EXHIBIT 10.16
CONTRIBUTION AGREEMENT
BY AND AMONG
XXXXX & X'XXXX EDUCATIONAL PROPERTIES, LLC,
a Tennessee limited liability company,
FSPP EDUCATION I, L.L.C.,
a Delaware limited liability company
and
FSPP EDUCATION II, L.L.C.
a Delaware limited liability company,
Collectively as the Contributors,
XXXXX & O'HARA, INC.,
a Tennessee corporation,
XXXXXX X. XXXXXX,
XXXXX X. XXXXXXXX,
XXXXXXX X. XXXXX,
XXXXXXX X. XXXXXX
and
XXXXXXX X. XXXXXX
As the Designees,
AND
EDUCATION REALTY OPERATING PARTNERSHIP, LP,
a Delaware limited partnership,
as the Acquirer
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made as of the 23
day of September, 2004 by and among XXXXX & O'HARA EDUCATIONAL PROPERTIES, LLC,
a Tennessee limited liability company ("A&O"), FSPP EDUCATION I, L.L.C., a
Delaware limited liability company ("FSPP I") and FSPP EDUCATION II, L.L.C., a
Delaware limited liability company ("FSPP II," together with FSPP I being
collectively referred to as "Fremont;" A&O, FSPP I and FSPP II are sometimes
hereinafter referred to individually as a "Contributor" and collectively
referred to as the "Contributors"); XXXXX & X'XXXX, INC., a Tennessee
corporation, 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 EDUCATION
REALTY OPERATING PARTNERSHIP, LP, a Delaware limited partnership (the
"Acquirer").
RECITALS
A. Education Properties Trust, LLC, a Delaware limited liability
company (the "Company") is the owner of four special purpose entities which
each own a student housing community, namely (i) EPT Tallahassee I, LLC, a
Delaware limited liability company ("EPT Tallahassee") which owns the property
known as the Player's Club Apartments located in Tallahassee, Florida, (ii) EPT
Athens I, LLC, a Delaware limited liability company ("EPT Athens") which owns
the property known as The Reserve at Athens located in Athens, Georgia, (iii)
EPT Clemson I, LLC, a Delaware limited liability company ("EPT Clemson") which
owns the property known as The Reserve at Clemson located in Central, South
Carolina, and (iv) EPT Tucson I, LLC, a Delaware limited liability company
("EPT Tuscon") which owns the property known as NorthPointe Apartments located
in Tucson, Arizona (each of EPT Tallahassee, EPT Athens, EPT Tuscon, EPT
Clemson, EDR Clemson I, L.P., a Delaware limited partnership ("EDR Clemson")
and EDR Clemson I GP, LLC, a Delaware limited liability company and the general
partner of EDR Clemson are referred to herein individually as an "Entity" and
collectively as the "Entities" and the real property and other assets owned by
each of the Entities are referred to herein individually as a "Property" and
collectively as the "Properties").
B. A&O is the record and beneficial owner of a 12.95% membership
interest in the Company, FSPP I is the record and beneficial owner of a 66.38%
membership interest in the Company and FSPP II is the record and beneficial
owner of a 20.67% membership interest in the Company (such membership interests
are referred to herein collectively as the "Company Interests").
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
THE CONTRIBUTION
1.1 Contribution of Company Interests. The Contributors agree to
contribute and transfer the Company Interests to the Acquirer, and the Acquirer
agrees to accept transfer of the Company Interests and to assume all
obligations and liabilities in respect thereof accruing on and thereafter
pursuant to the terms and conditions set forth in this Agreement. Although the
Properties are encumbered by certain deeds of trust securing loans (the
"Property Loans") from Bank of America, N.A. or its assignee (the "Property
Lender") to the Entities, as described in Section 1.1 of the Disclosure
Schedule attached hereto as Exhibit A (the "Disclosure Schedule"), the Company
Interests shall be transferred to the Acquirer free and clear of any claim,
lien, charge, security interest, mortgage, deed of trust, encumbrance, purchase
right or other right of any nature whatsoever of any third party ("Liens").
1.2 Consideration. The total consideration (the "Consideration")
for which the Contributors agree to contribute and assign the Company Interests
to the Acquirer, and which the Acquirer agrees to pay or deliver to the
Contributors (or the Contributors" Designee for such payment and delivery),
subject to the terms of this Agreement, shall equal the difference between
$77,884,000 and the outstanding principal balance of the Property Loans on the
Closing Date(1) (as hereinafter defined) (the amount of such difference being
the "Closing Value"). The Consideration payable to Fremont shall be payable in
cash and shall equal the Closing Value multiplied by 0.8705. The Consideration
payable to A&O shall equal the Closing Value multiplied by 0.1295 and shall be
paid as follows: cash in the amount of $2,252,045, and the balance in units of
limited partnership interest in the Acquirer ("Units") having a per Unit value
equal to the per share price at which the common stock (the "Common Stock") of
Education Realty Trust, Inc., a Maryland corporation (the "REIT"), are offered
to the public in the underwritten initial public offering of the Common Stock
(the "Public Offering") before any discounts or fees paid to underwriters. A
sample Consideration calculation is attached hereto as Schedule I. The
Contributors hereby direct the Acquirer to pay the Consideration on the Closing
Date to the Contributors (or their Designees set forth on Schedule II attached
hereto). No fractional Units will be issued as Consideration hereunder, but in
lieu of issuing fractional Units, the value thereof shall be paid in cash. The
Contributors and Designees that obtain Units acknowledge that any certificates
evidencing the Units will bear appropriate legends indicating (i) that the
Units have not been registered under the Securities Act of 1933, as amended
("Securities Act"), and (ii) that the Acquirer's Agreement of Limited
Partnership (the "Acquirer's Partnership Agreement") will restrict the transfer
of the Units. The Contributor or any Designee (provided the Designee is an
accredited investor) that receives Units shall upon receipt of the Units become
a limited partner of the Acquirer and shall execute the Acquirer's Partnership
Agreement. Except as otherwise expressly set forth in this Agreement, each
Contributor acknowledges and agrees that once the Closing (as hereinafter
defined) occurs, Acquirer shall be the sole member of the Company, the
Contributor shall no longer be a member of the Company, shall no longer be
entitled to receive any distributions from the Company, and shall have no
further right, title or interest in the Company.
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(1) For purpose of determining the outstanding principal balances of the
Property Loans on the Closing Date, it shall be assumed that any loan
payments due with respect to the month in which the Closing occurs
have been made as of the first day of such month, irrespective of
whether such payments have been made.
1.3 Tax Consequences to Contributor. The parties agree that the
transactions contemplated by this Agreement shall constitute a taxable sale of
the Company Interests as to the Contributors.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations by Acquirer. The Acquirer hereby represents
and warrants to each Contributor 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
partners 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 limited
partnership, partnership 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) 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.
(e) No Brokers. Acquirer has not 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 on account of any action by the Acquirer.
Acquirer hereby agrees to indemnify and hold the Contributors and their
employees, directors, members, partners, affiliates and agents harmless against
any claims, liabilities,
damages or expenses arising out of a breach of the foregoing. This
indemnification shall survive Closing or any termination of this Agreement.
(f) Units Validly Issued. The Units that constitute part
of the Consideration, 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"). The Designees shall each 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 Acquirer's 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.
(g) Solvency. Acquirer has been and will be solvent at
all times prior to and immediately following the Closing. There are no
attachments, executions, assignments for the benefit of creditors, or voluntary
or involuntary proceedings in bankruptcy or under other debtor relief laws
contemplated by, pending, or, to the Acquirer's knowledge, threatened against
the Acquirer.
2.2 Representations by A&O. A&O hereby represents and warrants to
the Acquirer:
(a) Organization and Power. It is duly formed, validly
existing, and in good standing under the laws of the jurisdiction of its
formation. It has full right, power, and authority to enter into this Agreement
and to assume and perform all of its obligations under this Agreement. The
execution and delivery of this Agreement and the performance by A&O of its
obligations hereunder have been duly authorized by all requisite action of A&O
and require no further action or approval of A&O'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 A&O. Each
of the Company and each Entity (i) is duly formed, validly existing and in good
standing under the laws of the jurisdiction of its formation, (ii) has the
requisite power and authority to carry on its business as it is presently
conducted and (iii) to the extent required applicable law, 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 with
respect to such entity. The general partner, managing member or administrative
member of each of the Company and of each Entity has provided to the Acquirer
true and correct copies of such entity's operating agreement and other
organizational documents, with all amendments as in effect on the date of this
Agreement (collectively, the "Organizational Documents"). Section 2.2(a) of the
Disclosure Schedule lists, with respect to the Company and each Entity, its
jurisdiction of formation and each of its partners, members or other equity
owners as of the date hereof.
(b) Noncontravention. Neither the entry into nor the
performance of, or compliance with, this Agreement by A&O 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
A&O, the Company, any of the Entities, the Company Interests or the Properties.
(c) Litigation. There is no action, suit, or proceeding,
pending or known to be threatened, against or affecting A&O, the Company, any
of the Entities or any of the Properties 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
asserts claims regarding the validity or enforceability of this Agreement, (ii)
could have a Material Adverse Effect with respect to A&O, the Company, any of
the Entities or the Properties, (iii) could have a Material Adverse Effect on
A&O's ability to perform its obligations hereunder or under any document to be
delivered pursuant hereto, or (iv) could create a Lien on the Company
Interests, the Company, any of the Entities, any of the Properties, any part
thereof, or any interest therein.
(d) Solvency. A&O, the Company and each Entity has been
and will be solvent at all times prior to and immediately following the
transfer of the Company Interests to the Acquirer. There are no attachments,
executions, assignments for the benefit of creditors, or voluntary or
involuntary proceedings in bankruptcy or under other debtor relief laws
contemplated by, pending, or, to A&O's knowledge, threatened against A&O, the
Entities or the Property.
(e) Ownership of Company Interests and the Entities. The
Company Interests listed on Section 2.2(e) of the Disclosure Schedule
constitute all of the issued and outstanding equity interests in the Company,
and all such interests are owned by the Contributors. Each Contributor is the
sole owner of its Company Interests, beneficially and of record, free and clear
of any Liens of any nature and has full power and authority to convey the
Company Interests, free and clear of any Liens. Upon delivery of consideration
for such Company Interests, the Contributors will transfer to Acquirer good and
valid title thereto, free and clear of any Liens except Liens created in favor
of the Acquirer by the transactions contemplated hereby. The Company owns
directly or indirectly all of the issued and outstanding equity interests in
each of the Entities, beneficially and of record, free and clear of any Liens
of any nature. Except for those to be acquired by the Acquirer in connection
with this Agreement, there are no rights to purchase, subscriptions, warrants,
options, conversion rights, preemptive rights, agreements, instruments or
similar understandings of any kind outstanding (i) relating to any interest in
the Company or any Entity or any of the Properties, or (ii) to purchase,
transfer or to otherwise acquire, or to in any way encumber, any of the Company
Interests, any of the Properties, any interest in the Company or any Entity, or
any securities of any kind convertible into any of the foregoing, or any equity
interest or profit participation of any kind in the Company or any of the
Entities (other than in connection with the existing management agreements for
the Properties provided to Acquirer). A&O does not have any commitment or legal
obligation, absolute or contingent, to any other individual, corporation,
limited liability company, partnership, trust or other entity ("Person") other
than the Acquirer to sell, sign, transfer or effect a sale of any right, title
or interest in or to the Company, any of its Company Interests, the Properties
or any of the Entities.
(f) No Consents. 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 governmental
agency or body is necessary for the execution, delivery, and performance of
this Agreement or the transactions contemplated hereby by A&O.
(g) No Brokers. A&O has not 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 on account of any action by any Contributor. A&O
hereby agrees to indemnify and hold the Acquirer, Fremont and their respective
employees, directors, members, partners, affiliates and agents harmless against
any claims, liabilities, damages or expenses arising out of a breach of the
foregoing. This indemnification shall survive Closing or any termination of
this Agreement.
(h) Title to the Property. From the date hereof through
the Closing Date, either EPT Clemson or EDR Clemson will own good and
marketable fee simple title to the Property known as the Reserve at Clemson,
free and clear of any Liens other than the deed of trust securing the Property
Loan related to such Property, the lien for current year real estate taxes and
assessments not yet due or payable, the Leases (as hereinafter defined) and
such recorded utility easements serving such Property which do not materially
and adversely affect the marketability of title to the Property or the use of
the Property and on the Closing Date EDR Clemson will own good and marketable
fee simple title to the Property known as The Reserve at Clemson, free and
clear of any Liens other than the deed of trust securing the Property Loan
related to such Property, the lien for current year real estate taxes and
assessments not yet due or payable, the Leases and such recorded utility
easements serving such Property which do not materially and adversely affect
the marketability of title to the Property or the use of the Property. Each
Entity other than EPT Clemson, EDR Clemson and EDR Clemson I GP, LLC owns good
and marketable fee simple title of record to the Property identified in the
recitals hereto and further described on Section 2.2(h) of the Disclosure
Schedule, free and clear of any Liens other than the deed of trust securing the
Property Loan related to such Property, the lien for current year real estate
taxes and assessments not yet due or payable, the Leases and such recorded
utility easements serving the Property which do not materially and adversely
affect the marketability of title to the Property or the use of the Property.
(i) No Agreements to Sell. Except for the Leases,
neither the Company nor any Entity has made any agreement with, and will not
enter into any agreement with, and has no obligation (absolute or contingent)
to, any other person or firm to sell, transfer or in any way encumber any
Property or to not sell any Property, or to enter into any agreement with
respect to a sale, transfer or encumbrance of or put or call right with respect
to any Property.
(j) Leases. Each Entity that owns fee title to the
underlying Property (the "Holder") holds the lessor's interest under all
leases, licenses, tenancies, possession agreements and occupancy agreements
with the tenants of such Property (the "Leases"). A true and complete copy of
all Leases have been made available to the Acquirer; to A&O's knowledge, such
Leases are in full force and effect, except as indicated otherwise in Section
2.2(j) the Disclosure Schedule, the Holder, as lessor under such Leases, has
not received any notice that it is in default of any of its obligations under
such Leases beyond any applicable grace period which has not been cured; to
A&O's knowledge, except as set forth in Section 2.2(j) of the Disclosure
Schedule, no tenant is in default under any Lease except to the extent such
default
would not have a Material Adverse Effect with respect to the applicable Holder;
rent is being billed to the tenants in accordance with the Leases; no tenant is
entitled to "free" rent, rent concessions, rebates, rent abatements, set-offs,
or offsets against rent and no tenant under any such Lease claims a right to
any of the foregoing, except as set forth in Section 2.2(j) of the Disclosure
Schedule; the Holder has received no written notice that any tenant under any
such Lease contests any rent or other charges billed to it, except as set forth
in Section 2.2(j) of the Disclosure Schedule; no assignment of the Holder's
rights under any Lease is in effect on the date hereof other than collateral
assignments to secure mortgage indebtedness; and, except as set forth in
Section 2.2(j) of the Disclosure Schedule with respect to any Leases entered
into by such Holder, no brokerage commissions will be due upon the failure of
any tenant under any such Lease to exercise any cancellation right granted in
its Lease or upon any extension or renewal of such Leases. To A&O's knowledge,
all material obligations of the lessor under the Leases that have accrued to
the date hereof have been performed or satisfied.
(k) Liabilities; Indebtedness. Except for the Property
Loans, neither the Company nor any of the Entities has any indebtedness or any
liabilities whatsoever, contingent, accrued or otherwise, except in each
instance for trade payables and obligations for other customary and ordinary
expenses incurred in the ordinary course of business that are not more than
30-days delinquent and that have been disclosed to the Acquirer.
(l) Insurance. Each Holder currently has in place public
liability, casualty and other insurance coverage with reputable insurance
companies with respect to its Property in customary amounts for projects
similar to the Property in the market in which such Property is located, and in
all cases in compliance with the existing financing arrangements. To A&O's'
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 A&O's knowledge
threatened with respect thereto.
(m) Personal Property. The Entities own all of the
tangible personal property constituting "Fixtures and Personal Property" (as
defined below) which is used in and, individually or in the aggregate with
other such property, is material to the operation of the Properties. "Fixtures
and Personal Property" shall mean all fixtures, furniture, furnishings,
apparatus and fittings, equipment, machinery, appliances, building supplies,
tools, and other items of personal property located on the Properties and used
in connection with the operation or maintenance of the Properties; excluding,
however, all furniture, furnishings, and other items of personal property owned
by tenants. To A&O's knowledge, except as set forth in Section 2.2(m) of the
Disclosure Schedule, such Fixtures and Personal Property are free and clear of
all Liens. All equipment, fixtures and personal property located at or on the
Property shall remain and not be removed prior to the Closing, except for
equipment that becomes obsolete or unusable to be replaced in the ordinary
course of business.
(n) Employees and Contracts. Except as set forth in
Section 2.2(n) of the Disclosure Schedule, (i) there are no contracts with
employees of the Company or any Entity as of the date hereof, nor (ii) service
or maintenance contracts affecting any Property, in each case which are not
cancelable upon thirty (30) days notice or less or which are for a contract
amount greater than $100,000 per annum. True and correct copies of all service,
equipment, franchise, operating, management, parking, supply, utility and
maintenance agreements relating to any
Property (the "Service 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 applicable Entity's business. To A&O's
knowledge, no event of default exists (which remains uncured) under any of the
Service Contracts which would have a Material Adverse Effect with respect to
the applicable Entity. To A&O's knowledge, there are no union contracts or
similar agreements between the Company or any Entity and its employees. Except
as set forth in Section 2.2(n) of the Disclosure Schedule, no employee is
entitled to receive annual compensation (including bonus) from the Company or
any Entity in excess of $100,000.
(o) Loans. To A&O's knowledge, the Property Loans and
the documents entered into in connection therewith (collectively, the "Loan
Documents") are in full force and effect as of the date hereof. To A&O's
knowledge, the mortgagor has not received written notice of an event of default
or event that with the passage of time or giving of notice or both would
constitute an event of default has occurred as of the date hereof under any of
the Loan Documents which would have a Material Adverse Effect. True and correct
copies of the existing Loan Documents have been made available to the Acquirer.
(p) Taxes. The copies of the real property tax bills for
each Property for the current tax year which have been furnished or made
available to the Acquirer by A&O are true and correct copies of all of the tax
bills for such tax year actually received by any Holder or such Holder's agents
for the Property. For federal income tax purposes, each Entity 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). Each Entity 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. No Entity has 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 any of the
Entities is the subject of a pending or ongoing audit, and neither the Company
nor A&O has received written notice from any federal, state, local or foreign
taxing authority as to any tax deficiency or other assessment against any
Property or any Entity.
(q) Zoning. None of A&O, the Company or any of the
Entities has received any written notice (which remains uncured) from any
governmental authority stating that any of the Properties is currently
violating any zoning, land use or other similar rules or ordinances in any
material respect that would reasonably be expected to have a Material Adverse
Effect with respect to the Company or any Entity.
(r) Property Management Agreements. All of the property
management agreements for the Properties are listed in Section 2.2(r) of the
Disclosure Schedule and are in full force and effect and no Entity or, to the
knowledge of A&O, other party to such management agreements is in default
thereunder.
(s) No Agreements. Except as set forth in the
Organizational Documents or Section 2.2(s) of the Disclosure Schedule, no
Property is subject to any outstanding agreement of sale or ground lease,
option to purchase or other right of any third party to acquire any interest
therein (other than under the Leases).
(t) Environmental Conditions. None of A&O, any of the
Entities or the Company has 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 Properties, any of the Entities or the Company to be in violation of any
applicable Environmental Laws and that remains uncured, nor has A&O, any of the
Entities or the Company received written notice that any Property is not in
compliance with applicable Environmental Laws. Except as disclosed on the Phase
I environmental reports with respect to the Properties delivered by A&O to the
Acquirer, to A&O's knowledge, 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.
(u) Compliance With Laws. The Company and each of the
Entities possess 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 neither the
Company nor any Entity has 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 or any Entity. Neither the Company
nor any Entity has 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 any Property, which remains uncured and
would have a Material Adverse Effect with respect to the Company or any Entity.
(v) Condemnation and Moratoria. There are (i) no pending
or to the knowledge of A&O, threatened condemnation or eminent domain
proceedings, or negotiations for purchase in lieu of condemnation, which affect
or would affect any Property; (ii) no pending or to the knowledge of A&O,
threatened moratoria on utility or public water or sewer hook-ups or the
issuance of permits, licenses or other inspections or approvals necessary in
connection with the construction or reconstruction of improvements which affect
or would affect any portion of any Property; and (iii) no pending or threatened
proceeding to change adversely the existing zoning classification as to any
portion of any Property. No portion of any Property is a designated historic
property or located within a designated historic area or district, and there
are no graveyards or burial grounds located within any of the Properties. A&O
has no actual knowledge of any change or proposed change in the route, grade or
width of or otherwise affecting, any street or road adjacent to or serving any
of the Properties which could reasonably be expected to have a Material Adverse
Effect with respect to any Entity.
(w) Condition of Improvements. To the best of A&O's
knowledge, there is no material defect in the condition of any Property,
including the improvements thereon, the roof,
foundation, load-bearing walls or other structural elements thereof, and the
mechanical, electrical, plumbing and safety systems therein. To the best of
A&O's knowledge, no material damage to any Property has occurred from casualty
or other cause, nor is there any soil condition of any nature that will not
support all of the improvements thereon without the need for unusual or new
subsurface excavations, fill, footings, caissons or other installations. All
utilities necessary for the current operation of each of the Properties are
available to each Property.
(x) Patriot Act Representations. Neither A&O, nor to the
knowledge of A&O, any direct or indirect owner of A&O, (i) are included on any
Government List, (ii) are Persons who have been determined by competent
authority to be subject to the prohibitions contained in the Presidential
Executive Order No. 13224 or any other similar prohibitions contained in the
rules and regulations of the OFAC or in any enabling legislation or other
Presidential Executive Orders in respect thereof, (iii) have been indicted or
convicted of any Patriot Act Offenses, or (iv) are currently under
investigation by any governmental authority for alleged criminal activity. For
purposes of this Agreement, (i) "Government List" means (A) the Specially
Designated Nationals and Blocked Persons List maintained by OFAC, (B) any other
list of terrorists, terrorist organizations or narcotics traffickers maintained
pursuant to any of the Rules and Regulations of OFAC, or (C) any similar list
maintained by the United States Department of State, the United States
Department of Commerce or any other governmental authority or pursuant to any
Executive Order of the President of the United States of America; (ii) "OFAC"
means the Office of Foreign Asset Control, U.S. Department of the Treasury,
(iii) "Patriot Act" means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT
ACT) Act of 2001, as the same may be amended from time to time, and
corresponding provisions of future laws, and (iv) "Patriot Act Offense" means
any violation of the criminal laws of the United States of America or of any of
the several states, or that would be a criminal violation if committed within
the jurisdiction of the United States of America or any of the several states,
relating to terrorism or the laundering of monetary instruments, including any
offense under (A) the criminal laws against terrorism, (B) the criminal laws
against money laundering, (C) the Bank Secrecy Act, as amended, (D) the Money
Laundering Control Act of 1986, as amended, or (E) the Patriot Act and also
means the crimes of conspiracy to commit, or aiding and abetting another to
commit any of the foregoing.
2.3 Representations by Fremont. Each of FSPP I and FSPP II
jointly and severally represents and warrants to the Acquirer:
(a) Organization and Power. It is duly formed, validly
existing, and in good standing under the laws of the jurisdiction of its
formation. It has full right, power, and authority to enter into this Agreement
and to assume and perform all of its obligations under this Agreement. The
execution and delivery of this Agreement and the performance by it of its
obligations hereunder have been duly authorized by all requisite action of such
Contributor and require no further action or approval of such Contributor'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 such Contributor.
(b) Noncontravention. Neither the entry into nor the
performance of, or compliance with, this Agreement by such Contributor 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 such Contributor.
(c) Litigation. There is no action, suit, or proceeding,
pending or known to be threatened against or affecting such Contributor 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 asserts claims challenging the validity
or enforceability of this Agreement, (ii) could have a Material Adverse Effect
with respect to such Contributor; (iii) could have a Material Adverse Effect on
such Contributor's ability to perform its obligations hereunder or under any
document to be delivered pursuant hereto, or (iv) could create a Lien on such
Contributor's Company Interests.
(d) Solvency. Such Contributor has been and will be
solvent at all times prior to and immediately following the transfer of the
Company Interests to the Acquirer. There are no attachments, executions,
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy or under other debtor relief laws contemplated by,
pending, or, to such Contributor's knowledge, threatened against such
Contributor.
(e) Ownership of Company Interests. Such Contributor's
Company Interests listed on Schedule II constitute all of the issued and
outstanding equity interests of said Contributor in the Company, and all such
interests are owned by said Contributors. Such Contributor is the sole owner of
its Company Interests (with FSPP I being the record and beneficial owner of a
66.38% membership interest in the Company and FSPP II being the record and
beneficial owner of a 20.67% membership interest in the Company), beneficially
and of record, free and clear of any Liens of any nature and has full power and
authority to convey its Company Interests, free and clear of any Liens. Upon
delivery of consideration for such Company Interests, such Contributor will
transfer to Acquirer good and valid title thereto, free and clear of any Liens
except Liens created in favor of the Acquirer by the transactions contemplated
hereby. Such Contributor does not have any commitment or legal obligation,
absolute or contingent, to any Person other than the Acquirer to sell, sign,
transfer or effect a sale of any right, title or interest in or to its Company
Interests.
(f) No Consents. Except as shall have been obtained on
or before the Closing Date, no consent, approval, authorization, order,
license, certificate, permit, registration, designation, or filing by or with
any third party governmental agency or body is necessary for the execution,
delivery, and performance of this Agreement or the transactions contemplated
hereby by such Contributor.
(g) No Brokers. Such Contributor has not 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 on account of any action by such Contributor.
Such Contributor hereby agrees to indemnify and hold the Acquirer and its
employees, directors, members, partners, affiliates and agents harmless against
any claims, liabilities, damages or expenses arising out of a breach of the
foregoing. This indemnification shall survive Closing or any termination of
this Agreement.
(h) Patriot Act Respresentations. Neither such
Contributor, nor to the knowledge of such Contributor, any direct or indirect
owner of such Contributor, (i) are included on any Government List, (ii) are
Persons who have been determined by competent authority to be subject to the
prohibitions contained in the Presidential Executive Order No. 13224 or any
other similar prohibitions contained in the rules and regulations of the OFAC
or in any enabling legislation or other Presidential Executive Orders in
respect thereof, (iii) have been indicted or convicted of any Patriot Act
Offenses, or (iv) are currently under investigation by any governmental
authority for alleged criminal activity.
2.4 Representations of Designees. Each of Designees hereby
represents and warrants as to itself and not as to any other Designee the
following:
(a) The Designee is knowledgeable, sophisticated and
experienced in business and financial matters; the Designee 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. The Designee is able to bear the economic risk of holding
the Units for an indefinite period and is able to afford the complete loss of
its investment in the Units; the Designee has received and reviewed all
information and documents about or pertaining to the REIT, the Acquirer, the
business and prospects of the REIT and the Acquirer and the issuance of the
Units as the Designee 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 Acquirer, the business and prospects of the REIT and the Acquirer and the
Units which the Designee 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 the Designee understands and has taken
cognizance of all risk factors related to the purchase of the Units. The
Designee is a sophisticated real estate investor. In acquiring the Units and
engaging in this transaction, the Designee is not relying upon any
representations made to it by the Acquirer, or any of the officers, employees,
or agents of the Acquirer not contained herein. The Designee is relying upon
its own independent analysis and assessment (including with respect to taxes),
and the advice of the Designee'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. The Designee represents and warrants that it
has reviewed and approved the form of the Acquirer's Partnership Agreement
attached hereto as Exhibit C.
(b) The Designee 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 the Designee (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
Designee 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 Designee may distribute the Units to those
of its members or successors that (i) 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 (ii) have executed the Acquirer's Partnership
Agreement as limited partners. The Designee 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
Acquirer's Partnership Agreement will restrict transfer of the Units.
(c) The Designee is an "accredited investor" as that
term is defined in Rule 501 of Regulation D under the Securities Act of 1933,
as amended. The Designee 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.
ARTICLE III
COVENANTS AND INDEMNITIES
3.1 Covenants Pending Closing.
(a) From the date hereof until the Closing, each
Contributor agrees that with respect to itself and not to any other
Contributor, it shall not:
(i) Sell, transfer (or agree to sell or
transfer) or otherwise dispose of, or cause the sale, transfer or disposition
of (or agree to do any of the foregoing) all or any portion of its Company
Interests; or
(ii) Mortgage, pledge or encumber (or permit to
become encumbered) all or any portion of its Company Interests.
(b) From the date hereof through the Closing, A&O, in
its capacity as the Administrative Member of the Company, shall cause the
Company and each of the Entities to conduct its business in the ordinary course
of business, generally consistent with past practice, and shall, to the extent
within his or its control, not permit the Company or any Entity, without the
prior written consent of Acquirer (not to be unreasonably withheld or delayed),
to:
(i) Enter into any material transaction not in
the ordinary course of business of such entity:
(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 such entity, except in the ordinary course of business consistent
with past practice;
(iii) Mortgage, pledge or encumber (or permit to
become encumbered) any assets of such entity, 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 such entity in
good faith and by appropriate proceeding in the ordinary course of such
entity'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 Lease,
contract or other instruments relating to any of the Properties to which such
entity is a party, except in the ordinary course of the entity's business
generally consistent with past practice;
(v) Cause or affirmatively permit any Entity to
change the existing use of any Property;
(vi) Cause or affirmatively permit any entity to
enter into any new Lease or terminate any existing Lease except in the ordinary
course of the entity's business generally consistent with past practice;
(vii) Cause or take any action that would render
any of the representations or warranties regarding the Properties as set forth
herein untrue in any material respect;
(viii) Terminate or amend any existing insurance
policies affecting the Properties that results in a material reduction in
insurance coverage for one or more Properties;
(ix) Knowingly cause or affirmatively permit the
entity to violate or fail to use commercially reasonable efforts to cure any
violation of any applicable laws;
(x) Materially alter the manner of keeping such
entity's books, accounts or records or the accounting methods therein
reflected; or
(xi) Make any distribution to its members.
Fremont agrees that it will not, in its capacity as a member
of the Company approve any of the actions set forth above or cause the Company
to take any such actions.
Nothing in this Agreement will require any Contributor to
contribute any additional capital to the Company.
(c) From the date hereof until the Closing Date, the
Company and each Entity will afford to the officers and authorized
representatives of the Acquirer access to all of the Company's and each
Entity'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 and each Entity as the Acquirer may from time to time
reasonably request, subject only to any confidentiality restrictions imposed on
the Company by virtue of any written agreements with any other party concerning
any such information.
(d) Notwithstanding anything to the contrary contained
herein, any failure by any Contributor 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 Contributor 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 Contributors 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 Contributor with respect to any tax period ending on or before the
Closing Date. Each Contributor shall promptly notify the Acquirer in writing
upon receipt by such Contributor 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
Contributor 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 Contributors shall have the right
to control the conduct of any such audit or proceeding or portion thereof for
which the Contributors (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
Contributor 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 or
delayed. Each Contributor 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, A&O and
the Designees agree 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 to Contributor and the Designees with
respect to the Property.
3.3 Financial Records.
(a) Each Contributor 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 of shares of the REIT. As such,
Acquirer may be required to file with the SEC audited financial statements of
the Company, the Entity, the Property and/or pro forma financial statements
giving effect to the acquisition of the Company Interests. Accordingly, each
Contributor agrees to cooperate and make available to Acquirer such records as
may be necessary to permit Acquirer to comply with SEC requirements. For the
avoidance of doubt, no Contributor will be required to provide or disclose to
Acquirer the financial statements of such Contributor.
(b) At the Closing, A&O agrees to deliver to Acquirer
the most recent audited financial statements of the Company, the Entity and the
Property, if any, and any more current
unaudited balance sheets and income statements for the Company, the Entity and
the Property for the current fiscal year through the Closing Date and for the
comparable portion of the prior fiscal year.
(c) Subsequent to the Closing, A&O 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, the Entity and/or the Property for the
required periods pursuant to applicable SEC regulations. This provision shall
survive the Closing.
3.4 Contributors' Indemnity.
(a) A&O hereby agrees to indemnify and hold each of the
Acquirer, the REIT, and each of their respective employees, directors, members,
partners, affiliates 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 A&O's representations or warranties contained in Section 2.2 of this
Agreement, (b) any act or cause of action occurring or accruing prior to the
Closing Date and arising from the ownership of the Company Interests prior to
the Closing Date, and (c) the ownership or operation of the Properties and
relating to the period 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 occurring on or about or in
connection with the Properties or any portion thereof or with respect to the
Properties' operations at any time prior to the Closing Date.
(b) FSPP I and FSPP II hereby agrees to jointly and
severally indemnify and hold each of the Indemnified Acquirer Parties harmless
of and from all Losses which any Indemnified Acquirer Party may suffer or incur
by reason of any breach of the representations or warranties contained in
Section 2.3 of this Agreement.
3.5 Acquirer's Indemnity. The Acquirer agrees to indemnify and
hold each Contributor, and each Contributor's employees, directors, members,
partners, affiliates and agents (each of which is an "Indemnified Contributor
Party") harmless of and from all Losses which the Indemnified Contributor 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, (b)
the offering or sale of Common Stock in the Offering, (c) any act or cause of
action occurring or accruing on or after the Closing Date and arising from the
ownership of the Company Interests or the operation of the Properties on or
after the Closing Date, and (d) the ownership or operation of the Properties
and relating to the period 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 Properties or any portion thereof or with respect to
the Properties' 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 Contributor irrevocably waives, releases and
forever discharges the Acquirer and the Acquirer's affiliates, partners
(including the Company), 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,
"Contributor Claims"), known or unknown, suspected or unsuspected, arising out
of or relating to any of the Organizational Documents, the Properties or any
other matter which exists at the Closing, except for Contributor 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 Contributors.
As of the Closing, the Acquirer irrevocably waives, releases and
forever discharges each Contributor and each Contributor's affiliates,
partners, members, officers, directors, 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, the
Properties 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 Contributor 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) Contributors' Obligations. The Contributors shall
have performed, in all material respects, all obligations of the Contributors
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 Contributors pursuant to Section 6.2.
(b) Contributors' Representations and Warranties. The
Contributors' representations and warranties set forth in Sections 2.2 and 2.3
shall be true and correct, in all material respects, 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) Third Party Consents. To the extent required by the
Loan Documents, the Acquirer shall have obtained the consent of the Lender to
the Acquirer's acquisition of the Company Interests and/or either assigning the
existing Loan Documents to the Acquirer or entering into a new loan agreement
for the Property between the lender and the Acquirer.
(e) Completion of Public Offering. The Public Offering
shall have been completed.
(f) Title Policies. Acquirer shall have received updated
title policies for each Property as of the Closing Date satisfactory to the
Acquirer.
(g) Termination Agreement. Acquirer shall have received
a Termination Agreement substantially in the form of Exhibit C attached hereto
(the "Termination Agreement"), executed by each of Fremont Strategic Property
Partners, L.P., a Delaware limited partnership, and Fremont FSPP Partners,
L.P., a Delaware limited partnership, affiliates of Fremont, and Xxxxx & X'Xxxx
Education Services, LLC, a Tennessee limited liability company.
(h) Transfer of Clemson Property. EPT Clemson will have
transferred all of its right title and interest in the Property known as The
Reserve at Clemson to EDR Clemson.
5.2 Conditions to Contributors' Obligations. In addition to any
other conditions set forth in this Agreement, each Contributor'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 5.2, all of
which shall be conditions precedent to the Contributor'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
Contributor, 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.
(d) 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.
(e) Termination Agreement. Acquirer shall have received
the Termination Agreement, executed by each of Fremont Strategic Property
Partners, L.P., a Delaware limited
partnership, and Fremont FSPP Partners, L.P., a Delaware limited partnership,
affiliates of Fremont, and Xxxxx & X'Xxxx Education Services, LLC, a Tennessee
limited liability company.
(f) Lender Consent. The Property Lender shall have
provided any necessary consent to the transactions contemplated by this
Agreement.
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 Acquirer
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 December 31, 2004, unless this Agreement is extended pursuant to
Section 7.16.
6.2 Contributors' Deliveries. At the Closing, each Contributor
shall deliver the following to the Acquirer in addition to all other items
required to be delivered to the Acquirer by the Contributors:
(a) Assignment of Company Interests. The Contributors
shall have executed and delivered an Assignment, in substantially the form of
Exhibit B attached hereto (the "Assignment"), granting and conveying to the
Acquirer good and valid title to the Company Interests, free and clear of all
Liens.
(b) 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).
(c) Books and Records. All books and records, title
insurance policies, leases, lease files, contracts, stock certificates,
original promissory notes, and other indicia of ownership with respect to the
Company and each Entity which are in each Contributor's possession.
(d) Other Documents. Any other document or instrument
reasonably requested by the Acquirer or required hereby. Without limiting the
generality of the foregoing, to the extent that individuals associated with any
Contributor serve as managers, officers or directors in the Company or any of
the Entities, the Contributor shall cause such individuals to resign and
withdraw from such positions at Closing. Upon request of the Acquirer, each
Contributor shall provide a certified copy of all appropriate corporate actions
approving the execution, delivery and performance by each Contributor of this
Agreement.
6.3 Acquirer's Deliveries. At the Closing, the Acquirer shall
deliver the following to the Contributors in addition to all other items
required to be delivered to the Contributors by the Acquirer:
(a) Delivery of the Consideration. The Consideration
that each Contributor (or its Designee(s)) is entitled to receive under this
Agreement. If the Units are certificated, certificates representing Units duly
issued by the Acquirer in the name of each of the Designees as of the Closing
Date representing the Units to which each such Designee is entitled pursuant to
Section 1.2 of this Agreement.
(b) Executed Acquirer's Partnership Agreement. The fully
executed Acquirer's Partnership Agreement, with the original duly executed
signature of Education Realty OP GP, Inc., a Delaware corporation which is the
wholly-owned subsidiary of the REIT, as general partner, and original or
photostatic copies of the signatures of all limited partners.
(c) Assignment. the Assignment and any other document or
instrument reasonably requested by the Contributors or required hereby.
6.4 Fees and Expenses; Closing Costs. The Acquirer shall pay any
documentary transfer taxes, escrow charges, title charges and recording taxes
for fees incurred in connection with the transactions contemplated by this
Agreement; provided however, that each of Acquirer and the Contributors 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:
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
A&O:
Education Realty Operating Partnership, LP
000 Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Fax No.: (000)000-0000
Fremont:
c/o Fremont Realty Capital, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Fax No.: (000) 000-0000
with a copy to:
Fremont Realty Capital, L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Fax No.: (000) 000-0000
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 Contributors or 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 Contributors 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 Contributors 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 all of its rights and obligations to an affiliate. This
Agreement shall be binding upon, and inure to the benefit of, the Contributors,
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 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 Acquirer and the Contributors, the Acquirer and Contributors 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 Contributor 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 seek an injunction or injunctions to prevent breaches of this
Agreement by such Contributor and to enforce specifically the terms and
provisions hereof in any federal or state court located in New York (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 Contributor 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
Contributor 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 Contributors' key employees,
legal counsel, financial advisors, the Property Lender and any other parties to
whom Contributor deems such disclosure to be necessary or desirable, 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 Contributor or its key employees, legal counsel, financial advisors,
the Property Lender or any other person to whom the Information is revealed by
a Contributor (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 at Acquirer's costs to obtain reliable assurance that confidential
treatment will be accorded the Information. Each Contributor 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 Contributor agrees to
the seeking of granting of injunctive relief in favor of the REIT and/or the
Acquirer without proof of actual damages.
7.15 No Joint Liability. Each of the representations and
warranties and covenants of A&O on the one hand, and Fremont on the other hand,
are made severally, and not jointly, and there shall be no joint liability
therefor.
7.16 Termination. If the Closing has not occurred on or before
December 31, 2004, then this Agreement will terminate unless it is extended
pursuant to this Section 7.16. If the Closing has not occurred on or before
December 31, 2004, then the Acquirer shall have the
option to extend the term of this Agreement for successive one (1) calendar
month periods (each an "Extension Term") up to a maximum of three Extension
Terms. If the Acquirer desires to exercise its option to extend the term of
this Agreement by an Extension Term, then it must deliver written notice to
Fremont not less than five (5) days prior to the termination date of this
Agreement (taking into account any previously exercised extension(s) of this
Agreement) together with cash or other immediately available funds paid to
Fremont in the amount of $253,000 (it being acknowledged that a separate
$253,000 payment will be required to be paid to Fremont for each Extension Term
that the Acquirer elects to extend the term of this Agreement and that any such
payment(s) shall be in addition to, and not in reduction of, the Consideration
to be paid to Fremont hereunder). For the avoidance of doubt, if the Closing
occurs prior to the termination of this Agreement, then there will be no
requirement for the Acquirer to exercise any unexercised Extension Terms of
this Agreement and the provisions of this Agreement that survive the Closing
pursuant to Section 7.8 will survive the Closing and be operative following the
Closing.
[SIGNATURES APPEAR ON FOLLOWING PAGES.]
IN WITNESS WHEREOF, this Agreement has been entered into effective as
of the 23 day of September, 2004.
CONTRIBUTORS:
XXXXX & X'XXXX EDUCATIONAL PROPERTIES, LLC
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Chief Manager/President
FSPP EDUCATION I, L.L.C.
By: Fremont Strategic Property REIT, Inc.
Its: Sole Member
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: CFO and Treasurer
FSPP EDUCATION II, L.L.C.
By: Fremont FSPP Partners, L.P.
Its: Sole Member
By: Fremont Realty Capital Investors, L.P.
Its: General Partner
By: Fremont Resources, Inc.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
DESIGNEES:
XXXXX & O'HARA, INC.
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: President
/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:
EDUCATION REALTY OPERATING PARTNERSHIP, LP
By: Education Realty OP GP, Inc., its
General Partner
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: President and Chief Executive
Officer
SCHEDULE I
SAMPLE CONSIDERATION CALCULATION
SCHEDULE II
I-1
EXHIBIT A
A-1
EXHIBIT B
Assignment
B-1
EXHIBIT C
Termination Agreement
C-1
