EXHIBIT 10.16
AGREEMENT AND
XXXX OF TRANSFER AND ASSIGNMENT
This AGREEMENT AND XXXX OF TRANSFER AND ASSIGNMENT ("Xxxx of Transfer") is
made as of the 1st day of March, 1997, among Apple Realty Group, Inc., a
Virginia corporation (the "Company"), Cornerstone Realty Income Trust, Inc., a
Virginia corporation (the "Acquiror") and Apple Residential Income Trust, Inc.,
a Virginia corporation ("Apple").
RECITALS
A. The Company was engaged to render certain property acquisition and
disposition services to Apple under a Property Acquisition/Disposition
Agreement dated as of November 1, 1997 (the "Brokerage Agreement") in
exchange for payment by Apple of certain fees described therein.
B. The Company has agreed to transfer all of the assets of the Company (the
only material assets being its rights in the Brokerage Agreement) to the
Acquiror for certain cash and common shares of the Acquiror, as set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged:
1. Transferred Assets. The Company hereby transfers, conveys, assigns and
delivers to the Acquiror all of the material assets of the Company as
follows: All of the Company's rights and interests in, to and under the
Brokerage Agreement (collectively, the "Transferred Assets"). The Company
hereby represents, and the Acquiror hereby acknowledges, that the
Transferred Assets are free of all liens and other encumbrances and
comprise all of the material assets of the Company. The Company represents
and acknowledges that there are no defaults under the Brokerage Agreement.
Further, the Company and the Acquiror acknowledge that the Company is
entitled to acquisition fees under the Brokerage Agreement earned with
respect to property acquisitions of Apple closed during the period
preceding March 1, 1997, and that the Acquiror shall be entitled to all
fees and compensation under the Brokerage Agreement attributable to the
period on and after such date.
2. Consideration for Transfer. In exchange for the Transferred Assets, the
Acquiror agrees to transfer to the Company on the date of this Xxxx of
Transfer (i) the Agreed-Upon Number of common shares of the Acquiror (the
"REIT Common Shares") plus (ii) cash in the amount of $350,000. The
Agreed-Upon Number of such common shares shall equal (1) $1,650,000 divided
by (2) $11.00 per Share. The REIT Common Shares total 150,000.
3. Assignability. The right to be issued the REIT Common Shares may be
distributed by the Company to its shareholders, but shall not otherwise be
voluntarily assigned or transferred.
4. Registration Rights. Prior to June 1, 1997, the Acquiror shall enter into
with the Company or any subsequent holder of the REIT Common Shares (any
such person, a "Rights Holder") a registration rights agreement
("Registration Rights Agreement") in form and substance agreeable to the
Acquiror and the Rights Holders, providing, among other things, for the
following with respect to the REIT Common Shares:
(a) In the time periods and with the frequency described in Section
4(b) below, the Acquiror shall file and use its best efforts to cause to
become effective, registration statements under the Securities Act of 1933,
and all necessary qualifications or registrations under the securities laws
covering the resale by the Rights Holders of the REIT Common Shares issued
to the Rights Holders hereunder (each, a "Registration Statement").
(b) A Registration Statement shall be filed within 60 days after the
first anniversary of the issuance of the REIT Common Shares hereunder.
(c) The Acquiror shall use its best efforts to maintain the
effectiveness of each Registration Statement until the earlier of (i) such
time as all of the REIT Common Shares covered thereby have been sold by the
Rights Holders, and (ii) such time as all of the REIT Common Shares covered
thereby may be resold by the Rights Holders without restriction under the
Securities Act.
(d) During any consecutive three month period, the Rights Holders
shall be prohibited, unless the Acquiror shall otherwise consent thereto in
writing, from selling more than 25% of the outstanding REIT Common Shares,
whether pursuant to a Registration Statement or otherwise, except in an
underwritten public offering in which the managing underwriter is one
reasonably acceptable to the Acquiror.
(e) All expenses of such Registration Statement shall be borne by the
Acquiror, other than (i) any underwriting discounts or commissions or
transfer taxes, and (ii) the fees and expenses of all separate counsel for
the Rights Holders in excess of the reasonable fees and expenses of one
separate counsel retained by the Rights Holders to (A) review the
Registration Statement as requested by the Acquiror, (B) review or prepare
information to be provided at the Acquiror's request, and (C) review
documents and instruments to be executed by the Rights Holders at the
request of the Acquiror.
(f)
(i) The Rights Holders shall refrain from the sale of any REIT
Common Shares for one or more periods of not more than sixty (60) days
following written notice from the Acquiror that the relevant
Registration Statement is not then current, due to the existence of
material non-public information disclosure of which would materially
adversely affect the business interests of the Acquiror, and prior to
the Rights Holders' receipt from the Acquiror of written notice that
such Registration Statement is again current, provided that the Rights
Holders shall not be precluded from effecting sales pursuant to this
clause (i) for more than ninety (90) days during any 360-day period.
(ii)Following written notice from the Acquiror that it has filed
and caused to become effective a registration statement including an
offering of common shares for sale by the Acquiror to the public in an
underwritten public offering, the Rights Holders shall enter into
agreements with the underwriters of such public offering,
substantially in the same form and for the same time period as
agreements entered into by the officers and directors of the Acquiror,
precluding the sale of common shares in the Acquiror by Rights Holders
for a period not to exceed one hundred eighty (180) days following
such notice, provided that the Rights Holders were given the
opportunity to include their REIT Common Shares for sale in such
public offering.
(g) With respect to a Registration Statement, the following procedures
shall apply:
(i) The Acquiror will, prior to filing a Registration Statement
or prospectus or any amendment or supplement thereto, furnish to the
Rights Holders and counsel designated by the Rights Holders, copies of
such registration statement or prospectus as proposed to be filed,
together with exhibits thereto, which documents will be subject to
review by the foregoing, and thereafter furnish to the Rights Holders,
such number of copies of such Registration Statement (including each
preliminary prospectus) and such other documents as the Rights Holders
may reasonably request in order to facilitate the disposition of the
REIT Common Shares covered by the Registration Statement.
(ii) The Acquiror will use its best efforts to register or
qualify the REIT Common Shares under such other securities or blue sky
laws of such jurisdictions in the United States as the Rights Holders
reasonably request; provided, that the Acquiror will not be required
to (A) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify, (B) subject itself to
taxation in any such jurisdiction, or (C) consent to general service
of process in any such jurisdiction.
(iii) The Acquiror will immediately notify the Rights Holders at
any time when a prospectus included in a Registration Statement is
required to be delivered under the Securities Act of 1933, of the
occurrence of an event requiring the preparation of a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such REIT Common Shares, such
prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and will
promptly make available to the Rights Holders any such supplement or
amendment.
(iv) The Acquiror will otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC.
(v) The Acquiror shall promptly notify the Rights Holders (A)
when the prospectus or any prospectus supplement has been filed, and,
with respect to the Registration Statement or any post-effective
amendment, when the same has been declared effective, (B) of any
request by the SEC for amendments or supplements to the Registration
Statement or the prospectus or for additional information, (C) of the
issuance by the SEC of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for
that purpose, and (D) of the receipt by the Acquiror of any
notification with respect to the suspension of the qualification of
the REIT Common Shares for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose.
(vi) The Rights Holders and each officer, director and
controlling person of the Rights Holders shall be indemnified by the
Acquiror for all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) caused by any untrue or
alleged untrue statement or any omission or alleged omission in the
then-current prospectus included in a Registration Statement, unless
based upon information (if any) furnished to the Acquiror by the
Rights Holders expressly for use in a Registration Statement in a
writing signed by or on behalf of the Rights Holders.
(h) The Acquiror and each officer, director and controlling person of
the Acquiror shall be indemnified by the Rights Holders for all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation) caused by any untrue or alleged untrue statement or any
omission or alleged omission in the then-current prospectus included in a
Registration Statement, if based upon information (if any) furnished to the
Acquiror by the Rights Holders expressly for use in a Registration
Statement in a writing signed by or on behalf of the Rights Holders.
(i) The Rights Holders agree to promptly provide information or
execute and deliver documents reasonably determined by the Acquiror to be
necessary to facilitate the preparation or filing of a Registration
Statement.
5. Apple Consent. Apple consents to the assignment by the Company to the
Acquiror of its rights and interests in, to and under the Brokerage
Agreement. The Acquiror shall assume all of the duties and obligations and
shall be entitled to all of the rights, powers and benefits formerly held
by the Company under the Brokerage Agreement.
6. Benefits of Agreement. Except as set forth in Paragraph 7 below, nothing in
this Agreement, express or implied, is intended or shall be construed to
confer upon any person, firm or corporation other than the parties hereto
any remedy or claim.
7. Successors. The provisions of this Agreement are intended to be binding
upon the Company, its successors and permitted assigns, and are for the
benefit of the Acquiror, its successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement and Xxxx of
Transfer and Assignment as of the date set forth above.
The Company:
APPLE REALTY GROUP, INC.
By:/s/ Xxxxx X. Xxxxxx
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Title: Chairman
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The Acquiror:
CORNERSTONE REALTY INCOME TRUST, INC.
By:/s/ Xxxxx X. Xxxxxx
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Title: Chairman
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Apple:
APPLE RESIDENTIAL INCOME TRUST, INC.
By:/s/ Xxxxx X. Xxxxxx
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Title: Chairman
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