EXHIBIT 10.3
CONTRIBUTION AGREEMENT
By and Among
BELCREST REALTY CORPORATION
AND BELAIR REAL ESTATE CORPORATION
and
NATIONAL GOLF OPERATING PARTNERSHIP, L.P.
and
NATIONAL GOLF PROPERTIES, INC.
Dated: As of July 28, 1999
CONTRIBUTION AGREEMENT
Contribution Agreement (this "Agreement") made as of the 28th
day of July, 1999 ("Agreement Date"), by and between BELCREST REALTY
CORPORATION, a Delaware corporation and BELAIR REAL ESTATE CORPORATION, a
Delaware corporation (the "Contributors"), and NATIONAL GOLF OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership (the "Operating Partnership")
and NATIONAL GOLF PROPERTIES, INC., a Maryland corporation (the "Company").
WITNESSETH:
WHEREAS, Contributors desire to contribute to Operating
Partnership cash in return for Preference Units in Operating Partnership on the
terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Definitions. For purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Affiliate" means with respect to any Person, any other Person
controlled by, controlling or under common control with such Person. For
purposes hereof, "control" shall include the power to direct the actions of a
Person, regardless of whether the same shall involve an ownership interest in
such Person.
"Agreement" has the meaning set forth in the initial paragraph
hereof.
"Agreement Date" has the meaning set forth in the initial
paragraph hereof.
"Agreement of Limited Partnership" means the Third Amended and
Restated Agreement of Limited Partnership of Operating Partnership, dated as of
July 28, 1999 in the form attached hereto as Exhibit A, as further amended from
time to time.
"Articles Supplementary" means the Articles Supplementary of
the Company substantially in the form attached hereto as Exhibit B.
"Belair" means Belair Real Estate Corporation.
"Belcrest" means Belcrest Realty Corporation.
"Broker" has the meaning set forth in Paragraph 10.
"Bylaws" means the Bylaws of the Company, as amended from time
to time.
2
"Charter" means the Articles of Incorporation of the Company,
as amended and restated from time to time, including, as supplemented by the
Articles Supplementary.
"Closing" has the meaning set forth in Paragraph 6(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the initial paragraph
hereof.
"Contribution Amount" means $35,000,000, such amount to be
contributed severally $15,000,000 by Belair and $20,000,000 by Belcrest.
"Contributors" has the meaning set forth in the initial
paragraph hereof.
"Contributors' Closing Documents" has the meaning set forth in
Paragraph 6(c).
"ERISA" means the Employee Retirement Income Securities Act of
1974, as amended.
"Exchange Date" means, with respect to any Preferred Unit, the
date on which the exchange of such Preferred Unit for a Preferred Share shall
occur in accordance with the Agreement of Limited Partnership.
"GAAP" means generally accepted accounting principles
consistently applied.
"Governing Documents" means, with respect to (i) a limited
partnership, such limited partnership's certificate of limited partnership and
the agreement of limited partnership, and any amendments or modifications of any
of the foregoing; (ii) a corporation, such corporation's articles or certificate
of incorporation, by-laws and any applicable authorizing resolutions, and any
amendments or modifications of any of the foregoing; (iii) a limited liability
company, such limited liability company's articles or certificate of
organization, by-laws and operating agreement or agreement of limited liability
company, and any amendments or modifications of any of the foregoing; and (iv) a
trust, such trust's declaration of trust and by-laws and any amendments or
modifications of any of the foregoing.
"Manager" means Boston Management and Research, a Massachusetts
business trust.
"Operating Partnership's Closing Documents" has the meaning
set forth in Paragraph 6(b).
3
"Parity Preferred Shares" has the meaning ascribed to such
term in the Articles Supplementary.
"Partner" has the meaning ascribed to such term in the
Agreement of Limited Partnership.
"Person" means a natural person, partnership (whether general
or limited), trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual or
entity in its own or representative capacity.
"Preference Units" means the 9.30% Series B Cumulative
Redeemable Preferred Units more fully described in the Amendment.
"Preferred Shares" means the 9.30% Series B Cumulative
Redeemable Preferred Stock of the Company more fully described in the Articles
Supplementary.
"Price Ownership" means the actual and "constructive" (as
determined for purposes of the real estate investment trust income requirements)
ownership of interests in the Operating Partnership and American Golf
Corporation (a significant tenant of the Operating Partnership) by Xxxxx Xxxxx
and Dallas Price, and by members of their family, which ownership would cause
the rent received by the Operating Partnership, if the Operating Partnership
were a REIT (as defined below), to fail to satisfy the income requirements of
Section 856 of the Code.
"PTP" means a Apublicly traded partnership" within the meaning
of Section 7704 of the Code.
"Registration Rights Agreement" has the meaning set forth in
Paragraph 6(b)(iv) hereof.
"REIT" has the meaning set forth in Paragraph 8(g) hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means with respect to any Person, any
corporation, partnership, limited liability company, joint venture or other
entity of which a majority of (i) voting power of the voting equity securities
or (ii) the outstanding equity interests, is owned, directly or indirectly, by
such Person.
"US$" means United States dollars, lawful money of the United
States of America.
2. Contribution of Cash. Subject to the terms and provisions
of this Agreement, Belcrest and Belair each hereby agrees to contribute to
Operating Partnership the
4
Contribution Amount on the date of the Closing in consideration for Preference
Units in Operating Partnership. Subject to the terms and provisions of this
Agreement, Operating Partnership hereby agrees to accept the Contribution Amount
and to issue to Contributors 800,000 and 600,000, respectively, Preference Units
in exchange therefor.
3. Conditions to Closing. (a) Conditions to Operating
Partnership's and Company's Obligations. Operating Partnership's and Company's
obligations under this Agreement to accept the Contribution Amount, provide
Contributors with Preference Units and otherwise consummate the transactions
contemplated herein are subject to the satisfaction (or waiver in writing by
Operating Partnership and the Company) of the following conditions on or before
the Closing:
(i) No Injunction. No temporary restraining order or
preliminary or permanent injunction or any court or
administrative agency of competent jurisdiction
prohibiting the consummation of the transactions
contemplated herein shall be in effect.
(ii) Accuracy of Representations and Warranties. The
representations and warranties of Contributors
contained in this Agreement shall be true and correct
in all material respects on the date of the Closing
with the same effect as though made on the date of
the Closing.
(iii) Performance of Agreement. Each Contributor shall have
performed, in all material respects, all of its
respective covenants, agreements and obligations
required by this Agreement to be performed or
complied with by it prior to or at the Closing,
including, without limitation, delivery of the
Contribution Amount.
(iv) Delivery of Closing Documents. Operating Partnership
and Company shall have received the Contributors'
Closing Documents.
In the event that for any reason any of the conditions set forth
in this Paragraph 3(a) or elsewhere in this Agreement are not satisfied or
waived by Operating Partnership and Company at or prior to the Closing, at
Operating Partnership's or Company's option, this Agreement shall be terminated
and Operating Partnership, Company and Contributors shall be released from their
obligations under this Agreement and none of Operating Partnership, Company or
Contributors shall have any further liability hereunder.
(b) Conditions to Contributors' Obligations. Contributors'
obligations under this Agreement to deliver the Contribution Amount and
otherwise consummate the transactions contemplated herein are subject to the
satisfaction (or waiver in writing by Contributors) of the following conditions
on or before the Closing:
5
(i) No Injunction. No temporary restraining order or
preliminary or permanent injunction or any court or
administrative agency of competent jurisdiction
prohibiting the consummation of the transactions
contemplated herein shall be in effect.
(ii) Accuracy of Representations and Warranties. The
representations and warranties of Operating
Partnership and Company contained in this Agreement
shall be true and correct in all material respects on
the date of the Closing with the same effect as
though made on the date of the Closing.
(iii) Performance of Agreement. Operating Partnership and
Company shall have performed, in all material
respects, all of their respective covenants,
agreements and obligations required by this Agreement
to be performed or complied with by it prior to or at
the Closing.
(iv) Delivery of Closing Documents. Contributors shall
have received the Operating Partnership's Closing
Documents.
In the event that for any reason any of the conditions set
forth in this Paragraph 3(b) or elsewhere in this Agreement are not satisfied or
waived by Contributors at or prior to the Closing, at Contributors' option, this
Agreement shall be terminated and Contributors, Operating Partnership and
Company shall be released from their obligations under this Agreement and none
of Contributors, Operating Partnership or Company shall have any further
liability hereunder.
4. Covenants. (a) On the Exchange Date, Company shall issue
Preferred Shares in Company in a number equal to the number of Preferred Shares
into which the Preference Units are exchangeable pursuant to the terms of the
Agreement of Limited Partnership. Upon consummation of such exchange in
accordance with the terms of the Agreement of Limited Partnership, and issuance
in accordance with the Charter, the Preferred Shares shall be validly issued,
fully paid and non-assessable pursuant to the Articles Supplementary.
(b) Operating Partnership covenants to notify holders of
Preference Units promptly in the event it anticipates or realizes either that
(i) the value of its assets constituting "stock and securities" within the
meaning of Section 351(e)(1) of the Code will equal 10% or more of the value of
the Operating Partnership's total assets or (ii) there is a material increase in
such percentage of Operating Partnership's assets constituting "stock and
securities" if immediately preceding such material increase the percentage of
Operating Partnership's assets constituting "stock and securities" within the
meaning of Section 351(e)(1) of the Code equaled 10% or more of the Operating
Partnership's total assets.
6
(c) Company agrees that it will notify holders of Preference
Units promptly in the event it becomes aware of any facts that it concludes will
or likely will cause Operating Partnership to become a PTP on or after January
1, 2000.
(d) Through the end of 1999, Operating Partnership: (i) shall
take all actions reasonably available to it under the Agreement of Limited
Partnership as presently in effect to avoid treatment as a PTP; and (ii) shall
not issue, or enter into binding agreements to issue, any Operating Partnership
units to the extent such issuance would cause it to fail to satisfy the private
placement safe harbor of Treasury Regulation Section 1.7704-1(h) (3) immediately
after such issuance (taking into account any person treated as a partner under
Treasury Regulation Section 1.7704-1(h)(3)) and substituting "60" for "100".
(e) Operating Partnership covenants that it shall deliver to
holders of Preference Units the following:
(i) as soon as available, but in no event later than five
business days following the date on which Company files its annual report in
respect of a fiscal year on Form 10-K, or such other applicable form ("Form
10-K"), with the Securities and Exchange Commission (the "Commission") (or, in
the event that Operating Partnership is required under rules and regulations
promulgated by the Commission to file with the Commission a Form 10-K separate
from Company's Form 10-K, five business days after the filing of such report by
Operating Partnership with the Commission), a complete copy of Operating
Partnership's financial statements for such fiscal year including a balance
sheet, income statement and cash flow statement for such fiscal year in
accordance with GAAP (except with respect to footnotes);
(ii) as soon as available, but in no event later than five
business days following the date on which Company files its quarterly report in
respect of a fiscal quarter on Form 10-Q, or such other applicable form ("Form
10-Q"), with the Commission (or, in the event the Operating Partnership is
required under rules and regulations promulgated by the Commission to file with
the Commission a Form 10-Q separate from Company's Form 10-Q, five business days
after the filing of such report by Operating Partnership with the Commission), a
complete copy of Operating Partnership's unaudited quarterly financial
statements for such fiscal quarter including a balance sheet, income statement
and cash flow statement for such fiscal quarter prepared in accordance with GAAP
(except with respect to footnotes); and
(iii) on a quarterly basis, (as soon as possible, but in no
event later than sixty (60) days following the end of each fiscal quarter of
Operating Partnership and one hundred fifteen (115) days following the end of
each fiscal year of Operating Partnership) a reasonable good faith written
estimate of, together with reasonable supporting information of, (1) the
percentage of the Operating Partnership's gross income that is derived from
sources enumerated in Section 856(c)(2) and (3) (disregarding the Price
Ownership), respectively, of the Code and (2) the percentage of the Operating
Partnership's assets (by value) that are within the relevant categories of
Section 856(c)(4) of the Code.
7
(g) Provided that all other conditions to Operating
Partnership's and Company's obligations set forth in this Agreement have been
satisfied or properly waived, Operating Partnership covenants that it shall
record Contributors as the holders of the Preference Units on its books and
records and shall admit Contributors as limited partners to Operating
Partnership on the Closing Date.
(h) Operating Partnership shall not issue any Preference Units
to any Person other than Contributors and Company shall not issue any Preferred
Shares to any Person other than a holder of Preference Units upon exchange of
such Preference Units.
(i) So long as there shall be accrued and unpaid distributions
in arrears with respect to the Preference Units, Company or Operating
Partnership shall not sell, exchange, dispose of or otherwise transfer any
property of the Partnership contributed at the time of the closing of the
initial public offering of the common shares in the Company prior to the end of
the fifteenth (15th) year following the Effective Date (as defined in the
Agreement of Limited Partnership) in a manner that requires distributions to be
made to Common Limited Partners pursuant to Section 7.1.A(3) of the Agreement of
Limited Partnership, unless (i) all such Common Limited Partners entitled to
such distributions waive their right to receive such distributions in cash or by
a promissory note pursuant to Section 7.1.A(3), or (ii) any such distributions
in arrears with respect to the Preference Units are paid in full with the
proceeds of such sale, exchange, disposition or transfer.
(j) Operating Partnership covenants and agrees to promptly
provide notice to the Contributors and any Affiliate of a Contributor which
holds Preference Units in the event that the Operating Partnership or the
Company or any Affiliate thereof becomes aware of any fact that causes it to
conclude that the Operating Partnership, disregarding the Price Ownership, would
fail to satisfy the income and assets requirements of Section 856 of the Code if
the Operating Partnership were a REIT.
(k) Through July 31, 2000, upon request of any Contributor,
the Operating Partnership and the Company agree to deliver a certificate to each
Contributor bringing down the representations and warranties made by the
Operating Partnership and the Company in paragraphs 8(d), 8(e), 8(f) and 8(g)
hereof, as to a date or dates requested by a Contributor (but not later than
July 31, 2000) if and to the extent, after due inquiry, the Operating
Partnership and the Company can make such representations and warranties as of
such date.
The covenants set forth in this Paragraph 4 shall survive the
Closing.
5. Transaction Costs. Except as otherwise specifically set
forth herein, each of the parties hereto shall bear its own costs and expenses
with respect to the transaction contemplated hereby.
8
6. Closing. (a) The closing of the transactions contemplated
by this Agreement shall be consummated on July 28, 1999 (the "Closing").
(b) At the Closing, Operating Partnership and Company shall
deliver to Contributors the following documents and the following other items
(the documents and other items described in this Paragraph 6(b) being
collectively referred to herein as the "Operating Partnership Closing
Documents"):
(i) This Agreement duly executed and delivered by Operating
Partnership and Company;
(ii) The Amendment, duly executed and delivered by all persons
necessary to make such amendment binding on and enforceable against all Partners
in Operating Partnership;
(iii) The Articles Supplementary of the Company, in the form
set forth on Exhibit B duly executed and delivered by the Company and certified
as filed in the State Department of Assessments and Taxation of Maryland.
(iv) The Registration Rights Agreement, substantially in the
form set forth on Exhibit C, duly executed and delivered by Company;
(v) A Certificate of the Secretary of Company substantially in
the form set forth on Exhibit D together with completed exhibits attached
thereto, executed by the secretary of the Company and dated as of the date of
the Closing;
(vi) Cross-Receipts, substantially in the form set forth on
Exhibits E-1 and E-2; and
(vii) An opinion of counsel to Company and Operating Partnership
substantially in the form set forth on Exhibit F;
(viii) A Certificate representing the Preference Units for
each Contributor.
(ix) A Written Consent of the existing limited partners in the
Operating Partnership, substantially in the form set forth on Exhibit G;
(x) Those other closing documents required to be executed by it
or as may be otherwise necessary or appropriate to consummate the transaction
contemplated herein;
(c) At the Closing, Contributors shall deliver to Operating
Partnership and Company the following documents and the following other items
(the documents and other items described in this Paragraph 6(c) being
collectively referred to herein as the "Contributors' Closing Documents"):
9
(i) Counterparts of documents listed in Paragraph 6(b)(i), (ii),
(iv), and (vi), duly executed and delivered by Contributors.
(ii) Those other closing documents required to be executed by
it or as may be otherwise necessary or appropriate to consummate the transaction
contemplated hereby.
7. Representations and Warranties of Contributors.
Contributors make the following representations and warranties to Operating
Partnership and Company, all of which (except as otherwise designated) are true
and correct in all material respects on the Agreement Date and shall be true and
correct in all material respects as of the date of the Closing:
(a) Contributors are duly organized and validly existing under
the laws of the state of their organization and have been duly authorized by all
necessary and appropriate action to enter into this Agreement and to consummate
the transactions contemplated herein. This Agreement is a valid and binding
obligation of Contributors, enforceable against Contributors in accordance with
its terms, except insofar enforceability may be affected by bankruptcy,
insolvency or similar laws affecting creditor's rights generally and the
availability of any particular equitable remedy.
(b) Neither the execution nor the delivery of this Agreement nor
the consummation of the transactions contemplated hereby nor fulfillment of or
compliance with the terms and conditions hereof (a) conflict with or will result
in a breach of any of the terms, conditions or provisions of (i) the Governing
Documents of Contributors or (ii) any agreement, order, judgement, decree,
arbitration award, statute, regulation or instrument to which Contributor is a
party or by which it or its assets are bound, or (b) constitutes or will
constitute a breach, violation or default under any of the foregoing. No consent
or approval, authorization, order, regulation or qualification of any
governmental entity or any other person is required for the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby by Contributors.
(c) Contributors acknowledge that the Preference Units have
not been and will not be registered or qualified under the Securities Act or any
state securities laws and are offered in reliance upon an exemption from
registration under Regulation D of the Securities Act and similar state law
exceptions. The Preference Units to be received by Contributors hereunder and
any Preferred Shares acquired in exchange therefor shall be held by Contributors
for investment purposes only for their own account, and not with a view to or
for sale in connection with any distribution of the Preference Units or such
Preferred Shares, and Contributors acknowledge that the Preference Units and
Preferred Shares cannot be sold or otherwise disposed of by the holders thereof
unless they are subsequently registered under the Securities Act or pursuant to
an exemption therefrom; and the Preference Units may not be sold, assigned or
otherwise transferred except in compliance with the Agreement of Limited
Partnership. Contributors hereby acknowledge receipt of a copy of the Agreement
of Limited Partnership, as amended to
10
the date hereof, and represents that it has reviewed same and understands the
provisions thereof which have a bearing on the representations made in this
Paragraph 7(c).
(d) Contributors have no contract, understanding, agreement or
arrangement with any person or entity to sell, transfer or grant a participation
to such person or entity or any other person or entity, with respect to any or
all of the Preference Units it will receive in accordance with the provisions
hereof or any Preferred Shares to be acquired in exchange therefor.
(e) Each of the Contributors is an "accredited investor"
within the meaning of Regulation D under the Securities Act and has knowledge
and experience in financial and business matters such that it is capable of
evaluating the merits and risks of receiving and owning the Preference Units and
Contributors are able to bear the economic risk of such ownership and
understands that an investment in Preference Units involves substantial risks.
(f) No part of the funds to be used by Contributor to purchase
the Preference Units constitutes "plan assets", as defined in Department of
Labor Regulation Section 2510.3-101 (29 C.F.R. 2510.3-101), of any "employee
benefit plan", as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or individual retirement account or
plan which is subject to Section 4975 of the Code (collectively, a "Benefit
Plan") or of any account or entity whose underlying assets constitute "plan
assets" of a Benefit Plan by reason of the Benefit Plan's investment in the
account or entity.
(g) In making this investment, Contributors are relying upon
the advice of their own personal, legal and tax advisors with respect to the tax
and other aspects of an investment in Operating Partnership.
(h) There has been made available to Contributors and its
respective advisors the opportunity to ask questions of, and receive answers
from, Operating Partnership and Company concerning the terms and conditions of
the investment in the Preference Units, and to obtain Company's Registration
Statements filed with the Securities and Exchange Commission on Form S-11 and
S-3, the Agreement of Limited Partnership, and any additional information, to
the extent that any of them possess such information, or can acquire it without
unreasonable effort or expense, necessary to verify the accuracy of the
information given to it, or to otherwise make an informed investment decision,
and that Contributors have had an opportunity to consult with counsel and other
advisers about the investment in the Preference Units, and that all material
documents, records and books pertaining to such investment have, on request,
been made available to Contributors and their respective advisors. Contributors
have reviewed Company's Registration Statement, referenced above, and any other
documents filed by Company since January 1, 1997 in accordance with the
requirements of the Securities Act of 1934, including any business plans or
strategies of Company or of Operation Partnership set forth therein.
11
(i) None of Contributors or any of their advisors, including
Xxxxxxx Xxxxx & Co., is aware of or has engaged in any form of general
solicitation or advertising with respect to sales of the Preference Units,
including (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio; and (ii) any seminar or meeting whose attendees were
invited by any general solicitation or general advertising.
(j) Contributors shall accept an interest in global
certificates representing the Preference Units with the following legends
appearing thereon:
THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE OR
INSTRUMENT MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER,
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT (A
COPY OF WHICH IS ON FILE WITH THE OPERATING PARTNERSHIP).
EXCEPT AS OTHERWISE PROVIDED IN THE PARTNERSHIP AGREEMENT, NO
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE PARTNERSHIP UNITS REPRESENTED BY THIS
CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR (B) IF THE OPERATING PARTNERSHIP HAS
BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE
HOLDER OF THE PARTNERSHIP UNITS REPRESENTED BY THIS
CERTIFICATE OR OTHER EVIDENCE SATISFACTORY TO THE OPERATING
PARTNERSHIP THAT SUCH TRANSFER, SALE ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND
REGULATIONS IN EFFECT THEREUNDER.
(k) For such time as a Contributor holds an interest in the
Operating Partnership, such Contributor will be treated for Federal income tax
purposes as either a real estate investment trust or a C corporation (and not an
S corporation or a division of another corporation, unless such other
corporation complies with such covenant and agreement).
Contributors hereby expressly permit Xxxxxxx Xxxxx Xxxxxxx &
Xxxxxxxxx, LLP, as counsel to Company, and Xxxxxx & Xxxxxxx, as counsel to
Company and Operating Partnership, to rely upon representations and warranties
set forth above as if such representations and warranties were made by
Contributors directly to Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP and Xxxxxx &
Xxxxxxx.
12
8. Representations and Warranties of Operating Partnership and
Company. Operating Partnership and Company make the following representations
and warranties to Contributors and Manager, all of which (except as otherwise
designated) are true and correct in all material respects on the Agreement Date
and shall be true and correct in all material respects as of the date of the
Closing:
(a) Operating Partnership is duly organized and validly
existing under the laws of the state of its organization and is duly registered
and qualified to do business in each jurisdiction where such registration or
qualification is material to the transactions contemplated hereby and has been
duly authorized by all necessary and appropriate action to enter into this
Agreement, to issue, sell and deliver the Preference Units and to consummate the
transactions contemplated herein, and the individuals executing this Agreement
on behalf of Operating Partnership have been duly authorized by all necessary
and appropriate action on behalf of Operating Partnership. This Agreement is a
valid and binding obligation of Operating Partnership, enforceable against
Operating Partnership in accordance with its terms, except insofar
enforceability may be affected by bankruptcy, insolvency or similar laws
affecting creditor's rights generally and the availability of any particular
equitable remedy.
(b) Company is duly organized and validly existing under the
laws of the state of its organization and is duly registered and qualified to do
business in each jurisdiction where such registration or qualification is
material to the transactions contemplated herein and has been duly authorized by
all necessary and appropriate action to enter into this Agreement, to issue and
deliver, upon exchange of the Preference Units in accordance with the Agreement
of Limited Partnership, the Preferred Shares and to consummate the transactions
contemplated herein, and the individuals executing this Agreement on behalf of
Company have been duly authorized by all necessary and appropriate action on
behalf of Company. This Agreement is a valid and binding obligation of Company,
enforceable against Company in accordance with its terms, except insofar as
enforceability may be affected by bankruptcy, insolvency or similar laws
affecting creditor's rights generally and the availability of any particular
equitable remedy. Notwithstanding anything to the contrary in this Agreement,
Company shall not be obligated to issue Preferred Shares in violation of the
provisions on stock ownership limitations set forth in the Charter or the
Agreement of Limited Partnership.
(c) Neither the execution nor the delivery of this Agreement
nor the consummation of the transactions contemplated hereby nor fulfillment of
or compliance with the terms and conditions hereof (a) conflict with or will
result in a breach of any of the terms, conditions or provisions of (i) the
Governing Documents of Company or Operating Partnership or any of its general
partners or (ii) any agreement, order, judgement, decree, arbitration award,
statute, regulation or instrument to which Company or Operating Partnership is a
party or by which it or its assets are bound, or (b) constitutes or will
constitute a breach, violation or default under any of the foregoing. No consent
or approval, authorization, order, registration or qualification of any
governmental entity or any other person is required for the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby by Operating Partnership or Company, except for filings under state
securities or "blue sky" laws.
13
(d) Immediately following the issuance of the Preference Units
pursuant to this Agreement, less than 8% of the value of the Operating
Partnership's assets will consist of "stock and securities" within the meaning
of Section 351(e)(1) of the Code and Operating Partnership has no plan to
increase the amount of its assets constituting "stock and securities" to a
percentage equal to or greater than 10% (except for cash equivalents and assets
arising from the temporary investment of stock or debt issuance proceeds).
(e) Operating Partnership has not been and is not presently a
PTP.
(f) Neither the Company nor any Subsidiary of Company has any
present plan or intention, and neither the Company nor any Subsidiary of Company
has any actual knowledge of any present plan or intention of any partner in
Operating Partnership, to take any action or actions that would or likely would
result in Operating Partnership becoming a PTP in the foreseeable future.
Neither Company nor any Subsidiary of Company has actual knowledge of facts that
reasonably would cause it to expect that Operating Partnership would or likely
would become a PTP in the foreseeable future. For purposes of the
representations set forth in this Paragraph 8(f), it is understood that neither
the Company nor any Subsidiary of Company shall have any duty of inquiry.
(g) The Company has properly elected to be taxed as a real
estate investment trust ("REIT") under and in accordance with Sections 856 to
860 of the Code, currently qualifies for taxation as a REIT and has no plan or
intention or knowledge of facts that likely would cause it to fail to qualify
for taxation as a REIT in the foreseeable future.
(h) The Preference Units have been duly authorized and upon
contribution of the Contribution Amount to the Operating Partnership will be
validly issued, fully paid and, to the extent permitted by the Revised Uniform
Limited Partnership Act of the State of Delaware, non-assessable.
(i) The Preferred Shares issuable upon exchange of the
Preference Units in accordance with the Agreement of Limited Partnership have
been duly and validly reserved for issuance, and upon issuance in accordance
with this Agreement, the Agreement of Limited Partnership and the Charter, shall
be duly and validly issued, fully paid and non-assessable.
(j) Neither the issuance, sale or delivery of the Preference
Units nor, upon exchange, the issuance and delivery of the Preferred Shares, is
subject to any preemptive right of any Partner of Operating Partnership arising
under law or the Agreement of Limited Partnership or any stockholder of Company
arising under applicable law or the Charter or Bylaws of Company, or to any
contractual right of first refusal or other right in favor of any person. With
the exception of the Charter, the Agreement of Limited Partnership, existing
registration rights agreements, the Credit Agreement, dated as of March 29,
1999, among the Operating Partnership, as Borrower, the Company, as General
Partner and Guarantor, and the Lenders
14
named therein, as amended or modified from time to time, the Restated Note
Agreement, dated as of July 1, 1996, with respect to the Operating Partnership's
Series A-1, Series A-2 and Series A-3 7.9% Guaranteed Senior Promissory Notes
due June 15, 2006 and Series B 8% Guaranteed Senior Promissory Notes due
December 12, 2006, and the Note Purchase Agreement, dated as of December 15,
1994, and amended as of August 31, 1995, with respect to the Operating
Partnership's Series A 8.68% Guaranteed Senior Promissory Notes due December 15,
2004 and Series B 8.73% Guaranteed Senior Promissory Notes due June 15, 2005,
there are no agreements or understandings in effect restricting the voting
rights, the distribution rights or any other rights or privileges of the holders
of the Preference Units, or upon exchange, the Preferred Shares.
(k) There is no action, suit, proceeding or investigation
pending or, to Operating Partnership's and Company's knowledge, currently
threatened against Operating Partnership or Company that questions the validity
of this Agreement or the right of Operating Partnership or Company to enter into
this Agreement, to consummate the transactions contemplated herein, or that
would reasonably be expected to, either individually or in the aggregate, have a
material adverse affect on the business, capitalization, operations, properties
or condition (financially or otherwise) of Operating Partnership or Company, or
result in any change in the current equity ownership of Operating Partnership or
Company, nor is Company or Operating Partnership aware that there is any basis
for the foregoing.
(l) Neither Operating Partnership nor Company is in conflict
with, or in default or violation of (i) any law, rule, regulation, order,
judgment or decree applicable to it or by which any of its properties or assets
is bound or affected, or (ii) any note, bond, mortgage, indenture or obligation
to which it is a party or by which Operating Partnership or Company or any
property or asset of Company or Operating Partnership is bound or affected,
except for any such conflicts, defaults or violations that would not reasonably
be expected to, individually or in the aggregate, have a material adverse effect
on the business, operations, properties or condition (financially or otherwise)
of Operating Partnership or Company.
Operating Partnership and Company hereby consent to any pledge
and release of such pledge of the Preference Units and to any pledge and release
of such pledge of any Preferred Shares into which such Preference Units are
exchanged, to secure the obligations of Contributors, so long as the pledge and
exercise of remedies thereunder shall be subject in all respects to the
provisions of the Agreement of Limited Partnership.
Operating Partnership and Company hereby expressly permit
Shearman & Sterling, as counsel to Contributors and Manager, to rely upon the
representations and warranties set forth in this Paragraph 8 as if such
representations and warranties were made by Operating Partnership and Company
directly to Shearman & Sterling.
9. Survival of Representations and Warranties. The
representations and warranties set forth in Paragraphs 7 and 8 shall survive
the Closing.
15
10. Brokers. Each party represents and warrants to the other
that it has dealt with no broker, finder or other person (collectively,
"Broker") with respect to this Agreement or the transactions contemplated hereby
and that no Broker is entitled to a commission as a result of this transaction,
except for Xxxxxxx Xxxxx & Co. Operating Partnership is responsible for the
commission to Xxxxxxx Xxxxx & Co. pursuant to a separate agreement. Each of (a)
Operating Partnership and Company, severally and not jointly, on the one hand,
and (b) Contributors on the other hand, agree to indemnify and hold harmless the
other party against any loss, liability, damage, expense or claim incurred by
reason of any brokerage commission or finder's fee alleged to be payable because
of any act, omission or statement of the indemnifying party. Such indemnity
obligation shall be deemed to include the payment of reasonable attorney's fees
and court costs incurred in defending any such claim. The provisions of this
Paragraph 10 shall survive the Closing.
11. Complete Agreement. This Agreement represents the entire
agreement between Contributors, Operating Partnership and Company covering
everything agreed upon or understood in this transaction and all other prior
agreements, written or oral, including any prior subscription agreements or
letters, are merged into this Agreement. There are no oral promises, conditions,
representations, understandings, interpretations or terms of any kind as
conditions or inducements to the execution hereof in effect between the parties.
No change or addition shall be made to this Agreement except by a written
agreement executed by Contributors, Operating Partnership and Company.
12. Authorized Signatories. The persons executing this
Agreement for and on behalf of Contributors, Operating Partnership and Company
each represent that they have the requisite authority to bind the entities on
whose behalf they are signing.
13. Partial Invalidity. If any term, covenant or condition of
this Agreement is held to be invalid or unenforceable in any respect, such
invalidity or unenforceability shall not affect any other provision hereof, and
this Agreement shall be construed as if such invalid or unenforceable provision
had never been contained herein.
14. Miscellaneous. (a) Governing Law. This Agreement shall be
interpreted and enforced according to the laws of the State of New York.
(b) Headings; Sections. All headings and sections of this
Agreement are inserted for convenience only and do not form part of this
Agreement or limit, expand or otherwise alter the meaning of any provisions
hereof.
(c) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which shall constitute one and the same agreement. Facsimile signatures shall be
deemed effective execution of this Agreement and may be relied upon as such by
the other party. In the event facsimile signatures
16
are delivered, originals of such signatures shall be delivered to the other
party within three (3) business days after execution.
(d) No Benefit For Third Parties. The provisions of this
Agreement are intended to be for the sole benefit of the parties hereto and
their respective successors and permitted assigns, and none of the provisions of
this Agreement are intended to be, nor shall they be construed to be, for the
benefit of any third party.
(e) Rights and Obligations. The rights and obligations of
Contributors, Operating Partnership and Company shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns in accordance with the provisions of Article 11 and Section
17.6 of the Agreement of Limited Partnership.
(f) Limitation of Liability. The liability of Contributors
hereunder shall be limited to the Contribution Amount.
15. Notices. All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered, delivered by nationally recognized
overnight courier with proof of delivery thereof, sent by United States
registered or certified mail (postage prepaid, return receipt requested)
addressed as hereinafter provided or via telephonic facsimile transmission with
proof of delivery in the form of a telecopier's transmission confirmation
report. Notice shall be sent and deemed given when (a) if personally delivered
or via nationally recognized overnight courier, then upon receipt by the
receiving party, or (b) if mailed, then three (3) days after being postmarked,
or (c) if sent via telephonic facsimile transmission, then at the time set forth
in the telecopier's transmission confirmation report.
Any party listed below may change its address hereunder by
notice to the other party listed below. Until further notice, notice and other
communications hereunder shall be addressed to the parties listed below as
follows:
If to Contributors: Belcrest Realty Corporation and
Belair Real Estate Corporation
c/o Xxxxx Xxxxx Management
The Xxxxx Xxxxx Building
000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxx Xxxxxx
Fax: (000) 000-0000
If to Operating Partnership
or Company: National Golf Properties, Inc.
0000 00xx Xxxxxx, Xxxxx 0000
00
Xxxxx Xxxxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
16. Press Releases. Contributors, Operating Partnership and
Company each agrees that it will not issue any press release, advertisement or
other public communication with respect to this Agreement or transaction
contemplated therein without the prior consent of the other party hereto, except
to the extent such communication is required by applicable law or by the New
York Stock Exchange Rules; provided, however, that in such event such party
shall use best efforts to deliver a copy of the proposed press release,
advertisement or other public communication to the other party prior to the
publication thereof and shall grant the other party an opportunity to review the
same and shall make reasonable revisions to such communication requested by such
other party.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the day first written above.
CONTRIBUTORS:
BELCREST REALTY CORPORATION
By: /s/ Xxxxxx X. Xxxxx
------------------------
Name: Xxxxxx X. Xxxxx
Title:Executive Vice President
BELAIR REAL ESTATE CORPORATION
By: /s/ Xxxxxx X. Xxxxx
------------------------
Name: Xxxxxx X. Xxxxx
Title:Executive Vice President
OPERATING PARTNERSHIP:
NATIONAL GOLF OPERATING PARTNERSHIP, L.P.
By: NATIONAL GOLF PROPERTIES, INC.,
its general partner
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
Title:President
COMPANY:
NATIONAL GOLF PROPERTIES, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
Title:President
