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EXHIBIT A
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MASTER AGREEMENT
AMONG
USRP I, LLC,
USRP GP, LLC,
USRP LP, LLC
US RETAIL PARTNERS LIMITED PARTNERSHIP,
U.S. RETAIL PARTNERS, LLC,
FIRST WASHINGTON REALTY TRUST, INC.,
FIRST WASHINGTON REALTY LIMITED PARTNERSHIP,
AND
EACH OF THE DIRECTLY OR INDIRECTLY
WHOLLY-OWNED SUBSIDIARIES OF FIRST WASHINGTON REALTY TRUST, INC.
AND FIRST WASHINGTON REALTY LIMITED PARTNERSHIP
LISTED ON EXHIBIT A TO THIS AGREEMENT
Dated as of September 27, 2000
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RECITALS....................................................................................................................1
1. Definitions..........................................................................................................1
1.1 General................................................................................................1
1.2 Other Defined Terms....................................................................................5
2. Title and Survey Matters.............................................................................................5
2.1 Existing Title Policies and Surveys; Update of Title and Survey........................................5
2.2 Permitted Exceptions...................................................................................5
2.3 FW Encumbrances........................................................................................6
2.4 Other Encumbrances.....................................................................................6
2.5 Extension of Closing to Cure Encumbrances..............................................................6
2.6 Assumed Loan Lender Consents and Estoppels.............................................................7
3. Access to Properties and Information; Confidentiality; Certain Covenants.............................................8
3.1 Access to Properties and Information...................................................................8
3.2 Confidentiality........................................................................................9
3.3 Financial and Other Statements.........................................................................9
3.4 Termination of Property Contracts......................................................................9
4. Representations and Warranties of FW Entities.......................................................................10
4.1 Corporate Status; Compliance With Law.................................................................11
4.2 Authorization, Validity and Effect of Agreements......................................................12
4.3 Capitalization........................................................................................12
4.4 Subsidiaries..........................................................................................14
4.5 Other Interests.......................................................................................15
4.6 Conflicts.............................................................................................15
4.7 SEC Documents.........................................................................................16
4.8 Litigation............................................................................................17
4.9 Absence of Certain Changes or Events..................................................................17
4.10 Taxes.................................................................................................18
4.11 Books and Records.....................................................................................20
4.12 Properties and Title..................................................................................20
4.13 Physical Condition of Properties......................................................................21
4.14 Construction Projects.................................................................................21
4.15 Compliance with Restrictions..........................................................................21
4.16 Condemnation..........................................................................................22
4.17 Leases................................................................................................22
4.18 [Intentionally Omitted]...............................................................................23
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4.19 Certain Reports.......................................................................................23
4.20 Hazardous Materials...................................................................................23
4.21 Rights to Purchase....................................................................................24
4.22 [Intentionally Omitted]...............................................................................24
4.23 FIRPTA................................................................................................24
4.24 Personal Property.....................................................................................24
4.25 Intellectual Property.................................................................................24
4.26 Other Agreements......................................................................................24
4.27 Development Rights....................................................................................25
4.28 Assumed Loans.........................................................................................25
4.29 [Intentionally Omitted]...............................................................................25
4.30 Insurance.............................................................................................25
4.31 Bankruptcy............................................................................................25
4.32 Employee Benefit Plans................................................................................26
4.33 Labor Matters.........................................................................................28
4.34 [Intentionally Omitted]...............................................................................28
4.35 Related Party Transactions............................................................................28
4.36 Company Rights Agreement..............................................................................28
4.37 Brokers...............................................................................................29
4.38 Opinion of Financial Advisor..........................................................................29
5. Representations and Warranties of USRP Entities.....................................................................29
5.1 Corporate Status: Compliance With Law.................................................................29
5.2 Authorization; Validity of Transaction Documents; Necessary Action....................................30
5.3 Consents and Approvals; No Violations.................................................................30
5.4 Required Financing....................................................................................30
5.5 Formation of the USRP Entities; No Prior Activities...................................................31
5.6 Capitalization........................................................................................31
5.7 [Intentionally Omitted]...............................................................................32
5.8 Brokers...............................................................................................32
6. Conditions to Closing Transactions..................................................................................32
6.1 Conditions to the Obligations of Each Party to Effect the Transactions................................32
6.2 Obligations of USRP Entities..........................................................................33
6.3 Obligations of FW Entities............................................................................35
6.4 Risk of Loss..........................................................................................36
7. Conduct of Business Pending the Transactions........................................................................36
7.1 General...............................................................................................36
7.2 Leasing...............................................................................................40
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7.3 Liens.................................................................................................41
7.4 Personal Property.....................................................................................41
7.5 Property Contracts....................................................................................41
7.6 General Maintenance and Operation of Properties.......................................................41
7.7 [Intentionally Omitted]...............................................................................42
7.8 Other Filings.........................................................................................42
7.9 Additional Agreements.................................................................................42
7.10 No Solicitations......................................................................................43
7.11 Estoppels and Other Items.............................................................................44
8. Prorations and Adjustments; Closing Costs...........................................................................45
8.1 General...............................................................................................45
8.2 Taxes and Assessments.................................................................................45
8.3 Certain Property Income and Expense Items.............................................................46
8.4 Settlement Statement..................................................................................48
8.5 Application of Prorations and Adjustments.............................................................48
8.6 Fees and Expenses; Closing Costs......................................................................49
8.7 Adjustment for Net Working Capital....................................................................49
8.8 Exclusions............................................................................................51
8.9 No Solicitation of Offers or Sale of Properties by FW Entities; Pending Sale Properties...............51
9. Public Announcements................................................................................................52
10. Termination.........................................................................................................52
10.1 Termination...........................................................................................52
10.2 Effect of Termination.................................................................................54
11. Miscellaneous.......................................................................................................56
11.1 Amendment.............................................................................................56
11.2 Extension; Waiver.....................................................................................56
11.3 Entire Agreement......................................................................................56
11.4 Binding On Successors and Assigns.....................................................................56
11.5 Assignment............................................................................................56
11.6 Counterparts..........................................................................................56
11.7 Notices...............................................................................................57
11.8 Attorneys' Fees.......................................................................................58
11.9 Time Periods..........................................................................................58
11.10 Further Instruments...................................................................................58
11.11 Descriptive Headings..................................................................................58
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11.12 Time of the Essence...................................................................................58
11.13 Construction of Agreement.............................................................................59
11.14 Execution by Officer of FW Entities...................................................................59
11.15 Execution by Officer of the USRP Entities.............................................................59
11.16 JURY TRIAL WAIVER.....................................................................................59
11.17 Choice of Law; Consent to Jurisdiction................................................................59
11.18 Joint and Several Obligations.........................................................................60
11.19 Non-Survival of Representations, Warranties, Covenants and Agreements.................................60
11.20 Severability..........................................................................................60
11.21 No Agreement Until Executed...........................................................................60
11.22 Rights of Non-Parties.................................................................................60
12. Arbitration of Disputes.............................................................................................61
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EXHIBIT INDEX
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GLOSSARY
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"Acquisition Proposal".....................................................................................................44
"Additional Rents".........................................................................................................47
"Adjusted Receivables".....................................................................................................50
"Affiliate"................................................................................................................28
"Agreement".................................................................................................................1
"Allocated Consideration"...................................................................................................2
"Assumed Loan"..............................................................................................................7
"Assumed Loan Lender Consent Documents".....................................................................................7
"Assumed Loan Lenders"......................................................................................................2
"Assumed Loans".............................................................................................................2
"Bankruptcy Event".........................................................................................................25
"Break-Up Fee".............................................................................................................54
"Brokers"..................................................................................................................29
"Business Day"..............................................................................................................2
"Closing"...................................................................................................................2
"Closing Date"..............................................................................................................2
"Code"......................................................................................................................2
"Common Units".............................................................................................................13
"Company"...................................................................................................................1
"Company Common Stock"......................................................................................................2
"Company Material Adverse Effect"...........................................................................................2
"Company Options"..........................................................................................................13
"Company Preferred Stock"..................................................................................................13
"Company Subsidiary"........................................................................................................3
"Confidentiality Agreement".................................................................................................9
"Construction Projects"....................................................................................................21
"Contribution Agreements"..................................................................................................19
"Cudahy Repair Escrow Agreement"...........................................................................................48
"Diligence Reports".........................................................................................................3
"Dispute Resolution Notice"................................................................................................61
"Effective Time"............................................................................................................3
"Employee Arrangements"....................................................................................................27
"Employee Program".........................................................................................................27
"Encumbrances".............................................................................................................20
"Environmental Requirements"...............................................................................................23
"ERISA"....................................................................................................................26
"Excess Cash Reserve"......................................................................................................49
"Exchange Act"..............................................................................................................3
"Extension Notice"..........................................................................................................6
"FW Partnership Agreement".................................................................................................14
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"FW Encumbrance"............................................................................................................6
"FW Entities"...............................................................................................................1
"FWM"......................................................................................................................10
"FWOP"......................................................................................................................1
"GAAP".....................................................................................................................17
"Governmental Entity"......................................................................................................11
"Hazardous Materials"......................................................................................................23
"hazardous substance"......................................................................................................23
"hazardous waste"..........................................................................................................23
"HSR Act"..................................................................................................................15
"Improvements"..............................................................................................................3
"Injunction"...............................................................................................................32
"In-Negotiation Leases"....................................................................................................40
"Insurance Termination Costs"..............................................................................................10
"Intangible Property".......................................................................................................3
"IRS"......................................................................................................................18
"Known Title Matters".......................................................................................................5
"Land"......................................................................................................................3
"Leases"....................................................................................................................3
"Limited Partnership Interest Purchase and Sale Agreement"..................................................................1
"Litigation"...............................................................................................................17
"maintains"................................................................................................................27
"Major Tenants"............................................................................................................34
"Maryland Courts"..........................................................................................................59
"Merger Agreement"..........................................................................................................1
"Merger Agreement Properties"...............................................................................................3
"MergerCo"..................................................................................................................1
"MergerLP"..................................................................................................................1
"Mergers"...................................................................................................................3
"MGCL"......................................................................................................................4
"Multi employer Plan"......................................................................................................28
"Net Working Capital"......................................................................................................49
"NYSE".....................................................................................................................52
"Option Holders"...........................................................................................................48
"Option Parcels"...........................................................................................................48
"Other Agreement"..........................................................................................................24
"Other Filings"............................................................................................................42
"Pending Sale Agreement"...................................................................................................51
"Pending Sale Properties"..................................................................................................51
"Permitted Exceptions"......................................................................................................5
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"Person"....................................................................................................................4
"Personal Property".........................................................................................................4
"Plan of Liquidation"......................................................................................................12
"Preferred Units",.........................................................................................................14
"Prepayment Costs"..........................................................................................................7
"Properties"................................................................................................................4
"Property"..................................................................................................................4
"Property Contracts"........................................................................................................4
"Property Information"......................................................................................................8
"Property Material Adverse Effect"..........................................................................................4
"Property Restrictions"....................................................................................................20
"Proposed Reconciliation"..................................................................................................48
"Purchase Agreement"........................................................................................................1
"Purchase Agreement Properties".............................................................................................4
"Real Property".............................................................................................................4
"Regulatory Filings".......................................................................................................15
"Rent Rolls"...............................................................................................................22
"Retail Partners"...........................................................................................................1
"SEC".......................................................................................................................4
"SEC Reports"..............................................................................................................16
"Securities Act"...........................................................................................................13
"Securities Laws"..........................................................................................................16
"Series A Preferred Stock".................................................................................................13
"Series A Preferred Units".................................................................................................13
"Series B Preferred Stock".................................................................................................13
"Series B Preferred Units",................................................................................................13
"Stock Option Plan"........................................................................................................13
"Superior Proposal"........................................................................................................44
"Surveys"...................................................................................................................5
"Taxes"....................................................................................................................18
"Tenant Deposits"..........................................................................................................22
"Terminated Property Contracts"............................................................................................10
"Termination Amount".......................................................................................................54
"Third Party"..............................................................................................................43
"Title Commitment"..........................................................................................................5
"Title Company".............................................................................................................5
"Title Policies"............................................................................................................5
"Title Update Report".......................................................................................................5
"to the knowledge of the Company"..........................................................................................29
"Transaction Documents".....................................................................................................1
"Transactions"..............................................................................................................4
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"Units"....................................................................................................................14
"USRP Entities".............................................................................................................1
"USRP Expenses"............................................................................................................54
"USRP I"....................................................................................................................1
"USRP LP"...................................................................................................................1
"USRP Material Adverse Effect"..............................................................................................5
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MASTER AGREEMENT
THIS MASTER AGREEMENT (this "Agreement"), dated as of September 27, 2000,
by and among USRP I, LLC, a Delaware limited liability company ("USRP I"), USRP
GP, LLC, a Delaware limited liability company ("MergerCo"), USRP LP, LLC, a
Delaware limited liability company ("USRP LP"), US RETAIL PARTNERS LIMITED
PARTNERSHIP, a Delaware limited partnership ("MergerLP"), U.S. RETAIL PARTNERS,
LLC, a Delaware limited liability company ("Retail Partners", and collectively
with USRP LLC, MergerCo, USRP LP LLC and MergerLP, the "USRP Entities"), FIRST
WASHINGTON REALTY TRUST, INC., a Maryland corporation (the "Company"), FIRST
WASHINGTON REALTY LIMITED PARTNERSHIP, a Maryland limited partnership ("FWOP"),
and each of the directly or indirectly wholly-owned subsidiaries of the Company
and FWOP listed on Exhibit A to this Agreement (collectively and jointly and
severally with the Company and FWOP, the "FW Entities").
RECITALS
WHEREAS, MergerCo, MergerLP, the Company and FWOP are parties to that
certain Agreement and Plan of Merger dated as of the date hereof which is being
executed and delivered contemporaneously herewith (the "Merger Agreement") with
respect to the matters set forth therein;
WHEREAS, USRP I and the FW Entities are parties to that certain Real Estate
Purchase Agreement dated as of the date hereof which is being executed and
delivered contemporaneously herewith (the "Purchase Agreement") with respect to
the matters set forth therein;
WHEREAS, the Company and USRP LP are parties to that certain Limited
Partnership Interests Purchase and Sale Agreement dated as of the date hereof
which is being executed and delivered contemporaneously herewith (the "Limited
Partnership Interest Purchase and Sale Agreement", and collectively with this
Agreement, the Merger Agreement and the Purchase Agreement, the "Transaction
Documents") with respect to the matters set forth therein; and
WHEREAS, the parties hereto desire to enter into this Agreement to set
forth certain terms, conditions and provisions which are applicable to the
transactions contemplated in each of the other Transaction Documents and to
induce the others to enter into the other Transaction Documents.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and in the other Transaction Documents, the receipt and
sufficiency of which are hereby acknowledged, the USRP Entities and the FW
Entities hereby agree as follows:
1. Definitions.
1.1 General. The following terms used in this Agreement shall have the
meanings ascribed to them in this Section 1.1:
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"Allocated Consideration" means that portion of the total
consideration (prior to any adjustments under Section 8 of this Agreement
or otherwise provided for in the Transaction Documents) to be paid by the
USRP Entities under the Transaction Documents at the Closings as allocated
among the individual Properties and listed on Exhibit 1.1(a).
"Assumed Loan Lenders" means, collectively, the holders of the Assumed
Loans.
"Assumed Loans" means those loans listed on Exhibit 1.1(b) attached
hereto, subject to the provisions of Section 2.6.
"Business Day" means any day other than Saturday, Sunday and any day
which is a legal holiday in the State of California or the State of
Maryland.
"Closing" means (i) with respect to the transactions contemplated
under the Merger Agreement, the closing of such transactions as defined and
described therein, (ii) with respect to the transactions contemplated under
the Purchase Agreement, the closing of such transactions as defined and
described therein, and (iii) with respect to the transactions contemplated
under the Limited Partnership Interest Purchase and Sale Agreement, the
closing of such transactions as defined and described therein.
"Closing Date" means (i) with respect to the transactions contemplated
by the Merger Agreement, the date of the Closing of such transactions, (ii)
with respect to the transactions contemplated by the Purchase Agreement,
the date of the Closing of such transactions, and (iii) with respect to the
transactions contemplated by the Limited Partnership Interest Purchase and
Sale Agreement, the date of the Closing of such transactions.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Common Stock" means the shares of common stock, par value
$.01 per share, of the Company.
"Company Material Adverse Effect" means a material adverse effect on
the business, results of operations, financial condition or operating
income of the Company and the Company Subsidiaries taken as a whole;
provided that adverse effects on the business, results of operations,
financial condition or operating income of the Company and the Company
Subsidiaries resulting primarily and directly from (A) the fact that any or
all of the FW Entities have entered into the Transaction Documents or
consummated the Transactions, or (B) the real estate industry generally or
the neighborhood shopping center industry generally (other than the
financial condition or bankruptcy of one or more tenants), including such
adverse effects that result from general market conditions, shall not,
individually or in the aggregate, constitute a Company Material Adverse
Effect or contribute affirmatively to any determination that a Company
Material Adverse Effect exists or has occurred.
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"Company Subsidiary" means all of the directly or indirectly
wholly-owned subsidiaries of the Company or FWOP, and includes all of the
entities listed on Exhibit 1.1(c).
"Diligence Reports" means, collectively, those certain reports with
respect to the physical and environmental condition of the Properties which
are listed in Exhibit 1.1(d) and any other formal written reports delivered
by consultants engaged by the USRP Entities regarding the physical or
environmental condition of the Properties, including the Surveys.
"Effective Time" means the moment in time at which the Mergers become
effective, as more particularly described in the Merger Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Improvements" means, as to each Property, the right, title and
interest of the Company or any Company Subsidiary or any affiliate of such
Person in any and all structures, buildings, facilities, parking areas or
other improvements situated on such Property's Land and all related
fixtures, improvements, building systems and equipment (including, without
limitation, HVAC, security and life safety systems).
"Intangible Property" means, as to each Property, the right, title and
interest of the Company or any Company Subsidiary or any affiliate of such
Person in: (a) any and all permits, entitlements, filings, building plans,
specifications and working drawings, certificates of occupancy, operating
permits, sign permits, development rights and approvals, certificates,
licenses, warranties and guarantees, engineering, soil, pest control,
survey, environmental, appraisal, market and other reports relating to the
Property; (b) all trade names, service marks, tenant lists, advertising
materials and telephone exchange numbers identified with the Property; (c)
the Property Contracts and the Leases; (d) all claims, awards, actions,
remedial rights and judgments relating to the Property; (e) all books,
records, files and correspondence relating to the Property; and (f) all
other transferable intangible property, miscellaneous rights, benefits or
privileges of any kind or character with respect to the Property.
"Land" means, as to each Property, the land component in the Property
as described in the Title Policies.
"Leases" means, as to each Property, all leases, concession
agreements, rental agreements or other agreements (including all amendments
or modifications thereto) which entitle any Person to the occupancy or use
of any portion of the Property.
"Mergers" shall have the meaning ascribed to it in the Merger
Agreement.
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"Merger Agreement Properties" means, collectively, all of the
Properties excluding the Purchase Agreement Properties. The Merger
Agreement Properties are listed on Exhibit 1.1(e) hereto.
"MGCL" means the Maryland General Corporation Law.
"Person" means a natural person, firm, partnership, association,
corporation, company, trust, business trust, Governmental Entity or other
entity.
"Personal Property" means, as to each Property, all furniture,
furnishings, trade fixtures and other tangible personal property directly
or indirectly owned by the Company or any Company Subsidiary that is
located at and used exclusively in connection with the operation of any
Property.
"Properties" means, with respect to each of the shopping center
properties listed in Exhibit 1.1(a) attached hereto, the Real Property, the
Personal Property and the Intangible Property, and "Property" means each of
the individual Properties.
"Property Contracts" means all maintenance, service and other
operating contracts, equipment leases and other arrangements or agreements
to which the Company or any Company Subsidiary or any affiliate of such
Person is a party affecting the ownership, repair, maintenance, management,
leasing or operation of the Properties, but not including Leases.
"Property Material Adverse Effect" means a direct or indirect material
adverse effect on the operations, financial condition, or operating income
derived from or value of a Property; provided, that adverse effects
resulting primarily and directly from the real estate industry generally or
the neighborhood shopping center industry generally (other than the
financial condition or bankruptcy of one or more tenants), including such
adverse effects that result from general market conditions, shall not,
individually or in the aggregate, constitute a Property Material Adverse
Effect or contribute affirmatively to any determination that any Property
Material Adverse Effect exists or has occurred.
"Purchase Agreement Properties" means, collectively, those Properties
which are to be sold by certain of the FW Entities to certain of the USRP
Entities or their designee(s) pursuant to the Purchase Agreement.
"Real Property" means, as to each Property, the Land, the Improvements
and all of the right, title and interest of a FW Entity in and to the
rights, privileges, easements, and appurtenances to the Land or the
Improvements, including, without limitation, any air, development, water,
hydrocarbon or mineral rights held by a FW Entity, all licenses, easements,
rights-of-way, claims, rights or benefits, covenants, conditions and
servitudes and other appurtenances used or connected with the beneficial
use or enjoyment of the Land or the Improvements and all rights or
interests relating to any roads, alleys or parking areas adjacent to or
servicing the Land or the Improvements.
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"SEC" means the United States Securities and Exchange Commission.
"Transactions" means, collectively, the transactions contemplated by
the Transaction Documents.
"Title Policies" means the existing title insurance policies naming
the applicable FW Entities as owners of the Properties, including all
endorsements thereto.
"USRP Material Adverse Effect" means a material adverse effect on the
business, results of operations, financial condition or operating income of
the USRP Entities taken as a whole; provided that adverse effects on the
business, results of operations, financial condition or operating income of
the USRP Entities resulting primarily and directly from (A) the fact that
any or all of the USRP Entities have entered into the Transaction Documents
or consummated the Transactions, or (B) the real estate industry generally
or the neighborhood shopping center industry generally, including any
adverse effects to the real estate industry generally or the neighborhood
shopping industry generally that result from general market conditions,
shall not, individually or in the aggregate, constitute a USRP Material
Adverse Effect or contribute affirmatively to any determination that a USRP
Material Adverse Effect exists or has occurred.
1.2 Other Defined Terms. Other terms used herein shall have the
meanings ascribed to them elsewhere in this Agreement.
2. Title and Survey Matters.
2.1 Existing Title Policies and Surveys; Update of Title and Survey.
The FW Entities have provided to the USRP Entities copies of any existing
surveys of each Real Property in the possession or control of the FW
Entities. The USRP Entities have received from Commercial Settlements,
Inc., as agent for LandAmerica Title Insurance Company ("Title Company"),
reports updating title to each Real Property since the date of the existing
Title Policy for such Property (each, a "Title Update Report"), along with
an undertaking (each, a "Title Commitment") by the Title Company to issue a
new owner's policy of title insurance to a party designated by the USRP
Entities in the same form as the existing Title Policy, subject only to
such additional matters as are set forth in the Title Update Report (such
additional matters (if any), together with those matters disclosed in
Schedule B of the existing Title Policy for the applicable Property, are
referred to herein as the "Known Title Matters"), in the amount of the
Allocated Consideration for each Property. The USRP Entities have received
from International Land Services, Inc. updates of the existing surveys of
each Real Property (as so updated, the "Surveys").
2.2 Permitted Exceptions. As used herein, the term "Permitted
Exceptions" means, collectively, (a) all Known Title Matters, other than
any FW Encumbrances, (b) matters shown on the Surveys, (c) all title
matters reflecting the existence or terms of Leases shown on the Rent Rolls
and other Leases entered into in accordance with this Agreement between the
date hereof and the Closing Date, (d) real estate taxes and
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assessments for the fiscal year in which the Closing occurs (subject to the
provisions of Section 8.2 hereof), (e) all matters, whether or not of
record, to the extent caused by the USRP Entities or its agents,
representatives or contractors, (f) liens filed by parties supplying labor
or materials to any Property to the extent that the USRP Entities shall
have received an adjustment to the Purchase Price on account thereof, and
(g) any other matters not constituting Known Title Matters, as long as the
items in this clause (g) are not violated by the existing improvements and
use of the applicable Properties as improved, used and operated as of the
date hereof or would not otherwise materially detract from the value of any
of the applicable Properties. The FW Entities agree to reasonably cooperate
with the USRP Entities to cause the removal of or issuance of affirmative
title insurance over (by endorsement or otherwise) each of the exceptions
listed on Exhibit 2.2 attached hereto, including without limitation, to
prepare and deliver affidavits as to factual matters.
2.3 FW Encumbrances. As used herein, the term "FW Encumbrance" shall
mean any mortgage or deed of trust or other monetary lien voluntarily
granted or expressly assumed by the Company or any Company Subsidiary and
securing indebtedness of the Company or any Company Subsidiary or any of
its affiliates other than the Assumed Loans. In any event, all FW
Encumbrances must be satisfied by the FW Entities on or prior to the
Closing Date (as the same may be extended as set forth below) or, if not so
satisfied, shall be satisfied at Closing out of the proceeds otherwise
payable to FW Entities, without adjustment of the Purchase Price.
2.4 Other Encumbrances. If title to any Real Property is or becomes
encumbered by any matter (including, without limitation, an attachment, a
judgment or a lien) other than a Permitted Exception (which term shall
exclude, for purposes of this Section 2.4 only, any matters referenced in
clause (g) of Section 2.2 first arising after the date of the applicable
Title Update Report), the FW Entities shall use commercially reasonable
efforts to remove any such encumbrance, except that the FW Entities shall
not be required to expend more than a total of $1,500,000 to cure such
encumbrances which do not constitute FW Encumbrances. Notwithstanding
anything to the contrary set forth above in this Section 2.4, the FW
Entities shall be obligated to have each FW Encumbrance removed at the sole
cost and expense of the FW Entities at or prior to Closing as provided in
Section 2.3 hereof.
2.5 Extension of Closing to Cure Encumbrances. If, despite reasonable
efforts consistent with the foregoing provisions of this Section 2, the FW
Entities are unable to remove any encumbrance required by this Agreement or
the other Transaction Documents to be removed prior to the scheduled
Closing Date, and such encumbrance can reasonably be removed on or before
September 30, 2001 with commercially reasonable efforts consistent with the
foregoing provisions of this Section 2, either the USRP Entities or the FW
Entities shall have the right on one or more occasion by delivering written
notice (an "Extension Notice") to the other to extend the applicable
Closing to a date that is the earliest of (i) the date by which the parties
reasonably expect such cure can be effected or (ii) September 30, 2001.
Upon any such extension, the term "Closing Date" as used in
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this Agreement shall mean the date set forth in such Extension Notice.
During such extended period, the FW Entities shall continue to use all
commercially reasonable efforts consistent with the foregoing provisions of
this Section 2 to cure such matters.
2.6 Assumed Loan Lender Consents and Estoppels. The FW Entities shall,
solicit and obtain on or before the Closing Date (and the USRP Entities
shall cooperate with the FW Entities to the extent reasonably necessary to
obtain) all approvals, consents, acknowledgments, agreements and
authorizations from the Assumed Loan Lenders which are required for either
(i) the assignment to and assumption by the applicable USRP Entities in
connection with the sale of any Property which is encumbered by a mortgage
or deed of trust securing such Assumed Loan under the Purchase Agreement or
(ii) the Mergers, in each case, without any material change in the terms of
such Assumed Loans (the "Assumed Loan Lender Consent Documents"). To the
extent necessary to obtain any Assumed Loan Lender Consent, the USRP
Entities agree to provide Person(s) to assume the obligations of the
existing borrower(s) and/or guarantor(s) with creditworthiness reasonably
comparable to the creditworthiness of the existing borrower(s) and/or
guarantor(s), as applicable, under the applicable Assumed Loans. If an
Assumed Loan Lender's consent is required in order to consummate the
Transactions without prepaying such Assumed Loan, and if the FW Entities
are unable to obtain such consent, then (x) the FW Entities, at their sole
cost and expense, shall cause the outstanding principal balance and accrued
interest on such Assumed Loan (but not any prepayment fees, yield
maintenance amounts, defeasance costs or similar amounts ("Prepayment
Costs"), which shall be paid as provided below) to be paid in full at the
Closing, without adjustment of the Purchase Price, and (y) such Assumed
Loan shall no longer be deemed an "Assumed Loan" for purposes of the
Transaction Documents. In connection with the foregoing, (a) the FW
Entities shall pay (x) the first $3,000,000 of any Prepayment Costs and any
out-of-pocket costs incurred by, or on behalf of, any of the FW Entities or
the USRP Entities (excluding fees of counsel to the FW Entities or the USRP
Entities, but including any fees of counsel to the Assumed Loan Lenders
required to be paid by the FW Entities or the USRP Entities) (collectively,
"Loan Assumption Costs") payable in connection with obtaining the consent
of the Assumed Loan Lender (including, without limitation, loan assumption
fees and costs of any required "date down" or other endorsements to any
Assumed Loan Lender's title insurance policy) or the satisfaction of such
Assumed Loans requiring an Assumed Loan Lender's consent which consent is
not obtained by Closing and (y) 25% of any Prepayment Costs and any Loan
Assumption Costs in excess of $3,000,000, and (b) the USRP Entities shall
pay 75% of any Prepayment Costs and Loan Assumption Costs in excess of
$3,000,000 payable in connection with obtaining the consent of the Assumed
Loan Lender or the satisfaction of such Assumed Loans requiring an Assumed
Loan Lender's consent which consent is not obtained by Closing. To the
extent that any Assumed Loan Lender holding any indebtedness required to be
maintained under tax protection agreements related to the Merger Agreement
Properties does not consent to the assumption thereof by the applicable
USRP Entity where such consent is required, then the FW Entities shall
cause such indebtedness to be refinanced prior to Closing with qualified
non-recourse (except for reasonable and customary so-called "non-recourse
carveouts") mortgage financing which is assumable by the applicable USRP
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Entity in an amount equal to the existing balance of such indebtedness or
such lesser amount needed to comply with the terms of the applicable tax
protection agreement, as determined by the FW Entities and approved by the
USRP Entities and otherwise on terms and conditions reasonably acceptable
to the USRP Entities, which refinancing shall constitute an Assumed Loan
for the purposes of this Agreement and the Merger Agreement.
3. Access to Properties and Information; Confidentiality; Certain
Covenants.
3.1 Access to Properties and Information. From the date hereof until
the Effective Time, each of the FW Entities shall, and shall cause their
respective officers, employees and agents to, afford to the USRP Entities
and to the officers, employees and agents of the USRP Entities access
during normal business hours to such officers, employees, agents,
Properties, books, records and contracts, and shall furnish the USRP
Entities and their officers, employees and agents such financial, operating
and other data and information, as the USRP Entities may reasonably
request. Without limiting the generality of the foregoing:
(a) The USRP Entities, personally or through their respective
authorized agents or representatives, shall be entitled upon (i)
presentation to the FW Entities of a certificate of insurance evidencing
that the USRP Entities carry a liability insurance policy in an amount not
less than $5,000,000, which liability insurance policy names the Company
and FWOP as additional insureds, and (ii) not less than 24 hours advance
notice to the FW Entities, to enter upon the Properties during normal
business hours, and shall have the right to make such reasonable
investigations, including, but not limited to, conducting engineering and
structural studies, soil tests and environmental studies (including,
without limitation, so-called "Phase I" and "Phase II" environmental
studies), as the USRP Entities deem necessary or advisable with respect to
the Properties; and
(b) The FW Entities agree to copy and deliver (or otherwise make
available as set forth below) to the USRP Entities, or to their duly
authorized agents or representatives, upon demand, (i) copies of all
Leases, (ii) copies of all applicable books and financial records relating
to each Property and the operation and maintenance thereof, and (iii) such
other items as the USRP Entities may reasonably request, in each case to
the extent currently within the possession or control of a FW Entity or
available to a FW Entity after reasonable inquiry or effort (all
information described in this Section 3.1, collectively, the "Property
Information"). Property Information may be made available at the main
office of the FW Entities to the extent copying is not reasonably
practicable.
The Property Information may be examined at all reasonable times during
normal business hours upon prior reasonable notice to the FW Entities and
may be photocopied by the USRP Entities. The activities of the USRP
Entities at the Property shall be conducted in such a manner so as not to
interfere materially with the occupancy of any tenant with due regard given
to the nature and type of activity, test or analysis being conducted. The
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USRP Entities shall conduct their activities in a manner that will not
cause any material damage to the Properties (unless restored by the USRP
Entities as provided herein) or liability to the FW Entities or the
Properties. In the event the Closings do not occur for any reason, the USRP
Entities shall return to the FW Entities all Property Information and any
and all other materials and information provided to the USRP Entities by
the FW Entities or any of their agents.
3.2 Confidentiality. Prior to the Effective Time, the USRP Entities
shall hold in confidence all Property Information provided by the FW
Entities and all results of their investigations of the FW Entities and the
Properties on the terms and subject to the conditions contained in that
certain confidentiality agreement between BPP Retail, LLC and the Company
dated April 16, 1999 (the "Confidentiality Agreement"), as if each of the
USRP Entities were named therein as a party. Each of the FW Entities hereby
waives the provisions of the Confidentiality Agreement as and to the extent
necessary to permit the making and consummation of the Transactions. At the
Effective Time, the Confidentiality Agreement and all obligations under
this Section 3.2 shall terminate.
3.3 Financial and Other Statements. Supplementing the provisions of
Section 3.1, during the term of this Agreement the FW Entities shall
provide to the USRP Entities or their representatives the following
documents and information:
(a) As soon as reasonably available after filing with the SEC,
the FW Entities shall deliver to the USRP Entities or their representatives
the Company's Quarterly Report on Form 10-Q as filed under the Exchange Act
for each fiscal quarter ending after the date of this Agreement. As soon as
reasonably available after filing with the SEC, the FW Entities shall
deliver to the USRP Entities or their representatives the Company's Annual
Report on Form 10-K, as filed under the Exchange Act for each fiscal year
ending after the date of this Agreement. The FW Entities shall also deliver
to the USRP Entities or their representatives, promptly after its being
filed with the SEC, a copy of each Current Report on Form 8-K and a copy of
each other report, statement or schedule filed with the SEC by or with
respect to the Company or any Company Subsidiary.
(b) Promptly upon receipt thereof, the FW Entities shall furnish
to the USRP Entities or their representatives copies of all internal
control reports submitted to any FW Entity by independent accountants in
connection with each annual, interim or special audit of the books of any
FW Entity made by such accountants.
(c) As soon as practicable, the FW Entities shall furnish to the
USRP Entities or their representatives copies of all such financial
statements, reports or other communications as the Company or any Company
Subsidiary shall send to its stockholders, partners, members, the SEC or
any other regulatory authority, except to the extent any such reports
furnished to any such regulatory authority are confidential and except as
legally prohibited thereby.
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3.4 Termination of Property Contracts.
(a) Property Management and Affiliate Property Contracts;
Insurance. The FW Entities shall terminate or cause to be terminated,
effective immediately prior to the Closing under the Purchase Agreement and
at the sole cost and expense of the FW Entities, the property management
contract for each Property with its affiliate First Washington Management,
Inc. ("FWM") and each of the other Property Contracts between the Company
or a Company Subsidiary and any affiliate of a FW Entity. The FW Entities
shall reasonably cooperate with the USRP Entities in arranging for the
ability of the USRP Entities to terminate, at any time after the Effective
Time, any casualty, liability and other insurance maintained by the Company
and Company Subsidiaries, including determining the amount of any fees,
additional premiums, reductions in refunds of unused prepaid premiums and
other costs which will be payable as a result of any such early termination
of insurance ("Insurance Termination Costs").
(b) Other Property Contracts. Not later than forty-five (45) days
prior to the Closing Date under the Purchase Agreement, the USRP Entities
may deliver a written notice to the FW Entities setting forth those
Property Contracts listed on Exhibit 3.4 that the USRP Entities wish to
have terminated upon Closing and which, by their terms, may be terminated
upon not more than thirty (30) days' notice without payment of any
termination fee or similar amount (together with any other Property
Contracts not listed on Exhibit 3.4 unless one of the USRP Entities
expressly agrees in writing to assume the same, the "Terminated Property
Contracts"). The FW Entities will terminate or cause to be terminated,
prior to the Closing, all of the Terminated Property Contracts (subject to
customary obligations under each such Terminated Property Contract
involving leasing commissions payable to parties unaffiliated with a FW
Entity to pay such leasing commissions if the leasing agent secures a
tenant from a designated list of possible tenants with whom such
unaffiliated leasing agent has had dealings regarding a possible lease
within a specified period of time after termination, which the USRP
Entities will assume). At the Closings, the FW Entities shall assign or
cause to be assigned to the USRP Entities all of the Property Contracts
listed on Exhibit 3.4 other than the Terminated Property Contracts and any
other Property Contracts not listed on Exhibit 3.4 which the USRP Entities
expressly agree in writing to assume, except to the extent that such
assignment occurs by operation of law and is not otherwise deemed an
"assignment" by its terms upon a merger or change in ownership (i.e., for
Property Contracts relating to the Merger Agreement Properties). The FW
Entities shall pay and discharge at or before the Closings all obligations
and liabilities of the Company and the Company Subsidiaries under any
Property Contracts assumed by the USRP Entities in connection with the
Transactions arising during any period prior to Closing under the Purchase
Agreement unless the USRP Entities receive a credit against the Purchase
Price on account thereof.
(c) Third Party Management Property Contracts. Prior to Closing,
the FW Entities shall cause the applicable Company Subsidiaries to
terminate all of the third party management contracts to which a Company
Subsidiary is a party, unless at least
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45 days prior to the Closings the USRP Entities deliver written notice to
the FW Entities directing the FW Entities not to terminate any of such
third party management contracts.
4. Representations and Warranties of FW Entities. Except for Known Title
Matters and as set forth in the Diligence Reports, the FW Entities, jointly and
severally, represent and warrant to the USRP Entities as follows:
4.1 Corporate Status; Compliance With Law. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Maryland. The Company is duly licensed or
qualified to do business as a foreign corporation and is in good standing
under the laws of any other state of the United States in which the
character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary (other than
in such states where the failure to be so qualified or licensed would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect); which states are listed in Exhibit 4.1(a)
attached hereto. Each of the Company Subsidiaries is a corporation,
partnership or limited liability company duly incorporated or organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the corporate, partnership or company
power and authority to own its Properties and to carry on its business as
it is now being conducted, and is duly qualified to do business and is in
good standing in each jurisdiction in which the ownership of its Property
or the conduct of its business requires such qualification (other than in
such states where the failure to be so qualified or licensed would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect), which states are listed in Exhibit 4.1(a)
attached hereto. Neither the Company, any Company Subsidiary nor any
Property is in violation of any order of any court, administrative or
regulatory agency or commission or other governmental authority, domestic
or foreign ("Governmental Entity") or arbitration board or tribunal, or any
law, ordinance, governmental rule or regulation to which the Company or any
Company Subsidiary or any of its respective Properties or assets is
subject, except where such violation would not, individually or in the
aggregate, reasonably be expected to have a Property Material Adverse
Effect. The Company and the Company Subsidiaries have obtained all
licenses, permits and other authorizations and have taken all actions
required by applicable law or governmental regulations in connection with
their business as now conducted, except where the failure to obtain any
such license, permit or authorization or to take any such action would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. No Real Property is in violation of any applicable
federal, state, county or municipal law, code, rule, or regulation
(including, without limitation, The Americans with Disabilities Act of
1990, as amended, and the regulations promulgated thereunder, zoning and
other land use laws and regulations, and applicable building codes) or
requires the correction of any condition by reason of a violation of any
applicable federal, state, county or municipal law, code, rule, or
regulation, which has not been previously cured, except in each case to the
extent such violation or required correction, together with all other
violations or required corrections, would not reasonably be expected to
have a Property Material Adverse Effect. With respect to each of the
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Properties listed on Exhibit 4.1(b), no physical changes have been made to
any such Property since the date of the most recent title insurance policy
with respect thereto which would cause such Property to violate the
provisions of any zoning or other land use law or regulation, in each case
to the extent such violation, together with all other violations, would not
reasonably be expected to have a Property Material Adverse Effect. Copies
of the Charter or other equivalent documents, Bylaws, organizational
documents and partnership, operating and joint venture agreements (and in
each such case, all amendments thereto) of the Company and the Company
Subsidiaries are listed in Exhibit 4.1(c) attached hereto, and the copies
of such documents which have previously been delivered or made available to
the USRP Entities and their counsel, are true and correct.
4.2 Authorization, Validity and Effect of Agreements. Each of the
Company and the Company Subsidiaries has the requisite power and authority
to execute and deliver the Transaction Documents and to perform its
obligations thereunder, subject to obtaining the approvals contemplated
herein and therein, as applicable. The Board of Directors of the Company
has, by resolutions duly adopted by unanimous vote and approved the
Transactions and the Transaction Documents, and has agreed to recommend
that the holders of Company Common Stock adopt and approve a plan of
liquidation (the "Plan of Liquidation") and the Transactions at the Company
stockholders' meeting which will be held in accordance with the provisions
of Section 7.1 of the Merger Agreement. In connection with the foregoing,
the Board of Directors of the Company has taken such actions and votes as
are necessary on its part to render the provisions of Article IV, Sections
4.3.7 and Section 4.5.5 of the Company's Charter, Section 12 of the
Company's Articles Supplementary, and the applicable provisions of the
Control Share Acquisition Statute (Title 3, Subtitle 7), the Business
Combination Statute (Title 3, Subtitle 6) and all other applicable takeover
statutes of the MGCL and any other applicable takeover statutes of any
other state, inapplicable to the Transaction Documents and the
Transactions. As of the date hereof, all of the directors and executive
officers of the Company have indicated that they presently intend to vote
all shares of Company Common Stock and Units which they own to approve the
Transactions and the Transaction Documents at the Company stockholders'
meeting. Subject only to the approval of the holders of a majority of the
outstanding shares of Company Common Stock entitled to be cast and, to the
extent required, by the holders of a Majority-in-Interest (as defined in
the FW Partnership Agreement (as hereinafter defined)) of the limited
partners of FWOP, the execution by the Company and the Company Subsidiaries
of the Transaction Documents to which they are parties and the consummation
of the Transactions and such ancillary agreements have been duly authorized
by all requisite corporate, partnership or company action on the part of
such entities, and no other action on the part of stockholders or partners
is required. The Transaction Documents constitute, and the ancillary
agreements to which they are parties (when executed and delivered pursuant
hereto) will constitute (assuming due and valid authorization, execution
and delivery hereof and thereof, as applicable, by each of the USRP
Entities that are a party hereto or thereto, as applicable), the valid and
legally binding obligations of the Company and the Company Subsidiaries,
enforceable against the Company and each of the Company Subsidiaries in
accordance with their respective terms,
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subject to applicable bankruptcy, insolvency, moratorium or other similar
laws relating to creditors' rights and general principles of equity.
4.3 Capitalization.
(a) The authorized stock of the Company consists of 90,000,000
shares of Company Common Stock of which as of the date hereof 10,462,422
shares are issued and outstanding and 10,000,000 shares of preferred stock,
of which 3,750,000 shares are classified as shares of Series A Cumulative
Participating Convertible Preferred Stock, par value $.01 per share
("Series A Preferred Stock") and 1,000,000 shares are classified as Class B
Junior Participating Preferred Stock (the "Series B Preferred Stock" and
together with the Series A Preferred Stock, the "Company Preferred Stock"),
of which as of the date hereof 1,968,484 shares of Series A Preferred Stock
are issued and outstanding and no shares of Series B Preferred Stock are
issued and outstanding. All such issued and outstanding shares of Company
Common Stock and Company Preferred Stock are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. The
Company has no outstanding bonds, debentures, notes or other obligations
the holders of which have the right to vote (or which are convertible into
or exercisable for securities having the right to vote) with the
stockholders of the Company on any matter. Except for the options
(collectively, the "Company Options") granted under the Company's 1994
Amended and Restated Stock Option Plan, as amended (the "Stock Option
Plan"), and except as set forth on Exhibit 4.3(a) there are not at the date
of this Agreement any existing options, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or commitments which
obligate the Company to issue, transfer or sell any shares of capital stock
of the Company. Exhibit 4.3(a) attached hereto sets forth a full list of
the Company Options, including the name of the Person to whom such stock
options have been granted, the number of shares subject to each option, the
per share exercise price for each option, the vesting schedule for each
option and the termination date for each option. There are no agreements or
understandings to which the Company or any Company Subsidiary is a party
with respect to the voting of any shares of Company Common Stock or Company
Preferred Stock or which restrict the transfer of any such shares, nor does
the Company have knowledge of any such agreements or understandings with
respect to the voting of any such shares or which restrict the transfer of
any such shares. Except as set forth in Exhibit 4.3(a) hereto, there are no
outstanding contractual obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire any shares of capital
stock, partnership interests or any other securities of the Company or any
Company Subsidiary. All dividends with respect to Company Common Stock and
the Company Preferred Stock have been paid in full as of the most recent
dividend period. As of the date hereof, each share of Series A Preferred
Stock is convertible into 1.282051282 shares of Company Common Stock.
Except as set forth in Exhibit 4.3(a) hereof, neither the Company nor any
Company Subsidiary is under any obligation, contingent or otherwise, by
reason of any agreement to register any of their securities under the
Securities Act of 1933, as amended (the "Securities Act"), and after the
Effective Time, neither the Surviving Company nor any affiliate thereof
will have any obligation to register any of their securities as a result of
any prior commitment made by
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<PAGE> 23
the Company or any of the Company Subsidiaries. After the Effective Time,
the Surviving Company will have no obligation to issue, transfer or sell
any shares of capital stock or other equity interest of the Company or the
Surviving Company pursuant to the Stock Option Plan or any other Employee
Program (as hereinafter defined).
(b) The Company is the sole general partner of FWOP. As of the
date hereof, there are 14,865,264 common units of limited partnership
interest in FWOP ("Common Units"), 1,968,484 Series A preferred units of
limited partnership interest in FWOP ("Series A Preferred Units") and
85,760 Series B preferred units of limited partnership interest in FWOP
("Series B Preferred Units", and together with the Series A Preferred
Units, the "Preferred Units", and the Preferred Units together with the
Common Units are collectively referred to herein as the "Units") of FWOP
issued and outstanding all as set forth in Exhibit 4.3(b) attached hereto.
The Company owns 10,462,422 of such Common Units, 1,968,484 of such Series
A Preferred Units and no Series B Preferred Units, in each case, free and
clear of all liens, security interests, claims against title or other
encumbrances on title. The Company had a reasonable basis for believing
that each limited partner of FWOP was an "accredited investor" (as such
term is defined in Rule 501 of Regulation D of the SEC under the Securities
Act) at the time such Person first became a limited partner of FWOP. All
such issued and outstanding partnership interests are duly and validly
issued, fully paid, and free of preemptive rights. There are not at the
date of this Agreement any existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate FWOP to issue, transfer or sell any partnership
interests of FWOP. Except as set forth in Exhibit 4.3(b), there are no
outstanding contractual obligations of FWOP to repurchase, redeem or
otherwise acquire any partnership interests of FWOP. The partnership
interests owned by the Company and, to the knowledge of the Company, any
other Person, are subject only to the restrictions on transfer set forth in
the First Amended and Restated Agreement of Limited Partnership of FWOP, as
amended (the "FW Partnership Agreement") and those imposed by applicable
securities laws and, with respect to Persons other than the Company and the
Company Subsidiaries, the Contribution Agreements. FWOP has not issued or
granted, and is not a party to, any commitments of any kind relating to, or
any agreements or understandings with respect to, partnership interests or
any other interest in FWOP or any securities convertible into partnership
interests or such other interests. All distributions which have been
declared or accrued as of the most recent period with respect to the Units
have been paid in full as of the most recent period. As of the date hereof,
each Series A Preferred Unit and each Series B Preferred Unit is
convertible into 1.282051282 shares of Company Common Stock. Prior to the
date hereof, the general partner of FWOP has consented in writing to the
consummation of the Partnership Merger, the Recapitalization (as defined in
the Merger Agreement), the sale of the Purchase Agreement Properties
pursuant to the Purchase Agreement and the other transactions contemplated
in the Transaction Documents.
4.4 Subsidiaries. Except as set forth in Exhibit 4.4 attached hereto,
the FW Entities, collectively, own, directly or indirectly, all of the
outstanding shares of capital stock or all of the partnership or other
equity interests of each of the Company
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<PAGE> 24
Subsidiaries. Each of the outstanding shares of capital stock in each of
the Company Subsidiaries having corporate form is duly authorized, validly
issued, fully paid and nonassessable. The following information for each
Company Subsidiary is set forth in Exhibit 4.4 attached hereto: (i) its
name and jurisdiction of incorporation or organization; (ii) the
jurisdictions in which such entity is qualified to conduct business; (iii)
its authorized capital stock or share capital or partnership or other
interests; (iv) the name of each stockholder or owner of a partnership or
other equity interest and the number of issued and outstanding shares of
capital stock or share capital or percentage ownership for non-corporate
entities held by it; and (v) the name of the general partners or managers,
if applicable.
4.5 Other Interests. Except for interests in the Company Subsidiaries
as set forth in Exhibit 4.5 attached hereto, neither the Company nor any
Company Subsidiary owns directly or indirectly any interest or investment
(whether equity or debt) in any corporation, partnership, joint venture,
trust or other entity (other than investments in short-term investment
securities). With respect to the interests set forth in Exhibit 4.5
attached hereto, the Company or the applicable Company Subsidiary, as the
case may be, is a partner, member or stockholder in good standing, owns
such interests free and clear of all liens, pledges, security interests,
claims, options or other encumbrances, is not in breach of any provision of
any agreement, document or contract governing such entity's rights in or to
the interests owned or held, all of which agreements, documents and
contracts are set forth in Exhibit 4.5 attached hereto, and have not been
modified or amended since their description therein, and are in full force
and effect and, to the knowledge of the Company, the other parties to such
agreements, documents or contracts are not in breach of any of their
respective obligations under such agreements, documents or contracts.
4.6 Conflicts. Neither the execution and delivery by the Company and
the applicable Company Subsidiaries of the Transaction Documents nor the
consummation by the Company and the applicable Company Subsidiaries of the
Transactions, nor the compliance by the Company and the applicable Company
Subsidiaries with the Transaction Documents: will (i) conflict with or
result in a breach of any provisions of the Charter, Bylaws, organizational
documents, partnership agreements, operating agreements, or other joint
venture agreements of the Company or any Company Subsidiary; (ii) result in
a breach or violation of, a default under, or the triggering of any payment
or other material obligations pursuant to, or accelerate vesting under, any
Employee Program or any grant or award made thereunder except as set forth
in Exhibit 4.6 attached hereto for which the Surviving Company (as defined
in the Merger Agreement) would be liable after the Effective Time; (iii)
except as set forth in Exhibit 4.6 attached hereto, violate, or conflict
with, or result in a breach of any provision of, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute
a default) under, or result in the termination or in a right of termination
or cancellation of, or accelerate the performance required by, or result in
the creation of any lien, security interest, charge or encumbrance upon any
of the Properties of the Company or the Company Subsidiaries under, or
result in being declared void, voidable or without further binding effect,
any of the terms, conditions or provisions of the Company Rights
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Agreement (as defined in Section 4.36) or any note, bond, mortgage,
indenture, deed of trust or any license, franchise, permit, lease,
contract, agreement or other instrument, commitment or obligation to which
the Company or any of the Company Subsidiaries is a party, or by which the
Company or any of the Company Subsidiaries or any of their Properties is
bound or affected, which would reasonably be expected to have a Property
Material Adverse Effect; or (iv) other than as required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Securities Act or applicable state securities and "Blue Sky" laws
(collectively, the "Regulatory Filings") and other than customary filings
required in connection with the recording of the Deeds (as defined in the
Purchase Agreement), require any consent, approval or authorization of, or
declaration, filing or registration with any Governmental Entities, except
where any such breaches, violations, defaults, triggering of payments or
obligations, conflicts, termination, acceleration, liens, encumbrances, or
voiding of any rights or obligations, would not, individually or in the
aggregate, reasonably be expected to have a Property Material Adverse
Effect or materially restrict or impair the ability of the FW Entities to
consummate the Transactions.
4.7 SEC Documents.
(a) True, correct and complete copies of all material filings by
the Company with the SEC and each (A) registration statement, (B) annual
report on Form 10-K, (C) quarterly report on Form 10-Q, (D) current report
on Form 8-K, (E) proxy statement or information statement, and (F) other
report filed with the SEC pursuant to the requirements of the Exchange Act
or the Securities Act (in all such cases, including all exhibits,
amendments and supplements thereto), prepared by the Company or any of the
Company Subsidiaries or relating to properties of the Company or the
Company Subsidiaries since January 1, 1997 in the form (including exhibits
and any amendments thereto) filed with the SEC have (except for any
exhibits) previously been provided or made available to the USRP Entities
or their counsel (collectively, the "SEC Reports"). The SEC Reports
constitute all material forms, reports and documents required to be filed
by the Company under the Securities Act, the Exchange Act and the rules and
regulations promulgated thereunder (the "Securities Laws") since January 1,
1997. As of their respective dates, the SEC Reports (i) complied as to form
in all material respects with the applicable requirements of the Securities
Laws, and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements made therein, in the light of the circumstances under
which they were made, not misleading in any material respect. Each of the
consolidated balance sheets of the Company included in or incorporated by
reference into the SEC Reports (including the related notes and schedules)
fairly presents the consolidated financial position of the Company and the
Company Subsidiaries as of its date and each of the consolidated statements
of income, retained earnings and cash flows of the Company included in or
incorporated by reference into the SEC Reports (including any related notes
and schedules) fairly presents the consolidated results of operations,
retained earnings or cash flows, as the case may be, of the Company and the
Company Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to normal year-end
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audit adjustments which would not be material in amount or effect), in each
case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be noted
therein and except, in the case of the unaudited statements, as permitted
by Form 10-Q of the SEC. Except as and to the extent set forth on the
consolidated balance sheet of the Company and the Company Subsidiaries at
June 30, 2000, including all notes thereto and the notes to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1999,
neither the Company nor any of the Company Subsidiaries has any material
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on, or
reserved against in, a balance sheet of the Company or in the notes
thereto, prepared in accordance with generally accepted accounting
principles consistently applied, except liabilities arising in the ordinary
course of business since such date and liabilities for expenses of
attorneys, accountants and investment bankers incurred in connection with
the Transactions.
(b) The Units are not registered under Section 12 of the Exchange
Act.
4.8 Litigation. Except as disclosed in Exhibit 4.8 attached hereto,
there is no suit, action, proceeding, investigation, arbitration, claim or
charge pending (in which service of process has been received by an
employee of the Company or a Company Subsidiary) or, to the knowledge of
the Company, threatened in writing against or threatened in writing
affecting the Company or any Company Subsidiary or any of their respective
assets or properties, nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity, or arbitrator outstanding against or
affecting the Company or any Company Subsidiary or any of their respective
assets or properties (any such proceeding hereinafter referred to as
"Litigation") that, individually or in the aggregate, could reasonably be
expected to (i) as of the date hereof, be material, (ii) as of the
Closings, have a Company Material Adverse Effect or (iii) prevent or
materially restrict or impair the consummation of any of the Transactions,
and to the knowledge of the Company, Exhibit 4.8 indicates the status of
the insurance carrier's acceptance thereof.
4.9 Absence of Certain Changes or Events. Except as disclosed in
Exhibit 4.9 attached hereto, since June 30, 2000, the Company and the
Company Subsidiaries have conducted their business only in the ordinary
course and there has not been (a) any change which, individually or in the
aggregate with all other such changes, has had a Company Material Adverse
Effect, nor has there been any occurrence or circumstance that with the
passage of time which, individually or in the aggregate with all other such
changes, occurrences or circumstances, would reasonably be expected to
result in a Company Material Adverse Effect, (b) except for distributions
consistent with Section 7.1(k) hereof, any authorization, declaration,
setting aside or payment of any dividend or other distribution (whether in
cash, stock or property) with respect to the Company Common Stock, the
Company Preferred Stock or the Units, (c) other than the Recapitalization
(as defined in the Merger Agreement), any split, combination or
reclassification of the Company Common Stock or the Company Preferred Stock
or the Units or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in
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<PAGE> 27
substitution for, or giving the right to acquire by exchange or exercise,
shares of capital stock of the Company or partnership interests in FWOP or
any issuance of an ownership interest in, any Company Subsidiary, (d) any
damage, destruction or loss, whether or not covered by insurance, that,
individually or in the aggregate with all other such damages, destruction
or losses, has had, or might reasonably be expected to have, a Company
Material Adverse Effect, (e) any change in accounting methods, principles
or practices by the Company or any Company Subsidiary materially affecting
its assets, liabilities or business, except insofar as may have been
required by a change in generally accepted accounting principles ("GAAP"),
or (f) any material amendment of any employment, consulting, severance,
retention or any other agreement between the Company or any Company
Subsidiary and any officer, director, employee or significant stockholder
of the Company or any Company Subsidiary. For the purposes of updating the
representations and warranties set forth in this Section 4.9 as of the
Closing only, the term "Company Material Adverse Effect" as used in this
Section 4.9 shall be deemed modified as provided in Section 6.2(h).
4.10 Taxes.
(a) The Company and each of the Company Subsidiaries has paid or
caused to be paid all federal, state, local, foreign, and other taxes
including, without limitation, income taxes, estimated taxes, alternative
minimum taxes, excise taxes, sales taxes, use taxes, value-added taxes,
gross receipts taxes, franchise taxes, capital stock taxes, employment and
payroll-related taxes, withholding taxes, stamp taxes, transfer taxes,
windfall profit taxes, environmental taxes and property taxes and
assessments, whether or not measured in whole or in part by net income, and
all deficiencies, or other additions to tax, interest, fines and penalties
(collectively, "Taxes"), owed by it through the date hereof, other than
those taxes that individually or in the aggregate, are not material.
(b) The Company and each of the Company Subsidiaries has timely
filed, or requested extensions to file, all federal, state, local and
foreign tax returns required to be filed by any of them through the date
hereof, and all such returns are complete and accurate in all material
respects. Attached as Exhibit 4.10(b) attached hereto is a list all written
requests for extension of filing obligations with respect to Tax Returns
not yet filed which the Company has submitted to the Internal Revenue
Service ("IRS") and a summary of the current status of the filing.
(c) To the Company's knowledge, no material abatement proceedings
are pending with reference to any real estate taxes assessed against any
Real Property except as shown on Exhibit 4.10(c). To the Company's
knowledge, there are no material betterment assessments or other special
assessments presently pending or proposed by any governmental authority
with respect to any portion of any Real Property.
(d) Neither the IRS nor any other Governmental Entity is now
asserting by written notice to the Company or any Company Subsidiary or, to
the knowledge of the
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<PAGE> 28
Company or the Company Subsidiaries, threatening to assert against the
Company or any Company Subsidiary any deficiency or claim for additional
Taxes. To the knowledge of the Company, there is no dispute or claim
concerning any Tax liability of the Company or any Company Subsidiary,
either claimed or raised by any Governmental Entity, or as to which any
officer of the Company or any Company Subsidiary has reason to believe may
be claimed or raised by any federal or state Governmental Entity. No claim
has ever been made by notice to the Company or any Company Subsidiary nor
to the knowledge of the Company, has any claim been threatened to be made
by a taxing authority in a jurisdiction where the Company or any Company
Subsidiary does not file reports and returns that the Company or any
Company Subsidiary is or may be subject to taxation by that jurisdiction.
There are no security interests on any of the assets of the Company or any
Company Subsidiary that arose in connection with any failure (or alleged
failure) to pay any Taxes. Neither the Company nor any of the Company
Subsidiaries has ever entered into a closing agreement pursuant to Section
7121 of the Code.
(e) Neither the Company nor any of the Company Subsidiaries has
received written notice of any audit of any tax return filed by the Company
or any Company Subsidiary, and neither the Company nor any of the Company
Subsidiaries has been notified by any tax authority that any such audit is
contemplated or pending. Except as set forth in Exhibit 4.10(e), neither
the Company nor any of the Company Subsidiaries has executed or filed with
the IRS or any other taxing authority any agreement now in effect extending
the period for assessment or collection of any income or other taxes. True,
correct and complete copies of all federal, state and local income or
franchise tax returns filed by the Company and each of the Company
Subsidiaries and all communications relating thereto have been delivered to
the USRP Entities or made available to representatives of the USRP
Entities.
(f) Each of the Company Subsidiaries of which all the outstanding
capital stock is owned solely by the Company is a Qualified REIT Subsidiary
as defined in Section 856(i) of the Code. FWOP and each of the other
Company Subsidiaries listed as a partnership or limited liability company
in Exhibit 4.4 attached hereto are, and have been at all times during which
the Company, FWOP or any of the other Company Subsidiaries held an interest
therein, properly classified as partnerships for federal income tax
purposes and not as publicly-traded partnerships.
(g) For all tax years of the Company, the Company has qualified
as a REIT within the meaning of Sections 856-860 of the Code, including,
without limitation, the requirements of Sections 856 and 857 of the Code.
For the periods described in the preceding sentence, the Company has met
all requirements necessary to be treated as a REIT for purposes of the
income tax provisions of those states in which the Company is subject to
income tax and which provide for the taxation of REITs in a manner similar
to the treatment of REITs under Sections 856-860 of the Code. For the
period beginning immediately after the end of the last tax year completed
before the date of this Agreement and ending with the Effective Time, the
Company has operated and will operate in a manner that will allow it to
qualify as a REIT.
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(h) Exhibit 4.10(h)(i) contains a list of all agreements pursuant
to which the Company and/or any Company Subsidiary acquired Properties in
exchange for Units in whole or in part (collectively, the "Contribution
Agreements"). As of the date hereof, no limited partner of FWOP has raised,
or to the knowledge of the Company threatened to raise, a material claim
against the Company or FWOP for any breach of any tax protection agreement
or any similar arrangement. Exhibit 4.10(h)(ii) contains a complete list of
all Contribution Agreements that contain tax protection provisions that
will remain in place following the consummation of the Transactions. The
copies of such Contribution Agreements provided to the USRP Entities are
true and complete, and no such Contribution Agreement has been amended or
modified except to the extent set forth on Exhibit 4.10(h)(ii). Other than
the Contribution Agreements identified on Exhibit 4.10(h)(ii), there are no
written or oral tax protection agreements or similar arrangements in effect
which impose obligations or restrictions on any FW Entity with respect to
the sale of properties or the maintenance of indebtedness or otherwise,
other than those which will expire pursuant to their terms immediately
following the consummation of the Transactions.
4.11 Books and Records.
(a) The books of account and other financial records of the
Company and each of the Company Subsidiaries are true, complete and correct
in all material respects, have been maintained in accordance with
commercially reasonable business practices, and are accurately reflected in
all material respects in the financial statements included in the SEC
Reports.
(b) The minute books and other material records of the Company
and each of the Company Subsidiaries have been made available to the USRP
Entities, contain in all material respects accurate records of all meetings
and accurately reflect in all material respects all other corporate action
of the stockholders and directors and any committees of the Board of
Directors of the Company and each of the Company Subsidiaries and all
actions of the partners of each of the Company Subsidiaries.
4.12 Properties and Title.
(a) All of the Real Properties owned by the Company and each of
the Company Subsidiaries are set forth in Exhibit 4.12 attached hereto.
Except as set forth in Exhibit 4.12 attached hereto, the Company and each
Company Subsidiary owns fee simple title (or leasehold title to the extent
shown on Exhibit 4.12) to each of the Real Properties identified in Exhibit
4.12, free and clear of liens, mortgages or deeds of trust, claims against
title, charges which are liens, security interests or other encumbrances on
title (collectively, "Encumbrances"), and the Real Properties are not
subject to any rights of way, written agreements, laws, ordinances and
regulations affecting building use or occupancy, or reservations of an
interest in title (collectively, "Property Restrictions"), except for (x)
Property Restrictions imposed or promulgated by law or any governmental
body or authority with respect to real property, including zoning
regulations, that do not
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materially and adversely affect the current use of the Property, materially
detract from the value of the Property as currently used or materially
interfere with the present use of the Property, and (y) Encumbrances and
Property Restrictions which constitute Permitted Exceptions or FW
Encumbrances. Valid policies of title insurance have been issued insuring
the Company's or the applicable Company Subsidiary's fee simple title (or
leasehold title to the extent shown on Exhibit 4.12) to each of the Real
Properties in amounts at least equal to the purchase price thereof paid by
the applicable Company Subsidiary, and such policies are, at the date
hereof, in full force and effect and no material claim has been made
against any such policy. At the time each of the Title Policies were
issued, none of the FW Entities had knowledge of any facts or circumstances
which would constitute the basis for a claim against such Title Policies.
(b) Permits. Neither the Company nor any Company Subsidiary has
received any written notice from any Governmental Entity or from any other
Person that the Real Properties are not in substantial compliance with any
material governmental permit, license or certificate or any agreement,
easement or similar instrument applicable to any of the Real Properties
which has not been fully cured. To the knowledge of the Company, no
certificate, permit or license from any Governmental Entity having
jurisdiction over any of the Real Properties or any agreement, easement or
other right which is necessary to permit the lawful use and operation of
the buildings and improvements on any of the Real Properties or which is
necessary to permit the lawful use and operation of all driveways, roads
and other means of egress and ingress to and from any of the Real
Properties has not been obtained and is not in full force and effect, and
there is no pending threat of modification or cancellation of any of the
same nor is the Company nor any Company Subsidiary currently in default
thereunder and the Real Properties are in compliance with all governmental
permits, licenses and certificates, except for any of the foregoing matters
which would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect.
4.13 Physical Condition of Properties. Except as set forth on Exhibit
4.13 hereto or otherwise in the Diligence Reports and except for those
defects or damages, that, individually or in the aggregate with all other
such defects or damages, would not reasonably be expected to have a Company
Material Adverse Effect, (a) there are no material structural defects
relating to any of the Properties, (b) there is no Property whose building
systems are not in working order in any material respect, and (c) there is
no physical material damage to any Property for which there is no insurance
in effect covering the full cost of the restoration.
4.14 Construction Projects. There are no material renovation or
material construction projects currently being performed or scheduled to be
performed at any of the Properties except for the projects listed and
described on Exhibit 4.14 (the "Construction Projects"). Exhibit 4.14 sets
forth for each Construction Project (i) a description of the work, (ii) the
anticipated cost thereof, and (iii) the scope of the obligations of the
Company or any Company Subsidiary with respect thereto (e.g., reimbursement
to tenant for tenant improvement work performed by or on behalf of
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<PAGE> 31
tenant). Neither the Company nor any Company Subsidiary is in material
default of any obligation with respect to the Construction Projects and, to
the knowledge of the Company, the tenants obligated to complete any of the
Construction Projects are not in material default with respect to such
obligations as of the date of this Agreement.
4.15 Compliance with Restrictions. Neither the Company nor any Company
Subsidiary has received any written notice that the existing improvements
or current use, operation or parking at any Property does not comply with
any material restriction, covenant or similar agreement affecting such
Property. The current use and operation and the parking at the Properties
comply in all material respects with all restrictions, covenants, and
similar agreements affecting the Properties, except for such noncompliance
that, individually or in the aggregate, would not reasonably be expected to
have a Company Material Adverse Effect.
4.16 Condemnation. As of the date hereof, no condemnation proceeding
is pending or, to the knowledge of any FW Entity, contemplated in
connection with any Real Property except as shown on Exhibit 4.16 attached
to this Agreement and except for immaterial condemnations (e.g., taking of
so-called "slope easement" in connection with adjacent road construction)
which would not adversely affect access, parking, legal compliance or value
of a Property in any material respect. As of the Closing under the Purchase
Agreement, the foregoing sentence will remain true and correct, except for
any events or facts which, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
4.17 Leases.
(a) The FW Entities have delivered or made available true and
complete copies of all Leases and guarantees of the obligations of the
tenants thereunder, if any. The rent rolls attached hereto as Exhibit
4.17(a) (the "Rent Rolls"), taken as a whole, are accurate in all material
respects as of the date indicated therein. Except as disclosed in the Rent
Rolls, and except to the extent not material to any individual Property, as
of the date indicated in the Rent Rolls: (i) each Lease is in full force
and effect with respect to the applicable Company Subsidiary and, to the
Company's knowledge, with respect to the tenants under the Leases; (ii)
neither the Company nor any Company Subsidiary has received any notice that
it is in default (which has not been cured) of any of its obligations as
landlord under any Lease, and to the Company's knowledge the applicable
Company Subsidiary is not in material default (which has not been cured) of
its obligations as landlord under any Lease; (iii) no tenant is in default
in any material monetary obligation or any material non-monetary obligation
under its Lease; (iv) no rent has been paid by any tenant more than one
month in advance and no security or other deposits or payment of last
month's rent or similar amounts paid by tenants (collectively, "Tenant
Deposits") have been applied to perform tenant obligations; (v) the tenant
under each of the Leases is in actual possession of the leased premises;
and (vi) no tenant is entitled to any free rent, abatement, unpaid tenant
improvement or other cost reimbursement or unpaid allowance, rebate,
set-off or other concession during the
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remaining term of its Lease (including any renewal or extension term).
Except for the In-Negotiation Leases, neither the Company nor any Company
Subsidiary has made any written or oral commitments to lease any Property
or any portion thereof which has not yet been reduced to a written Lease.
(b) As of the date hereof, no material leasing or similar
commissions are payable with respect to any of the Leases, either for the
term then in effect or for any renewal, substitution, extension or
expansion thereunder, except as shown on Exhibit 4.17(b). As of the
Closing, no material leasing or similar commissions shall be payable with
respect to any of the Leases, either for the term then in effect or for any
renewal, substitution, extension or expansion thereunder, except as shown
on Exhibit 4.17(b) or otherwise approved by the USRP Entities in connection
with any new Leases entered into after the date hereof and prior to
Closing, other than those adjusted for at Closing.
4.18 [Intentionally Omitted]
4.19 Certain Reports. The Company has provided the USRP Entities with
true and complete copies of all material reports that are in the possession
or control of the Company relating to the physical and environmental
condition of the Property, which reports are included in the list of
Diligence Reports. For purposes of this Agreement, the term "Hazardous
Materials" shall mean any substance which is or contains: (i) any
"hazardous substance" as now or hereafter defined in Section 101(14) of the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. Section 9601 et seq.) or any regulations
promulgated thereunder; (ii) any "hazardous waste" as now or hereafter
defined in the Recourse Conservation and Recovery Act, as amended (42
U.S.C. Section 6901 et seq.) or regulations promulgated thereunder; (iii)
any substance regulated by the Toxic Substances Control Act, as amended (15
U.S.C. Section 2601 et seq.) or regulations promulgated thereunder; (iv)
gasoline, diesel fuel or other petroleum hydrocarbons; (v) asbestos and
asbestos containing materials, in any form, whether friable or nonfriable;
(vi) polychlorinated biphenyls; (vii) radon gas; and (viii) any additional
substances or materials which are now or hereafter classified or considered
to be hazardous or toxic under "Environmental Requirements" (as hereinafter
defined) or the common law, or any other applicable law related to a
Property. Hazardous Materials shall include, without limitation, any
substance, the presence of which on a Real Property: (A) requires
reporting, investigation or remediation under Environmental Requirements;
(B) causes or threatens to cause a nuisance on such Real Property or
adjacent property or poses or threatens to pose a hazard to health or
safety of persons on such Real Property or adjacent property; or (C) which,
if emanated or migrated from such Real Property, could constitute a
trespass. For purposes of this Agreement, the term "Environmental
Requirements" shall mean all laws, ordinances, statutes, codes, rules,
regulations, agreements, judgments, orders and decrees now or hereafter
enacted, promulgated, or amended, of the United States, the states, the
counties, the cities or any other political subdivisions in which a Real
Property is located and any other political subdivision, agency or
instrumentality exercising
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jurisdiction over the owner of such Real Property, such Real Property or
the use of such Real Property relating to pollution, the protection or
regulation of human health, natural resources or the environment, or the
emission, discharge, release or threatened release of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
waste or Hazardous Materials into the environment (including, without
limitation, ambient air, surface water, ground water or land or soil).
4.20 Hazardous Materials. Except as set forth in Exhibit 4.20 and
except as set forth in the Diligence Reports, each Property complies in all
material respects with all Environmental Requirements applicable to such
Property, there has been no release of Hazardous Materials on or from any
Real Property, and there are no underground storage tanks beneath any Real
Property and during the ownership of the Properties by the Company or any
Company Subsidiary, neither the Company nor any Company Subsidiary has
made, been requested to make, nor been required to make any report or
disclosure to any Governmental Entity relating to a release or threatened
release of Hazardous Materials to or from any Property, in each case except
to the extent such matters would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
4.21 Rights to Purchase. Except as set forth in Exhibit 4.21, neither
the Company nor any of the Company Subsidiaries has granted any option
agreements or rights of first refusal or rights of first offer with respect
to the purchase of any Property or any portion thereof or interest therein
or any other rights in favor of third persons to purchase or otherwise
acquire any Property or any portion thereof or any interest in any Property
or any interest in the Company or any Company Subsidiary and, to the
Company's knowledge, no prior owner of a Property has granted any option
agreements or rights of first refusal or rights of first offer with respect
to the purchase of any Property or any portion thereof or any other rights
in favor of third persons to purchase or otherwise acquire any Property or
any portion thereof or any interest in any Property or any interest in the
Company or any Company Subsidiary.
4.22 [Intentionally Omitted]
4.23 FIRPTA. None of the FW Entities is a "foreign person" within the
meaning of Section 1445(f)(3) of the Code. The taxpayer identification
number of each FW Entity is listed on Exhibit A.
4.24 Personal Property. None of the material personal property
necessary for the use, operation, repair or maintenance of any Property as
currently used, operated, maintained and repaired is leased from or
otherwise owned by third-parties except (i) for equipment owned or leased
by third party vendors providing maintenance or repair services to a
Property or (ii) as otherwise listed on Exhibit 4.24.
4.25 Intellectual Property. Except as would not, individually or in
aggregate, reasonably be expected to have a Company Material Adverse
Effect, as of the date of this
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Agreement, there are no claims pending or, to the Company's knowledge,
threatened, that any of the Company or the Company Subsidiaries is in
violation of any intellectual property right of any third party.
4.26 Other Agreements. Exhibit 4.26 sets forth (i) each unexpired
commitment, contractual obligation or borrowing (each, an "Other
Agreement") entered into by the Company or any of the Company Subsidiaries
which may result in total payments by or liability of the Company or any
Company Subsidiary in excess of $25,000, other than the Assumed Loans,
Property Contracts, Leases and Employee Programs, and (ii) all third party
management contracts whereby a Company Subsidiary provides management
services for a fee. True and complete copies of the foregoing have
previously been provided or made available to the USRP Entities or their
counsel. Neither the Company nor any of the Company Subsidiaries has
received any notice of a default that has not been cured (or will not be
cured at or prior to the Effective Time) under any of the documents
described in clauses (i) or (ii) above or is in default respecting any
payment obligations thereunder beyond any applicable grace periods except
where such default would not, individually or in the aggregate, be
reasonably expected to have a Property Material Adverse Effect. Neither the
Company nor any Company Subsidiary has entered into any unrecorded material
Other Agreements with any Governmental Entity affecting any Real Property
that have not been disclosed to the USRP Entities in writing.
4.27 Development Rights. To the Company's knowledge, all work to be
performed, payments to be made and actions to be taken by the Company or
any of the Company Subsidiaries prior to the date hereof pursuant to any
agreement entered into with a Governmental Entity in connection with the
development of the Properties, including any development agreement relating
to a site approval, zoning reclassification or other similar action (e.g.,
local improvement district, road improvement district, environmental
mitigation, etc.) has been performed, paid or taken in all material
respects, as the case may be, and neither the Company nor any Company
Subsidiary has received any written notice from any Governmental Entity
that any material portion of such work, payment or action has not been
performed, paid or taken, as the case may be.
4.28 Assumed Loans. Neither the Company nor any of the Company
Subsidiaries is in material default under any of the Assumed Loans and no
event has occurred which, with notice or the passing of time or both, would
constitute a material default under the Assumed Loans. All of the material
documents evidencing, securing or otherwise relating to the Assumed Loans
are listed on Exhibit 4.28 and have been delivered or made available to the
USRP Entities.
4.29 [Intentionally Omitted]
4.30 Insurance. The Company, each Company Subsidiary and the
Properties are currently insured with financially responsible insurers with
the coverages, and in the amounts and with the deductibles, shown in
Exhibit 4.30 hereof. No Property has any
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defects or inadequacies which would materially and adversely affect the
insurability of such Property.
4.31 Bankruptcy. There has not been filed by or against the Company or
any Company Subsidiary any petition in bankruptcy or other insolvency
proceedings or proceedings for reorganization of the Company or any Company
Subsidiary or for the appointment of a receiver or trustee for all or any
substantial part of the Company's or any Company Subsidiary's property, nor
has the Company or any Company Subsidiary made any assignment for the
benefit of its creditors or filed a petition for an arrangement, or entered
into an arrangement with creditors or filed a petition for an arrangement
with creditors or otherwise admitted in writing its inability to pay its
debts as they become due (each, as to any Person that is the subject
thereof, a "Bankruptcy Event"). Except as listed on Exhibit 4.31, to the
knowledge of the Company there is no Bankruptcy Event with respect to any
tenant under any Lease as of the date of this Agreement.
4.32 Employee Benefit Plans.
(a) Exhibit 4.32(a) sets forth a list of every Employee Program
that has been maintained by the Company, any Company Subsidiary or an
Affiliate.
(b) Each Employee Program which has been intended to qualify
under Section 401(a) or 501(c)(9) of the Code has received a favorable
determination or approval letter from the IRS regarding its qualification
under such Section or the amendment period for such Employee Program has
not expired. No event or omission has occurred which would cause any
Employee Program to lose its qualification or otherwise fail to satisfy the
relevant requirements to provide tax-favored benefits under the applicable
Code Section (including without limitation Code Sections 105, 125, 401(a)
and 501(c)(9)).
(c) Neither the Company nor any Affiliate knows, nor should any
of them reasonably know, of any failure of any party to comply with any
laws applicable with respect to the Employee Programs. With respect to any
Employee Program, there has been no (i) "prohibited transaction", as
defined in Section 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or Code Section 4975, (ii) failure to comply
with any provision of ERISA, other applicable law, or any agreement, or
(iii) non-deductible contribution, which, in the case of any of (i), (ii),
or (iii), could subject the Company, any Company Subsidiary or any
Affiliate to liability either directly or indirectly (including, without
limitation, through any obligation of indemnification or contribution) for
any damages, penalties, or taxes, or any other loss or expense that could
reasonably be expected to have a Company Material Adverse Effect. No
litigation or governmental administrative proceeding (or investigation) or
other proceeding (other than those relating to routine claims for benefits)
is pending or threatened with respect to any such Employee Program. All
payments and/or contributions required to have been made (under the
provisions of any agreements or other governing documents or applicable
law) with respect to all Employee Programs, for all periods prior to the
Closing Date, either have
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been made or have been accrued (and all such unpaid but accrued amounts are
described on Exhibit 4.32(c).
(d) None of the Company, any Company Subsidiary nor any Affiliate
(i) has ever maintained any Employee Program which has been subject to
Title IV of ERISA or Code Section 412 or ERISA Section 302, including, but
not limited to, any Multi employer Plan or (ii) except as set forth in
Exhibit 4.32(d) has ever provided health care or any other non-pension
benefits to any employees after their employment is terminated (other than
as required by part 6 of subtitle B of title I of ERISA) or has ever
promised to provide such post-termination benefits.
(e) With respect to each Employee Program maintained by the
Company or any Company Subsidiary, complete and correct copies of the
following documents (if applicable to such Employee Program) have
previously been delivered to the USRP Entities: all documents embodying or
governing such Employee Program, and any funding medium for the Employee
Program, including, without limitation, trust agreements) as they may have
been amended to the date hereof.
(f) Except as set forth in Exhibit 4.32(f), the execution of the
Transaction Documents and the performance of the Transactions will not
(either alone or upon the occurrence of any additional or subsequent
events) (i) constitute an event under any Employee Program, policy,
practice, agreement or other arrangement or any trust or loan (the
"Employee Arrangements") that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits
with respect to any employee, director or consultant of the Company or any
of the Company Subsidiaries, or (ii) result in the triggering or imposition
of any restrictions or limitations on the right of the Company or any of
the Company Subsidiaries to amend or terminate any Employee Arrangement and
receive the full amount of any excess assets remaining or resulting from
such amendment or termination, subject to applicable taxes. Except as set
forth in Exhibit 4.32(f), no payment or benefit which will be required to
be made pursuant to the terms of any agreement, commitment or Employee
Program, as a result of the transactions contemplated by the Transaction
Documents, to any officer, director or employee of the Company or any of
the Company Subsidiaries, could be characterized as an "excess parachute
payment" within the meaning of Section 280G of the Code.
(g) For purposes of this Section 4.32:
(i) "Employee Program" means (A) all employee benefit plans
within the meaning of ERISA Section 3(3), including, but not limited
to, multiple employer welfare arrangements (within the meaning of
ERISA Section 3(40)), plans to which more than one unaffiliated
employer contributes and employee benefit plans (such as foreign or
excess benefit plans) which are not subject to ERISA; (B) all stock
option plans, stock purchase plans or other stock or equity based
plans, awards or arrangements, bonus or incentive award plans,
severance
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pay policies or agreements, deferred compensation agreements,
supplemental income arrangements, vacation plans, and all other
employee benefit plans, agreements, and arrangements (including any
informal arrangements) not described in (A) above, including without
limitation, any arrangement intended to comply with Code Section 120,
125, 127, 129 or 137; and (C) all plans or arrangements providing
compensation to employee and non-employee directors. In the case of an
Employee Program funded through a trust described in Code Section
401(a) or an organization described in Code Section 501(c)(9), or any
other funding vehicle, each reference to such Employee Program shall
include a reference to such trust, organization or other vehicle.
(ii) An entity "maintains" an Employee Program if such
entity sponsors, contributes to, or provides benefits under or through
such Employee Program, or has any obligation (by agreement or under
applicable law) to contribute to or provide benefits under or through
such Employee Program, or if such Employee Program provides benefits
to or otherwise covers employees of such entity (or their spouses,
dependents, or beneficiaries).
(iii) An entity is an "Affiliate" of the Company if it would
have ever been considered a single employer with the Company or any
Company Subsidiary under ERISA Section 4001(b) or part of the same
"controlled group" as the Company or any Company Subsidiary for
purposes of ERISA Section 302(d)(8)(C).
(iv) "Multi employer Plan" shall have the meaning set forth
in Section 3(37) of ERISA.
4.33 Labor Matters. Neither the Company nor any Company Subsidiary is
a party to, or bound by, any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor union
organization. To the knowledge of the Company there are no organizational
efforts with respect to the formation of a collective bargaining unit
presently being made or threatened involving employees of Company or the
Company Subsidiaries. There has not been and there is not presently pending
or existing, and to the Company's knowledge, there is not threatened, any
strike, slowdown, picketing, or work stoppage. Except as set forth on
Exhibit 4.33, neither the Company nor any of the Company Subsidiaries has
any written agreement with any employee that contains a specific term of
employment that would be inconsistent with the status of all employees of
the Company being "at will" employees. The Company has provided or made
available to the USRP Entities true, correct and complete copies of all
written employment agreements (and written summaries of all oral
agreements) between the Company or any of the Company Subsidiaries and any
of their respective employees.
4.34 [Intentionally Omitted]
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4.35 Related Party Transactions. Set forth in Exhibit 4.35 is a list
of all arrangements, agreements, contracts and understandings entered into
by the Company or any Company Subsidiary (which are or will be in effect as
of or after the date of this Agreement) with (i) any Person who is, or was
at any time during the last 8 years, an officer, director or affiliate of
the Company or any Company Subsidiary, any relative of any of the foregoing
or any entity of which any of the foregoing is an affiliate involving
payments in excess of $25,000, except for Employee Programs of which any of
such individuals are participants or (ii) any Person who acquired Company
Common Stock in a private placement. All such documents are listed in
Exhibit 4.35 and the copies of such documents, which have previously been
provided or made available to the USRP Entities its counsel, are true and
correct copies.
4.36 Company Rights Agreement. The execution, delivery and performance
of this Agreement and the consummation of the Transactions will not cause
any of the USRP Entities to become an "Acquiring Person" (as defined in the
Company Rights Agreement) under the Rights Agreement, dated as of October
10, 1998 by and between the Company and American Stock Transfer & Trust
Company, as amended (the "Company Rights Agreement").
4.37 Brokers. No broker, investment banker or other party is entitled
to any broker's, finder's or other similar fee or commission in connection
with the transactions contemplated by the Transaction Documents based upon
dealings with the Company or any Company Subsidiary other than Chase
Securities Inc. and Capital Market Solutions ("Brokers"). Brokers are the
only real estate brokers or investment bankers with whom the Company or any
Company Subsidiary has dealt in connection with the transactions
contemplated by the Transaction Documents. All fees, commissions or other
amounts due Brokers will be paid by FWOP at Closing.
4.38 Opinion of Financial Advisor. The Company has received the
opinion of Chase Securities Inc., to the effect that, as of the date hereof
(i) the consideration to be paid by USRP I pursuant to the Purchase
Agreement (the "Purchase Consideration") is fair, from a financial point of
view, to FWOP and (ii) the consideration to be paid by MergerCo and
MergerLP pursuant to the Merger Agreement and the Purchase Consideration,
taken together as a whole and not separately, is fair, from a financial
point of view, to the Company and its stockholders and FWOP and its
partners.
As used in this Agreement, the phrase "to the knowledge of the Company" (or
words of similar import) means the actual knowledge of those individuals
identified in Exhibit 4.39. Any fact or item disclosed in an Exhibit to this
Agreement referred to in this Section 4 shall be deemed to be disclosed in the
other Exhibits referred to in this Section 4 to the extent such fact or item
reasonably relates to such other Exhibits or such deemed disclosure is otherwise
reasonably inferable notwithstanding that such Exhibit does not contain an
express cross-reference to such other Exhibit.
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5. Representations and Warranties of USRP Entities. The USRP Entities,
jointly and severally, represent and warrant to the FW Entities as follows:
5.1 Corporate Status: Compliance With Law. Each of the USRP Entities
has been duly formed, validly existing and in good standing under the laws
of the State of Delaware, and each has all requisite power and authority
and all necessary governmental approvals to own, lease and operate their
properties and to carry on its business as now being conducted, except
where the failure to be in good standing or to have such governmental
approvals would not, individually or in the aggregate, have a USRP Material
Adverse Effect. Each of the USRP Entities is duly qualified or licensed to
do business and in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by
it makes such qualification or licensing necessary, except where the
failure to be so duly qualified or licensed and in good standing would not,
individually or in the aggregate, have a USRP Material Adverse Effect. No
USRP Entity is in violation of any order of any court, Governmental Entity
or arbitration board or tribunal, or any law, ordinance, governmental rule
or regulation to which any USRP Entity or any of its properties or assets
is subject, except for those violations that individually or in the
aggregate would not reasonably be expected to be material.
5.2 Authorization; Validity of Transaction Documents; Necessary
Action. Each USRP Entity has full power and authority to execute and
deliver the Transaction Documents and to consummate the Transactions. The
execution, delivery and performance by each USRP Entity of the Transaction
Documents and the consummation of the Transactions have been duly
authorized by the members or general partner of such USRP Entity as the
case may be, and no other action on the part of any USRP Entity is
necessary to authorize the execution and delivery by the USRP Entities of
the Transaction Documents and the consummation of the Transactions. The
Transaction Documents have been duly executed and delivered by each of the
USRP Entities and, assuming due and valid authorization, execution and
delivery hereof by the FW Entities, is a valid and binding obligation of
each of the USRP Entities, enforceable against each of them in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
5.3 Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under
the HSR Act and state securities or state "Blue Sky" laws, none of the
execution, delivery or performance of the Transaction Documents by the USRP
Entities, the consummation by the USRP Entities of the Transactions or
compliance by the USRP Entities with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the certificate
of formation or operating agreement of any of the USRP Entities, (ii)
require any filing with, or permit, authorization, consent or approval of,
any Governmental Entity, (iii) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination or in a right of termination or cancellation of,
or accelerate the performance
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required by, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties of the USRP Entities
under, or result in being declared void, voidable or without further
binding effect, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust or any license, franchise, permit,
lease, contract, agreement or other instrument, commitment or obligation to
which any USRP Entity is a party, or by which any USRP Entity or any of its
properties is bound or affected or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the USRP
Entities, or any of their properties or assets, excluding from the
foregoing clauses (ii), (iii) and (iv) such violations, breaches or
defaults which would not, individually or in the aggregate, materially
restrict or impair the ability of the USRP Entities to consummate the
Transactions or otherwise be material.
5.4 Required Financing. The USRP Entities have sufficient funds to
consummate the Transactions, including, without limitation, to (i) pay the
Stock Exchange Fund and the Unit Exchange Fund (each as defined in the
Merger Agreement), (ii) pay any fees and expenses incurred by the USRP
Entities in connection with the Transactions, and (iii) provide for the
working capital needs of the USRP Entities following the consummation of
the Transactions.
5.5 Formation of the USRP Entities; No Prior Activities. Each of the
USRP Entities (other than Retail Partners) was formed solely for the
purpose of engaging in the Transactions. As of the date hereof and as of
the Effective Time, except for obligations or liabilities (i) incurred in
connection with its formation and the Transactions, and (ii) contained in
or relating to the Transaction Documents and any other agreements or
arrangements contemplated by the Transaction Documents or in furtherance of
the Transactions, none of the USRP Entities (other than Retail Partners)
has incurred, directly or indirectly, through any subsidiary or affiliate,
any obligations or liabilities or engaged in any business activities of any
type or kind whatsoever or entered into any agreements or arrangements with
any Person, excluding such obligations or liabilities which would not,
individually or in the aggregate, materially restrict or impair the ability
of the USRP Entities to consummate the Transactions or otherwise be
material. MergerCo's sole subsidiary is MergerLP and MergerLP has no
subsidiaries.
5.6 Capitalization.
(a) MergerCo is the sole general partner of MergerLP. USRP LP is
the sole limited partner of MergerLP. As of the date hereof, MergerCo owns
a 1% general partnership interest in MergerLP and USRP LP owns a 99%
limited partnership interest in MergerLP. All such issued and outstanding
partnership interests are duly authorized, validly issued, fully paid, and
free of preemptive rights. There are not at the date of this Agreement any
existing options, warrants, calls, subscriptions, convertible securities,
or other rights, agreements or commitments which obligate MergerLP to
issue, transfer or sell any partnership interests of MergerLP. There are no
outstanding contractual obligations of MergerLP to repurchase, redeem or
otherwise acquire any partnership interests of MergerLP. The partnership
interests of MergerLP are subject only
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to the restrictions on transfer imposed by applicable securities laws.
MergerLP has not issued or granted, and is not a party to, any commitments
of any kind relating to, or any agreements or understandings with respect
to, partnership interests or any other interest in MergerLP or any
securities convertible into partnership interests or such interests.
(b) Retail Partners owns, directly or indirectly, in excess of
95% of the outstanding partnership interest of MergerLP and, except as
contemplated by this Agreement, no Person, other than a subsidiary of
Retail Partners, has any lien, pledge, security interest, claim or other
encumbrance on, or otherwise owns any beneficial interest in, any of such
partnership interests.
(c) Retail Partners owns, directly or indirectly, 100% of the
outstanding membership interests in USRP I, and except as contemplated by
this Agreement, no Person, other than a subsidiary of Retail Partners, has
any lien, pledge, security interest, claim or other encumbrance on, or
otherwise owns any beneficial interest in, any of such membership
interests.
(d) Retail Partners currently has a net worth of not less than
Two Hundred Fifty Million Dollars ($250,000,000) and Retail Partners hereby
agrees to maintain a net worth of at least such amount until the Effective
Time.
(e) The California Public Employees Retirement System owns,
directly or indirectly, in excess of ninety-five percent (95%) of the
outstanding membership interests in Retail Partners.
5.7 [Intentionally Omitted].
5.8 Brokers. Brokers are the only real estate broker or investment
banker with whom the USRP Entities have dealt in connection with the
transactions contemplated by the Transaction Documents. All fees of the
Brokers arising out of or in connection with the Transactions will be paid
by the FW Entities.
6. Conditions to Closing Transactions.
6.1 Conditions to the Obligations of Each Party to Effect the
Transactions. The respective obligations of each party to effect the
Transactions shall be subject to the fulfillment or, where permissible,
waiver, at or prior to the Closings, of each of the following conditions:
(a) Stockholder Approval. The Transactions shall have been
approved and adopted by the affirmative vote of the stockholders of the
Company as required by the MGCL and the Company's Charter (as then in
effect).
(b) Limited Partner Approval. The Partnership Merger (as defined
in the Merger Agreement) and all other matters with respect to which
approval is sought in
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the Consent Solicitation Materials (as defined in the Merger Agreement)
shall have been approved and consented to by at least a
Majority-in-Interest (as defined in the FW Partnership Agreement) of the
limited partners of FWOP.
(c) Hart-Scott-Rodino Act. Any waiting period (and any extension
thereof) applicable to the consummation of the Transactions under the HSR
Act shall have expired or been terminated.
(d) Other Regulatory Approvals. All necessary approvals,
authorizations and consents of any Governmental Entity required to
consummate the Transactions shall have been obtained and remain in full
force and effect, and all waiting periods relating to such approvals,
authorizations and consents shall have expired or been terminated.
(e) No Injunctions, Orders or Restraints; Illegality. No
preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission (an "Injunction") nor any statute,
rule, regulation or executive order promulgated or enacted by any
Governmental Entity shall be in effect which would (i) make the
consummation of the Transactions illegal, or (ii) otherwise materially
restrict, prevent or prohibit the consummation of any of the Transactions.
6.2 Obligations of USRP Entities. In addition to any other conditions
precedent in favor of the USRP Entities as may be set forth elsewhere in
the Transaction Documents, the obligations of the USRP Entities under the
Transaction Documents are expressly subject to the timely fulfillment or,
where permissible, waiver of the conditions set forth in this Section 6.2
at or prior to the Closings. Each condition may be waived in whole or in
part only by written notice of such waiver from the USRP Entities to the FW
Entities.
(a) Each FW Entity performing and complying in all material
respects with all of the terms of the Transaction Documents to be performed
and complied with by such FW Entity prior to or at the Closing.
(b) All of the representations and warranties of each FW Entity
set forth in the Transaction Documents which are qualified by materiality
or a Company Material Adverse Effect or words of similar effect shall be
true and correct in all respects as of the date of this Agreement and as of
the Closings as though made on and as of the Closing Date (except to the
extent such representations and warranties expressly relate to a specific
date, in which case such representations and warranties shall
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be true and correct as of such date), and all of the representations and
warranties of each FW Entity set forth in the Transaction Documents which
are not so qualified shall be true and correct in all material respects as
of the date of this Agreement and as of the Closings as though made on and
as of the Closing Date (except to the extent such representations and
warranties expressly relate to a specific date, in which case such
representations and warranties shall be true and correct in all material
respects as of such date). Notwithstanding anything to the contrary
contained in this Agreement, FW Entities shall not be deemed to be in
breach of a representation or warranty made in Section 4 of this Agreement
to the extent that the USRP Entities had actual knowledge of such breach as
of the date of this Agreement. The USRP Entities shall be deemed to have
had actual knowledge of a breach of a representation or warranty made by
the FW Entities only to the extent that Lou Jug, James W. Gaube or John A.
Waters had, as of the date of this Agreement, actual knowledge of such
breach.
(c) The willingness of Title Company, upon payment of the
applicable premium therefor (at standard premium rates or less) and
performance by the USRP Entities of their respective obligations under the
Transaction Documents, to issue in the name of a party designated by the
USRP Entities ALTA Owner's Policies of Title Insurance in the form and with
the endorsements contained in the Title Policies or as otherwise provided
in the Title Commitments, dated the date and time of the recording of the
Deeds (as defined in the Purchase Agreement), with respect to the Purchase
Agreement Properties, or the Effective Date (as defined in the Merger
Agreement), with respect to the Merger Agreement Properties, each in an
amount not less than the Allocated Consideration for the applicable
Property, insuring the party designated by the USRP Entities as owner of
good, marketable and indefeasible fee simple (or leasehold, to the extent
indicated on Exhibit 1.1(a)) title to each Real Property, subject only to
the Permitted Exceptions.
(d) Receipt by the USRP Entities prior to Closing of estoppel
certificates substantially in the form of Exhibit 6.2(d) attached hereto
completed in a manner which does not allege the existence of any material
default by a FW Entity or any unperformed material obligation by a FW
Entity and which otherwise is consistent in all material respects with the
information in the Rent Roll and the representations and warranties of the
FW Entities in the Transaction Documents from (i) each tenant (the "Major
Tenants") with a Lease demising 15,000 or more gross leasable square feet
other than those Leases listed on Exhibit 6.2(d)(i) attached hereto, and
(ii) tenants leasing more than eighty percent (80%) of the gross leasable
area of all of the Properties under the Leases listed on Exhibit 6.2(d)(i)
and Leases which demise 5,000 or more gross leasable square feet but less
than 15,000 gross leasable square feet, and (iii) tenants leasing more than
sixty percent (60%) of the gross leasable area of all of the Properties
under Leases demising less than 5,000 gross leasable square feet; provided,
however, that (A) if a Lease specifies a form of estoppel certificate, then
the estoppel certificate can be an estoppel certificate in the specified
form, and (B) with respect to any Lease with a Major Tenant or a national
"chain" tenant, the estoppel certificate can be in the form customarily
delivered by such Major Tenant.
(e) [Intentionally Omitted]
(f) Receipt by the USRP Entities prior to Closing of all consents
required from the lessors under any ground lease or their mortgage lenders
to the
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assignment of any ground lease whereby the Company or any Company
Subsidiary is the tenant for any portion of the Properties. The USRP
Entities also agree to use commercially reasonable efforts to obtain an
estoppel certificate or other reasonable confirmation from each ground
lessor that there is no default by the Company or any Company Subsidiary or
any unperformed material obligation by the Company or any Company
Subsidiary under such ground lease, except that the failure to obtain any
such estoppel certificate or confirmation shall not be a condition to
Closing.
(g) All other consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board,
other regulatory body or third parties required to be made or obtained by
any FW Entity or any affiliated entity in connection with the execution,
delivery and performance of the Transaction Documents shall have been
obtained or made, except where the failure to have obtained or made any
such consent, authorization, order, approval, filing or registration would
not, individually or in the aggregate, materially impair or significantly
delay the ability of the USRP Entities to consummate the Transactions.
(h) From June 30, 2000 through the applicable Closing Date, there
shall not have occurred any change or changes concerning the Company or any
Company Subsidiary or any Property that, individually or collectively with
all other such changes has had, or is reasonably likely to have, a Company
Material Adverse Effect (it being understood and agreed that in determining
whether a Company Material Adverse Effect has occurred since June 30, 2000,
or is reasonably likely to occur, as a result of one or more tenant
bankruptcies the parties shall take into account (A) whether it is
reasonably likely that the space leased to such tenant will be re-leased
promptly on comparable or better terms and conditions (including net rent,
tenant improvement costs and other concessions, length of term and use),
and (B) the impact of any actual or potential loss of revenue (considering
the remaining term of the prior lease) on the results of operations,
operating income or financial condition of the Company and the Company
Subsidiaries).
(i) All conditions precedent to the obligations of a USRP Entity
elsewhere in this Agreement or in any of the other Transaction Documents
shall have been satisfied or waived by the USRP Entities.
(j) The FW Entities shall have furnished the USRP Entities with a
certificate dated as of the Closing Date signed on its behalf by the Chief
Executive Officer of the Company to the effect that the conditions in
clauses (a), (b), (g) and (h) of this Section 6.2 and elsewhere in the
Transaction Documents have been satisfied.
(k) The Management Agreement between FRW, Inc. as manager and
USRP I and MergerLP for managing the Properties executed on the date hereof
remains in full force and effect as of the Effective Time.
Notwithstanding the foregoing, if the foregoing conditions or any
other condition of Closing shall not have been fulfilled on or before the
Closing Date, each of the USRP
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Entities, on the one hand, and the FW Entities, on the other hand, shall
have the continual right to send to the others an extension notice at or
before the then-scheduled Closing to extend the Closing Date to a date
specified in such notice and reasonably necessary to provide additional
time for the fulfillment of such conditions; provided, however, that (a) no
Person may extend the Closing unless it is reasonable to conclude that all
unsatisfied and unwaived conditions precedent can be satisfied on or before
the extended Closing Date, and (b) in no event shall the Closing Date be
extended beyond September 30, 2001. Upon any such extension, the term
"Closing Date" as used herein shall mean the date set forth in such
extension notice.
6.3 Obligations of FW Entities. In addition to any other conditions
precedent in favor of the FW Entities as may be set forth elsewhere in the
Transaction Documents, the obligations of the FW Entities under the
Transaction Documents are expressly subject to the timely fulfillment or,
where permissible, waiver of the conditions set forth in this Section 6.3
on or before the Closing Date, or such earlier date as is set forth below.
Each condition may be waived in whole or in part only by written notice of
such waiver from the FW Entities to the USRP Entities.
(a) Each USRP Entity performing and complying in all material
respects with all of the terms of the Transaction Documents to be performed
and complied with by such USRP Entity prior to or at the Closing, except
where any failure to perform would not, individually or in the aggregate,
materially impair or significantly delay the ability of the FW Entities to
consummate the Transactions.
(b) All of the representations and warranties of each USRP Entity
set forth in the Transaction Documents which are qualified by materiality
or a USRP Material Adverse Effect or words of similar effect shall be true
and correct in all respects as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closings (except to the extent
such representations and warranties expressly relate to a specific date, in
which case such representations and warranties shall be true and correct as
of such date), and all of the representations and warranties of each USRP
Entity set forth in the Transaction Documents which are not so qualified
shall be true and correct in all material respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the
Closing Date (except to the extent such representations and warranties
expressly relate to a specific date, in which case such representations and
warranties shall be true and correct in all material respects as of such
date).
(c) The USRP Entities shall have furnished the FW Entities with a
certificate dated as of the Closing Date signed on its behalf by an
executive officer of USRP I to the effect that the conditions to be
satisfied by the USRP Entities set forth in Section 6.3 have been
satisfied.
6.4 Risk of Loss. If all or any portion of the Improvements shall be
damaged or destroyed by fire or other casualty prior to the Closing Date or
if all or any portion of any Real Property shall be condemned or become the
subject of condemnation
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proceedings or a threat of condemnation proceedings prior to the Closing
Date, the USRP Entities shall nevertheless be required to close on the
Transactions notwithstanding such casualty or condemnation event, except
that (a) the Allocated Consideration with respect to such Property shall be
reduced by (i) the amount of any uninsured portion of the loss resulting
from any casualty, including the amount of any insurance deductible or
self-insured amount (or such lesser amount as the USRP Entities and the FW
Entities reasonably agree to be necessary to repair the damage), and (ii)
the amount of casualty or condemnation proceeds paid to and retained by a
lender, lessor or other party in interest, and (b) the FW Entities shall
assign to the USRP Entities at Closing all insurance proceeds and claims
and all condemnation proceeds and claims payable on account of such damage
or condemnation event and shall deliver to the USRP Entities at Closing any
insurance proceeds or condemnation proceeds previously paid to a FW Entity
or any affiliate of a FW Entity on account of such damage or condemnation
event. All proceeds, claims and/or amounts paid or assigned pursuant to
this Section 6.4 shall be excluded from the determination of Net Working
Capital in Section 8.7 hereof.
7. Conduct of Business Pending the Transactions.
7.1 General. During the period from the date of this Agreement to the
Effective Time, except as otherwise contemplated by the Transaction
Documents, the Company and each Company Subsidiary shall:
(a) carry on their respective businesses in the usual, regular
and ordinary course, consistent with past practice, and use commercially
reasonable efforts to preserve intact their present business organizations,
keep available the services of their present advisors, managers, officers
and employees and preserve their relationships with customers, suppliers,
insurers, licensors and others having business dealings with them and
continue existing contracts as in effect on the date hereof (for the term
provided in such contracts);
(b) confer on a regular basis with one or more representatives of
the USRP Entities to report on material operational matters and any
proposals to engage in material transactions;
(c) promptly notify the USRP Entities of any material emergency
or other material change in the condition (financial or otherwise),
business, properties, assets, liabilities, prospects or the normal course
of their businesses, any material governmental complaints, investigations
or hearings (or communications indicating that the same may be
contemplated), or the breach in any material respect of any representation
or warranty contained herein;
(d) provide the USRP Entities with a reasonable opportunity to
review and comment on any federal income tax returns filed by the Company
or any Company Subsidiary prior to the Effective Time;
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(e) do all things necessary to ensure that the Company continues
to meet all of the requirements to be treated as a REIT for all purposes
under the Code and the tax provisions of any state in which the Company is
subject to tax and which provides for the taxation of REITs in a manner
similar to the treatment of REITs under Sections 856-860 of the Code, and
shall make any and all required filings in connection therewith, including
providing the USRP Entities with all information, documentation and
assistance the USRP Entities may reasonably request in order for the USRP
Entities to mail the stockholder demand letters required by Treasury
Regulation Section 1.857-8 within 30 days after the Effective Time and to
take any other actions that may be necessary or appropriate for MergerCo,
as the Surviving Company (as defined in the Merger Agreement), to take in
order to maintain the Company's status as a REIT through the Effective
Time;
(f) keep the USRP Entities informed in a timely manner regarding
any communications to or filings with any state environmental regulatory
authorities regarding the Properties;
(g) not submit any written communication or filing to any state
environmental authority without prior written consent of the USRP Entities,
which consent shall not be unreasonably withheld;
(h) not acquire, enter into an option to acquire or exercise an
option or contract to acquire, additional Real Property, incur additional
indebtedness (including, without limitation, refinancing any existing
indebtedness), encumber assets or commence construction of, or enter into
any agreement or commitment to develop or construct, shopping centers or
any other type of real estate projects (including, but not limited to,
exercising existing options to purchase real property) other than in the
ordinary course of business consistent with past practice; provided,
however, that the Company and the Company Subsidiaries shall be able to
borrow money under their existing lines of credit in the ordinary course of
business;
(i) not amend its Charter, Bylaws, joint venture documents,
partnership agreements, limited liability company agreements or other
organizational documents or the Company Rights Agreement;
(j) not (i) except pursuant to the exercise of options, warrants,
conversion rights (including rights under the FW Partnership Agreement to
convert Units to cash and/or shares in accordance with the terms thereof)
and other contractual rights existing on the date hereof and disclosed in
the Transaction Documents (including the exhibits and schedules thereto),
issue any shares of its capital stock or partnership or other interests,
effect any split, reverse split, dividend of capital stock or partnership
or other interests, recapitalization or other similar transaction, other
than the Recapitalization (as defined in the Merger Agreement), (ii) grant,
confer or award any option, warrant, conversion right or other right not
existing on the date hereof to acquire any shares of its capital stock or
partnership or other interests, (iii) increase any compensation or enter
into
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or amend any employment agreement with any of its present or future
officers or directors, or (iv) except with respect to the adoption of an
employee retention bonus which will not impose any surviving obligation on
MergerCo or any of its subsidiaries or affiliates after the Effective Time,
adopt any new employee benefit plan (including any stock option, stock
benefit or stock purchase plan) or amend any Employee Program in any
material respect, except for changes which are less favorable to
participants in such plans;
(k) not:
(i) declare, set aside or pay any dividend or make any other
distribution or payment with respect to any shares of its capital
stock or partnership or other interests, except for (A) the greater of
(1) a regular quarterly dividend or distribution in an amount not to
exceed $.4875 per share of Company Common Stock or per Common Unit
payable (in accordance with normal payment schedules and without
proration for partial periods) to common stockholders of the Company
and, as applicable, to holders of Common Units FWOP, and (2) the
minimum extent necessary to prevent the Company from having positive
REIT taxable income for any taxable year and to the extent otherwise
necessary to accommodate a Code Section 858(a) dividend for the 1999
taxable year, taking into account liquidating distributions for tax
purposes, (B) the dividends or distributions with respect to the
Series A Preferred Stock or the Preferred Units as and when required
by the Company's Charter or the FW Partnership Agreement, as the case
may be, and (C) immediately prior to the Mergers, FWOP shall pay the
Partnership Liquidating Distribution (as defined in the Merger
Agreement) and the Company shall pay the Company Liquidating
Distribution (as defined in the Merger Agreement); or
(ii) directly or indirectly redeem, purchase or otherwise
acquire any shares of its capital stock, partnership or other
interests or capital stock or partnership or other interests of the
Company or any Company Subsidiary, or make any commitment for any such
action;
(l) not sell, or otherwise dispose of (i) any Properties or any
portion thereof or any of the capital stock of or partnership, membership
or other interests in any of the FW Entities or (ii) except in the ordinary
course of business, any of its other assets;
(m) not make any loans, advances or capital contributions to, or
investments in, any other Person;
(n) not pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto)
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of the Company included in the SEC Reports or incurred in the ordinary
course of business consistent with past practice;
(o) not enter into any Other Agreement which may result in total
payments or liability by or to it in excess of $25,000, except for the
renewal of casualty and property insurance held by the FW Entities in the
ordinary course of business (provided, however, that nothing contained in
this clause (o) shall permit a FW Entity to take any action prohibited by
the other provisions of this Section 7);
(p) not enter into any Other Agreement with any officer,
director, consultant or affiliate of the Company or any Company Subsidiary
or any family member thereof;
(q) not, without prior notification and consultation with the
USRP Entities, terminate any employee under circumstances which would
result in severance payments to such employee or pay any severance benefits
to any employee on account of such employee's termination, other than as
specified to on Exhibit 8.2(f) of the Merger Agreement;
(r) observe and comply with the material terms and conditions of
all Leases, Other Agreements, Property Contracts, insurance policies,
licenses and approvals relating to the Properties, and the provisions of
the Assumed Loans;
(s) not during the pendency of this Agreement intentionally take
any action or fail to take any action which would cause the condition set
forth in Section 6.2(b) not to be met;
(t) not amend or modify the terms or conditions of any Assumed
Loan or the documents evidencing or securing any Assumed Loan without the
prior written consent of the USRP Entities, which consent shall not be
unreasonably withheld or delayed;
(u) comply in all material respects with all reciprocal easement
agreements affecting the Real Properties and all other easements,
covenants, conditions, restrictions and other encumbrances affecting any
Real Property;
(v) not amend or modify the terms of any Contribution Agreement
without the prior written consent of the USRP Entities;
(w) use reasonably diligent efforts to obtain promptly after the
execution of this Agreement the Assumed Loan Lender Consent Documents and
the estoppel certificates and other items described in Sections 6.2(d), (f)
and (g) of this Agreement;
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(x) not amend or modify the terms of any insurance policy without
the prior written consent of the USRP Entities;
(y) use commercially reasonable efforts to settle or resolve the
Litigation listed in Exhibit 4.8 and all other Litigation arising after the
date hereof that, individually or in the aggregate, could reasonably be
expected to be material;
(z) use commercially reasonable efforts to dissolve each of the
entities listed on Exhibit 7.1(z) hereto;
(aa) not amend, modify or waive any provisions of the Pending
Sale Agreements without the prior written consent of the USRP Entities;
and/or
(bb) not take any action which will result in a tax protection
provision in a Contribution Agreement to be violated.
7.2 Leasing. Neither the Company nor any Company Subsidiary shall
during the pendency of this Agreement execute or modify in any material
fashion any Leases pertaining to premises in excess of 3,000 rentable
square feet, other than with the prior consent of the USRP Entities, which
consent shall be deemed given as to the leases or modifications to existing
Leases listed on Exhibit 7.2 to this Agreement (the "In-Negotiation
Leases") (and the budgets for leasing costs attendant to such
In-Negotiation Leases as set forth on Exhibit 7.2) and which shall be
deemed given if the USRP Entities should fail to approve or disapprove
proposed lease matters in writing within five (5) Business Days following
receipt by the USRP Entities of the FW Entities' written request. The USRP
Entities shall exercise their rights of approval of leasing matters
reasonably and in good faith. With respect to new Leases or Lease
amendments pertaining to premises of 3,000 rentable square feet or less,
the Company Subsidiary shall have the right to enter into new Leases or
amendments without any need to obtain the consent of the USRP Entities,
provided that (i) such new Lease or amendment is entered into on an arm's
length basis and the applicable Company Subsidiary believes in its good
faith reasonable discretion that it is entering into such new Lease or
modification on market terms (ii) the USRP Entities shall have approved any
period of free rent or abated rent which will continue after the Closing
Date and any tenant improvement or similar costs which will be incurred
after the applicable Closing Date in excess of the standard tenant
improvement allowance customarily provided by the FW Entities to comparable
tenants in connection with comparable leases, and (iii) the USRP Entities
are provided with a copy of the executed Lease or modification documents
within three (3) Business Days after such documents are executed. The FW
Entities shall use reasonable efforts to continue to seek new leases for
the Properties in a manner consistent with its past and current practices.
7.3 Liens. Neither the Company nor any Company Subsidiary shall during
the pendency of this Agreement voluntarily create, consent to or acquiesce
in the creation of liens or exceptions to title other than Permitted
Exceptions without the prior written
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consent of the USRP Entities, provided that the USRP Entities shall not
unreasonably withhold or delay consent to any proposed matters affecting
title necessary to maintain or enhance the value of Property.
7.4 Personal Property. Neither the Company nor any Company Subsidiary
shall during the pendency of this Agreement sell or otherwise dispose of
any material item of Personal Property unless replaced with an item of like
value, quality and utility.
7.5 Property Contracts. The Company and the Company Subsidiary shall
not during the pendency of this Agreement enter into or modify any Property
Contracts relating to the operation or maintenance of a Property, except
for (i) those entered into in the ordinary course of business and (A) which
are cancelable upon not more than thirty (30) days prior notice without
penalty or premium, and (B) which require payments to the applicable vendor
of $15,000 or less per year and which, in the aggregate for any individual
Property, require payments to the applicable vendors of $35,000 or less per
year, or (ii) those otherwise approved by the USRP Entities, which approval
shall not be unreasonably withheld and shall be deemed given if the USRP
Entities should fail to approve or disapprove proposed Property Contract
matters in writing within five (5) Business Days following receipt by the
USRP Entities of the FW Entities' written request.
7.6 General Maintenance and Operation of Properties. At all times
prior to Closing, the Company and each Company Subsidiary shall continue
(a) to maintain or cause to be maintained each Property in its current
condition, reasonable wear and tear consistent with its current maintenance
and repair practices excepted, and (b) to maintain or cause to be
maintained all casualty, liability, rent loss and other insurance in force
on each Property as of the date of this Agreement.
7.7 [Intentionally Omitted]
7.8 Other Filings. As promptly as practicable, the USRP Entities and
the FW Entities each shall properly prepare and file, or cause to be
prepared or filed, any filings required under the Exchange Act or any other
federal or state law relating to the Transactions (including filings, if
any, required under the HSR Act) (collectively, the "Other Filings"). The
USRP Entities on the one hand, and the FW Entities, on the other hand shall
each pay 50% of any filing fee and other fees required to be paid in
connection with any filing under the HSR Act. Each of the USRP Entities, on
the one hand, and the FW Entities, on the other hand, shall promptly notify
the other of the receipt of any comments on, or any request for amendments
or supplements to, any of the Other Filings by the SEC or any other
Governmental Entity or official, and each of the USRP Entities, on the one
hand, and the FW Entities, on the other hand, shall supply the other with
copies of all correspondence between themselves and their representatives,
on the one hand, and the SEC or the members of its staff or any other
appropriate governmental official, on the other hand, with respect to any
of the Other Filings. Each of the USRP Entities and the FW Entities shall
use reasonable best efforts to obtain and furnish the information required
to be included in any of the Other Filings.
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7.9 Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use reasonable best efforts
to take, or cause to be taken, all actions and to do, or cause to be done,
all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the Transactions and to cooperate with each
other in connection with the foregoing, including, without limitation, the
taking of such actions as are necessary to obtain any necessary consents,
approvals, orders, exemptions and authorizations by or from any public or
private third party, including without limitation any that are required to
be obtained under any federal, state or local law or regulation or any
contract, agreement or instrument to which any of the FW Entities is a
party or by which any of their respective properties or assets are bound,
to defend all lawsuits or other legal proceedings challenging the
Transaction Documents or the consummation of the Transactions, to cause to
be lifted or rescinded any Injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the
Transactions, and to effect all necessary registrations and Other Filings,
and submissions of information requested by Governmental Entities. For
purposes of the foregoing sentence, the obligation of the parties to use
reasonable best efforts to obtain waivers, consents and approvals to loan
agreements, leases and other contracts shall not include any obligation to
agree to an adverse modification of the terms of such documents or to
prepay or incur additional obligations to such other parties (except as
otherwise provided in the Transaction Documents).
7.10 No Solicitations.
(a) Each FW Entity represents and warrants that it has terminated
any discussions or negotiations relating to, or that may reasonably be
expected to lead to, any Acquisition Proposal (as hereinafter defined).
Except as permitted by this Agreement, no FW Entity, and no FW Entity shall
authorize or permit any of its respective officers, directors or employees
or any investment banker, financial advisor, attorney, accountant or other
representative retained by any of them to, directly or indirectly, (i)
solicit, initiate or encourage (including by way of furnishing non-public
information), or take any other action to facilitate, any inquiries or the
making of any proposal that constitutes an Acquisition Proposal, or (ii)
participate in any discussions or negotiations regarding an Acquisition
Proposal; provided, however, that, at any time prior to the approval of the
Transactions by the stockholders of the Company and the partners of FWOP,
if any FW Entity receives a written Acquisition Proposal that did not
result from a breach of this Section 7.10(a) and the Board of Directors of
the Company determines in good faith (after consultation with and
consistent with the advice of its outside legal counsel and its financial
advisor) that (A) such Acquisition Proposal is reasonably likely to lead to
a Superior Proposal (as defined below), and (B) such action is consistent
with the Company's Board of Directors' duties under applicable Maryland
law, then the FW Entities may furnish information, including, without
limitation, non-public information, with respect to the FW Entities to the
person who made such Acquisition Proposal (a "Third Party") and the FW
Entities may participate in negotiations regarding such Acquisition
Proposal if such Third Party executes a confidentiality/standstill
agreement with the FW Entities in customary form and providing, in a form
satisfactory to the USRP Entities, that the USRP Entities shall have third
party beneficiary rights thereunder. The Company agrees not to amend any
such agreement or waive any of its rights thereunder without the prior
written approval of the USRP
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Entities other than in connection with the execution of a binding merger or
other acquisition agreement providing for a Superior Proposal.
(b) The FW Entities shall promptly notify (but in any event
within one Business Day) MergerCo of any FW Entity's first receipt of a
written Acquisition Proposal by such Third Party and of the identity of the
offeror and the material terms and conditions thereof and any subsequent
material changes thereto.
(c) The Company's Board of Directors shall not withdraw or
modify, or propose to withdraw or modify, in a manner adverse to the USRP
Entities, its approval or recommendation of the Transactions unless the
Company's Board of Directors (i) shall have received an Acquisition
Proposal that constitutes a Superior Proposal, and (ii) shall have
determined in good faith, after consultation with and consistent with the
advice of its outside legal counsel and its financial advisor, that the
Transactions are no longer in the best interests of the Company's
stockholders and that such withdrawal or modification is required to
satisfy the Company's Board of Directors' duties, if any, under applicable
Maryland law.
(d) Nothing contained in this Section 7.10 shall prohibit a FW
Entity from at any time disclosing to its stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act
or making any disclosure required by Rule 14a-9 promulgated under the
Exchange Act.
(e) As used in this Agreement, the term "Acquisition Proposal"
shall mean any proposed or actual (i) merger, consolidation or similar
transaction involving a FW Entity, (ii) sale, lease or other disposition,
directly or indirectly, by merger, consolidation, share exchange or
otherwise, of any assets of the FW Entities representing 10% or more of the
consolidated assets of the FW Entities, (iii) issue, sale or other
disposition by the Company or FWOP of (including by way of merger,
consolidation, share exchange or any similar transaction) securities (or
options, rights or warrants to purchase, or securities convertible into,
such securities) representing 10% or more of the votes associated with the
outstanding securities of the Company or FWOP, (iv) tender offer or
exchange offer in which any Person would acquire beneficial ownership (as
such term is defined in Rule 13d-3 under the Exchange Act), or the right to
acquire beneficial ownership, of 10% or more of the outstanding shares of
Company Common Stock, (v) recapitalization, restructuring, liquidation,
dissolution, or other similar type of transaction with respect to the
Company or FWOP or (vi) transaction which is similar in form, substance or
purpose to any of the foregoing transactions; provided, however, that the
term "Acquisition Proposal" shall not include the Transactions.
(f) As used in this Agreement, the term "Superior Proposal" shall
mean an Acquisition Proposal (except that for the purposes of this
definition, each percentage of
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<PAGE> 54
10% set forth therein shall instead be 50%) that the Company's Board of
Directors determines in good faith, based on the advice of its outside
legal counsel and its financial advisor is likely to be consummated and
would, if consummated, result in a transaction that is consistent with its
duties to and is more favorable to the equity holders of the Company and
FWOP than the Transactions, it being understood and agreed that in deciding
whether a Superior Proposal has been offered, the Company's Board of
Directors may consider the interests of the partners of FWOP only if and to
the extent it concludes in good faith, based on the advice of its outside
legal counsel, that the Board of Directors has fiduciary duties to the
partners of FWOP with respect to such proposal, and such determination is
consistent with its duties to the Company's equity holders and such
partners.
7.11 Estoppels and Other Items. Promptly following the execution of
this Agreement, the FW Entities shall request (i) the estoppel certificates
and other items from all third parties contemplated in Sections 6.2(d), (f)
and (g) hereof and (ii) estoppel certificates from the parties to
reciprocal easement agreements and similar documents shown on Exhibit
7.11(i) in the form attached to this Agreement as Exhibit 7.11(ii) attached
hereto, and shall thereafter use reasonably diligent efforts to obtain such
estoppel certificates and other items from all such third parties. The
requests for any estoppel certificates shall specify that executed copies
thereof be returned to both the USRP Entities (at 110 West A Street, Suite
900, San Diego, CA 92101, c/o John Waters) and the FW Entities (as
specified in Section 11.7 hereof). If either a FW Entity or a USRP Entity
receives any estoppel certificate or other item referred to in clauses (i)
or (ii) above from a third party, such party shall promptly provide a copy
thereof to the other parties to this Agreement (or shall confirm with the
other party that it has a copy hereof).
8. Prorations and Adjustments; Closing Costs.
8.1 General. The USRP Entities, on the one hand, and the FW Entities,
on the other hand, shall prorate and adjust as of the Closing Date each of
the items set forth in this Section 8 and as elsewhere provided in the
Transaction Documents. All prorations and closing payments shall be made on
the basis of closing statement(s) reasonably approved by the USRP Entities
and the FW Entities at Closing (or, if the parties fail to agree, as
determined by binding arbitration in accordance with Section 12 hereof, in
which case the Closing Date shall be the date on which the arbitrator
renders its decision on such matter). The USRP Entities and the FW Entities
acknowledge that, except as otherwise expressly provided herein, the
purpose and intent of the provisions set forth in this Section 8 and
elsewhere in the Transaction Documents as to prorations and apportionments
is that the FW Entities shall bear all expenses of the ownership and
operation of the Properties and shall receive the benefit of all income
therefrom accruing through the close of business on the day immediately
preceding the Closing Date and the USRP Entities shall bear all such
expenses and receive the benefit of all income accruing thereafter.
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8.2 Taxes and Assessments. All real estate taxes, personal property
taxes and general or special assessments on the Properties shall be
prorated and adjusted as set forth below.
(a) General. The FW Entities shall be responsible for all such
taxes and assessments that are allocable to any period prior to the Closing
Date and the USRP Entities shall be responsible for all such taxes
allocable to any period from and after the Closing Date. Notwithstanding
the foregoing, with respect to each Real Property located in the State of
Illinois (i) general real estate taxes which are payable for the tax year
prior to the tax year in which the Closing occurs and all prior years shall
be paid by the FW Entities, and (ii) general real estate taxes which are
payable for the tax year in which the Closing occurs shall be prorated by
the FW Entities and the USRP Entities as of the Closing Date.
(b) Estimated Taxes and Assessments. To the extent that the
actual amount of taxes or assessments to be prorated for the year in which
the Closing occurs (and, with respect to Real Property located in Illinois,
for the tax year prior to the tax year in which the Closing occurs) is not
known as of the Closing Date, the proration shall be based on estimates of
such taxes and assessments as reasonably agreed to by the FW Entities and
the USRP Entities, and if the FW Entities and the USRP Entities cannot
agree on any such estimate for a Property prior to the Closing Date, then
such proration shall be determined by binding arbitration in accordance
with Section 12 hereof.
(c) Taxes and Assessments Subject to Appeal. To the extent that
any taxes or assessments to be prorated for the year in which the Closing
occurs (and, with respect to Real Property located in Illinois, for the tax
year prior to the tax year in which the closing occurs) are, as of the
Closing Date, the subject of any appeal filed by or on behalf of any FW
Entity, then the proration shall be based on the projected results of such
appeal as reasonably agreed to by the FW Entities and the USRP Entities,
and if the FW Entities and the USRP Entities cannot agree on any such
projected results for a Property prior to the Closing Date, then such
proration shall be determined by binding arbitration in accordance with
Section 12 hereof.
8.3 Certain Property Income and Expense Items. Items of income and
expense relating to the Properties shall be prorated and adjusted as set
forth below. Prior to the Closing Date, the FW Entities shall provide all
information to the USRP Entities required to calculate such prorations and
adjustments and representatives of the FW Entities and the USRP Entities
shall reasonably cooperate in making such calculations.
(a) Tenant Deposits. The USRP Entities shall be credited at
Closing with any portion of Tenant Deposits which have not been applied to
outstanding tenant obligations in accordance with the terms of the
applicable Lease. The FW Entities shall transfer their entire interest in
any letters of credit or certificates of deposit held by the FW Entities as
Tenant Deposits and shall diligently cooperate with the USRP Entities in
obtaining any reissuance or confirmation of the effect of the transfer of
such instruments.
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The USRP Entities shall be credited at Closing with any interest on Tenants
Deposits required to be refunded, paid or otherwise credited to any tenant
under a Lease or applicable law accruing prior to the Closing Date.
(b) Leasing Costs. The USRP Entities shall be credited with any
leasing commissions, tenant improvements or other allowances to be paid or
endured by the USRP Entities on or after the Closing Date with respect to
the current term of any Lease or Lease modification executed, or any
extension or renewal term or expansion of premises exercised, in each case,
prior to the date of this Agreement (other than any In-Negotiation Leases
executed prior to the Closing Date, which shall be treated as set forth
below), and the FW Entities shall pay on or before the Closing Date all
such items payable prior to the Closing Date. The FW Entities shall be
credited with any leasing commissions, tenant improvement or other
allowances paid or endured by the FW Entities prior to the Closing Date to
the extent such items relate to (i) the In-Negotiation Leases or (ii) other
Leases or Lease modifications executed or extensions of terms or expansions
of premises that are exercised during the period between the date of this
Agreement and Closing and permitted under the terms of this Agreement, but
in each case only to the extent equitably allocable to that portion of the
stabilized term (i.e., the term following the tenant's entry into occupancy
and commencement of unabated rental obligations) of any such Lease
following the Closing Date. The USRP Entities shall assume all obligations
for any leasing commissions, tenant improvement and other allowances
payable following the Closing Date with respect to the In-Negotiation
Leases to the extent equitably allocable to that portion of the stabilized
term of any such In-Negotiation Lease or such other Leases or Lease
modifications executed or extensions of terms or expansions of premises
that are exercised following the date of this Agreement. Any expenditures
or commitments to make expenditures (and, therefore, any credit to the FW
Entities based on their expenditures prior to the Closing Date) relating to
the In-Negotiation Leases in excess of the amounts budgeted on Exhibit 7.2
shall be subject to the specific approval of the USRP Entities, which shall
not be unreasonably withheld and shall be deemed given if the USRP Entities
shall fail to approve or disapprove such excess expenditure within five (5)
Business Days following receipt by the USRP Entities' of the FW Entities'
written request; similarly, any expenditures or commitments to make
expenditures relating to Leases or modifications executed following the
date of this Agreement in excess of the amounts budgeted and approved as
part of the USRP Entities' approval of any Lease or modification pursuant
to Section 7.2 shall be subject to the specific approval of the USRP
Entities, which shall not be unreasonably withheld and shall be deemed
given if the USRP Entities should fail to approve or disapprove such excess
expenditure within five (5) Business Days following receipt by the USRP
Entities' of the FW Entities' written request.
(c) Rents. All rents payable by tenants under the Leases,
including, without limitation, Additional Rents, shall be pro-rated as of
Closing, subject, however, to the provisions of Section 8.7. "Additional
Rents" means any percentage rent, escalation charges for real estate taxes,
parking charges, operating and maintenance expenses, escalation rents or
charges, electricity charges, cost of living increases or any other
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<PAGE> 57
charges of a similar nature payable by tenants under Leases. The USRP
Entities and the FW Entities shall consider the best available current and
historical information (including information as to seasonality and
collections) in calculating the Adjusted Receivables (as hereinafter
defined) allocable to Additional Rents pursuant to Section 8.7.
(d) Assumed Loans. The USRP Entities shall be credited for the
full principal amount of, plus the amount of any accrued and unpaid
interest under, the Assumed Loans as of the Closing Date. The adjustment
provided for in this Section 8.3(d) for Assumed Loans which encumber the
Purchase Agreement Properties shall be made pursuant to the Purchase
Agreement and the adjustment for the Assumed Loans which encumber the
Merger Agreement Properties shall be made pursuant to the Merger Agreement
and the Limited Partnership Interest Purchase and Sale Agreement.
(e) Insurance Termination Costs. If the USRP Entities have made
arrangements to terminate any insurance maintained by the Company and
Company Subsidiaries following the Effective Time, then the USRP Entities
shall be credited for the full amount of any Insurance Termination Costs
payable as a result of the termination of such insurance.
(f) Construction Projects. The USRP Entities shall be credited
with (i) the amount of the reasonably anticipated cost to complete and/or
pay for any of the Construction Projects specified on Exhibit 4.14 that
have not been completed and fully paid prior to the Closings less (ii) in
the case of the Valley Center project, $215,000, and the case of Parkville,
$1,925,500 (in each case, representing an amount already deducted by the
USRP Entities from the Purchase Price payable under the Purchase Agreement
as indicated on Exhibit 4.14), it being agreed that if the foregoing amount
is a negative number, such negative amount shall represent an upward
adjustment to such Purchase Price. The parties acknowledge and agree that
(i) the Construction Projects include the obligations of FWOP to perform
the Immediate Repairs (as defined in that certain Escrow Security Agreement
dated as of January 5, 2000 with respect to Cudahy Center (the "Cudahy
Repair Escrow Agreement") between FWOP and Principal Life Insurance
Company) and (ii) in calculating the adjustment under this clause (f) for
the Immediate Repairs not completed and paid for prior to the Closings, the
FW Entities shall be credited in accordance with Section 8.7 with the
unapplied balance of the Property Reserves (as defined in the Cudahy Repair
Escrow Agreement), but only to the extent that such Property Reserves have
been validly assigned to the USRP Entities. Any dispute as to the
reasonably anticipated cost to complete and/or pay for any Construction
Projects under this clause (f) shall be resolved by binding arbitration in
accordance with Section 12 hereof.
(g) Purchase Option Parcels. The parties acknowledge and agree
that the Transactions may trigger a right in favor of certain third Persons
("Option Holders") to purchase or otherwise acquire the Properties or
portions of the Properties ("Option Parcels"). If any of the Option Holders
elect to purchase or otherwise acquire an Option Parcel and the closing of
such transaction occurs prior to the Closing Date, then the
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Allocated Consideration for the Property of which the applicable Option
Parcel forms a part shall be reduced by the Allocated Consideration to the
extent the applicable Option Parcel is an entire Property or, in the case
of a portion of a Property, an appropriate amount which reflects the
diminution in value of such Property consistent with the financial model
used to determine the Allocated Consideration. If any of the Option Holders
elect not to purchase or otherwise acquire an Option Parcel, or if an
Option Holder elects to purchase or otherwise acquire an Option Parcel but
the transaction does not close prior to the Closing Date, then there shall
be no reduction in the Allocated Consideration for the Property.
8.4 Settlement Statement. On or before that date which is ten (10)
Business Days prior to the Closing Date, the FW Entities shall prepare and
provide to the USRP Entities a draft settlement statement setting forth all
items to be prorated or adjusted under this Section 8, together with (i)
reasonably detailed schedules showing how all such prorations and
adjustments were determined, and (ii) all relevant backup documentation
(the "Proposed Reconciliation"). Upon reasonable notice and during normal
business hours, each party shall make available to the other all
information reasonably required to confirm and agree upon the Proposed
Reconciliation. If the FW Entities and the USRP Entities do not agree on
the Proposed Reconciliation despite their good faith reasonable efforts on
or before the scheduled Closing Date, such disagreement shall be resolved
by binding expedited arbitration in accordance with Section 12 and the
Closing Date shall be the date that the arbitrator renders its decision in
each matter.
8.5 Application of Prorations and Adjustments. The parties acknowledge
and agree that (a) the consideration to be paid by the USRP Entities to the
holders of capital stock of the Company or partnership interests in FWOP
described in the Merger Agreement shall not be increased or reduced based
upon such prorations and adjustments (except to the extent relating to the
Assumed Loans encumbering the Merger Agreement Properties, as more
particularly set forth in the Merger Agreement and the Limited Partnership
Interest Purchase and Sale Agreement), and (b) the net credit or debit
resulting from all of the prorations and adjustments (except to the extent
relating to the Assumed Debt encumbering the Merger Agreement Properties,
as more particularly set forth in the Merger Agreement and the Limited
Partnership Interest Purchase and Sale Agreement) shall be applied against
the Purchase Price (as defined in the Purchase Agreement) for the Purchase
Agreement Properties, as more particularly set forth in the Purchase
Agreement.
8.6 Fees and Expenses; Closing Costs. The USRP Entities and the FW
Entities shall each pay their own legal, investment banking and other
fees and expenses related to the negotiation and preparation of the
Transaction Documents and all documents and actions required to close and
settle the transactions contemplated in the Transaction Documents. All
closing costs in connection with the conveyance of the Properties or the
transfer of the Interests (as defined in the Purchase Agreement under any
of the Transaction Documents (including any conveyance by operation of law
pursuant to the Mergers shall be paid by the USRP Entities, on the one
hand, and the FW Entities, on the
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other hand, in accordance with the custom in the jurisdiction where each
Property is located, including, without limitation (i) recording fees
(other than to discharge FW Encumbrances, which shall be paid by the FW
Entities in accordance with Section 2.3), (ii) transfer taxes, deed stamps
and similar amounts, and (iii) title insurance premiums and costs for the
Title Update Reports and the policies issued to the USRP Entities at
Closing. Any closing escrow charges shall be paid 50% by the FW Entitles
and 50% by the USRP Entities. The parties agree that the custom in the
jurisdiction where each Property is located for payment of transfer taxes,
deed stamps, and similar amounts and title insurance premiums and costs is
as specified in Exhibit 8.6 hereof. The USRP Entities shall pay all costs
associated with their diligence not otherwise addressed above, including
the cost of appraisals, Survey Updates and architectural, engineering and
environmental reports.
8.7 Adjustment for Net Working Capital. If the Net Working Capital (as
defined below) is greater than zero, then the Purchase Price payable under
the Purchase Agreement shall be adjusted upward by such amount, and if the
Net Working Capital is less than zero, then the Purchase Price payable
under the Purchase Agreement shall be adjusted downward by such amount.
"Net Working Capital" means the aggregate amount as of the close of
business on the day immediately preceding the Closing Date of (i) the sum
of all cash and cash equivalents owned by the Company and the Company
Subsidiaries (including any customary reserves held by Assumed Loan Lenders
for the benefit of the borrowers thereunder (except as otherwise provided
in Section 8.3(f) and elsewhere herein) to the extent validly assigned to
the USRP Entities at the Closings, but excluding the $3,000,000 of cash
reserved with respect to the Woodmoor Merger Agreement Property pursuant to
Section 8.2(n) of the Merger Agreement and excluding the amount of the
"Excess Cash Reserve" under the mortgage financing on the Cudahy Center
Property required as a result of the tenant Pick 'N Save not exercising its
extension option under its lease in November 2000, which reserve (or an
equitable amount of cash if such mortgage financing does not constitute an
Assumed Loan at Closing) shall be transferable to the USRP Entities at
Closing at no cost to the USRP Entities), the amount of Adjusted
Receivables (as defined below) of the Company and the Company Subsidiaries,
and all prepaid expenses of the Company and the Company Subsidiaries (other
than (A) prepaid expenses pursuant to Terminated Contracts or any prepaid
expenses, including any amounts paid or payable pursuant to Section 7.3 of
the Merger Agreement, (B) intercompany prepaid expenses, or (C) any
expenses related to, arising out of or incurred in connection with the
Transactions, minus (ii) the sum of (A) accounts payable of the Company and
Company Subsidiaries (including without limitation, payables to tenants of
the Properties), (B) accrued expenses and other accrued current liabilities
of the Company and Company Subsidiaries (including, without limitation,
accrued current liabilities for Taxes and the aggregate amounts of any
dividends declared but not yet paid by the Company or distributions
declared but not yet paid by FWOP and current liabilities which result
from, arise out of, or are otherwise related to the consummation of the
Transactions (including any fees payable to the Brokers and to the
attorneys representing the Company or Company Subsidiaries and any amounts
to be paid pursuant to Section 8.2(f), (g) and (h) of the Merger Agreement
and severance costs), and (C) the aggregate amount of abatements shown on
Exhibit 4.17(a) for the tenant Pat's Hallmark
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at Northway Shopping Center and the tenant Movie Gallery at Laburnum Park
Shopping Center with all such items in clauses (i) and (ii) defined and
measured in accordance with the past practices of the FW Entities and GAAP
except as otherwise provided in this Section 8.7. "Adjusted Receivables"
means the aggregate amount of accounts receivable (excluding intercompany
receivables and excluding receivables from those tenants shown on part 5 of
Exhibit 4.17(a) as tenants in default and tenants listed on Exhibit 4.31,
but including other tenant receivables) of the Company and the Company
Subsidiaries which the FW Entities and the USRP Entities reasonably
anticipate will be collected on a timely basis based on past collection
history and then prevailing facts and circumstances with respect to the
applicable obligor and the nature of such receivable; provided, however,
that (x) accounts receivable which are less than or equal to 60 days old as
of the close of business on the day immediately preceding Closing Date
shall be deemed collectible absent compelling evidence to the contrary, (y)
accounts receivable which are more than 60 days old as of the close of
business on the day immediately preceding the Closing Date shall be deemed
uncollectible absent compelling evidence to the contrary, and (z) all
accounts receivable of any obligor which has accounts receivable which are
more than 90 days old, which accounts receivable in excess of 90 days old
are equal to or greater than 25% of the total accounts receivable of such
obligor to the Company and the Company Subsidiaries, shall be deemed
uncollectible absent compelling evidence to the contrary; provided,
however, that for the purposes of calculating such 25% amount pursuant to
the foregoing clause (y), receivables which are the subject of a bona fide
dispute shall be excluded. Net Working Capital shall be determined
reasonably and in good faith by the FW Entities and the USRP Entities, and
shall be determined by binding arbitration as provided in Section 12 if the
FW Entities and the USRP Entities fail to agree on the amount of Net
Working Capital. The FW Entities and the USRP Entities agree that the
adjustment based on Net Working Capital described in this Section 8.7 is
not intended to be duplicative of any prorations and adjustments provided
for elsewhere in this Section 8 and there shall be no double counting of
any such adjustments. In the event of any conflict between the provisions
of this Section 8.7 and the specific provisions of Section 8.2 or Section
8.3, the specific provisions of Section 8.2 or Section 8.3, as applicable,
shall control.
8.8 Exclusions. The FW Entities and the USRP Entities hereby
acknowledge and agree that there shall be no proration or adjustment under
Section 8.7 for environmental and structural items (other than accrued
expenses and accounts payable resulting from repairs and maintenance made
in the ordinary course of business and accounted for as current
liabilities).
8.9 No Solicitation of Offers or Sale of Properties by FW Entities;
Pending Sale Properties. Subject to the provisions of Section 7.10 hereof,
each of the FW Entities agree that after the date hereof through the
Closing or termination of the Transaction Documents, no FW Entity shall (a)
solicit or encourage offers or proposals from other parties for the
purchase of all or any portion of any Property or any direct or indirect
interest therein (including, without limitation, the transfer of any
interest in a FW Entity) or (b) sell all or any portion of any Property or
any direct or indirect interest therein (including, without limitation, the
transfer of any interest in a FW Entity).
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Notwithstanding the foregoing, the USRP Entities acknowledge that certain
Company Subsidiaries have entered into binding contracts (each a "Pending
Sale Agreement") for the sale of two outparcels at two of the Purchase
Agreement Properties as described in Exhibit 8.9 attached to this Agreement
(the "Pending Sale Properties"), true and complete copies of which Pending
Sale Agreements and all related documents have been provided or made
available by the FW Entities to the USRP Entities. The sale of a Pending
Sale Property prior to Closing pursuant to a Pending Sale Agreement shall
not violate the provisions of this Section 8.9, and in such event the
balance of the Property of which such Pending Sale Property formed a part
shall be conveyed to the Purchaser under the Purchase Agreement and there
shall be no adjustment to the Allocated Consideration with respect to such
Property. To the extent that the closing of a sale of a Pending Sale
Property has not occurred as of the Closings but the applicable Pending
Sale Agreement remains in full force and effect, then such Pending Sale
Property shall be conveyed to the Purchaser under the Purchase Agreement,
subject to the provisions of the applicable Pending Sale Agreement, and to
the extent that (i) there are no contingencies or conditions to the
obligations of the purchaser thereunder to purchase such Pending Sale
Property other than (A) the purchaser under such Pending Sale Agreement
obtaining permits and approvals required for the development contemplated
on such Pending Sale Property and (B) the applicable Company Subsidiary
performing its obligations under such Pending Sale Agreement, then an
amount shall be added to the Allocated Consideration for the such Property
as follows:
(a) if there is no material risk that such permits and approvals
will not be obtained, the purchase price payable by such purchaser under
such Pending Sale Agreement; or
(b) if it is reasonably likely that such permits and approvals
will be obtained, but the standard enunciated in (a) above has not been
met, 90% of the purchase price payable by such purchaser under such Pending
Sale Agreement.
in each case net of all closing costs anticipated to be paid by the
applicable Company Subsidiary in connection with such sale and purchase of
such Pending Sale Property including, without limitation, the applicable
Company Subsidiary's share of any brokerage fees, transfer taxes and deed
stamps and similar costs, and escrow fees. In all other cases, the Pending
Sale Property shall be conveyed to the Purchaser under the Purchase
Agreement without any adjustment to the Allocated Consideration with
respect to such Property.
9. Public Announcements. The USRP Entities, on the one hand, and the FW
Entities, on the other hand, shall consult with each other before issuing any
press release or otherwise making any public statements with respect to the
Transactions or any of the Transaction Documents and shall not issue any such
press release or make any such public statement without the prior consent of the
other party, which consent shall not be unreasonably withheld; provided,
however, that a party may, without the prior consent of the other party, issue
such press release or make such public statement as may be required by law or
the applicable rules
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of any stock exchange if it has used reasonable best efforts to consult with the
other party and to obtain such party's consent but has been unable to do so in a
timely manner. In this regard, the parties shall make a public announcement of
the Transactions no later than (i) the close of trading on the New York Stock
Exchange ("NYSE") on the day the Transaction Documents as signed, if such
signing occurs during a Business Day or (ii) the opening of trading on the NYSE
on the first Business Day following the date on which the Transaction Documents
are signed, if such signing does not occur during a Business Day.
10. Termination.
10.1 Termination. This Agreement and the Transaction Documents in
their entirety may be terminated at any time prior to the Effective Time,
whether before or after approval by the stockholders of the Company or the
partners of FWOP thereof except as provided below:
(a) by mutual written consent of the USRP Entities, on the one
hand, and the FW Entities, on the other hand;
(b) by either the USRP Entities, on the one hand, or the FW
Entities, on the other hand, by written notice to the others, if any United
States federal or state court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree or ruling or taken
any other action permanently restraining, enjoining or otherwise
prohibiting any of the Transactions, provided that the party seeking to
terminate shall have used reasonable best efforts to appeal such order,
decree, ruling or other action;
(c) by the USRP Entities, by written notice to the FW Entities,
upon a breach of any representation, warranty, covenant or agreement on the
part of the FW Entities set forth in the Transaction Documents, or if any
representation or warranty of the FW Entities shall have become untrue, in
either case such that the conditions set forth in Section 6.2(a) or Section
6.2(b), as the case may be, would be incapable of being satisfied by
September 30, 2001;
(d) by the FW Entities, by written notice to the USRP Entities,
upon a breach of any representation, warranty, covenant or agreement on the
part of the USRP Entities set forth in the Transaction Documents, or if any
representation or warranty of the USRP Entities shall have become untrue,
in either case such that the conditions set forth in Section 6.3(a) or
Section 6.3(b), as the case may be, would be incapable of being satisfied
by September 30, 2001;
(e) by the USRP Entities, by written notice to the FW Entities,
if (i) the Board of Directors of the Company shall have failed to approve
or recommend, or shall have withdrawn, amended, modified or changed its
approval or recommendation of, the Plan of Liquidation or any of the
Transactions, (ii) the Company shall have failed to include the favorable
recommendation of its Board of Directors of the Plan of Liquidation and the
Transactions in the Proxy Statement, (iii) the Board of Directors of the
Company
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shall have recommended that stockholders of the Company accept or approve a
Superior Proposal by a Person other than one of the USRP Entities, (iv) the
Company or its Board of Directors shall have publicly expressed no opinion
and remained neutral toward any Acquisition Proposal or (v) the Company or
its Board of Directors shall have resolved to do any of the foregoing;
(f) by the Company at any time prior to the Special Meeting (as
defined in the Merger Agreement), if the Board of Directors of the Company
determines in good faith (after consultation with and consistent with the
advice of its outside legal counsel and its financial advisor), that such
action is consistent with the Company's Board of Directors' duties under
Maryland law and the Board of Directors authorizes or desires to authorize
the Company to execute an agreement to effect a Superior Proposal;
provided, however, that prior to terminating the Transaction Documents
pursuant to this Section 10.1(f) the Company shall have provided the USRP
Entities with four (4) Business Days' prior written notice of the Company's
decision to so terminate. Such notice shall indicate in reasonable detail
the terms and conditions of such Superior Proposal, including, without
limitation, the amount and form of the proposed consideration and whether
such Superior Proposal is subject to any material conditions. During such
four (4) Business Day period, the Company shall, and shall cause its
respective financial and legal advisors to, consider any adjustment in the
terms and conditions of the Transaction Documents and the Transactions that
the USRP Entities may propose; provided further, that the Company may not
effect such termination pursuant to this Section 10.1(f) unless the FW
Entities immediately prior to such termination pay to the USRP Entities or
their designee the Termination Amount pursuant to Section 10.2 hereof;
(g) by either the USRP Entities, on the on hand, or the FW
Entities, on the other hand, by written notice to the others, if the
Transactions shall have failed to receive the requisite vote for approval
and adoption by the stockholders of the Company upon the holding of a duly
convened stockholder meeting (including any adjournment thereof) or the
requisite vote for approval by the holders of Units after seeking their
consent pursuant to Section 7.2 of the Merger Agreement;
(h) by either the USRP Entities, on the one hand, or the FW
Entities, on the other hand, by written notice to the others, if the
Transactions shall not have been consummated on or before September 30,
2001 (other than due to the failure of the party seeking to terminate the
Transaction Documents to perform its obligations under the Transaction
Documents required to be performed by it at or prior to the Closing Date).
The right of any party hereto to terminate the Transaction Documents
pursuant to this Section 10.1 shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any party
hereto, any Person controlling any such party or any of their respective
employees, officers, directors, agents, representatives or advisors,
whether prior to or after the execution of the Transaction Documents.
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10.2 Effect of Termination.
(a) In the event of the termination and abandonment of this
Agreement pursuant to Section 10.1 hereof, the Transaction Documents shall
forthwith become void and have no effect, all rights and obligations of any
party hereto shall cease except for the rights and obligations which, by
their terms, survive the termination of the applicable Transaction
Documents, and no party shall have any liability to the other party or any
of its affiliates, directors, officers or stockholders; provided, however,
that the FW Entities shall be required to make such payments to the USRP
Entities as are required pursuant to this Section 10.
(b) If (x) the USRP Entities terminate the Transaction Documents
pursuant to Section 10.1(c) as a result of a willful breach by any of the
FW Entities of any representation, warranty or covenant contained in the
Transaction Documents and within one (1) year of such termination the
Company accepts an Acquisition Proposal from a Third Party, (y) the USRP
Entities terminate this Agreement pursuant to Section 10.1(e), or (z) the
Company terminates this Agreement pursuant to Section 10.1(f), then the FW
Entities shall pay to the USRP Entities an amount in cash (collectively,
the "Termination Amount") equal to the sum of (i) $18,000,000 (the
"Break-Up Fee") plus (ii) the out-of-pocket costs and expenses, up to a
maximum of $3,000,000, incurred by or on behalf of the USRP Entities in
connection with the Transaction Documents and the Transactions, including,
without limitation, the fees and disbursements of accountants, attorneys,
environmental and other consultants, appraisers and investment bankers
(collectively, the "USRP Expenses").
(c) If the USRP Entities terminate the Transaction Documents
pursuant to Section 10.1(c) (except for a termination to which the
provisions of Section 10.2(b) will apply), the FW Entities shall reimburse
the USRP Entities for all of the USRP Expenses.
(d) If the Transaction Documents are terminated pursuant to
Section 10.1(g), the FW Entities shall reimburse the USRP Entities for all
of the USRP Expenses.
(e) If (A) prior to the Company's Special Meeting (as defined in
the Merger Agreement), an Acquisition Proposal has been received by the
Company or a Person has publicly disclosed an Acquisition Proposal or an
intent to make an Acquisition Proposal and (B) at any time prior to or
within one year after termination of the Transaction Documents pursuant to
Section 10.1(g), any FW Entity enters into an agreement relating to an
Acquisition Proposal with a Person other than a USRP Entity or the
Company's Board of Directors recommends or resolves to recommend to the
Company's stockholders approval or acceptance of an Acquisition Proposal
with a Person other than a USRP Entity, then upon the entry into such
agreement or the making of such recommendation or resolution, the FW
Entities shall pay to the USRP Entities the
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Termination Amount, which amount shall be reduced by any monies previously
paid by the FW Entities to the USRP Entities pursuant to Section 10.2(d).
(f) At any time prior to or within one year after termination of
the Transaction Documents, no FW Entity shall enter into any agreement
relating to an Acquisition Proposal with a Person other than a USRP Entity
unless such agreement provides that such Person shall, upon the execution
of such agreement, pay or have paid any Termination Amount otherwise due to
the USRP Entity under this Section 10.2.
(g) If the Transaction Documents are terminated pursuant to
Section 10.1(h) based on any encumbrance on title to a Property other than
a Permitted Exception or a FW Encumbrance which is not removed by the FW
Entities consistent with the provisions of Section 2.4, then the FW
Entities shall reimburse the USRP Entities for all of the USRP Expenses.
(h) The parties acknowledge and agree that the provisions for
payment of USRP Expenses and/or the Termination Amount are included herein
in order to induce the USRP Entities to enter into the Transaction
Documents and to reimburse the USRP Entities for incurring the costs and
expenses related to entering into the Transaction Documents and the
Transactions. Notwithstanding anything to the contrary set forth in this
Agreement or the other Transaction Documents, in the event any USRP Entity
is required to file suit to seek all or a portion of the Termination Amount
and/or the USRP Expenses, the USRP Entities shall be reimbursed by the FW
Entities for any and all expenses which the USRP Entities incur in
enforcing their rights hereunder, including without limitation, attorneys'
fees and expenses.
(i) The provisions of this Section 10 shall survive the
expiration or termination of the Transaction Documents.
11. Miscellaneous.
11.1 Amendment. The Transaction Documents may be amended by the
parties thereto by an instrument in writing signed on behalf of each of the
parties thereto at any time before or after any approval hereof by the
stockholders of the Company or the partners of FWOP, but in any event
following authorization by the Company Board; provided, however, that after
any such stockholder or partner approval, no amendment shall be made which
by law requires further approval by stockholders or partners without
obtaining such approval.
11.2 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto,
and (iii) waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall
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be valid only if set forth in a written instrument signed on behalf of the
party against whom enforcement of the extension or waiver is sought. No
delay in exercising any right or remedy shall constitute a waiver thereof,
and no waiver by any FW Entity or any USRP Entity of the breach of any
covenant of the Transaction Documents shall be construed as a waiver of any
preceding or succeeding breach of the same or any other covenant or
condition of this the Transaction Documents.
11.3 Entire Agreement. This Agreement and the other Transaction
Documents constitute the entire agreement between the parties hereto with
respect to the transactions contemplated herein and therein, and they
supersede all prior discussions, understandings or agreements between the
parties. All Exhibits and Schedules attached hereto are a part of this
Agreement and are incorporated herein by reference.
11.4 Binding On Successors and Assigns. Subject to Section 11.5, the
Transaction Documents shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
11.5 Assignment. Except as expressly permitted by the terms hereof,
none of the Transaction Documents and none of the rights, interests or
obligations hereunder or thereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties thereto;
provided, however, that the USRP Entities may assign their rights under the
Transaction Documents to any of their affiliates; provided further, that
(i) such transferee agrees in writing to be bound by the provisions of
assigned Transaction Documents, and (ii) no such assignment shall in any
way affect the obligations or liabilities of the USRP Entities under the
Transaction Documents.
11.6 Counterparts. Each Transaction Document may be executed in any
number of counterparts and it shall be sufficient that the signature of
each party appear on one or more such counterparts. All counterparts shall
collectively constitute a single agreement.
11.7 Notices. All communications under the Transaction Documents shall
be in writing, personally delivered or mailed by first-class registered or
certified mail, return receipt requested, postage prepaid or delivered by
Federal Express or another nationally recognized overnight commercial
courier against receipt, or sent by facsimile providing that a confirming
copy is simultaneously sent by Federal Express or other nationally
recognized overnight commercial courier:
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If to: any or all of
the FW Entities First Washington Realty Trust, Inc.
4350 East-West Highway, Suite 400
Bethesda, MD 20814
Attention: Stuart D. Halpert
William J. Wolfe
Facsimile: (301) 907-0130
With a copy to: Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: R. Ronald Hopkinson, Esq.
Facsimile: (212) 751-4864
if to any or all
of the USRP
Entities: U.S. Retail Partners, LLC
10135 SE Sunnyside Road, Ste. 250
Clackamas, OR 97015
Attention: James W. Gaube
Facsimile: (503) 794-1702
with a copy to: CalPERS
400 P Street, Suite 3492
Sacramento, CA 95814
Attention: Mr. Lou Jug
Facsimile: (916) 326-3965
and with an additional
copy to: McDonough, Holland & Allen
555 Capital Mall, 9th Floor
Sacramento, CA 95814
Attention: David Krotine, Esq.
Facsimile: (916) 444-8334
and with an additional
copy to: Goodwin, Procter & Hoar LLP
599 Lexington Avenue
New York, NY 10022
Attention: Edward L. Glazer, P.C.
Facsimile: (212) 355-3333
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and with an additional
copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attention: Christopher B. Barker, P.C.
Facsimile: (617) 227-1462
Such notice shall be deemed given on the date of receipt by the addressee
or the date receipt would have been effected if delivery were not refused.
Each party may designate a new address by written notice to the other in
accordance with this paragraph. The inability to deliver a notice because
of a changed address of which proper notice was not given shall be deemed a
refusal of such notice.
11.8 Attorneys' Fees. In the event of a judicial or administrative
proceeding or action by one party against the other party with respect to
the interpretation or enforcement of any of the Transaction Documents, the
prevailing party shall be entitled to recover reasonable costs and expenses
including, without limitation, reasonable attorneys' fees and expenses,
whether at the investigative, pretrial, trial or appellate level. The
prevailing party shall be determined by the court based upon an assessment
of which party's major arguments or position prevailed.
11.9 Time Periods. In the event the time for performance of any
obligation under any of the Transaction Documents expires on a day that is
not a Business Day, the time for performance shall be extended to the next
Business Day.
11.10 Further Instruments. Each party, promptly upon the request of
the other, shall execute and have acknowledged and delivered to the other
or to Title Company, as may be appropriate, any and all further instruments
reasonably requested or appropriate to evidence or give effect to the
provisions of the Transaction Documents and which are consistent with the
provisions of Transaction Documents.
11.11 Descriptive Headings. The descriptive headings of the paragraphs
of the Transaction Documents are inserted for convenience only and shall
not control or affect the meaning or construction of any provisions of the
Transaction Documents.
11.12 Time of the Essence. Time is of the essence with respect to each
of the material provisions of the Transaction Documents.
11.13 Construction of Agreement. None of the Transaction Documents
shall be construed more strictly against one party than against the other
merely by virtue of the fact that it may have been prepared primarily by
counsel for one of the parties, it being recognized that each of the FW
Entities and each of the USRP Entities have contributed substantially and
materially to the preparation of the Transaction Documents.
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<PAGE> 69
11.14 Execution by Officer of FW Entities. The Transaction Documents
are executed on behalf of the FW Entities by one or more officers of the
Company, acting in his/her capacity as such officer, and not individually.
The USRP Entities and each person dealing with the FW Entities, or claiming
any rights or interests herein or hereunder, agrees to look solely to the
property of the FW Entities for satisfaction of any obligations of the FW
Entities, and that no investor, partner, owner, advisor, manager, employee,
officer, director or agent of the FW Entities shall have any personal
liability hereunder or otherwise.
11.15 Execution by Officer of the USRP Entities. The Transaction
Documents are executed on behalf of the USRP Entities by one or more
officers of the manager(s) of the USRP Entities, acting in his/her capacity
as such officer of the applicable USRP Entity and not individually. The FW
Entities and each person dealing with the USRP Entities, or claiming any
rights or interests herein or hereunder, agrees to look solely to the
property of the USRP Entities for satisfaction of any obligations of the
USRP Entities, and that no stockholder, member, advisor, manager, employee,
officer, director or agent of the USRP Entities shall have any personal
liability hereunder or otherwise.
11.16 JURY TRIAL WAIVER. THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER IN CONTRACT OR TORT)
BROUGHT BY ANY OF THE PARTIES HERETO AGAINST THE OTHER IN RESPECT OF ANY
MATTER ARISING OUT OF OR IN CONNECTION WITH THE TRANSACTION DOCUMENTS.
11.17 Choice of Law; Consent to Jurisdiction. Any dispute which is not
subject to arbitration in accordance with Section 12 shall be subject to
litigation by either party. All disputes, claims or controversies arising
out of or relating to the Transaction Documents, or the negotiation,
validity or performance of the Transaction Documents, or the transactions
contemplated hereby, shall be governed by and construed in accordance with
the laws of the State of Maryland without regard to its rules of conflict
of laws. Each of the FW Entities and each of the USRP Entities hereby
irrevocably and unconditionally consents to submit to the sole and
exclusive jurisdiction of the courts of the State of Maryland and of the
United States District Court for the District of Maryland (the "Maryland
Courts") for any litigation arising out of or relating to the Transaction
Documents, or the negotiation, validity or performance of the Transaction
Documents, or the Transactions (and agrees not to commence any litigation
relating thereto except in such courts), waives any objection to the laying
of venue of any such litigation in the Maryland Courts and agrees not to
plead or claim in any Maryland Court that such litigation brought therein
has been brought in any inconvenient forum. Each of the parties hereto
agrees, (a) to the extent such party is not otherwise subject to service of
process in the State of Maryland, to appoint and maintain an agent in the
State of Maryland as such party's agent for acceptance of legal process,
and (b) that service of process may also be made on such party by prepaid
certified mail with a proof of mailing receipt validated by the United
States Postal Service constituting evidence of valid service. Service made
pursuant to (a) or (b) above shall have the same legal force and effect as
if served upon
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<PAGE> 70
such party personally within the State of Maryland. For purposes of
implementing the parties' agreement to appoint and maintain an agent for
service of process in the State of Maryland, each of the parties hereto do
hereby appoint The Corporation Trust Company, 300 East Lombard Street,
Suite 1400, Baltimore, Maryland 21202, as such agent.
11.18 Joint and Several Obligations. Each of the representations,
warranties, covenants, undertakings and obligations of the FW Entities
under the Transaction Documents constitute the joint and several
obligations of each FW Entity. Each of the representations, warranties,
covenants, undertakings and obligations of the USRP Entities under the
Transaction Documents constitute the joint and several obligations of each
USRP Entity.
11.19 Non-Survival of Representations, Warranties, Covenants and
Agreements. Except as otherwise provided therein, none of the
representations, warranties, covenants and agreements contained in the
Transaction Documents or in any instrument delivered pursuant to the
Transaction Documents shall survive the Closing, and thereafter there shall
be no liability on the part of the parties hereto or any of their
respective officers, directors or stockholders in respect thereof. Except
as expressly set forth in the Transaction Documents, there are no
representations or warranties of any party hereto, express or implied.
11.20 Severability. If any provision of the Transaction Documents, or
the application thereof to any Person or circumstance is held invalid or
unenforceable, the remainder of the Transaction Documents, and the
application of such provision to other Persons or circumstances, shall not
be affected thereby, and to such end, the provisions of the Transaction
Documents are agreed to be severable.
11.21 No Agreement Until Executed. Irrespective of negotiations among
the parties or the exchanging of drafts of the Transaction Documents, the
Transaction Documents shall not constitute or be deemed to evidence a
contract, agreement, arrangement or understanding among the parties hereto
unless and until the Transaction Documents are executed by the parties
hereto.
11.22 Rights of Non-Parties. Notwithstanding anything contained herein
or in the other Transaction Documents to the contrary, except for the
provisions of Section 7.3 of the Merger Agreement, nothing in the
Transaction Documents, expressed or implied, is intended to confer on any
Person other than the parties hereto or their respective heirs, successors,
executors, administrators and assigns any rights, remedies, obligations or
liabilities under or by reason of the Transaction Documents.
12. Arbitration of Disputes. Controversies or claims required to be
submitted to binding arbitration pursuant to other provisions of this Agreement
shall be resolved by expedited binding arbitration, and either the FW Entities
or the USRP Entities may commence such arbitration proceeding by giving written
notice (a "Dispute Resolution Notice") to the other party that it intends to
seek such arbitration. If either the FW Entities or the USRP Entities give a
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<PAGE> 71
Dispute Resolution Notice, then both parties agree that the applicable dispute
shall be resolved by binding arbitration in accordance with the provisions of
this Section 12. The arbitration shall be held in Wilmington, Delaware before a
single impartial arbitrator who shall have had no dealings with any party or any
of its affiliates or any of their counsel for three years prior to the
arbitration, and who shall have not less than fifteen (15) years business
experience in connection with the purchase or sale of portfolios of significant
commercial retail shopping centers. The party which gives the Dispute Resolution
Notice may initiate the arbitration proceedings simultaneously with the giving
of the Dispute Resolution Notice, and shall request that the single arbitrator
which meets the requirements set forth above be appointed within five (5)
Business Days after the Dispute Resolution Notice. Unless the parties have
previously agreed upon the single arbitrator, then the arbitrator shall be
appointed by the then President of the Wilmington, Delaware chapter of the
American Arbitration Association or, if such entity no longer exists, a
successor trade organization of comparable purpose and stature. Within ten (10)
Business Days after the appointment of the arbitrator, each party shall submit
to the arbitrator, with a copy to the other party, a detailed explanation of the
dispute, the relevant provisions of the Transaction Documents, and a proposal of
terms for the resolution of such dispute, whereupon a hearing shall be held
before the arbitrator within five (5) Business Days after such submittal. Each
of the FW Entities and the USRP Entities shall promptly provide to the other any
documents (other than internal analysis created solely in preparation for such
arbitration) within such party's possession or control that the other party may
reasonably request in connection with the preparation of such submittal. Each
party shall also submit to the other party a copy of any source materials on
which its submittal is based or which were taken into account in preparing its
submittal as soon as such materials are available, and in any event prior to its
submittal to the arbitrator. If a party fails to timely provide such submittal
other than as a result of a breach by a party of its obligation to provide
information to the other party as set forth above, then the dispute shall be
conclusively deemed to have been resolved in favor of the party which provided
its submittal. Each party shall be limited to such amount of time for the
presentation of its case at the hearing, and the hearing shall be sequenced in
such manner, as the arbitrator shall determine to be commercially reasonable. In
no event shall the hearing extend beyond two (2) Business Days. Following such
hearing, the arbitrator shall select one of such submitted proposals within two
(2) Business Days thereafter, and shall have no authority to make any decision
other than the selection of one of the submitted proposals. The proposal of the
party selected by the arbitrator shall be the arbitrator's final and binding
decision, without any modification, enforceable in any state or federal court
without any right of appeal. In no event shall the arbitrator be empowered to
grant special, punitive or exemplary damages or to award attorneys' fees or
costs to any party.
By executing this Agreement, the FW Entities and the USRP Entities have
agreed to have any dispute which pursuant to the terms of the Transaction
Documents is required to be submitted to arbitration decided by neutral
arbitration and are giving up any rights they might possess to have the dispute
litigated in a court and are giving up their judicial rights to discovery and
appeal except to the extent of information required to be provided. If a party
refuses to submit any such matter to arbitration, such party may be compelled to
arbitrate under applicable laws.
[End of Page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
FIRST WASHINGTON REALTY TRUST, INC.
By: /s/ WILLIAM J. WOLFE
------------------------------------------
Name: William Wolfe
Title: President and CEO
FIRST WASHINGTON REALTY LIMITED PARTNERSHIP
By: First Washington Realty Trust, Inc.,
its general partner
By: /s/ WILLIAM J. WOLFE
------------------------------------
Name: William Wolfe
Title: President and CEO
FW NEWARK LLC
By: First Washington Realty Limited Partnership,
its sole member
By: First Washington Realty Trust,
Inc., its general partner
By: /s/ WILLIAM J. WOLFE
------------------------
Name: William J. Wolfe
Title: President and CEO
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<PAGE> 73
L&M DEVELOPMENT COMPANY LIMITED PARTNERSHIP
By: First Washington Realty Limited Partnership,
its general partner
By: First Washington Realty Trust,
Inc., its general partner
By: /s/ WILLIAM J. WOLFE
------------------------
Name: William J. Wolfe
Title: President and CEO
PARKVILLE SHOPPING CENTER LLC
By: First Washington Realty Limited Partnership,
its sole member
By: First Washington Realty Trust,
Inc., its general partner
By: /s/ WILLIAM J. WOLFE
------------------------
Name: William J. Wolfe
Title: President and CEO
CAPITOL PLACE I INVESTMENT LIMITED PARTNERSHIP
By: First Washington Realty Limited Partnership,
its general partner
By: First Washington Realty Trust,
Inc., its general partner
By: /s/ WILLIAM J. WOLFE
------------------------
Name: William J. Wolfe
Title: President and CEO
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<PAGE> 74
ENTERPRISE ASSOCIATES
By: First Washington Realty Limited Partnership,
a general partner
By: First Washington Realty Trust,
Inc., its general partner
By: /s/ WILLIAM J. WOLFE
------------------------
Name: William J. Wolfe
Title: President and CEO
CITY LINE SHOPPING CENTER ASSOCIATES
By: First Washington Realty Limited Partnership,
its general partner
By: First Washington Realty Trust,
Inc., its general partner
By: /s/ WILLIAM J. WOLFE
------------------------
Name: William J. Wolfe
Title: President and CEO
NORTHWAY LIMITED PARTNERSHIP
By: First Washington Realty Limited Partnership,
its general partner
By: First Washington Realty Trust,
Inc., its general partner
By: /s/ WILLIAM J. WOLFE
------------------------
Name: William J. Wolfe
Title: President and CEO
SOUTHSIDE MARKETPLACE LIMITED PARTNERSHIP
By: First Washington Realty Limited Partnership,
its general partner
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<PAGE> 75
By: First Washington Realty Trust,
Inc., its general partner
By: /s/ WILLIAM J. WOLFE
------------------------
Name: William J. Wolfe
Title: President and CEO
CLOPPERS MILL VILLAGE CENTER, L.L.C.
By: First Washington Realty Limited Partnership,
its managing member
By: First Washington Realty Trust,
Inc., its general partner
By: /s/ WILLIAM J. WOLFE
------------------------
Name: William J. Wolfe
Title: President and CEO
ALLENBETH ASSOCIATES LIMITED PARTNERSHIP
By: First Washington Realty Trust,
Inc., its general partner
By: /s/ WILLIAM J. WOLFE
------------------------
Name: William J. Wolfe
Title: President and CEO
BRANCHWOOD APARTMENTS LIMITED PARTNERSHIP
A tenant in common with First Washington Realty
Limited Partnership
By: Branchwood, Inc.,
its general partner
By: /s/ WILLIAM J. WOLFE
------------------------
Name: William J. Wolfe
Title: President and CEO
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<PAGE> 76
FIRST WASHINGTON REALTY LIMITED PARTNERSHIP
A tenant in common with Branchwood Apartments
Limited Partnership
By: First Washington Realty Trust,
Inc., its general partner
By: /s/ WILLIAM J. WOLFE
------------------------
Name: William J. Wolfe
Title: President and CEO
WOODHOLME PROPERTIES LIMITED PARTNERSHIP
By: First Washington Realty Limited Partnership,
its general partner
By: First Washington Realty Trust,
Inc., its general partner
By: /s/ WILLIAM J. WOLFE
------------------------
Name: William J. Wolfe
Title: President and CEO
SP ASSOCIATES LIMITED PARTNERSHIP
By: First Washington Realty Limited Partnership,
its general partner
By: First Washington Realty Trust,
Inc., its general partner
By: /s/ WILLIAM J. WOLFE
------------------------
Name: William J. Wolfe
Title: President and CEO
JFD LIMITED PARTNERSHIP
By: JFD, Inc.,
its general partner
By:
By: /s/ WILLIAM J. WOLFE
------------------------
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<PAGE> 77
Name: William J. Wolfe
Title: President and CEO
FW-BRYANS ROAD LIMITED PARTNERSHIP
By: Bryans QRS, Inc.,
its general partner
By: /s/ WILLIAM J. WOLFE
-----------------------------------
Name: William J. Wolfe
Title: President and CEO
GREENSPRING ASSOCIATES LIMITED PARTNERSHIP
By: Valley Centre, Inc.,
its general partner
By: /s/ WILLIAM J. WOLFE
-----------------------------------
Name: William J. Wolfe
Title: President and CEO
USRP I, LLC
By: U.S. Retail Partners, LLC,
its sole member
By: /s/ JAMES W. GAUBE
-----------------------------------
Name: James W. Gaube
Title: Executive V.P.
USRP GP, LLC
By: U.S. Retail Partners, LLC,
its sole member
By: /s/ JAMES W. GAUBE
-----------------------------------
Name: James W. Gaube
Title: Executive V.P.
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<PAGE> 78
USRP LP, LLC
By: U.S. Retail Partners, LLC,
its sole member
By: /s/ JAMES W. GAUBE
-----------------------------------
Name: James W. Gaube
Title: Executive V.P.
US RETAIL PARTNERS LIMITED PARTNERSHIP
By: USRP GP, LLC, its
general partner
By: U.S. Retail Partners, LLC,
its sole member
By: /s/ JAMES W. GAUBE
-----------------------------------
Name: James W. Gaube
Title: Executive V.P.
U.S. RETAIL PARTNERS, LLC
By: /s/ JAMES W. GAUBE
-----------------------------------
Name: James W. Gaube
Title: Executive V.P.
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<PAGE> 79
<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------
Exhibit # Exhibit Title
--------- -------------
<S> <C>
A Company Subsidiaries that Directly or Indirectly Own Properties
(including tax id number)
1.1(a) List of Properties and Allocated Consideration
1.1(b) Assumed Loans
1.1(c) List of Company Subsidiaries
1.1(d) List of Diligence Reports
1.1(e) Merger Agreement Properties
2.2 Title Exceptions Which Parties Shall Use Reasonable Efforts to
Remove
3.4 Property Contracts
4.1(a) States in which Company and Company Subsidiaries are Qualified to
Do Business (indicating any jurisdictions in which the Company or
any Company Subsidiary is not currently in good standing or
qualified to do business)
4.1(b) Properties as to which No Physical Changes Have Occurred Affecting
Zoning
4.1(c) Organizational Documents of the Company and the Company
Subsidiaries
4.3(a) Options, warrants, calls, subscriptions, convertible securities or
other rights or agreements that obligate the Company to issue,
transfer, repurchase or redeem any shares of capital stock,
partnership or other interests including the Company Options
(listing name, number, per share prices, vesting schedules and
termination dates); registration rights
4.3(b) Capitalization of FWOP
4.4 Company Subsidiaries Information; Capitalization and other
Information
4.5 Equity Interests and Investments
4.6 Conflicts; Consents and Approvals
4.8 Litigation; Insurance Status
4.9 Absence of Certain Events or Changes
4.10(b) Extension of Tax Filing Requests
4.10(c) Abatement Proceedings
</TABLE>
70
<PAGE> 80
<TABLE>
<CAPTION>
Exhibit # Exhibit Title
--------- -------------
<S> <C>
4.10(e) Tax Agreements Extending Period of Assessment or Collection
4.(h)(i) Contribution Agreements
4.10(h)(ii) Contribution Agreements with Tax Protection Provisions That Will
Survive the Closing; Amendments
4.12 List of Properties and Owning Company Subsidiaries
4.13 Physical Condition of Properties; Encumbrances and Restrictions
4.14 Ongoing Construction and Renovation Projects
4.16 Condemnation Proceedings
4.17(a) Rent Rolls (including defaults, leases where tenant not in
possession and expired free or abated rent periods, allowances or
reimbursement obligations and other concessions (including with
respect to any unexercised renewal or extension term))
4.17(b) Leasing Commissions
4.20 Hazardous Materials
4.21 Rights to Purchase Properties
4.24 Personal Property
4.26 Other Agreements (includes (i) all commitments, contractual
obligations or borrowings that may result in payments by the
Company or any Company Subsidiary in excess of $25,000 and (ii)
all third party management contracts)
4.28 Material Loan Documents Relating to Assumed Loans
4.30 Insurance
4.31 Tenant Bankruptcy Proceedings
4.32(a) Employee Programs
4.32(c) Accrued or Unpaid Amounts under the Employee Programs
4.32(d) Post-employment Benefits
4.32(f) Acceleration of Employee Benefits; Other Restrictions
</TABLE>
71
<PAGE> 81
<TABLE>
<CAPTION>
Exhibit # Exhibit Title
--------- -------------
<S> <C>
4.33 Employment Agreements
4.35 Related Party Transactions (including (i) all arrangements,
agreements, contracts and understandings with any Person who is or
was at any time in the last 8 years, an officer, director or
affiliate or any relative of the foregoing involving payments in
excess of $25,000 and (ii) any Person who acquired common stock or
units in a private transaction)
4.39 Company Knowledge Persons
6.2(d) Form of Tenant Estoppel Certificate
6.2(d)(i) Excluded Major Tenants
6.2(e)(i) Reciprocal Easement Agreement Estoppel Parties
7.11(e) Form of Reciprocal Easement Agreement Estoppel Certificate
7.11(e) Entities to be Dissolved
7.2 In-Negotiation Leases; Budget for Leasing Costs
7.1(2) Entities to be Dissolved
8.3(g) Option Parcels
8.6 Custom for Payment of Transfer Taxes and Title Insurance
8.8 Items Specifically Excluded from Prorations and Adjustments
8.9 Pending Sale Properties
</TABLE>
72
<PAGE> 82
<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------
Exhibit # Exhibit Title
--------- -------------
<S> <C>
A Company Subsidiaries that Directly or Indirectly Own Properties
(including tax id number)
1.1(a) List of Properties and Allocated Consideration
1.1(b) Assumed Loans
1.1(c) List of Company Subsidiaries
1.1(d) List of Diligence Reports
1.1(e) Merger Agreement Properties
2.2 Title Exceptions Which Parties Shall Use Reasonable Efforts to
Remove
3.4 Property Contracts
4.1(a) States in which Company and Company Subsidiaries are Qualified to
Do Business (indicating any jurisdictions in which the Company or
any Company Subsidiary is not currently in good standing or
qualified to do business)
4.1(b) Properties as to which No Physical Changes Have Occurred Affecting
Zoning
4.1(c) Organizational Documents of the Company and the Company
Subsidiaries
4.3(a) Options, warrants, calls, subscriptions, convertible securities or
other rights or agreements that obligate the Company to issue,
transfer, repurchase or redeem any shares of capital stock,
partnership or other interests including the Company Options
(listing name, number, per share prices, vesting schedules and
termination dates); registration rights
4.3(b) Capitalization of FWOP
4.4 Company Subsidiaries Information; Capitalization and other
Information
4.5 Equity Interests and Investments
4.6 Conflicts; Consents and Approvals
4.8 Litigation; Insurance Status
4.9 Absence of Certain Events or Changes
4.10(b) Extension of Tax Filing Requests
4.10(c) Abatement Proceedings
4.10(e) Tax Agreements Extending Period of Assessment or Collection
4.(h)(i) Contribution Agreements
4.10(h)(ii) Contribution Agreements with Tax Protection Provisions That Will
Survive the Closing; Amendments
4.12 List of Properties and Owning Company Subsidiaries
4.13 Physical Condition of Properties; Encumbrances and Restrictions
4.14 Ongoing Construction and Renovation Projects
4.16 Condemnation Proceedings
</TABLE>
73
<PAGE> 83
<TABLE>
<S> <C>
4.17(a) Rent Rolls (including defaults, leases where tenant not in
possession and expired free or abated rent periods, allowances or
reimbursement obligations and other concessions (including with
respect to any unexercised renewal or extension term))
4.17(b) Leasing Commissions
4.20 Hazardous Materials
4.21 Rights to Purchase Properties
4.24 Personal Property
4.26 Other Agreements (includes (i) all commitments, contractual
obligations or borrowings that may result in payments by the
Company or any Company Subsidiary in excess of $25,000 and (ii)
all third party management contracts)
4.28 Material Loan Documents Relating to Assumed Loans
4.30 Insurance
4.31 Tenant Bankruptcy Proceedings
4.32(a) Employee Programs
4.32(c) Accrued or Unpaid Amounts under the Employee Programs
4.32(d) Post-employment Benefits
4.32(f) Acceleration of Employee Benefits; Other Restrictions
4.33 Employment Agreements
4.35 Related Party Transactions (including (i) all arrangements,
agreements, contracts and understandings with any Person who is or
was at any time in the last 8 years, an officer, director or
affiliate or any relative of the foregoing involving payments in
excess of $25,000 and (ii) any Person who acquired common stock or
units in a private transaction)
4.39 Company Knowledge Persons
6.2(d) Form of Tenant Estoppel Certificate
6.2(d)(i) Excluded Major Tenants
6.2(e)(i) Reciprocal Easement Agreement Estoppel Parties
7.11(e) Form of Reciprocal Easement Agreement Estoppel Certificate
7.11(e) Entities to be Dissolved
7.2 In-Negotiation Leases; Budget for Leasing Costs
7.1(2) Entities to be Dissolved
8.3(g) Option Parcels
8.6 Custom for Payment of Transfer Taxes and Title Insurance
8.8 Items Specifically Excluded from Prorations and Adjustments
8.9 Pending Sale Properties
</TABLE>
74
