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Exhibit 99.9
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is dated as of September 26,
1996, by and among MARATHON U.S. REALTIES, INC., a Delaware corporation
("MUSRI"), FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS, an Ohio
business trust ("First Union"), SOUTHWEST SHOPPING CENTERS CO. I, L.L.C., a
Delaware limited liability company ("Southwest") and FIRST AMERICAN TITLE
INSURANCE COMPANY ("First American").
RECITALS:
WHEREAS, MUSRI and First Union have entered into that certain Purchase
and Sale Agreement dated as of June 12, 1996, as amended by that certain
Amendment to Purchase and Sale Agreement dated as of August 12, 1996, as amended
from time to time (said Purchase and Sale Agreement as amended is hereinafter
referred to as the "Purchase Agreement");
WHEREAS, the consent of TIAA (as defined in the Purchase Agreement) has
not yet been obtained by MUSRI in accordance with the terms of the Purchase
Agreement;
WHEREAS, pursuant to the terms of the Purchase Agreement, the Mall
Assets (as defined in the Purchase Agreement) with respect to Pecanland Mall (as
defined in the Purchase Agreement) are to be excluded from the Property to be
transferred under the terms of the Purchase Agreement; and
WHEREAS, the parties have agreed to escrow all documents and the
allocated portion of the Purchase Price (as defined in the Purchase Agreement)
pursuant to the terms of this Agreement, pending receipt of the TIAA consent.
NOW, THEREFORE, in consideration of the terms and conditions contained
in the Purchase Agreement and this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. The fully executed documents transferring the Mall Assets with
respect to Pecanland Mall, as set forth on Schedule 1, shall be deposited in
escrow with First American. MUSRI, First Union and Southwest acknowledge that
they have approved the title commitment and pro forma attached hereto as
Schedule 3 and all other required deliveries and matters set forth in the
Purchase Agreement with respect to Pecanland Mall. MUSRI shall arrange from time
to time for an extension of the title commitment so that it shall not lapse
prior to the first to occur of the expiration or termination of this Agreement
or the Disbursement Date.
2. The net amount of the allocated portion of the Purchase Price with
respect to Pecanland Mall in the amount of $4,188,193.20, in accordance with the
terms of the Closing Statement attached hereto as Schedule 2 (the "Net Purchase
Price"), shall be deposited in escrow with First American. The Net Purchase
Price shall be invested by First American in 7-day U.S. Treasury Bills, or as
otherwise directed by MUSRI and First Union, and all interest accrued shall be
paid to MUSRI in the event that the deposits are disbursed in accordance with
Paragraph 4 of this Agreement, or shall be paid to First Union in the event that
the deposits are disbursed in accordance
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with Paragraph 6 of this Agreement. Notwithstanding the foregoing sentence, the
provisions of Section 7.4(b) of the Purchase Agreement shall continue to be
applicable to Pecanland Mall.
3. Upon receipt by First American of a consent, assumption and release
document from TIAA (the "Consent") acceptable to MUSRI and First Union, pursuant
to which (a) TIAA consents to the transfer of the Mall Assets with respect to
Pecanland Mall, (b) Southwest assumes the obligations under the terms of the
Pecanland Loan (as defined in the Purchase Agreement), (c) TIAA releases MUSRI
under the terms of the Pecanland Loan, and (d) provided that there shall be no
change in the status of title to Pecanland Mall from that reflected in the title
commitment and pro forma attached hereto as Schedule 3 that has not been
approved in advance by First Union or been caused by any action of First Union
or Southwest, MUSRI and Southwest shall deliver to First American written notice
of their approval of the Consent (the "Consent Approval"). Any fees, expenses,
title charges or other consideration required by TIAA shall be paid by MUSRI.
Notwithstanding the foregoing, the Consent shall be deemed acceptable to MUSRI
if it provides for a release of MUSRI with respect to obligations under the loan
documents evidencing the Pecanland Loan prior to the date of execution thereof
by TIAA and Southwest delivers to MUSRI on or before execution thereof by TIAA,
an indemnification agreement reasonably acceptable to MUSRI indemnifying MUSRI
against obligations under the loan documents evidencing the Pecanland Loan
subsequent to the date of execution of the Consent by TIAA.
4. Upon receipt of the Consent Approval, First American is hereby
authorized and directed to record those documents noted on Schedule 1 as
documents for recording, to deliver two (2) execution copies of the remaining
documents noted on Schedule 1 to First Union, with two (2) execution copies
thereof to MUSRI and to disburse the Net Purchase Price less the disbursements
set out on Schedule 2 to MUSRI. The date upon which such disbursement occurs is
hereinafter referred to as the "Disbursement Date."
5. MUSRI, First Union and Southwest agree that notwithstanding the date
of recording of the deed conveying Pecanland Mall, the proration date and Cutoff
Date (as defined in the Purchase Agreement) with respect to Pecanland Mall shall
be the date of this Agreement.
6. In the event that the Consent has not been obtained within six (6)
months after the date of this Agreement, subject to the extension rights set
forth below, this Agreement shall terminate without any notice to any party and
thereupon the Act of Sale with respect to Pecanland Mall shall be returned to
MUSRI, the fully executed documents transferring the Mall Assets with respect to
Pecanland Mall, as set forth on Schedule 1, shall be destroyed by First American
and the Net Purchase Price shall be returned to First Union. Notwithstanding the
foregoing, at the expiration of the foregoing six (6) month period, First Union
shall have the right, exercisable by written notice to MUSRI, to extend this
Agreement for an additional period of six (6) months, and thereafter at the
expiration of said foregoing six (6) month extension First Union shall have the
right, exercisable by written notice to MUSRI, to extend this Agreement for a
second additional period of six (6) months. In addition, the parties may, by
written notice to First American, further extend the term of this Agreement for
such additional period as the parties agree. Further notwithstanding anything to
the contrary contained in this Agreement, in the event that MUSRI at any time
receives a notice of default from TIAA, which notice relates to any alleged
default relating to the transactions
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contemplated by this Agreement, this Agreement shall terminate on or before the
earlier to occur of (a) the expiration date of the cure period set forth in any
such notice or (b) any applicable notice and cure period under the documents
evidencing the Pecanland Loan. The termination of this Agreement as provided in
this Paragraph 6 shall not affect the rights and obligations of MUSRI, First
Union and Southwest under the Purchase Agreement, including, without limitation,
under Paragraph 3.3 thereof. Notwithstanding the foregoing, First Union may by
written notice to MUSRI, given not less than thirty (30) days prior to the
effective date of the termination, terminate this Agreement, including its
management rights and obligations, and to terminate the provisions of Section
3.3 of the Purchase Agreement if First Union determines that it is not fruitful
to continue pursuing the consent of TIAA to a Consent acceptable to First Union.
7. From the date of this Agreement until the Disbursement Date,
Pecanland Mall shall be managed by First Union Management, Inc. ("FUMI") in
accordance with the terms of this Paragraph 7, and in accordance with the terms
of the documents evidencing the Pecanland Loan, and in accordance with property
management standards applicable to similar properties in similar metropolitan
areas. In addition, in the event that the Consent has not been obtained within
fourteen (14) days after the date of this Agreement, the parties shall negotiate
in good faith the terms and conditions of a management and leasing agreement,
which terms and conditions shall include the management and leasing fee
arrangement set forth in this Paragraph 7, and authority for FUMI to execute
leases upon the same approval procedures as were applicable to MUSRI under
Section 8.2 of the Purchase Agreement. All revenue collected by FUMI or
Southwest during the term of this Agreement with respect to Pecanland Mall, as
determined in accordance with generally accepted accounting principles
consistently applied (the "Revenue") from the date of this Agreement until the
Disbursement Date shall be paid at the direction of FUMI for the benefit of
Southwest. During the term of this Agreement all expenses with respect to
Pecanland Mall, including, without limitation, the debt service under the
Pecanland Loan (collectively hereinafter referred to as the "Expenses"), shall
be paid by FUMI from the Revenue. Within fifteen (15) days after the end of each
month during the term of this Agreement, FUMI shall provide written statements
to MUSRI setting forth the Revenue and Expenses for the prior month. In the
event that this Agreement is terminated as set forth in Paragraph 6 of this
Agreement, the Revenue less the Expenses, and net of the Management Fee (as
hereinafter defined) shall be paid by FUMI to MUSRI within five (5) business
days after such termination. As used herein, the term "Management Fee" shall
mean a fee paid to FUMI for FUMI's services in connection with management and
leasing of the Pecanland Mall equal to 4% per month of gross revenues and
leasing fees payable at $3.00 per square foot on new leases and $1.00 per square
foot for renewal leases, prorated on a per diem basis from the date of this
Agreement until the Disbursement Date.
8. In the event conflicting demands for disbursement of the escrow
deposits are made, or conflicting notices are served on First American, and such
conflicting demands or notices remain unresolved for fourteen (14) days after
First American has received such conflicting demands or notices and notified the
parties hereto thereof, the parties hereto expressly agree and consent that
First American may at any time thereafter notify all parties, in the manner
required under Paragraph 10 hereof, that First American intends to file an
interpleader action in the United States District Court, Northern District of
Texas (the "Court"). First American shall then promptly file the interpleader
action and deposit the escrow deposits made under Paragraphs 1 and 2 with the
Court.
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MUSRI and First Union jointly and severally agreed to pay the costs, including
reasonable attorneys' fees, that First American may expend or incur in such
interpleader suit or any other litigation in connection with this Agreement, the
among of such costs to be fixed and judgment therefor to be rendered by the
Court in such suit. Upon the filing of an interpleader action and deposit of all
deposits made under the terms of this Agreement with the Court, First American
shall be fully released and discharged from all obligations imposed on it under
this Agreement.
9. The duties and obligations of First American hereunder shall be
determined solely by the express provisions of this Agreement. First American
shall be entitled to rely and shall be protected in acting in reliance upon any
instructions or directions furnished to it in writing by MUSRI, Southwest or
First Union or pursuant to any provisions of this Agreement. First American may
resign by giving not less than thirty (30) days' written notice to MUSRI,
Southwest and First Union of its intention to do so; provided, however, that
First American shall continue to serve until MUSRI, Southwest and First Union
shall have appointed a successor escrow agent. Similarly, First American may be
removed and replaced following the giving of not less than five (5) days prior
written notice to First American by MUSRI, Southwest and First Union.
10. Any notice, request, demand, instruction or other document to be
given or served hereunder shall be in writing and shall be deemed to be
delivered (a) upon personal delivery to and receipt by the person to whom
delivered (including without limitation delivery to and/or receipt by telecopy),
or (b) four (4) days after deposit in United States registered or certified
mail, return receipt requested, or (c) one (1) business day after deposit with a
nationally recognized overnight express courier for next day delivery, in each
case, addressed to the parties at their respective addresses or telecopy numbers
(as applicable) set forth below:
If to MUSRI:
Marathon Realty Company Limited
200 Wellington Street West
Suite 400
Toronto, Ontario M5V 3C7
Canada
Attention: John E. Beales
Telecopy: (416)348-1902
With a copy to:
Neal, Gerber & Eisenberg
Two N. LaSalle Street
21st Floor
Chicago, Illinois 60602
Attention: Reuben C. Warshawsky
Telecopy: (312)269-1747
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If to First Union or Southwest:
First Union Real Estate and Mortgage Investments
55 Public Square, Suite 1900
Cleveland, Ohio 44113
Attention: Paul F. Levin
Telecopy: (216)781-7364
With a copy to:
Thompson Hine & Flory P.L.L.
3900 Society Center
127 Public Square
Cleveland, Ohio 44114-1216
Attention: Linda A. Striefsky
Telecopy: (216)566-5800
If to First American:
First American Title Insurance Company
3030 LBJ Freeway
Suite 150
Dallas, Texas 75234
Attention: James B. Shackelford
Telecopy: (972)241-7112
11. Whenever any period of time is specified herein for the taking of
any action or the giving of any notice, the period shall be computed by
excluding the day upon which the period is specified to commence and including
the last day of the period specified. If the last day of the period falls on a
Saturday, Sunday or federal holiday, the period shall be extended to include the
first subsequent day thereafter that is not a Saturday, Sunday or federal
holiday.
12. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
13. None of the parties hereto may make any assignment of this
Agreement or any interest therein without the prior written consent of the other
parties. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and/or assigns.
14. Except as specifically set forth or referred to herein, nothing
herein expressed or implied is intended or shall be construed to confer upon or
give to any third party any rights or remedies under or by reason of this
Agreement. This Agreement may not be amended or terminated orally but only by an
instrument in writing duly executed by the parties hereto.
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15. First American shall not be responsible for any loss of principal
or interest due to changes in the market for any securities purchase pursuant to
the terms hereof; for any penalties or loss caused by purchase or sales delays
or the making or redeeming of investments; or for any loss or impairment of
funds while the funds are in the course of collection or while those funds are
on deposit in a financial institution, if such loss or impairment results from
failure, insolvency or suspension of a financial institution.
16. Notwithstanding anything contained herein to the contrary, this
Agreement is made and executed on behalf of First Union, a business trust
organized under the laws of the State of Ohio, by its officer(s) on behalf of
the trustees thereof, and none of the trustees or any additional or successor
trustee hereafter appointed, or any beneficiary, officer, employee or agent of
First Union shall have any liability in his personal or individual capacity, but
instead, all parties shall look solely to the property and assets of First Union
for satisfaction of any losses, claims or damages of any nature in connection
with this Agreement.
17. This Agreement has been made pursuant to and shall be governed by
the laws of the State of Texas.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered on the date first above written.
MARATHON U.S. REALTIES, INC.,
a Delaware corporation
By:/s/ John E. Beales
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John E. Beales
Vice-President
FIRST UNION REAL ESTATE EQUITY AND
MORTGAGE INVESTMENTS,
By:/s/ James C. Mastandrea
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Name:
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Title: Chairman, President
Chief Executive Officer and
Chief Financial Officer
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SOUTHWEST SHOPPING CENTERS CO. I, L.L.C.,
a Delaware limited liability company
By: FIRST UNION SOUTHWEST L.L.C.,
a Delaware limited liability company,
its manager
By: FIRST SOUTHWEST I, INC.,
a Delaware corporation,
its manager
By:/s/ James C. Mastandrea
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James C. Mastandrea
President and Chief Executive
Officer
FIRST AMERICAN TITLE INSURANCE COMPANY
By:
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Name:
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Title:
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