbursement in the amount of $15 million.
ARTICLE XI
MISCELLANEOUS
11.1 Broker. JRI and CBL expressly acknowledge that Goldman, Sachs & Co.
has acted as JRI's exclusive broker with respect to the transaction contemplated
herein and with respect to this Agreement, and that JRI shall pay any brokerage
commission due to Goldman, Sachs & Co. in accordance with the separate agreement
between JRI and Goldman, Sachs & Co. JRI and CBL expressly acknowledge that
Merrill Lynch & Co., Inc. has acted as CBL's exclusive broker with respect to
the transaction contemplated herein and with respect to this Agreement, and that
CBL shall pay any brokerage commission due to Merrill Lynch & Co., Inc. in
accordance with the separate agreement between CBL and Merrill Lynch & Co., Inc.
Each of JRI and CBL represents and warrants to the other that it has not dealt
with any other broker in this transaction and each agrees to hold harmless the
other and indemnify the other from and against any and all damages, costs or
expenses (including, but not limited to, reasonable attorneys' fees and
disbursements) suffered by the indemnified party as a result of acts of the
indemnifying party that would constitute a breach of its representation and
warranty in this Section. The provisions of this Section 11.1 shall survive the
Principal Closing and any Deferred Closing.
11.2 Expenses. JRI hereby acknowledges and agrees that it will be
responsible for paying any severance payments to its employees and any fees
payable to Goldman, Sachs & Co. or any other consultant retained by it in
connection with the contributions contemplated herein. In addition, JRI agrees
to pay (except as specifically set forth herein) any prepayment penalties or
premiums or other payments to lenders, ground lessors, outside investors or
other third parties in connection with refinancing any indebtedness secured by
any of the Properties at or prior to the applicable Closing or obtaining any
Required Consents.
11.3 Further Assurances. The Jacobs Parties and CBL agree, at any time and
from time to time after the Principal Closing, to execute, acknowledge where
appropriate and deliver such further instruments and documents and to take such
other action as the other party may reasonably request in order to carry out the
intent and purpose of this Agreement, at the expense of the party making such
request, provided, however, that neither the Jacobs Parties nor CBL shall, in
connection with the foregoing, be obligated to incur any liabilities or
obligations in addition to their respective liabilities or obligations otherwise
contemplated in this Agreement. The provisions of this Section 11.3 shall
survive the Closing.
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11.4 Payment of Expenses. Each party will pay the expenses provided for in
this Agreement to be paid by it (including pursuant to Section 4.13 above) and
the fees and disbursements of its attorneys, accountants and other professionals
and experts incurred in connection with the negotiation of this Agreement and in
preparation for any Closing (or any ICOA Option Closing).
11.5 Notices. All notices, demands, consents, requests or other
communications provided for or permitted to be given hereunder by a party hereto
must be in writing and shall be deemed to have been properly given or served (x)
on the fifth (5th) Business Day after deposit in the United States mail
addressed to such party by registered or certified mail, postage prepaid, return
receipt requested, (y) on the day after delivery to a reputable national
overnight air courier service, prepaid and addressed to such party, or (z) if
not deposited in the United States mail or delivered to a national overnight air
courier service as aforesaid, shall be deemed to be properly given or served
upon actual receipt (with rejection of delivery by addressee to constitute
receipt), as follows:
If to any of the Jacobs Parties:
Jacobs Realty Investors Limited Partnership
25425 Center Ridge Road
Westlake, Ohio 44145
Attention: Richard E. Jacobs
with a copy sent simultaneously to JRI's attorneys:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Benjamin R. Weber
and
Thompson Hine & Flory LLP
3900 Key Center
127 Public Square
Cleveland, Ohio 44114-1216
Attention: Donald H. Messinger
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If to CBL:
CBL & Associates Properties, Inc.
Watermill Center
800 South Street, Suite 395
Waltham, Massachusetts 02453
Attention: Stephen D. Lebovitz
and
CBL & Associates Properties, Inc.
One Park Place
6148 Lee Highway, Suite 300
Chattanooga, Tennessee 37421
Attention: Charles B. Lebovitz and
H. Jay Wiseman, Jr.
with a copy sent simultaneously to CBL's attorneys:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6099
Attention: Eugene A. Pinover and
Yaacov M. Gross
and
Shumacker & Thompson, P.C.
Suite 103, One Park Place
6148 Lee Highway
Chattanooga, Tennessee 37421
Attention: Jeffery V. Curry
Any of the aforementioned parties may change its address for the receipt of
notices, demands, consents, requests and other communications by giving written
notice to the others in the manner provided for above.
11.6 Assignment. None of the parties to this Agreement shall have the right
to assign, transfer, convey and/or otherwise sell (or enter into any agreement
to do the same), directly or indirectly, any interest it may have in or under
this Agreement without first having obtained the written consent of the other
parties, which consent may be withheld in such party's sole and absolute
discretion.
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The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal representatives,
successors and permitted assigns, but shall not inure to the benefit of, or be
enforceable by, the Title Company or (unless otherwise expressly provided
herein) any other Person.
11.7 Waiver. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom the enforcement of the change, waiver,
discharge or termination is sought or, in the case of a default, by the
non-defaulting party or parties.
11.8 Incorporation of Recitals and Schedules. The Recitals to this
Agreement and the Exhibits and Schedules attached hereto are hereby incorporated
by reference into the body of this Agreement and made a part hereof.
11.9 Confidentiality; Press Releases.
(a) Agreement. Each of CBL and the Jacobs Parties agrees that it will not
disclose the contents of this Agreement to any third parties or issue any press
release with respect thereto or any Closing hereunder without the consent of the
other parties, except (i) as may be required or, based on the advice of counsel,
advisable to ensure compliance with any applicable laws, rules or regulations of
any Governmental Authority having jurisdiction over such party, (ii) as is
expressly authorized or required by the terms of this Agreement (e.g., in
connection with soliciting any stockholder or partner consents or obtaining any
required third-party consents or approvals) or (iii) if and to the extent such
contents have already been placed in the public domain (other than by the party
seeking to disclose and in a manner not permitted by this Section 11.9(a)).
Nothing contained in this Section 11.9 shall be construed as prohibiting (x) the
Jacobs Parties from disclosing the contents of this Agreement (A) on a
confidential basis to the Jacobs Parties' counsel, accountants, consultants,
property managers and other agents, or (B) (if necessary or appropriate in JRI's
reasonable judgment) to regulatory authorities having jurisdiction over the
Jacobs Parties (which authorities, by law, may not be bound by any
confidentiality restrictions), or (C) to parties from which it is seeking
financing or (y) CBL from disclosing the contents of this Agreement (A) on a
confidential basis to its counsel, accountants, consultants, property managers
and other agents, or (B) (if necessary or appropriate in CBL's reasonable
judgment) to regulatory authorities having jurisdiction over CBL (which
authorities, by law, may not be bound by any confidentiality restrictions), or
(C) to parties from which it seeks financing. The Jacobs Parties and CBL each
agree (I) to consult with and cooperate with the other parties on the content
and timing of all press releases and other public announcements relating to the
transactions contemplated by this Agreement and (II) that the initial press
release to be issued with respect to the transactions contemplated by this
Agreement will be in the form agreed to by the parties hereto prior to the
execution of this Agreement. Notwithstanding the foregoing, in connection with
the disposition of the remaining retail shopping center
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properties owned by the Jacobs Parties and their affiliates (the "Remaining
Portfolio"), the Jacobs Parties may disclose the contents of this Agreement with
any potential buyer of the Remaining Portfolio, provided such potential buyer
agrees to keep the same confidential on terms similar to the terms contained
herein.
(b) Property Information. In the event this Agreement is terminated, CBL
and CBL's representatives shall promptly deliver to the Jacobs Parties all
originals and copies of the information relating to the Interests and the
Properties supplied by, or at the direction of, the Jacobs Parties in the
possession of CBL and CBL's representatives. In addition to the foregoing, CBL
shall remain obligated and bound pursuant to the terms and provisions of that
certain Confidentiality Agreement by and between The Richard E. Jacobs Group,
Inc. and the REIT, dated January 4, 2000, except to the extent that the
requirements of that agreement are inconsistent with the provisions of this
Section 11.9.
11.10 Merger. Subject to the last sentence of Section 11.9(b) above, all
understandings and agreements heretofore had between the parties hereto are
merged in this Agreement and the instruments and documents referred to herein,
which fully and completely express their agreements with respect to the
transactions contemplated herein, and supersede all prior agreements, written or
oral, with respect thereto.
11.11 GOVERNING LAW. AS PERMITTED BY SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK, THE PARTIES HERETO AGREE THAT THIS
AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
11.12 Jurisdiction. Each of the Jacobs Parties and CBL hereby irrevocably
and unconditionally submits to the jurisdiction of any New York State Court or
Federal Court of the United States of America sitting in the borough of
Manhattan, and any appellate court from any such court, in any suit, action or
proceeding arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment, and each hereby irrevocably and unconditionally
agrees that all claims in respect of any such suit, action or proceeding shall
be brought in and may be heard and determined in such New York State Court or,
to the extent permitted by law, in such Federal Court. Each of JRI and CBL
agrees that a final judgment in any such suit, action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Each of the Jacobs Parties and CBL hereby
irrevocably and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement in any New York State Court or Federal Court sitting in the
borough of Manhattan. Each of the Jacobs Parties and CBL hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such suit, action or proceeding in any such
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court. Nothing contained in this Section 11.12 shall be construed as preventing
any of the Jacobs Parties and CBL, or any of their respective affiliates, from
(i) objecting to the jurisdiction of any New York State Court on the ground that
the matter involved exceeds the statutory jurisdiction of such court or (ii)
from seeking to remove any suit, action or proceeding from a New York State
Court to a Federal Court sitting in the borough of Manhattan, or vice versa.
11.13 Captions. The captions and Article headings included in this
Agreement and the table of contents are for convenience only, do not constitute
part of this Agreement and shall not be considered or referred to in
interpreting the provisions of this Agreement.
11.14 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument. The submission of a signature page
transmitted by facsimile (or similar electronic transmission facility) shall be
considered as an "original" signature page for purposes of this Agreement so
long as the original signature page is thereafter transmitted by mail or by
other delivery service and the original signature page is substituted for the
facsimile signature page in the original and duplicate originals of this
Agreement.
11.15 Severability. If any provision hereof is held invalid or not
enforceable to its fullest extent, such provision shall be enforced to the
extent permitted by law, and the validity of the remaining provisions hereof
shall not be affected thereby.
11.16 Prior Negotiations; Construction. No negotiations concerning or
modifications made to prior drafts of this Agreement shall be construed in any
manner to limit, reduce or impair the rights, remedies, duties and obligations
of the parties under this Agreement or to restrict or expand the meaning of any
of the provisions of this Agreement or to construe any of the provisions of this
Agreement in any party's favor. The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement and that the normal rule 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 amendment, Schedule or Exhibit hereto.
11.17 Litigation Expenses. In the event that either the Jacobs Parties or
CBL is required to employ an attorney because any litigation arises out of this
Agreement between the parties hereto, the non-prevailing party shall pay the
prevailing party all reasonable fees and expenses, including attorneys' fees and
expenses, incurred in connection with such litigation.
11.18 No Recordation. The Jacobs Parties and CBL each agree that neither
this Agreement nor any memorandum or notice hereof shall be recorded and CBL
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agrees (a) not to file any notice of pendency or other instrument (other than a
judgment or lis pendens filed by CBL in connection with CBL's enforcement of its
rights hereunder) against any of the Properties or any portion thereof in
connection herewith and (b) to indemnify the Jacobs Parties against all costs,
expenses and damages, including, without limitation, reasonable attorneys' fees
and disbursements, incurred by the Jacobs Parties by reason of the filing by CBL
of such notice of pendency or other instrument.
11.19 Competitive Activities. Nothing herein shall be construed as
restricting or limiting in any way the Jacobs Parties, their principals,
affiliates, or any partner, member or shareholder of any of them, from engaging
in activities that may be deemed to be competitive with the Properties or any
other business activities currently conducted or to be conducted by CBL or any
of their affiliates on or after the date hereof. This Section 11.19 shall not,
however, be construed as releasing Richard Jacobs from the provisions of the
Non-Competition Agreement.
11.20 No Obligations of Property Owners. It is expressly acknowledged that
none of the Property Owners shall have any obligations whatsoever under this
Agreement or under the terms of any Interest Contribution Agreement or Deed
Contribution Agreement to which they are not a party, and each Property Owner
shall only be bound by the terms and provisions of the applicable Interest
Contribution Agreement or Deed Contribution Agreement relating to its Property
if, as and when fully executed and delivered and not otherwise.
11.21 WAIVER OF TRIAL BY JURY. THE JACOBS PARTIES AND CBL HEREBY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM FILED BY THE JACOBS PARTIES OR CBL, WHETHER IN
CONTRACT, TORT OR OTHERWISE, WHICH RIGHT OR CLAIM RELATES DIRECTLY OR INDIRECTLY
TO THIS AGREEMENT, ANY DOCUMENTATION RELATED THERETO, OR ANY ACTS OR OMISSIONS
IN CONNECTION WITH THIS AGREEMENT. THIS WAIVER HAS BEEN AGREED TO AFTER
CONSULTATION WITH LEGAL COUNSEL SELECTED BY CBL AND THE JACOBS PARTIES.
11.22 Relationship of JRI to the Jacobs Parties. Each Jacobs Party agrees
(and CBL acknowledges) that JRI alone will represent and act on behalf of all of
the Jacobs Parties for the purpose of giving any required notice or consent
hereunder and for the purpose of determining whether the conditions precedent to
the Jacobs Parties' obligations hereunder have been satisfied.
11.23 General Limitation on Liabilities. The parties acknowledge and agree
that (i) neither the Jacobs Trusts nor any other owner of interests in or
affiliate of JRI will have any liability to CBL for any breach by JRI of any of
its representations,
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warranties, covenants or other obligations contained in or pursuant to this
Agreement, and (ii) no stockholder of the REIT and no holder of limited
partnership interests in the Operating Partnership will have any liability to
the Jacobs Parties for any breach by the REIT or the Operating Partnership of
any of its representations, warranties, covenants or other obligations contained
in or pursuant to this Agreement, provided, however, that the foregoing shall
not preclude the Jacobs Parties or CBL from making any claims against any direct
or indirect partner, member or other equity owner of the other pursuant to
Section 17-607 of the Delaware Revised Uniform Limited Partnership Act to the
extent the partner, member or other equity owner has received a distribution or
other payment in violation of that Section or other similar law to which such
Person is subject.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
JRI:
JACOBS REALTY INVESTORS LIMITED
PARTNERSHIP
By: JG Realty Investors Corp.
By: /s/ Martin J. Cleary
------------------------------
Name: Martin J. Cleary
Title: President
JACOBS TRUSTS:
solely with respect to its express
obligations pursuant to Section 1.1(a),
Article IV and Article XI hereof,
By: /s/ Richard E. Jacobs
------------------------------
Richard E. Jacobs, solely as trustee
for the Richard E. Jacobs Revocable
Living Trust
solely with respect to its express
obligations pursuant to Section 1.1(a),
Article IV and Article XI hereof,
By: /s/ Richard E. Jacobs
------------------------------
Richard E. Jacobs, solely as trustee
for the David H. Jacobs Marital
Trust
<PAGE>
OPERATING PARTNERSHIP:
CBL & ASSOCIATES LIMITED PARTNERSHIP
By: CBL Holdings I, Inc.
By: /s/ Charles B. Lebovitz
------------------------------
Name: Charles B. Lebovitz
Title: Chairman of the Board and
Chief Executive Officer
REIT:
CBL & ASSOCIATES PROPERTIES, INC.
By: /s/ Charles B. Lebovitz
------------------------------
Name: Charles B. Lebovitz
Title: Chairman of the Board and
Chief Executive Officer
