EXHIBIT 10.12
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXX & X'XXXX, EDUCATION SERVICES, INC.,
a Tennessee corporation
as the Company
XXXXX & O'HARA, INC.,
a Tennessee corporation
STUDENT MANAGEMENT ASSOCIATES, LLC
a Tennessee limited liability company,
Collectively as the Owners,
XXXXXX X. XXXXXX, XXXXX X. XXXXXXXX, XXXXXXX X. XXXXX, XXXXXXX X. XXXXXX and
XXXXXXX X. XXXXXX
Collectively as the Designees
AND
XXXXX & X'XXXX EDUCATION SERVICES, INC.,
a Delaware corporation,
as the Acquirer
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of the
20th day of September, 2004 by and among XXXXX & O'HARA EDUCATION SERVICES, LLC,
a Tennessee limited liability company ("Company"), XXXXX & X'XXXX, INC., a
Tennessee corporation ("A&O") STUDENT MANAGEMENT ASSOCIATES, LLC, a Tennessee
limited liability company (together with A&O are sometimes hereinafter referred
to individually as a "Owner" and collectively referred to as the "Owners");
XXXXXX X. XXXXXX, XXXXX X. XXXXXXXX, XXXXXXX X. XXXXX, XXXXXXX X. XXXXXX and
XXXXXXX X. XXXXXX (sometimes hereinafter individually referred to as a
"Designee" and collectively referred to as the "Designees"); and XXXXX & O'HARA
EDUCATION SERVICES, INC., a Delaware corporation (the "Acquirer"). EDUCATION
REALTY OPERATING PARTNERSHIP, LP, a Delaware limited partnership (the
"Partnership"), joins in this Agreement for the purpose of agreeing to the
covenants and obligations set forth in Section 3.2.
RECITALS
A. The Company is engaged in the business of managing and developing
student housing properties throughout the United States.
B. The Owners are, collectively, the record and beneficial owners of all
of the outstanding membership interests in the Company (such membership
interests are referred to herein collectively as the "Company Interests").
C. In lieu of being paid the merger consideration payable to it in
connection with the merger contemplated by this Agreement, Student Management
Associates, LLC has directed that the consideration payable to it by virtue of
the transactions contemplated by this Agreement be paid to A&O and the
Designees.
D. The managers and members of the Company and the Board of Directors and
sole shareholder of Acquirer deem it to be in the best interests of the Company
and Acquirer and the Company's members and Acquirer's sole shareholder for the
Company to merge into Acquirer.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 Merger. In accordance with the terms and subject to the conditions of
this Agreement, and pursuant to the Tennessee Limited Liability Company Act and
the Delaware General Corporation Law, at the Effective Time (as defined in
Section 1.2 below), the Company shall be merged with and into the Acquirer (the
"Merger"). The Acquirer is herein referred to as the "Surviving Entity" whenever
reference is made to it at or after the Effective Time. At the Effective Time,
all of the Company Interests shall be converted into the right to receive the
consideration set forth in Section 1.4 hereof, and the separate existence of the
Company shall cease.
1.2 Effective Time of Merger. At or before the Closing Date (as defined in
Section 6.1 below), the Company and Acquirer shall execute the Certificate of
Merger in substantially the form attached hereto as Exhibit A, which shall be
filed with the Secretary of State of the State of Tennessee and the Secretary of
State of the State of Delaware on the Closing Date or as soon thereafter as
practicable. The Merger shall become effective at the time the Certificate of
Merger is duly filed with the Secretary of State of the State of Tennessee and
the Secretary of State of the State of Delaware (the "Effective Time").
1.3 Effect of Merger. At the Effective Time, the separate existence of the
Company shall cease and the Surviving Entity shall possess all of the rights,
privileges, immunities, powers and franchises, as well of a public nature as of
a private nature, of the Company; and all property, real, personal and mixed,
and all debts due on whatever account, and all other choses in action, and all
and every other interest of or belonging to or due to each of the Company shall
be taken and deemed to be transferred to and vested in the Surviving Entity
without further act or deed, and the title to any real estate or any interest
therein vested in the Company shall not revert or be in any way impaired by
reason of this Merger; and the Surviving Entity shall thenceforth be responsible
and liable for all the liabilities, obligations and penalties of the Company;
and any claim existing or action or proceeding, civil or criminal, pending by or
against the Company may be prosecuted as if such Merger had not taken place, or
the Surviving Entity may be substituted in its place, and any judgment rendered
against the Company may thenceforth be enforced against the Surviving Entity;
and neither the rights of creditors nor any liens upon the property of the
Company shall be impaired by such Merger.
1.4 Conversion of Membership Interests of the Company. At the Effective
Time, the Company Interests shall be converted into a total number of units
("Units") of limited partnership interest in the Partnership equal to (a) the
sum of (x) $12,400,000 (the "Base Purchase Price"), plus (y) an amount (which
shall not be less than zero) equal to the difference, determined on a date not
earlier than the filing of Pre-effective Amendment No. 2 to the Registration
Statement of the REIT on Form S-11 filed with the Securities and Exchange
Commission in connection with the public offering (the "Public Offering") of
shares of common stock (the "Common Stock") of Education Realty Trust, Inc., a
Maryland corporation (the "REIT") and not later than the completion of the
Public Offering, between (i) the valuation of the Company as reasonably
determined by the joint book-running managing underwriters (the "Book Runners")
of the Public Offering using valuation methods consistent with those utilized in
determining the Base Purchase Price at the time of this Agreement, and (ii) the
Base Purchase Price (the "Additional Consideration"), divided by (b) the per
share price at which the Common Stock is offered to the public in the Public
Offering, before any discounts or fees paid to the underwriters (the "Merger
Consideration"). The Book Runners shall provide written notice to the Owners
upon determination of the amount of the Additional Consideration. The Merger
Consideration shall be payable to the Owners or their Designees in accordance
with the percentages set forth on Exhibit B attached hereto. Student Management
Associates, LLC acknowledges that it will receive none of the Units and that all
Units issuable to it by virtue of the transactions contemplated by this
Agreement will be paid to its members. No fractional Units will be issued as
Merger Consideration hereunder, but in lieu of issuing fractional Units, the
value thereof shall be paid in cash. Each Owner and Designee acknowledges that
any certificates evidencing the Units will bear appropriate legends indicating
(a) that the Units have not been registered under the Securities Act of 1933, as
amended ("Securities Act"), and (b) that the Partnership's Agreement of Limited
Partnership (the "Partnership Agreement") will restrict the transfer of the
Units. Upon receipt of the Units, the Owner or its Designee (provided the
Designee is an accredited investor) shall become a limited partner of the
Acquirer and shall execute the Partnership Agreement. At and after the Effective
Time, all of the issued and outstanding shares in the Acquirer shall remain
issued and outstanding. From and after the Effective Time, each holder of any
Company Interests to be converted as above provided shall surrender any
certificates
representing its Company Interest to the Surviving Entity. Irrespective of
whether so surrendered, however, each such Company Interest shall be deemed to
be canceled and shall be of no further force or effect.
1.5 Redemption Rights for Units. Each Unit shall be redeemable at the
option of the holder, in accordance with, but subject to the restrictions
contained in, the Partnership Agreement; provided, however, that such redemption
option may not be exercised prior to the first anniversary of the Closing Date.
1.6 Tax Consequences to Owners. Notwithstanding anything to the contrary
contained in this Agreement, including without limitation the use of words and
phrases such as "sell and" "sale," and "pay," the parties agree that it is their
intent that the transactions contemplated hereby, shall be treated for federal
income tax purposes pursuant to Section 721 of the Internal Revenue Code of
1986, as amended (the "Code"), as the contribution of the Company Interests by
the Owners to the Partnership, in exchange for Units.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations by Acquirer. The Acquirer hereby represents and
warrants to each Owner that:
(a) Organization and Power. The Acquirer is duly organized, validly
existing, and in good standing under the laws of the State of Delaware, and has
full right, power, and authority to enter into this Agreement and to perform all
of its obligations under this Agreement. The execution and delivery of this
Agreement and the performance by the Acquirer of its obligations hereunder have
been duly authorized by all requisite action of the Acquirer and require no
further action or approval of the Acquirer's members or of any other individuals
or entities in order to constitute this Agreement as a binding and enforceable
obligation of the Acquirer.
(b) Noncontravention. Neither the entry into nor the performance of,
or compliance with, this Agreement by the Acquirer has resulted, or will result,
in any violation of, or default under, or result in the acceleration of, any
obligation under any existing certificate of formation, limited liability
company agreement, mortgage, indenture, lien agreement, note, contract, permit,
judgment, decree, order, restrictive covenant, statute, rule, or regulation
applicable to the Acquirer.
(c) Litigation. There is no action, suit, or proceeding, pending or
known to be threatened, against or affecting the Acquirer in any court or before
any arbitrator or before any federal, state, municipal, or other governmental
department, commission, board, bureau, agency or instrumentality which (i) in
any manner raises any question affecting the validity or enforceability of this
Agreement or any other agreement or instrument to which the Acquirer is a party
or by which it is bound and that is to be used in connection with or is
contemplated by this Agreement, (ii) could have material and adverse effect on
the business, financial position, or results of operations (a "Material Adverse
Effect") of the Acquirer, (iii) could materially and
adversely affect the ability of the Acquirer to perform its obligations
hereunder, or under any document to be delivered pursuant hereto.
(d) Units Validly Issued. The Units, when issued, will have been
duly and validly authorized and issued, free of any preemptive or similar
rights, and will be fully paid and nonassessable, without any obligation to
restore capital except as required by the Delaware Revised Uniform Limited
Partnership Act (the "Limited Partnership Act"). Each Owner (or its designee)
shall be admitted as a limited partner of the Acquirer as of the Closing Date
and shall be entitled to all of the rights and protections of a limited partner
under the Limited Partnership Act and the provisions of the Partnership
Agreement, with the same rights, preferences, and privileges as all other
limited partners on a pari passu basis. The Common Stock for which the Units may
be redeemed have been validly authorized and will be duly and validly issued,
fully paid and nonassessable, free of preemptive or similar rights.
(e) Consents. Each consent, approval, authorization, order, license,
certificate, permit, registration, designation, or filing by or with any
governmental agency or body necessary for the execution, delivery, and
performance of this Agreement or the transactions contemplated hereby by the
Acquirer has been obtained or will be obtained on or before the Closing Date.
2.2 Representations by Owners. Each Owner hereby jointly and severally
represents and warrants to the Acquirer:
(a) Organization and Power. The Company is duly formed, validly
existing, and in good standing under the laws of the State of Tennessee. The
Company and each Owner has full right, power, and authority to enter into this
Agreement and to assume and perform all of their respective obligations under
this Agreement. The execution and delivery of this Agreement and the performance
by the Company and each Owner of their respective obligations hereunder have
been duly authorized by all requisite action of the Company and each Owner and
require no further action or approval of the Company's or any Owner's members,
managers, officers, directors or shareholders or of any other individuals or
entities in order to constitute this Agreement as a binding and enforceable
obligation of the Company and each Owner. The Company is qualified to do
business in each jurisdiction in which the nature of its business or the
character of its property makes such qualification necessary, except where
failure to be so qualified would not have a Material Adverse Effect on the
Company. The Company has provided to the Acquirer true and correct copies of the
Company's operating agreement and other organizational documents, with all
amendments as in effect on the date of this Agreement (collectively, the
"Organizational Documents").
(b) Noncontravention. Neither the entry into nor the performance of,
or compliance with, this Agreement by the Company or any of the Owners has
resulted, or will result, in any violation of, or default under, or result in
the acceleration of, any obligation under any of the Organizational Documents,
regulations, mortgage indenture, lien agreement, note, contract, permit,
judgment, decree, order, restrictive covenant, statute, rule, or regulation
applicable to, the Company or any Owner.
(c) Litigation. There is no action, suit, or proceeding, pending or
known to be threatened, against or affecting the Company or any of the Owners in
any court or before any
arbitrator or before any federal, state, municipal, or other governmental
department, commission, board, bureau, agency or instrumentality which (i) in
any manner raises any question affecting the validity or enforceability of this
Agreement, (ii) could have a Material Adverse Effect with respect to the Company
or any Owner, (iii) could materially and adversely affect the ability of the
Company or any Owner to perform its obligations hereunder or under any document
to be delivered pursuant hereto, or (iv) could create a mortgage, lien, pledge,
security interest, assessment, charge, claim, restriction, pledge, or
encumbrance (a "Lien") on the Company Interests, the Company, the Company's
property, any part thereof, or any interest therein.
(d) Solvency. The Company and each Owner has been and will be
solvent at all times prior to and immediately following the Merger.
(e) Ownership of Company Interests. The Company Interests listed on
Section 2.2(e) of the Disclosure Schedule attached hereto as Exhibit C (the
"Disclosure Schedule") constitute all of the issued and outstanding equity
interests in the Company, and all such interests are owned by the Owners.
(f) No Consents. Except for the filing of the Certificate of Merger
in accordance with Section 1.2 hereof, and except as shall have been obtained on
or before the Closing Date, and, for informational purposes, as set forth in
Section 2.2(f) of the Disclosure Schedule, no consent, approval, authorization,
order, license, certificate, permit, registration, designation, or filing by or
with any third party or governmental agency or body is necessary for the
execution, delivery, and performance of this Agreement or the transactions
contemplated hereby by the Company or any Owner.
(g) No Brokers. Neither the Company nor any of the Owners has
engaged the services of any real estate agent, broker, finder or any other
person or entity for any brokerage or finder's fee, commission or other amount
with respect to the transactions described herein.
(h) Title to the Property. The Company has good and marketable title
to, or a valid leasehold interest in, all of its assets (all of its assets
collectively being the "Property"), free and clear of all Liens of every kind,
nature and description whatsoever except: (i) Liens disclosed on Schedule
2.2(h); (ii) Liens for taxes not yet due and payable or being contested in good
faith; or (iii) Liens that do not materially detract from the value of its
properties as now used, or materially interfere with any present or intended use
of such properties.
(i) Securities Law Matters.
(i) Each Owner is knowledgeable, sophisticated and experienced
in business and financial matters; each Owner has previously invested in
securities similar to the Units and fully understands the limitations on
transfer imposed by the federal securities laws and as described in this
Agreement. Each Owner is able to bear the economic risk of holding the Units for
an indefinite period and is able to afford the complete loss of his, her or its
investment in the Units; each Owner has received and reviewed all information
and documents about or pertaining to the REIT, the Partnership, Acquirer, the
business and prospects of the REIT, the Partnership and the Acquirer and the
issuance of the Units as each Owner deems necessary or desirable and has been
given the opportunity to obtain any additional information or documents and to
ask
questions and receive answers about such information and documents, the REIT,
the Partnership, the Acquirer, the business and prospects of the REIT, the
Partnership and the Acquirer and the Units which such Owner deems necessary or
desirable to evaluate the merits and risks related to its investment in the
Units and to conduct its own independent valuation of the Units; and each Owner
understands and has taken cognizance of all risk factors related to the purchase
of the Units. Each Owner is a sophisticated real estate investor. In acquiring
the Units and engaging in this transaction, no Owner is relying upon any
representations made to it by the Partnership or Acquirer, or any of the
officers, employees, or agents of the Partnership or Acquirer not contained
herein. Each Owner is relying upon its own independent analysis and assessment
(including with respect to taxes), and the advice of such Owner's advisors
(including tax advisors), and not upon that of the Acquirer or any of the
Acquirer's advisors or affiliates, for purposes of evaluating, entering into,
and consummating the transactions contemplated by this Agreement. Each Owner
represents and warrants that it has reviewed and approved the form of the
Partnership Agreement attached hereto as Exhibit D.
(ii) Each Owner understands that neither the Units nor the
Common Stock issuable upon redemption of the Units have been registered under
the Securities Act or any state securities acts and are instead being offered
and sold in reliance on an exemption from such registration requirements. The
Units issuable to each Owner (or its designee) are being acquired solely for its
own account, for investment, and are not being acquired with a view to, or for
resale in connection with, any distribution, subdivision, or fractionalization
thereof, in violation of such laws, and the Owner has no present intention to
enter into any contract, undertaking, agreement, or arrangement with respect to
any such resale; provided, however, that, at or following Closing, the Owner may
distribute the Units to those of its members or successors that (A) have
represented and warranted to the Acquirer in writing that, as of the time of
such distribution, such member is an accredited investor as that term is defined
in Rule 501 of Regulation D under the Securities Act, and (B) have executed the
Partnership Agreement as limited partners. Each Owner understands that any
certificates evidencing the Units will contain appropriate legends reflecting
the requirement that the Units not be resold without registration under such
laws or the availability of an exemption from such registration and that the
Partnership Agreement will restrict transfer of the Units.
(iii) Each Owner is an "accredited investor" as that term is
defined in Rule 501 of Regulation D under the Securities Act of 1933, as
amended. Each Owner has previously provided the Acquirer with a duly executed
Accredited Investor Questionnaire. No event or circumstance has occurred since
delivery of such Questionnaire to make the statements contained therein false or
misleading.
(j) Liabilities; Indebtedness. The Company has no indebtedness or
liabilities whatsoever, contingent, accrued or otherwise, except for trade
payables and obligations for other customary and ordinary expenses incurred in
the ordinary course of business that are not more than thirty (30) days
delinquent and that have been disclosed to the Acquirer.
(k) Insurance. The Company currently has in place public liability,
casualty and other insurance coverage with reputable insurance companies in
customary amounts similar to comparable management and development companies,
and in all cases in compliance with the existing financing arrangements. To the
Owners' knowledge, each of such policies is in full force
and effect, and all premiums due and payable thereunder have been fully paid
when due. No written notice of cancellation, default or non-renewal has been
received or to the Owners' knowledge threatened with respect thereto.
(l) Employees and Contracts. Except as set forth in Section 2.2(l)
of the Disclosure Schedule, (i) there are no contracts with employees of the
Company as of the date hereof, nor (ii) contracts which are not cancelable upon
thirty (30) days notice or less or which are for a contract amount greater than
$100,000 per annum. All of the Company's material contracts (the "Contracts")
have been made available to the Acquirer and the same are in full force and
effect and have not been modified or amended except in the ordinary course of
the Company's business. To the Owners' knowledge, no event of default exists
(which remains uncured) under any of the Contracts which would have a Material
Adverse Effect with respect to the Company. To the Owners' knowledge, there are
no union contracts or similar agreements between the Company and its employees.
Except as set forth in Section 2.2(l) of the Disclosure Schedule, no employee is
entitled to receive annual compensation (including bonus) from the Company in
excess of $100,000.
(m) Taxes. To the Owners' knowledge, the transactions contemplated
hereby will not result in any income tax liability to the Company, the Acquirer
or the Partnership, and no tax Lien or other Lien exists or will exist upon
consummation of the transactions contemplated hereby with respect to the
Property, except such tax Liens for which the tax is not due and which has been
properly reserved for payment by the Company or tax Liens or other charges which
individually or in the aggregate would not have a Material Adverse Effect with
respect to the Company. For federal income tax purposes, the Company is, and at
all times during its existence has been, a partnership or limited liability
company taxable as a partnership (rather than an association or a publicly
traded partnership taxable as a corporation). The Company has timely and
properly filed all tax returns required to be filed by it and has timely paid
all taxes required to be paid by it. The Company has not requested any extension
of time or agreed to any extension of the applicable statue of limitations
within which to file any pending tax returns. None of the tax returns filed by
the Company is the subject of a pending or ongoing audit, and no federal, state,
local or foreign taxing authority has asserted any tax deficiency or other
assessment against any Property or the Company.
(n) Environmental Conditions. The Company has not received any
written notice of the presence or release of any substance that is regulated
under any Environmental Laws as a pollutant, contaminant or toxic, radioactive
or otherwise hazardous substance, including petroleum, its derivatives or
by-products and other hydrocarbons (collectively and individually, "Hazardous
Substances") that would cause any of the Company to be in violation of any
applicable Environmental Laws and that remains uncured, nor has the Company
received written notice that it is not in compliance with applicable
Environmental Laws. There are no Hazardous Substances located at, on or under
any Property and no Hazardous Substances have leaked, escaped or been
discharged, emitted or otherwise released from any Property onto any adjoining
properties. For the purposes of this Section, "Environmental Laws" means any and
all federal, state and local statutes, laws, regulations and rules in effect on
the date hereof relating to the protection of the environment or to the use,
transportation and disposal of Hazardous Substances.
(o) Compliance With Laws. The Company possesses and/or on or prior
to Closing will possess such certificates, authorities or permits issued by the
appropriate state or federal agencies or bodies necessary to conduct the
business to be conducted by it, and the Company has not received any written
notice of proceedings that have been or may be commenced relating to the
revocation or modification or any such certificate, authority or permit which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling,
or finding, would have a Material Adverse Effect with respect to the Company.
The Company has not received any written or other notice of any violation of any
applicable zoning, building or safety code, rule, regulation or ordinance, or of
any employment, environmental, wetlands or other regulatory law, order,
regulation or other requirement, including without limitation the Americans with
Disabilities Act, or any restrictive covenants or other easements, encumbrances
or agreements, relating to the Company or the Property, which remains uncured
and would have a Material Adverse Effect with respect to the Company.
2.3 Representations and Warranties of the Designees. Each of the Designees
jointly and severally makes the representations and warranties contained in
Section 2.2(i) that are made by each of the Owners as if all references to
"Owner" or "Owners" is Section 2.2(i) referred to "Designee" and "Designees."
ARTICLE III
COVENANTS AND INDEMNITIES
3.1 Covenants Pending Closing.
(a) From the date hereof through the Closing, each Owner shall, to
the extent within his or its control, cause the Company to conduct its business
in the ordinary course of business, consistent with past practice, and shall, to
the extent within his or its control, not permit the Company, without the prior
written consent of Acquirer, to:
(i) Enter into any material transaction not in the ordinary
course of business:
(ii) Sell, transfer or dispose of, or cause the sale, transfer
or disposition of (or agree to do any of the foregoing) any assets of the
Company, except in the ordinary course of business consistent with past
practice;
(iii) Mortgage, pledge or encumber (or permit to become
encumbered) any assets of the Company, except (A) liens for taxes not due, (B)
purchase money security interests in the ordinary course of such entity's
business, and (C) mechanics' liens being disputed by the Company in good faith
and by appropriate proceeding in the ordinary course of the Company's business
(provided such mechanics liens are released prior to or on the Closing Date at
no cost to the Acquirer);
(iv) Amend, modify or terminate any Contract, except in the
ordinary course of the Company's business consistent with past practice;
(v) Cause or permit the Company to enter into any new material
Contract or terminate any existing Contract except in the ordinary course of the
Company's business consistent with past practice;
(vi) Cause or take any action that would render any of the
representations or warranties regarding the Company as set forth herein untrue
in any material respect;
(vii) Terminate or amend any existing insurance policies
affecting the Property that results in a material reduction in insurance
coverage for the Company;
(viii) Knowingly cause or permit the Company to violate or
fail to use commercially reasonable efforts to cure any violation of any
applicable laws;
(ix) Materially alter the manner of keeping the Company's
books, accounts or records or the accounting methods therein reflected; or
(x) Make any distribution to its members.
(c) From the date hereof until the Closing Date, the Company will
afford to the officers and authorized representatives of the Acquirer access to
all of the Company's books and records and will furnish the Acquirer with such
additional financial and operating data and other information as to the business
and properties of the Company as the Acquirer may from time to time reasonably
request.
(d) Notwithstanding anything to the contrary contained herein, any
failure by an Owner to comply with or fulfill the covenants contained in this
Section 3.1 shall not constitute an indemnifiable claim under Section 3.4 of
this Agreement, but shall constitute an unfulfilled condition precedent pursuant
to Section 5.1, provided such failure is identified to or otherwise becomes
known to the Acquirer prior to Closing.
3.2 Tax Covenants.
(a) From the date hereof and subsequent to the Closing, each Owner
and the Acquirer shall provide each other with such cooperation and information
relating to the Company as the parties reasonably may request in (i) filing any
tax return, amended tax return or claim for tax refund, (ii) determining any
liability for taxes or a right to a tax refund, or (iii) conducting or defending
any proceeding in respect of taxes. The Acquirer shall promptly notify the
Owners in writing upon receipt by the Acquirer or any of its affiliates of
notice of (i) any pending or threatened tax audits or assessments with respect
to the Company and (ii) any pending or threatened federal, state, local or
foreign tax audits or assessments of the Acquirer or any of its affiliates, in
each case which may affect the liabilities for taxes of any Owner with respect
to any tax period ending on or before the Closing Date. Each Owner shall
promptly notify the Acquirer in writing upon receipt by such Owner of notice of
any pending or threatened federal, state, local or foreign tax audits or
assessments relating to the income, properties or operations of the Company.
Each of the Acquirer and each Owner may participate at its own expense in the
prosecution of any claim or audit with respect to taxes attributable to any
taxable period ending on or before the Closing Date, provided, that such Owners
shall have the right to
control the conduct of any such audit or proceeding or portion thereof for which
the Owners (or its owners) has acknowledged liability (except as a partner of
the Partnership) for the payment of any additional tax liability, and the
Acquirer shall have the right to control any other audits and proceedings.
Notwithstanding the foregoing, neither the Acquirer nor any Owner may settle or
otherwise resolve any such claim, suit or proceeding which could have an adverse
tax effect on the other party or its owners without the consent of the other
party, such consent not to be unreasonably withheld. Each Owner and the Acquirer
shall retain all tax returns, schedules and work papers, and all material
records and other documents relating thereto, until the expiration of the
statute of limitations (and, to the extent notified by any party, any extensions
thereof) of the taxable years to which such tax returns and other documents
relate to and until the final determination of any tax in respect of such years.
(b) With respect to the Property, the Acquirer and each Owner agrees
that the Acquirer shall use the "traditional method with "curative allocations",
as described in Regulations Section 1.704-3(c), to make allocations of taxable
income and loss among the partners of the Partnership with respect to the
Property.
3.3 Financial Records.
(a) Each Owner acknowledges that Acquirer may be required to comply
with certain acquisition audit or disclosure requirements pursuant to applicable
regulations of the Securities Exchange Commission ("SEC") in connection with the
Public Offering. As such, Acquirer may be required to file with the SEC audited
financial statements of the Company and/or pro forma financial statements giving
effect to the acquisition of the Company. Accordingly, each Owner agrees to
cooperate and make available to Acquirer such records as may be necessary to
permit Acquirer to comply with SEC requirements.
(b) At the Closing, each Owner agrees to cause the Company to
deliver to Acquirer the most recent audited financial statements of the Company,
if any, and any more current unaudited balance sheets and income statements for
the Company for the current fiscal year through the Closing Date and for the
comparable portion of the prior fiscal year.
(c) Subsequent to the Closing, each Owner agrees to cooperate with
Acquirer's independent auditors to provide access to financial records and
accounting personnel that may be required to permit the preparation and audit of
financial statements of the Company for the required periods pursuant to
applicable SEC regulations. This provision shall survive the Closing.
3.4 Owners' Indemnity. The Owners hereby jointly and severally agree to
indemnify and hold each of the Acquirer, the REIT, and each of their respective
employees, directors, members, partners, affiliates, officers and agents (each
of which is an "Indemnified Acquirer Party") harmless of and from all
liabilities, losses, damages, costs, and expenses (including reasonable
attorneys' fees) (collectively, "Losses") which the Indemnified Acquirer Party
may suffer or incur by reason of (a) any breach of any Owner's representations
or warranties contained in Section 2.2 of this Agreement and (b) any act or
cause of action occurring or accruing prior to the Closing Date and arising from
the ownership of the Company prior to the Closing Date, including, without
limitation, actions or claims relating to damage to property or injury to or
death of any person occurring or arising during the period prior to the Closing
Date, or any claims for any debts or obligations of the Company occurring on or
about or with respect to the Company's operations at any time prior to the
Closing Date.
3.5 Acquirer's Indemnity. The Acquirer agrees to indemnify and hold each
Owner, and each Owner's employees, directors, members, partners, affiliates,
officers and agents (each of which is an "Indemnified Owner Party") harmless of
and from all Losses which the Indemnified Owner Party may suffer or incur by
reason of (a) any breach of the Acquirer's representations or warranties
contained in Section 2.1 of this Agreement and (b) any act or cause of action
occurring or accruing on or after the Closing Date and arising from the
ownership of the Company on or after the Closing Date, including, without
limitation, actions or claims relating to damage to property or injury to or
death of any person occurring or arising during the period on or after the
Closing Date, or any claims for any debts or obligations occurring on or about
or in connection with the Company or with respect to the Company's operations at
any time on or after the Closing Date.
ARTICLE IV
RELEASES AND WAIVERS
Each of the releases and waivers enumerated in this Article 4 shall become
effective only upon the Closing.
4.1 General Release of Acquirer.
As of the Closing, each Owner irrevocably waives, releases and forever
discharges the Acquirer and the Acquirer's affiliates (including the Company),
member, agents, attorneys, successors and assigns of and from, any and all
charges, complaints, claims, liabilities, damages, actions, causes of action,
losses and costs of any nature whatsoever (collectively, "Owner Claims"), known
or unknown, suspected or unsuspected, arising out of or relating to any of the
Organizational Documents, or any other matter which exists at the Closing,
except for Owner Claims arising from the breach of any representation, warranty,
covenant or obligation by the Acquirer under this Agreement or any agreement
contemplated hereby.
4.2 General Release of Owners.
As of the Closing, the Acquirer irrevocably waives, releases and forever
discharges each Owner and each Owner's agents, attorneys, successors and assigns
of and from, any and all charges, complaints, claims, liabilities, damages,
actions, causes of action, losses and costs of any nature whatsoever
(collectively, "Acquirer Claims"), known or unknown, suspected or unsuspected,
arising out of or relating to any of the Organizational Documents, or any other
matter which exists at the Closing, except for Acquirer Claims arising from the
breach of any representation, warranty, covenant, or obligation by any Owner
under this Agreement or any agreement contemplated hereby.
ARTICLE V
CONDITIONS PRECEDENT TO THE CLOSING
5.1 Conditions to Acquirer's Obligations. In addition to any other
conditions set forth in this Agreement, the Acquirer's obligation to consummate
the Closing is subject to the timely satisfaction of each and every one of the
conditions and requirements set forth in this Section 5.1, all of which shall be
conditions precedent to the Acquirer's obligations under this Agreement.
(a) Company's and Owners' Obligations. The Company and the Owners
shall have performed all of their respective obligations hereunder which are to
be performed prior to Closing, and shall have delivered or caused to be
delivered to the Acquirer, all of the documents and other information required
of the Owners pursuant to Section 6.2.
(b) Owners' Representations and Warranties. The Owners'
representations and warranties set forth in Section 2.2 shall be true and
correct as if made again on the Closing Date.
(c) No Injunction. On the Closing Date, there shall be no effective
injunction, writ, preliminary restraining order or other order issued by a court
of competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated hereby.
(d) Completion of Public Offering. The Public Offering shall have
been completed.
5.2 Conditions to the Company's and the Owners' Obligations. In addition
to any other conditions set forth in this Agreement, the Company's and the
Owners' obligation to consummate the Closing is subject to the timely
satisfaction of each and every one of the conditions and requirements set forth
in this Section 5.2, all of which shall be conditions precedent to the Owner's
obligations under this Agreement.
(a) Acquirer's Obligations. The Acquirer shall have performed all
obligations of the Acquirer hereunder which are to be performed prior to
Closing, and shall have delivered or caused to be delivered to the Owners, all
of the documents and other information required of the Acquirer pursuant to
Section 6.3.
(b) Acquirer's Representations and Warranties. The Acquirer's
representations and warranties set forth in Section 2.1 shall be true and
correct as if made again on the Closing Date.
(c) Completion of Public Offering. The Public Offering shall have
been completed.
ARTICLE VI
CLOSING AND CLOSING DOCUMENTS
6.1 Closing. The consummation and closing (the "Closing") of the
transactions contemplated under this Agreement shall take place at 10:00 a.m. at
the offices of Xxxxxx, Xxxxxxx & Xxxxxx, LLP in Atlanta, Georgia, or such other
place as is mutually agreeable to the parties, on the day (the "Closing Date")
the Partnership receives the proceeds from the Public Offering from the
underwriter(s); provided, however, that this Agreement shall terminate if
Closing does not occur prior to March 31, 2005.
6.2 Owners' Deliveries. At the Closing, the Owners shall deliver the
following to the Acquirer in addition to all other items required to be
delivered to the Acquirer by the Owners:
(a) Company Interest Certificates. If the Company Interests are
certificated, certificates issued by the Company to the Owners representing all
the issued and outstanding Company Interests duly endorsed in blank.
(b) Execution of the Partnership Agreement. Signature pages of the
Partnership Agreement (which Partnership Agreement shall be in substantially the
form attached hereto as Exhibit D) duly executed by the Contributor (or its
designee), as limited partner.
(c) Books and Records. All books and records, contracts,
certificates, original promissory notes, another indicia of ownership with
respect to the Company and the Property which are in the Company's possession or
which can be obtained through the Company's reasonable efforts.
(d) Other Documents. Any other document or instrument reasonably
requested by the Acquirer or required hereby. Upon request of the Acquirer, the
Owners shall provide a certified copy of all appropriate corporate actions
executing the execution, delivery and performance by each Owner of this
agreement.
(e) FIRPTA Certificate. An affidavit from each of the Contributors
certifying pursuant to Section 1445 of the Internal Revenue Code that the
Contributor is not a foreign corporation, foreign partnership, foreign trust,
foreign estate or foreign person (as those terms are defined in the Internal
Revenue Code and the Income Tax Regulations promulgated thereunder).
6.3 Acquirer's Deliveries. At the Closing, the Acquirer shall deliver the
following to the Owners:
(a) Merger Consideration. The Merger Consideration. If certificates
are issued, certificates representing Units duly issued by the Partnership in
the name the Contributor (or its designee) as of the Closing Date representing
the Units to which the Contributor is entitled pursuant to Section 1.2 of this
Agreement.
(b) Other Documents. Any other document or instrument reasonably
requested by the Owners or required hereby.
6.4 Fees and Expenses; Closing Costs. The Acquirer shall pay all legal
fees and professional expenses incurred by the Company and Acquirer in
connection with the transactions contemplated by this Agreement; provided
however, that the Owners shall pay their own legal fees and expenses.
ARTICLE VII
MISCELLANEOUS
7.1 Notices. Any notice provided for by this Agreement and any other
notice, demand, or communication required hereunder shall be in writing by
either (i) personal delivery (including recognized overnight delivery service),
(ii) confirmed facsimile transmission or (iii) certified or registered mail,
postage prepaid, with return receipt requested. All notices shall be addressed
as follows:
Acquirer:
Xxxxx & O'Hara Education Services, Inc.
c/o Education Realty Operating Partnership, LP
000 Xxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Fax No.: (000)000-0000
with a copy to:
Xxxxxx, Xxxxxxx & Xxxxxx, LLP
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxx
Fax No.: (000) 000-0000
The Company or the Owners:
Xxxxx & X'Xxxx Education Services, Inc.
c/o Education Realty Operating Partnership, LP
000 Xxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Fax No.: (000)000-0000
with a copy to:
Martin, Tate, Xxxxxx & Xxxxxxx, P.C.
International Place, Tower II
Suite 1000, 0000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxx Xxxxx
Fax No.: (000) 000-0000
The Designees at the addresses set forth for the Designees on
Exhibit "B" hereto.
Any address or name specified above may be changed by a notice given by the
addressee to the other party. Any notice, demand or other communication shall be
deemed given and effective as of the date of delivery. The inability to deliver
because of changed address of which no notice was given, or rejection or other
refusal to accept any notice, demand or other communication, shall be deemed to
be receipt of the notice, demand or other communication as of the date of such
attempt to deliver or rejection or refusal to accept.
7.2 Entire Agreement; Modifications and Waivers; Cumulative Remedies. This
Agreement supersedes any existing letter of intent between the parties,
constitutes the entire agreement among the parties hereto and may not be
modified or amended except by instrument in writing signed by the parties
hereto, and no provisions or conditions may be waived other than by a writing
signed by the party waiving such provisions or conditions. No delay or omission
in the exercise of any right or remedy accruing to the Company, the Owners or
the Acquirer upon any breach under this Agreement shall impair such right or
remedy or be construed as a waiver of any such breach theretofore or thereafter
occurring. The waiver by the Company, the Owners or the Acquirer of any breach
of any term, covenant, or condition herein stated shall not be deemed to be a
waiver of any other breach, or of a subsequent breach of the same or any other
term, covenant, or condition herein contained. All rights, powers, options, or
remedies afforded to the Company, the Owners or the Acquirer either hereunder or
by law shall be cumulative and not alternative, and the exercise of one right,
power, option, or remedy shall not bar other rights, powers, options, or
remedies allowed herein or by law, unless expressly provided to the contrary
herein.
7.3 Exhibits. All exhibits referred to in this Agreement and attached
hereto are hereby incorporated in this Agreement by reference.
7.4 Successors and Assigns. This Agreement may not be assigned by any
party without the prior approval of the other parties hereto, except that the
Acquirer may assign its rights and obligations to an affiliate. This Agreement
shall be binding upon, and inure to the benefit of, the Owners, the Acquirer,
and their respective legal representatives, successors, and permitted assigns.
7.5 Article Headings. Article headings and article and section numbers are
inserted herein only as a matter of convenience and in no way define, limit, or
prescribe the scope or intent of this Agreement or any part hereof and shall not
be considered in interpreting or construing this Agreement.
7.6 Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Delaware, without regard to conflicts
of laws principles.
7.7 Counterparts. This Agreement may be executed in any number of
counterparts and by any party hereto on a separate counterpart, each of which
when so executed and delivered shall be deemed an original and all of which
taken together shall constitute but one and the same instrument.
7.8 Survival. All representations and warranties contained in this
Agreement, and all covenants and agreements contained in the Agreement which
contemplate performance after the Closing Date and the obligations of the
parties not fully performed at the Closing (including, without limitation, those
covenants and agreements contained in Sections 1.6, 3.2, 3.3, 3.4, 3.5, 4.1,
4.2, 6.4, and 7.14 hereof) shall survive the Closing.
7.9 Further Acts. In addition to the acts, instruments and agreements
recited herein and contemplated to be performed, executed and delivered by the
Acquirer, the Company and the Owners, the Acquirer, the Company and Owners shall
perform, execute, and deliver or cause to be performed, executed, and delivered
at the Closing or after the Closing, any and all further acts, instruments, and
agreements and provide such further assurances as the other parties may
reasonably require to consummate the transaction contemplated hereunder.
7.10 Severability. In case any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal, or unenforceable provision had never been
contained herein.
7.11 Equitable Remedies. Each Owner agrees that irreparable damage would
occur to the Acquirer in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Acquirer shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement by such Owner
and to enforce specifically the terms and provisions hereof in any federal or
state court located in Tennessee (as to which the parties agree to submit to
jurisdiction for the purposes of such action), this being in addition to any
other remedy to which the Acquirer is entitled under this Agreement or otherwise
at law or in equity.
7.12 Time of the Essence. TIME IS OF THE ESSENCE with respect to all
obligations of the parties under this Agreement.
7.13 Attorneys' Fees. Should a party employ an attorney or attorneys to
enforce any of the provisions hereof or to protect its interest in any manner
arising under this Agreement, or to recover damages for breach of this
Agreement, any non-prevailing party in any action pursued in a court of
competent jurisdiction (the finality of which is not legally contested) shall
pay to the prevailing party all reasonable costs, damages, and expenses,
including reasonable attorneys' fees, expended or incurred in connection
therewith.
7.14 Confidentiality. Each Owner acknowledges that the matters relating to
the REIT, the Public Offering, this Agreement, and the other documents, terms,
conditions and information related thereto (collectively, the "Information") are
confidential in nature. Therefore, each Owner covenants and agrees to keep the
Information confidential and will not (except as required by applicable law,
regulation or legal process including applicable securities laws), without the
Acquirer's prior written consent, disclose any Information in any manner
whatsoever; provided, however, that the Information may be revealed only to the
Owners' key employees, and legal counsel and financial advisors, each of whom
shall be informed of the confidential nature of the Information and shall agree
to act in accordance with the terms of this Section 7.14. In the event that the
Owner or its key employees, legal counsel or financial advisors (collectively,
the "Information Group") are requested pursuant to, or required by, applicable
law (other than in connection with the Public Offering), regulation or legal
process to disclose any of the Information, the applicable member of the
Information Group will notify the Acquirer promptly so that it may seek a
protective order or other appropriate remedy or, in its sole discretion, waive
compliance with the terms of this Section 7.14. In the event that no such
protective order or other remedy is obtained, or that the Acquirer waives
compliance with the terms of this Section 7.14, the applicable member of the
Information Group may furnish only that portion of the Information which it is
advised by counsel is legally required and will exercise all reasonable efforts
to obtain reliable assurance that confidential treatment will be accorded the
Information. Each Owner acknowledges that remedies at law may be inadequate to
protect the Acquirer or the REIT against any actual or threatened breach of this
Section 7.14, and, without prejudice to any other rights and remedies otherwise
available, the Owner agrees to the granting of injunctive relief in favor of the
REIT and/or the Acquirer without proof of actual damages.
[SIGNATURES APPEAR ON FOLLOWING PAGES.]
IN WITNESS WHEREOF, this Agreement has been entered into effective as of
the 20th day of September, 2004.
OWNERS:
XXXXX & X'XXXX, INC.
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: President
STUDENT MANAGEMENT ASSOCIATES, LLC
By: Xxxxx & O'Hara, Inc.
Its: Managing Member
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: President
DESIGNEES:
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxxx
--------------------------------------------
Xxxxx X. Xxxxxxxx
ACQUIRER:
XXXXX & X'XXXX EDUCATION SERVICES, INC.
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: President and Chief Executive Officer
COMPANY:
XXXXX & O'HARA, EDUCATION SERVICES, LLC
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: President and Chief Executive Officer
Education Realty Operating Partnership, LP joins in the execution of this
Agreement for purposes of Section 3.2 of this Agreement.
EDUCATION REALTY OPERATING
PARTNERSHIP, LP
By: Education Realty OP GP, Inc.,
its general partner
Name: /s/ Xxxx X. Xxxxx
--------------------------------------
Title: President and Chief Executive Officer
EXHIBIT A
Certificate of Merger
A-1
EXHIBIT B
Allocation of Merger Consideration
X-0
XXXXXXX X
Xxxxxxxxxx Xxxxxxxx
X-0
EXHIBIT D
Education Realty Operating Partnership, LP Agreement of Limited Partnership
E-1
