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EXHIBIT 2.1
AGREEMENT
AND
PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION is made and
entered into as of October 31, 1998, by and among SUMMIT PROPERTIES INC., a
Maryland corporation ("SUMMIT"), SUMMIT PROPERTIES PARTNERSHIP, L.P., a
Delaware limited partnership (the "OPERATING PARTNERSHIP"), XXXXX INDUSTRIES,
INC., an Ohio corporation ("XXXXX"), XXXXX INDUSTRIES - BUENA VISTA LIMITED
PARTNERSHIP, a Texas limited partnership (the "BUENA VISTA PARTNERSHIP"), XXXX-
XxXXXXXX LIMITED PARTNERSHIP, a Texas limited partnership (the "BELCOURT
PARTNERSHIP"), XXXXX INDUSTRIES - HORIZON PARKWAY LIMITED
PARTNERSHIP, a Texas limited partnership (the "TURTLE COVE PARTNERSHIP"), XXXXX
INDUSTRIES-CAMINO REAL, L.P., a Texas limited partnership (the "CAMINO REAL
PARTNERSHIP"), XXXXX INDUSTRIES-RANCHO LAS PALMAS, L.P., a Texas limited
partnership (the "RANCHO LAS PALMAS PARTNERSHIP"), XXXXX PROPERTIES - LOS
ARBOLES LIMITED PARTNERSHIP, a Texas limited partnership (the "LOS ARBOLES
PARTNERSHIP"), XXXXX INDUSTRIES - OAKWELL FARMS LIMITED PARTNERSHIP,
a Texas limited partnership (the "TURTLE ROCK PARTNERSHIP"), RANCHO LAS PALMAS
II, L.P., a Texas limited partnership ("RANCHO II"), and XXXX XXXXXXX XXXXXXX,
XXXXXX XXXXXXXX XXXXXXX, XXXX X. XXXXX, XXXXX X. XXXXX, X. XXXX
XXXXX, XXXXXXX X. XXXXX, XXXXXX X. XXXXX, XX., XXXX X. XXXXXX, XXXXX
X. XXXXX, XXXXXXXX X. XXXXXXX, XXXX XXXXX OSTEVOLL REVOCABLE TRUST,
XXXXXX X. XXXXXXXX and XXXXXXX X. XXXXXXXX, XX. (individually and collectively,
the "XXXXX STOCKHOLDERS"), and XXXXX INDUSTRIES II, L.C., a Texas limited
liability company ("XXXXX XX"), and KW PARTNERSHIP, an Ohio general partnership,
LAD PARTNERSHIP, an Ohio general partnership, XXXXXXX X. XXXXXXXX, MILAN
INVESTMENT TRUST, and S. XXXXXX XXXXXXX (individually and collectively, the
"XXXXX LIMITED PARTNERS").
RECITALS
A. The Buena Vista Partnership is the owner of a 467-unit
apartment complex known as (and hereinafter called) "Buena Vista", located at
0000 Xxxxxxxxx Xxxx, Xxxxxx, Xxxxx and more particularly described in Exhibit
"A-1" hereof.
B. The Belcourt Partnership is the owner of a 180-unit
apartment complex known as (and hereinafter called) "Belcourt", located at 0000
Xxxx Xxxxxx, Xxxxxx, Xxxxx and more particularly described in Exhibit "A-2"
hereof.
C. The Turtle Cove Partnership is the owner of a 348-unit
apartment complex known as (and hereinafter called) "Turtle Cove", located at
0000 Xxxxxxx Xxxxx Xxxxxxx, Xxxxxx, Xxxxx and more particularly described in
Exhibit "A-3" hereof.
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D. The Camino Real Partnership is the owner of a 364-unit
apartment complex known as (and hereafter called) "Camino Real", located at 0000
Xxxxxxx Xxxxx Xxxxxxx, Xxxxxx, Xxxxx and more particularly described in Exhibit
"A-4" hereof.
E. The Rancho Las Palmas Partnership is the owner of a
448-unit apartment complex known as (and hereafter called) "Rancho Las Palmas",
located at 0000 XxXxx Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxxx and more particularly
described in Exhibit "A-5" hereof.
F. The Los Arboles Partnership is the owner of a 408-unit
apartment complex known as (and hereinafter called) "Los Arboles", located at
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxxx, Xxxxx and more particularly described in
Exhibit "A-6" hereof.
G. The Turtle Rock Partnership is the owner of a 250-unit
apartment complex known as (and hereinafter called) "Turtle Rock", located at
0000 Xxxxxxx Xxxxx, Xxx Xxxxxxx, Xxxxx and more particularly described in
Exhibit "A-7" hereof.
H. The Xxxxx Stockholders collectively own all of the issued
and outstanding shares of the capital stock of Xxxxx.
I. Summit is a corporation that has elected to be taxed as a
real estate investment trust under Sections 856 through 860 of the "Code" (as
hereinafter defined),.
J. The respective Boards of Directors of Summit and Xxxxx have
each determined that the merger of Xxxxx with and into Summit is in the best
interests of their respective stockholders and such Boards of Directors have
approved such merger, upon the terms and conditions set forth in this Agreement,
which merger is intended to qualify as a "reorganization" within the meaning of
Section 368(a) of the Code.
K. The Xxxxx Limited Partners desire to contribute, and the
Operating Partnership desires to accept from the Xxxxx Limited Partners, upon
the terms and conditions set forth in this Agreement, all of the Xxxxx Limited
Partners' partnership interests in the Partnerships, which transaction is
intended to be a contribution governed by Section 721 of the Code.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein, the parties hereby agree as
follows:
ARTICLE 1. CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
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"ADDITIONAL CLOSING OP UNITS" has the meaning specified in
Section 2.09 and shall consist of the Buena Vista Additional Closing OP Units,
the Belcourt Additional Closing OP Units, the Turtle Cove Additional Closing OP
Units, the Camino Real Additional Closing OP Units, the Los Arboles Additional
Closing OP Units, and the Turtle Rock Additional Closing OP Units.
"ADDITIONAL CLOSING SHARES" has the meaning specified in
Section 2.09.
"AFFILIATE" of a specified Person means any Person who
directly or indirectly controls or is controlled by or is under common control
with, such specified Person.
"AGGREGATE RANCHO OP UNITS" has the meaning specified in
Section 2.10.
"AGGREGATE RANCHO SHARES" has the meaning specified in Section
2.10.
"AGGREGATE SHORTFALL AMOUNT" means the product of (i) the
amount, if any, by which (A) $1,532,917, plus the aggregate Pet Fees and Month
to Month Fees for all of the Apartment Projects (other than Rancho Las Palmas)
for the Target Month, exceeds (B) the aggregate Net Rental Income of all of the
Apartment Projects (other than Rancho Las Palmas) for the month of September,
1998 (the "TARGET MONTH"), increased by the aggregate Pet Fees and Month to
Month Fees for the Target Month, multiplied by (ii) 24; provided, however, that
in no event shall the Aggregate Shortfall Amount exceed $2,900,000.
"AGREEMENT" or this "Agreement" means this Agreement and Plan
of Reorganization, including all exhibits hereto.
"APARTMENT PROJECTS" means, individually and collectively,
Buena Vista, Belcourt, Turtle Cove, Camino Real, Rancho Las Palmas, Los Arboles,
and Turtle Rock.
"ASSUMPTION FEE" has the meaning specified in Section 6.14.
"BASIC CLOSING OP UNITS" means, collectively, the Buena Vista
Basic Closing OP Units, the Belcourt Basic Closing OP Units, the Turtle Cove
Basic Closing OP Units, the Camino Real Basic Closing OP Units, the Los Arboles
Basic Closing OP Units, the Turtle Rock Basic Closing OP Units and the Rancho
Basic Closing OP Units.
"BASIC CLOSING SHARES" means the number of Summit Shares
determined by multiplying the Maximum Aggregate Closing Shares by the Xxxxx
Stockholders' Proportionate Closing Share.
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"BASIC NUMBER OF CLOSING OP UNITS" has the meaning specified
in Section 2.09.
"BASIC NUMBER OF CLOSING SHARES" has the meaning specified in
Section 2.09.
"BASIC PARTNERSHIP VALUE", when used with respect to a
Partnership, means the amount set forth opposite such Partnership's name below:
Buena Vista Partnership $ 36,400,000.00
Belcourt Partnership $ 17,000,000.00
Turtle Cove Partnership $ 23,500,000.00
Camino Real Partnership $ 25,200,000.00
Los Arboles Partnership $ 28,300,000.00
Turtle Rock Partnership $ 14,600,000.00
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Total $ 145,000,000.00
"BELCOURT ADDITIONAL CLOSING OP UNITS" has the meaning
specified in Section 3.02(b).
"BELCOURT BASIC CLOSING OP UNITS" has the meaning specified in
Section 3.02(b).
"BELCOURT RANCHO MAKEUP OP UNITS" has the meaning specified in
Section 3.03(b).
"BLUE SKY LAWS" means the securities laws and regulations of
any political subdivision of the United States.
"BUENA VISTA ADDITIONAL CLOSING OP UNITS" has the meaning
specified in Section 3.02(a).
"BUENA VISTA BASIC CLOSING OP UNITS" has the meaning specified
in Section 3.02(a).
"BUENA VISTA RANCHO MAKEUP OP UNITS" has the meaning specified
in Section 3.03(a).
"BUSINESS DAY" means any day other than a Saturday, Sunday or
other day on which the commercial banks in Cincinnati, Ohio or in Dallas, San
Antonio or Austin, Texas or in Charlotte, North Carolina are authorized by law
to close.
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"CAMINO REAL ADDITIONAL CLOSING OP UNITS" has the meaning
specified in Section 3.02(d).
"CAMINO REAL BASIC CLOSING OP UNITS" has the meaning specified
in Section 3.02(d).
"CAMINO REAL RANCHO MAKEUP OP UNITS" has the meaning specified
in Section 3.03(d).
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"CERTIFICATES" has the meaning specified in Section 2.12.
"CLAIMS" has the meaning specified in Section 15.01.
"CLOSING" has the meaning specified in Section 4.01.
"CLOSING CONFERENCE" has the meaning specified
in Section 4.01.
"CLOSING DATE" means October 31, 1998, or such later date as
shall be agreed upon by Summit and Xxxxx.
"CLOSING MARKET PRICE" means $18.50.
"CLOSING VALUE" means the sum of the Net Partnership Values of
the Buena Vista Partnership, the Belcourt Partnership, the Turtle Cove
Partnership, the Camino Real Partnership, the Los Arboles Partnership, and the
Turtle Rock Partnership.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"COMPETING TRANSACTION" has the meaning specified in Section
12.03E.
"CONFIDENTIALITY AGREEMENT" means the Agreement regarding
Confidentiality and Related Matters, dated June 25, 1998, by and between Summit
and Xxxxx.
"CONTRACTOR/MANAGER" has the meaning specified in the
definition of Rancho Construction Contract.
"CONTRIBUTION DATE" has the meaning specified in Section 3.01.
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"CONTRIBUTION TRANSACTION" has the meaning specified in
Section 3.01.
"CORPORATE ARTICLES OF MERGER" has the meaning specified in
Section 2.02.
"CORPORATE CERTIFICATE OF MERGER" has the meaning specified in
Section 2.02.
"CORPORATE MERGER" has the meaning specified in Section 2.01.
"CORPORATE MERGER EFFECTIVE TIME" has the meaning specified in
Section 2.02.
"DEFICIENCY AMOUNT" has the meaning specified in the
definition of Shortfall Amount.
"E&P STUDY" has the meaning specified in Section 5.20.
"EFFECTIVE DATE" means the date of this Agreement as set forth
in the Preamble.
"ENVIRONMENTAL AGENCY" has the meaning specified in the
definition of Hazardous Material.
"ENVIRONMENTAL COMPLIANCE COSTS" means any reasonable
out-of-pocket cost, fee or expense incurred directly to satisfy any requirement
imposed by any Environmental Agency to bring the Property into compliance with
applicable Federal, State and local laws and regulations directly relating to
the existence on the Property of any Hazardous Material.
"ENVIRONMENTAL REPORTS" has the meaning specified in Section
7.10B(4).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated and rulings issued thereunder.
"ERISA AFFILIATE", when used with respect to any Person, means
any trade or business (whether or not incorporated) under common control with
such Person within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions relating to
Section 412 of the Code).
"ESTIMATED XXXXX EXPENSES" means the Xxxxx Expenses as
estimated by Xxxxx in writing and delivered to Summit on or prior to the Closing
Date.
"XXXXX ENDING RETURNS" has the meaning specified in Section
14.02B.
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"XXXXX EXPENSES" means all costs and expenses incurred by
Xxxxx, the Xxxxx Stockholders, Xxxxx XX, the Xxxxx Limited Partners and the
Partnerships, in connection with the negotiation, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby,
including, but not limited to, attorneys' fees and disbursements and the Eastdil
Fee and charges imposed by lenders (such as appraisal fees and legal fees) in
connection with the assumption of the Mortgage Indebtedness to the extent not
adjusted for in the definition of Net Partnership Value.
"XXXXX MATERIAL ADVERSE CHANGE" has the meaning specified in
Section 7.08(b).
"XXXXX MATERIAL ADVERSE EFFECT" has the meaning specified in
Section 7.18.
"XXXXX LIMITED PARTNERS" shall have the meaning specified in
the Recitals to this Agreement except that when used with respect to a
Partnership, "XXXXX LIMITED PARTNERS" shall mean the Xxxxx Limited Partners of
such Partnership.
"XXXXX PARTNERSHIP INTERESTS" has the meaning specified in
Section 3.01.
"XXXXX STOCKHOLDERS' PROPORTIONATE CLOSING SHARE" means the
proportion (calculated to four decimal points) that (a) the sum of (i) Xxxxx'x
Partnership Percentage in the Buena Vista Partnership times the Net Partnership
Value of the Buena Vista Partnership, (ii) Xxxxx'x Partnership Percentage in the
Belcourt Partnership times the Net Partnership Value of the Belcourt
Partnership, (iii) Xxxxx'x Partnership Percentage in the Turtle Cove Partnership
times the Net Partnership Value of the Turtle Cove Partnership, (iv) Xxxxx'x
Partnership Percentage in the Camino Real Partnership times the Net Partnership
Value of the Camino Real Partnership, (v) Xxxxx'x Partnership Percentage in the
Los Arboles Partnership times the Net Partnership Value of the Los Arboles
Partnership, and (vi) Xxxxx'x Partnership Percentage in the Turtle Rock
Partnership times the Net Partnership Value of the Turtle Rock Partnership bears
to (b) the Closing Value.
"FIRST QUARTER OPERATING STATEMENT" has the meaning specified
in the definition of Net Rental Income.
"GAAP" means generally accepted accounting principles.
"GOVERNMENTAL ENTITY" means any federal, state or local
government or any court, administrative or regulatory agency or commission or
other governmental authority or agency, domestic or foreign.
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"HAZARDOUS MATERIAL" means (i) asbestos and any chemicals,
flammable substances or explosives, any radioactive materials (including radon),
any hazardous waste or substances which have, as of the date hereof, been
determined by any applicable Federal, State or local government law to be
hazardous or toxic by the U.S. Environmental Protection Agency, the U.S.
Department of Transportation, and/or any instrumentality now or hereafter
authorized to regulate materials and substances in the environment which has
jurisdiction over the Property ("ENVIRONMENTAL AGENCY"), and (ii) any oil,
petroleum or petroleum- derived substance, any drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, which materials listed under items (i) and (ii) above cause the
Property (or any part thereof) to be in material violation of any applicable
environmental laws or the regulations of any Environmental Agency; provided,
however, that the term "Hazardous Material" shall not include motor oil and
gasoline contained in or discharged from vehicles not used primarily for the
transport of motor oil or gasoline.
"IMPROVEMENTS" means the buildings, improvements, structures
and fixtures located upon the respective Lands.
"INDEMNIFIED PARTY" has the meaning specified in Section
15.01.
"INDEMNIFYING PARTY" has the meaning specified in Section
15.01.
"JAMS" has the meaning specified in Section 16.10.
"LAND" means the land described in Exhibits "A-1" through
"A-7", respectively, relating to the Apartment Projects, and all respective
rights and appurtenances pertaining thereto, including any rights in and to
adjacent streets, alleys or rights of way and easements, licenses or interests
therein.
"LATEST XXXXX BALANCE SHEET" has the meaning specified in
Section 7.08.
"LATEST PARTNERSHIP BALANCE SHEET" has the meaning specified
in Section 8.07(b).
"LOS ARBOLES ADDITIONAL CLOSING OP UNITS" has the meaning
specified in Section 3.02(e).
"LOS ARBOLES BASIC CLOSING OP UNITS" has the meaning specified
in Section 3.02(e).
"LOS ARBOLES RANCHO MAKEUP OP UNITS" has the meaning specified
in Section 3.03(e).
"LOSSES" has the meaning specified in Section 15.01A.
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"MARKET PRICE", when used with respect to a Summit Share on
any Trading Day, means the last sale price of a Summit Share as reported by the
New York Stock Exchange Composite Tape for such Trading Day.
"MAXIMUM AGGREGATE CLOSING SHARES" means the number of Summit
Shares obtained by dividing the Closing Value by the Closing Market Price.
"MAXIMUM AGGREGATE RANCHO OP UNITS" has the meaning specified
in Section 2.09.
"MAXIMUM AGGREGATE RANCHO SHARES" has the meaning specified in
Section 2.09.
"MAXIMUM CASH AMOUNT" has the meaning specified in Section
2.08.
"MAXIMUM NUMBER OF OP UNITS" has the meaning specified in
Section 2.09. "MAXIMUM NUMBER OF SHARES" has the meaning specified in Section
2.09.
"MORTGAGE INDEBTEDNESS" means indebtedness or other
obligations secured by a deed of trust, mortgage or other agreement or
instrument encumbering the Land or Improvements of any Apartment Project.
"MULTI-EMPLOYER PLAN", when used with respect to any Person,
means a "multi-employer plan", within the meaning of Section 4001(a)(3) of
ERISA, to which such Person or any ERISA Affiliate of such Person makes, is
making, or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions.
"MULTIPLE EMPLOYER PLAN", when used with respect to any
Person, means a single employer plan, as defined in Section 4001(a)(15) of
ERISA, which (a) is maintained for employees of such Person or any ERISA
Affiliate of such Person and at least one Person other than such Person and any
ERISA Affiliate of such Person or (b) was so maintained and in respect of which
such Person or an ERISA Affiliate of such Person could have liability under
Section 4064 of ERISA in the event such plan has been or were to be terminated.
"NET PARTNERSHIP VALUE", when used with respect to a
Partnership other than the Rancho Las Palmas Partnership, means the Basic
Partnership Value of such Partnership (a) minus the sum of (i) the principal
amount as of the Closing Date of the Mortgage Indebtedness secured by the
Apartment Project owned by such Partnership (including any amount of the
principal of any such Mortgage Indebtedness prepaid or to be prepaid as
contemplated by the provisions of Sections 6.15 and 6.16 hereof); (ii) a share
of the principal amount as of the Closing Date of the Mortgage Indebtedness
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secured by the Apartment Project known as "Rancho Las Palmas"
as follows: Buena Vista Partnership, $8,844,258.24; Belcourt Partnership,
$2,787,793.01; Turtle Cove Partnership, $3,837,639.25; Camino Real Partnership,
$4,132,493.17; Los Arboles Partnership, $2,721,497.48; and Turtle Rock
Partnership, $1,394,222.23; (iii) any Shortfall Amount attributable to such
Partnership; (iv) any Assumption Fee payable in connection with the Mortgage
Indebtedness encumbering the Apartment Project owned by such Partnership as
contemplated by the provisions of Section 6.14; (v) any amount deductible
pursuant to the provisions of Section 12.03Z and (vi) a percentage of the
Estimated Xxxxx Expenses as follows: Buena Vista Partnership, 20.87%; Belcourt
Partnership, 9.74%; Turtle Cove Partnership, 13.47%; Camino Real Partnership,
14.45%; Los Arboles Partnership, 16.22%; and Turtle Rock Partnership, 8.37%, and
(vii) a proportionate share of $500,000 based on the proportion (calculated to
four decimal points) that (x) the Basic Partnership Value of such Partnership
minus any Shortfall Amount attributable to such Partnership bears to (y)
$145,000,000.00 minus the Aggregate Shortfall Amount; and (b) plus or minus, as
the case may be, any net prorations with respect to such Partnership pursuant to
Exhibit "J" hereto.
"NET RANCHO OP UNITS" means such number of OP Units as shall
equal the difference between the number of Aggregate Rancho OP Units minus the
number of Rancho Makeup OP Units.
"NET RANCHO SHARES" means such number of Summit Shares as
shall equal the difference between the number of Aggregate Rancho Shares minus
the number of Rancho Makeup Shares.
"NET RENTAL INCOME", when used with respect to an Apartment
Project for any calendar month, means the rental income for such month,
determined on the cash basis and in the same manner as the actual "Net Rental
Income" for the month of April, 1998 was determined pursuant to that certain
statement ("FIRST QUARTER OPERATING STATEMENT") for such Apartment Project
captioned "Cash Flow Income Statement, Year to Date: 01 Jan 1998 Thru 30 Apr
1998".
"9.8% TEST" has the meaning specified in Section 2.15.
"1934 ACT" has the meaning specified in Section 12.03E.
"OP UNITS" means units of limited partnership interest in the
Operating Partnership.
"OWNER'S POLICY" has the meaning specified in Section 5.01.
"PARTNERS", when used with respect to a Partnership, means the
general and limited partners of such Partnership at the time of determination.
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"PARTNERSHIP ENDING RETURN" has the meaning specified in
Section 14.03.
"PARTNERSHIP INTEREST" shall mean the interest of a Partner in
a Partnership.
"PARTNERSHIP MATERIAL ADVERSE CHANGE" has the meaning
specified in Section 8.07(b).
"PARTNERSHIP MATERIAL ADVERSE EFFECT" has the meaning
specified in Section 8.16.
"PARTNERSHIP PERCENTAGE" when used with respect to a Partner
in a Partnership means the proportionate share, expressed as a percentage, of a
distribution of "Net Cash from Sales or Refinancing" (as such term is defined in
the Limited Partnership Agreement of such Partnership) to which such Partner
would be entitled, assuming that such distribution was (a) made (i) in the case
of each Partnership other than the Rancho Las Palmas Partnership on the
Contribution Date and (ii) in the case of the Rancho Las Palmas Partnership on
the Rancho Issue Date and (b) in an amount in cash equal to (x) the Net
Partnership Value of such Partnership in the case of each Partnership other than
the Rancho Las Palmas Partnership and (y) the Rancho Value in the case of the
Rancho Las Palmas Partnership provided, however, that any computation of the
Partnership Percentage of a Partner in a Partnership shall be deemed to be the
Partnership Percentage of such Partner in such Partnership immediately preceding
the Corporate Merger Effective Time in the case of Xxxxx and the Contribution
Date in the case of each Xxxxx Limited Partner.
"PARTNERSHIPS" means, individually and collectively, the Buena
Vista Partnership, the Belcourt Partnership, the Turtle Cove Partnership, the
Camino Real Partnership, the Rancho Las Palmas Partnership, the Los Arboles
Partnership, and the Turtle Rock Partnership.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under ERISA.
"PENSION PLAN", when used with respect to any Person, means a
pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA
which such Person sponsors, maintains, or to which it makes, is making, or is
obligated to make contributions, or in the case of a Multiple Employer Plan has
made contributions at any time during the immediately preceding five (5) plan
years.
"PERMITTED EXCEPTIONS" has the meaning specified in Section
5.01.
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"PERSON" means an individual, firm, corporation, division,
operation, partnership, limited liability company, joint venture, trust,
unincorporated association, government or any agency or political subdivision
thereof or any other entity.
"PERSONAL PROPERTY" means all tangible personal property
located on the respective Lands or related Improvements and used in connection
with the operation thereof, all tenant leases of the respective Land or related
Improvements, the leasehold interests in personal property leased to a
Partnership (but excluding tangible personal property owned by tenants and the
interest of any lessor in any personal property leased or rented to any
Partnership), and accounts receivable and service agreements pertaining to the
respective Lands and Improvements.
"PERSONALTY LEASES" has the meaning specified in Section
8.09B(15).
"PET FEES" and "MONTH TO MONTH FEES" for the Target Month,
when used with respect to an Apartment Project, have the same meanings as such
terms have for the month of April, 1998 in the First Quarter Operating Statement
for such Apartment Project and shall be calculated in the same manner (except
that the same shall relate to the Target Month rather than the month of April).
"PLAN", when used with respect to any Person, means an
employee benefit plan (as defined in Section 3(3) of ERISA) which such Person
sponsors or maintains or to which such Person makes, is making, or is obligated
to make contributions and includes any Pension Plan.
"POST-CLOSING PERIOD" has the meaning specified in Section
14.01B.
"PROPERTY" or "PROPERTIES" means the respective Land,
Improvements and Personal Property constituting the Apartment Projects.
"RANCHO BASIC CLOSING OP UNITS" has the meaning specified in
Section 3.02(g).
"RANCHO CONSTRUCTION CONTRACT" means that certain construction
contract between Rancho Las Palmas Partnership, as owner, and EPI Property
Development, L.P. ("CONTRACTOR/MANAGER"), as contractor, dated February 7, 1997.
"RANCHO EXTRAORDINARY TRANSACTION MARKET PRICE" means, in the event
the Company announces or otherwise publicly discloses a completed or proposed
merger, acquisition, financing or other extraordinary transaction, any such
announcement or other public disclosure constituting conclusive evidence that
the transaction or proposed transaction at issue constitutes an "extraordinary
transaction" for the purposes of this definition (other than the announcement or
other public disclosure of a stock repurchase program), on or after the
Effective Date and on or prior to the Trading Day immediately preceding the
Rancho Issue Date, the average of the Market Prices of a Summit Share for
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the ten (10) consecutive Trading Days ending with the Trading Day
immediately preceding the date of such announcement or other public disclosure.
In the event of announcements or public disclosures of consecutive transactions,
there shall be an Extraordinary Transaction Market Price with respect to each
such announcement or disclosure.
"RANCHO ISSUE DATE" means the tenth (10th) Business Day
following the date of receipt by Summit of a Rancho Issue Election.
"RANCHO ISSUE ELECTION" has the meaning set forth in Section
2.10.
"RANCHO MAKEUP OP UNITS" means, collectively, the Buena Vista
Rancho Makeup OP Units, the Belcourt Rancho Makeup OP Units, the Turtle Cove
Rancho Makeup OP Units, the Camino Real Rancho Makeup OP Units, the Los Arboles
Rancho Makeup OP Units, and the Turtle Rock Rancho Makeup OP Units.
"RANCHO MAKEUP SHARES" means such number of Summit Shares as
shall be required to be issued so that the aggregate value of the Basic Closing
Shares (valued at the Closing Market Price), cash, Additional Closing Shares
(valued at the Closing Market Price) and Rancho Makeup Shares (valued at the
Closing Market Price) received by the Xxxxx Stockholders in connection with the
Corporate Merger shall equal the aggregate value of the Basic Closing Shares,
cash, and Additional Closing Shares, if any, the Xxxxx Stockholders would have
received in connection with the Corporate Merger if the Net Partnership Value of
each of the Partnerships had been determined without deducting any amount from
said value pursuant to clause (ii) of the definition of Net Partnership Value.
"RANCHO MANAGEMENT AGREEMENT" has the meaning specified in
Section 12.01B.
"RANCHO MARKET PRICE" means (a) if the Rancho Issue Date occurs on or
before the ninetieth (90th) day following the Closing Date, the Closing Market
Price or (b) if the Rancho Issue Date occurs after the ninetieth (90th) day
following the Closing Date, the lowest of (i) the average of the Market Prices
of a Summit Share for the ten (10) consecutive Trading Days ending with the
Trading Day immediately preceding the Rancho Issue Date, (ii) the Rancho
Repurchase Market Price, if any, and (iii) the Rancho Extraordinary Transaction
Market Price, if any, or the lowest Rancho Extraordinary Market Price if more
than one, provided, however, that in no event shall the Rancho Market Price be
less than $18.50 or greater than $21.50.
"RANCHO NET OPERATING INCOME" has the meaning specified in the
definition of Rancho Value.
"RANCHO PURCHASE PRICE" has the meaning specified in Section
2.11.
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"RANCHO RECONVEYANCE ELECTION" has the meaning specified in
Section 2.11.
"RANCHO REPURCHASE MARKET PRICE" means, in the event the Company
announces or otherwise publicly discloses the commencement or proposed
commencement of a stock repurchase program on or after the Effective Date and on
or prior to the Trading Day immediately preceding the Rancho Issue Date, the
average of the Market Prices of a Summit Share for the ten (10) consecutive
Trading Days ending with the Trading Day immediately preceding the date of such
announcement or other public disclosure.
"RANCHO VALUE" means $28,000,000.00 plus the Rancho Premium, if any,
but not in excess of $30,900,000, minus 16.88% of the Estimated Xxxxx Expenses.
For the purposes of this definition "RANCHO PREMIUM" means the quotient obtained
by dividing (a) the Rancho Net Operating Income for the Measuring Period times
12 minus $2,400,000 by (b) .085. In addition, for the purpose of this definition
(a) "MEASURING PERIOD" means the last full calendar month prior to the calendar
month in which Xxxxx gives the Rancho Issue Election, and (b) "RANCHO NET
OPERATING INCOME" shall mean the net operating income of the Apartment Project
known as "Rancho Las Palmas" determined on the same basis as net operating
income was determined for the other Apartment Projects for the month of April,
1998 pursuant to the First Quarter Operating Statements except that in
determining Rancho Net Operating Income for the Measuring Period, expenses shall
be deemed to be $1,793,458.00.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
and LockUp Agreement to be entered into among Summit, the Xxxxx Limited Partners
and the Xxxxx Stockholders as of the Closing in the form attached hereto as
Exhibit "C."
"REIT" has the meaning specified in Section 10.04.
"REPORTABLE EVENT" means any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"RULES" has the meaning specified in Section 16.10.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and any similar federal statute and the rules and regulations thereunder, all as
the same may be in effect from time to time.
"SERVICE AGREEMENTS" has the meaning specified in Section
7.10B(3).
"SERVICE CONTRACTS" has the meaning specified in Section
8.09B(15).
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"SHORTFALL AMOUNT", when used with respect to a Partnership,
means such Partnership's proportionate share of the Aggregate Shortfall Amount,
calculated by multiplying the Aggregate Shortfall Amount by a fraction, the
numerator of which is the amount ("DEFICIENCY AMOUNT"), if any, by which (A) the
Net Rental Income plus the Pet Fees and Month to Month Fees for the Target Month
with respect to the Apartment Project of such Partnership, shall be less than
(B) the sum of the Target Amount plus the Pet Fees and Month to Month Fees for
the Target Month with respect to such Apartment Project, and the denominator of
which is the aggregate Deficiency Amounts with respect to all Apartment Projects
(other than Rancho Las Palmas) for which there shall be Deficiency Amounts.
"SSILP" has the meaning specified in Section 5.01.
"SUMMIT EMPLOYED PERSON" has the meaning specified in Section
12.04.
"SUMMIT LIMITED PARTNERSHIP AGREEMENT" has the meaning
specified in Section 10.03.
"SUMMIT SHARES" means shares of the Common Stock, par value
$.01 per share, of Summit.
"SURVIVING CORPORATION" has the meaning specified in Section
2.01.
"TARGET AMOUNT", when used with respect to an Apartment
Project, means the amount set forth opposite such Apartment Project's name
below:
Buena Vista $ 369,297.00
Belcourt $ 176,612.00
Turtle Cove $ 254,358.00
Camino Real $ 261,869.00
Los Arboles $ 300,915.00
Turtle Rock $ 169,866.00
----------------
Total $ 1,532,917.00
"TARGET MONTH" has the meaning specified in the definition of
Aggregate Shortfall Amount.
"TAXES" means all federal, state, county, local, foreign and
other taxes and governmental assessments, including, but not limited to, income
taxes, estimated taxes, withholding taxes, transfer taxes, excise taxes, real
and personal property taxes, ad valorem taxes, payroll-related taxes, employment
taxes, franchise taxes and import duties,
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together with any related liabilities, penalties, fines, additions to tax and
interest, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"THIRD PARTY" has the meaning specified in Section 12.03E.
"TITLE COMPANY" has the meaning specified in Section 5.01.
"TRADING DAY" means any day for which trades in Summit Shares
are reported on the New York Stock Exchange Composite Tape.
"TRANSFER AND GAINS TAXES" has the meaning specified in
Section 11.02.
"TURTLE COVE ADDITIONAL CLOSING OP UNITS" has the meaning
specified in Section 3.02(c).
"TURTLE COVE BASIC CLOSING OP UNITS" has the meaning specified
in Section 3.02(c).
"TURTLE COVE RANCHO MAKEUP OP UNITS" has the meaning specified
in Section 3.03(c).
"TURTLE ROCK ADDITIONAL CLOSING OP UNITS" has the meaning
specified in Section 3.02(f).
"TURTLE ROCK BASIC CLOSING OP UNITS" has the meaning specified
in Section 3.02(f).
"TURTLE ROCK RANCHO MAKEUP OP UNITS" has the meaning specified
in Section 3.03(f).
"UNFUNDED PENSION LIABILITY" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
ARTICLE 2. CORPORATE MERGER
2.01 THE CORPORATE MERGER. Subject to the terms and conditions
of this Agreement, at the Corporate Merger Effective Time (as hereinafter
defined), Xxxxx shall be merged with and into Summit (the "CORPORATE MERGER") in
accordance with the laws of the State of Maryland and the State of Ohio.
Following the Corporate Merger,
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the separate corporate existence of Xxxxx shall cease, and Summit shall
continue as the surviving corporation (the "SURVIVING CORPORATION").
2.02 CORPORATE MERGER EFFECTIVE TIME. On or after the Closing Date and
as soon as practicable following the satisfaction or waiver of the conditions
set forth in Articles 5 and 6 hereof Summit and Xxxxx shall cause the Corporate
Merger to be consummated by executing and delivering (i) Articles of Merger
consistent with this Agreement and in form and substance reasonably satisfactory
to Summit and Xxxxx (the "CORPORATE ARTICLES OF MERGER") and filing the same
with the State Department of Assessments and Taxation of the State of Maryland,
and (ii) a Certificate of Merger consistent with this Agreement and in form and
substance reasonably satisfactory to Summit and Xxxxx (the "CORPORATE
CERTIFICATE OF MERGER") and filing the same with the Secretary of State of the
State of Ohio. In accordance with the relevant provisions of the Maryland
General Corporation Law and the Ohio General Corporation Law, the Corporate
Merger shall become effective at the date and time (the "CORPORATE MERGER
EFFECTIVE TIME") that is the later of (i) the date and time at which the
Corporate Articles of Merger are accepted for filing by the State Department of
Assessments and Taxation of the State of Maryland, and (ii) the date and time at
which the Corporate Certificate of Merger is accepted for filing by the Ohio
Secretary of State.
2.03 EFFECTS OF THE CORPORATE MERGER. At and after the
Corporate Merger Effective Time, the effect of the Corporate Merger shall be as
provided by applicable law. Without limiting the generality of the foregoing,
and subject thereto, at the Corporate Merger Effective Time all property,
rights, privileges, powers and franchises of Summit and Xxxxx shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Summit and Xxxxx
shall become the debts, liabilities, and duties of the Surviving Corporation.
2.04 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of
Incorporation of Summit, as in effect immediately prior to the Corporate Merger
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law. The Bylaws of Summit, as in effect immediately prior to the
Corporate Merger Effective Time, shall be the Bylaws of the Surviving
Corporation until amended as provided therein or by applicable law.
2.05 DIRECTORS AND OFFICERS. The Directors of Summit as of the
Corporate Merger Effective Time shall be the Directors of the Surviving
Corporation, until the earlier of their resignation or removal or otherwise
ceasing to be a director or until their respective successors shall be duly
elected and qualified, as the case may be. The officers of Summit as of the
Corporate Merger Effective Time shall be the officers of the Surviving
Corporation until the earlier of their resignation or removal or otherwise
ceasing to be an officer or until their respective successors are duly elected
and qualified, as the case may be.
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2.06 REGISTERED AND PRINCIPAL OFFICE OF SURVIVING CORPORATION;
FOREIGN QUALIFICATION. The registered office of the Surviving Corporation in the
State of Maryland is c/o The Corporation Trust Incorporated, 000 X. Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000. The principal office of the Surviving
Corporation is located at 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000.
2.07 CONVERSION OF SHARES.
(a) Each share of the Capital Stock of Xxxxx outstanding
immediately before the Corporate Merger Effective Time shall, at the Corporate
Merger Effective Time, by virtue of the Corporate Merger and without any action
on the part of the holders thereof, be converted into the right to receive a
proportionate share (based on the proportion (calculated to four decimal points)
that one share of the Capital Stock of Xxxxx bears to the aggregate number of
shares of the Capital Stock of Xxxxx outstanding at the Corporate Merger
Effective Time) of each of the following: (1) the Basic Closing Shares, subject
to the rights of the Xxxxx Stockholders to elect to receive cash in lieu of
Summit Shares in the manner and to the extent provided in Sections 2.08 and
2.15, (2) the Additional Closing Shares, when and if issued, (3) the Rancho
Makeup Shares, when and if issued, and (4) Xxxxx'x Partnership Percentage in
Rancho Las Palmas multiplied by the number of Net Rancho Shares, when and if
issued. Notwithstanding any other provision of this Agreement, any shares of the
Capital Stock of Xxxxx which are held in the treasury of Xxxxx immediately prior
to the Corporate Merger Effective Time shall not be converted but shall be
cancelled.
(b) Each Summit Share issued and outstanding immediately
before the Corporate Merger Effective Time shall remain issued, outstanding and
unchanged as a validly issued, fully paid and nonassessable share of the Common
Stock of the Surviving Corporation as of the Corporate Merger Effective Time.
2.08 CASH ELECTION. Subject to Section 2.15, each Xxxxx
Stockholder may elect to receive cash at a rate equal to the Closing Market
Price per Summit Share in lieu of all or a portion of the Basic Closing Shares
to which such Xxxxx Stockholder is otherwise entitled by filing an election in
the form of Exhibit "E-1" hereto with Summit prior to the issuance of the Basic
Closing Shares, provided, however, that Summit and the Operating Partnership
shall not be required to pay cash in connection with any such elections or any
elections under Section 3.04 in an aggregate amount exceeding $8,000,000 minus
any adjustment pursuant to Section 2.15 hereof (the "MAXIMUM CASH AMOUNT"). The
apportionment of the Maximum Cash Amount among the Xxxxx Stockholders and the
Xxxxx Limited Partners shall be as agreed by them.
2.09 ADDITIONAL CLOSING SHARES AND ADDITIONAL CLOSING OP
UNITS. In the event that after giving effect to the elections of the Xxxxx
Stockholders to receive cash in lieu of Basic Closing Shares pursuant to
Sections 2.08 and 2.15 hereof, the aggregate number of Summit Shares issuable in
connection with the Corporate Merger (the "BASIC NUMBER OF CLOSING SHARES") is
less than 50% of the sum (such sum being
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herein referred to as the "MAXIMUM NUMBER OF SHARES") of (a) the
Basic Number of Closing Shares and (b) the number of Rancho Makeup Shares and
Net Rancho Shares which would be issuable pursuant to Section 2.10, assuming a
Rancho Value of $30,900,000.00 and a Rancho Market Price of $18.50 (the "MAXIMUM
AGGREGATE RANCHO SHARES"), then Summit shall issue such additional number of
Summit Shares (the "ADDITIONAL CLOSING SHARES") as shall be required so that (a)
the sum of (i) the Basic Number of Closing Shares, and (ii) the number of
Additional Closing Shares shall be equal to at least 50% of the Maximum Number
of Shares. In addition, in the event that after giving effect to the elections
of the Xxxxx Limited Partners to receive cash in lieu of Buena Vista Basic
Closing OP Units, Belcourt Basic Closing OP Units, Turtle Cove Basic Closing OP
Units, Camino Real Basic Closing OP Units, Los Arboles Basic Closing OP Units,
or Turtle Rock Basic Closing OP Units, as the case may be, pursuant to Sections
3.04 and 2.15 hereof, the aggregate number of OP Units issuable in connection
with the Contribution Transaction (the "BASIC NUMBER OF CLOSING OP UNITS") is
less than 50% of the sum (the "MAXIMUM NUMBER OF OP UNITS") of (a) the Basic
Number of OP Units and (b) the number of Rancho Makeup OP Units and Net Rancho
OP Units which would be issuable pursuant to Section 2.10, assuming a Rancho
Value of $30,900,000.00 and a Rancho Market Price of $18.50 (the "MAXIMUM
AGGREGATE RANCHO OP UNITS"), then the Operating Partnership shall issue such
additional number of OP Units (the "ADDITIONAL CLOSING OP UNITS") as shall be
required so that (a) the sum of (i) the Basic Number of Closing OP Units, and
(ii) the number of Additional Closing OP Units shall be equal to at least 50% of
the Maximum Number of OP Units.
2.10 RANCHO SHARES/OP UNITS. In the event that the Net Rental
Income of the Apartment Project known as Rancho Las Palmas for any calendar
month is equal to or greater than 85% of the greater of (i) the Gross Potential
Income of such Apartment Project for such calendar month determined on the same
basis as Gross Potential Income was determined for the other Apartment Projects
for the month of April, 1998 pursuant to the First Quarter Operating Statements,
and (ii) $379,910.00, Rancho II may cause Summit and the Operating Partnership
to issue and deliver the Aggregate Rancho Shares and the Aggregate Rancho OP
Units. Such election may be exercised by Rancho II by delivering to Summit and
the Operating Partnership a Rancho Issue Election substantially in the form of
Exhibit "F-1" hereto (the "RANCHO ISSUE ELECTION") which shall set forth (i)
Rancho II's election to cause the Aggregate Rancho Shares and the Aggregate
Rancho OP Units to be issued, (ii) the Net Rental Income of the Apartment
Project known as Rancho Las Palmas for such calendar month, and (iii) a
calculation of the Rancho Value. In the event of the receipt by Summit of a
Rancho Issue Election, Summit and the Operating Partnership shall issue and
deliver the Aggregate Rancho Shares and the Aggregate Rancho OP Units,
respectively, in accordance with the terms of this Agreement. "AGGREGATE RANCHO
SHARES" means the number of Summit Shares determined by (i) dividing the Rancho
Value by the Rancho Market Price, (ii) multiplying the result obtained in clause
(i) by Xxxxx'x Partnership Percentage in the Rancho Las Palmas Partnership
immediately prior to the Corporate Merger Effective Time, and (iii) subtracting
from the result obtained in clause (ii) the number of Additional
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Closing Shares, if any. The Aggregate Rancho Shares shall consist of the Rancho
Makeup Shares and the Net Rancho Shares and shall be issued and delivered on the
Rancho Issue Date. "AGGREGATE RANCHO OP UNITS" shall mean the aggregate number
of OP Units determined by dividing the Rancho Value by the Rancho Market Price
and deducting therefrom the number of Additional Rancho OP Units, if any. The
Aggregate Rancho OP Units shall consist of the Rancho Makeup OP Units and the
Net Rancho OP Units.
2.11 RECONVEYANCE OF RANCHO LAS PAMAS. In the event that
Rancho II has not delivered a Rancho Issue Election on or before December 31,
1999, at any time thereafter, Rancho II may elect to have the Apartment Project
known as Rancho Las Palmas conveyed to it for a purchase price (the "RANCHO
PURCHASE PRICE") equal to the sum of (a) the greater of (a) $1.00 and (b) an
amount equal to the product of (i) the sum of the number of Additional Closing
Shares, if any, and the Additional Closing OP Units, if any, and (ii) the
Closing Market Price and (2) the aggregate amount of all dividends paid by
Summit with respect to the Additional Closing Shares subsequent to the Corporate
Merger Effective Time and all distributions made by the Operating Partnership
with respect to the Additional Closing OP Units subsequent to the Contribution
Date, by delivering to Summit a Rancho Reconveyance Election substantially in
the form of Exhibit "F-2" hereto (the "RANCHO RECONVEYANCE ELECTION"). The
conveyance of the Apartment Project known as Rancho Las Palmas to Rancho II
shall be subject to, and in accordance with, the terms and conditions of Exhibit
"G' hereto. In the event that the Apartment Project known as Rancho Las Palmas
is so conveyed to Rancho II, Rancho II shall, within thirty (30) Business Days
following such reconveyance, pay to each Xxxxx Stockholder and each Xxxxx
Limited Partner of each Partnership other than Rancho Las Palmas an amount equal
to the value (based on the Closing Market Price) of the Rancho Makeup Shares or
Rancho Makeup OP Units, as the case may be, which would have been issued to such
Stockholder or Xxxxx Limited Partner if Rancho II had delivered a Rancho Issue
Election.
2.12 SURRENDER OF XXXXX CERTIFICATES. Promptly following the Corporate
Merger Effective Time, Summit will make available for exchange in accordance
with this Section 2.12 certificates, representing the aggregate number of Basic
Closing Shares and Additional Closing Shares, if any, issuable pursuant to
Section 2.07 hereof and cash payable pursuant to Section 2.08 hereof in exchange
for certificates (the "CERTIFICATES") formerly representing the outstanding
shares of the Capital Stock of Xxxxx. Promptly following the Corporate Merger
Effective Time, the Xxxxx Stockholders shall deliver to Summit or to such agent
as shall have been appointed by Summit for such purpose, the Certificates. Upon
surrender of a Certificate for cancellation to Summit or such agent, the Xxxxx
Stockholder surrendering the same shall be entitled to receive in exchange
therefor a certificate, dated the date on which the Corporate Merger Effective
Time occurred, representing the whole number of Basic Closing Shares and
Additional Closing Shares, if any, to which such Xxxxx Stockholder is entitled
pursuant to Section 2.07 hereof and a check for the amount of cash to which such
holder is entitled pursuant to Section 2.08 hereof, and the Certificate so
surrendered
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shall forthwith be cancelled. Until so surrendered, each Certificate which,
prior to the Corporate Merger Effective Time represented shares of the Capital
Stock of Xxxxx shall be deemed from and after the Corporate Merger Effective
Time, for all corporate purposes, to evidence the right to receive the number of
whole Basic Closing Shares, Additional Closing Shares, and cash into which such
shares of the Capital Stock of Xxxxx shall have been converted in accordance
with the provisions of Section 2.07. The Xxxxx Stockholders shall be deemed to
be shareholders of Summit as of the Corporate Merger Effective Time with respect
to the Closing Shares and Additional Closing Shares, if any, to which they are
entitled pursuant to Section 2.07 hereof.
2.13 LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed, and the delivery to
Summit of an indemnity in form reasonably satisfactory to Summit against any
claim that may be made against Summit with respect to such Certificate, Summit
shall deliver or cause to be delivered in exchange for such lost, stolen or
destroyed Certificate the Basic Closing Shares, Additional Closing Shares and
cash to which the holder thereof is entitled under this Agreement with respect
to the shares represented by such Certificate.
2.14 FRACTIONAL SHARES. No certificates or scrip or Summit Shares
representing fractional Summit Shares shall be issued in connection with the
Corporate Merger. In lieu of the issuance of fractional Summit Shares, the
number of Summit Shares issuable to each Xxxxx Stockholder shall be rounded to
the nearest full share, provided, however, that if such rounding would otherwise
increase or decrease the aggregate number of Summit Shares otherwise issuable,
such rounding shall be adjusted so as not to increase or decrease such number of
shares.
2.15 9.8% LIMITATION. It is the intention of the parties that after
giving effect to the Corporate Merger, the Contribution Transaction and the
issuance of the Aggregate Rancho Shares/OP Units, if issued, no Xxxxx
Stockholder or Xxxxx Limited Partner shall own or be deemed to own under the
applicable attribution rules under the Code more than 9.8% of the outstanding
Summit Shares, assuming the exchange of any OP Units so owned for Summit Shares
(the "9.8% TEST"). In the event that at the Closing Date and after giving effect
to the Corporate Merger, the Contribution Transaction, and the issuance of the
Maximum Aggregate Rancho Shares and the Maximum Aggregate Rancho OP Units on a
pro forma basis, any Xxxxx Stockholder or Xxxxx Limited Partner would not meet
the 9.8% Test, each such Xxxxx Stockholder and Xxxxx Limited Partner shall elect
to receive cash in lieu of Summit Shares or OP Units pursuant to the provisions
of Section 2.08 and 3.04 hereof in a sufficient amount so that such Xxxxx
Stockholder or Xxxxx Limited Partner would meet the 9.8% Test on such pro forma
basis. To the extent that one or more Xxxxx Stockholders or Xxxxx Limited
Partners is required to elect cash in lieu of Summit Shares or OP Units pursuant
to the provisions of this Section 2.15 shall be exempt from the limitations of
Sections 2.08 and 3.04 to the extent of such requirement, and the aggregate
amount of cash required to be elected by all Xxxxx Stockholders and Xxxxx
Limited Partners pursuant to this Section
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2.15, he shall be deducted from the maximum amount of cash otherwise available
to all other Xxxxx Stockholders and Xxxxx Limited Partners pursuant to the
provisions of Sections 2.08 and 3.04.
2.16 ADJUSTMENTS. In the event of any reclassification, stock split,
combination or stock dividend with respect to Summit Shares or any change or
conversion of Summit Shares into other securities (or if a record date with
respect to any of the foregoing should occur prior to the Corporate Merger
Effective Time or the Rancho Issue Date, as the case may be) appropriate and
proportionate adjustments, if any, shall be made to the number and type of
securities into which the shares of Capital Stock of Xxxxx are converted
pursuant to Section 2.07 hereof.
2.17 FURTHER ASSURANCES. At and after the Corporate Merger Effective
Time, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of Xxxxx, any
deeds, bills of sale, assignments, or assurances and to take and do, in the name
and on behalf of Xxxxx, any other actions and things to vest, perfect or confirm
of record or otherwise in the Surviving Corporation any and all right, title and
interest in, to and under any of the rights, properties, or assets acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Corporate Merger.
ARTICLE 3. CONTRIBUTION TRANSACTION
3.01 THE CONTRIBUTION TRANSACTION. (a) Subject to the terms
and conditions of this Agreement and immediately following the Corporate Merger
Effective Time, the Xxxxx Limited Partners shall contribute all of their
respective Partnership Interests in the Partnerships (collectively, the "XXXXX
PARTNERSHIP INTERESTS") to the Operating Partnership, and the Operating
Partnership agrees to accept the Xxxxx Partnership Interests from the Xxxxx
Limited Partners. The Xxxxx Limited Partners intend and the Operating
Partnership acknowledges the Xxxxx Limited Partners' intention that such
contribution and acceptance (the "CONTRIBUTION TRANSACTION") be treated as a
contribution governed by Section 721 of the Code. The date on which the
Contribution Transaction is consummated is referred to herein as the
"CONTRIBUTION DATE".
(b) The Operating Partnership and the Xxxxx Limited Partners agree
that, for purposes of Section 7.04(c) of the Code, the Net Partnership Value in
the case of each Partnership other than the Rancho Las Palmas Partnership and
the Rancho Value in the case of the Rancho Las Palmas Partnership will be
allocated among the various components of the Property of such Partnership in a
manner to be reasonably agreed upon by the Operating Partnership and Xxxxx prior
to the Closing. The method under Section 704(c) of the Code used by the
Operating Partnership with respect to any Property (or any property received in
exchange for such Property in a like-kind exchange) to adjust for discrepancies
between the agreed upon value of the various components of the Property
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and the adjusted tax basis of such components will be the "traditional method,"
as set forth in Treasury Regulation Section 1.704-3(c)(1).
3.02 INITIAL CONSIDERATION FOR CONTRIBUTION. In exchange for the
contribution of the Partnership Interests and upon the execution and delivery by
the Xxxxx Limited Partners of an amendment to the Summit Limited Partnership
Agreement in the form attached hereto as Exhibit "D", the Operating Partnership
will distribute to the Xxxxx Limited Partners, subject to the rights of the
Xxxxx Limited Partners to elect to receive cash in lieu of OP Units in the
manner and to the extent provided in Sections 2.15 and 3.16 hereof, OP Units as
follows:
(a) To each Xxxxx Limited Partner of the Buena Vista
Partnership (1) a number OP Units (collectively for all the Xxxxx Limited
Partners of the Buena Vista Partnership, the "BUENA VISTA BASIC CLOSING OP
UNITS") equal to the quotient obtained by dividing (i) such Xxxxx Limited
Partner's Partnership Percentage in the Buena Vista Partnership times the Net
Partnership Value of the Buena Vista Partnership by (ii) the Closing Market
Price and (2) a proportionate share of the Additional Closing OP Units, when and
if issued, based on the proportion (calculated to four decimal points) that (x)
the number of Additional Closing OP Units to which such Xxxxx Limited Partner
would have been entitled had no amount been deducted from the Basic Partnership
Value of the Buena Vista Partnership pursuant to clause (ii) of the definition
of Net Partnership Value in determining the Net Partnership Value of the Buena
Vista Partnership bears to (y) the aggregate number of Additional Closing OP
Units to which all Xxxxx Limited Partners would have been entitled had no
amounts been deducted from the Basic Partnership Value of any Partnership in
determining the Net Partnership Value of the Partnerships (collectively for all
the Xxxxx Limited Partners of the Buena Vista Partnership, the "BUENA VISTA
ADDITIONAL CLOSING OP UNITS).
(b) To each Xxxxx Limited Partner of the Belcourt Partnership
(1) a number OP Units (collectively for all the Xxxxx Limited Partners of the
Belcourt Partnership, the "BELCOURT BASIC CLOSING OP UNITS") equal to the
quotient obtained by dividing (i) such Xxxxx Limited Partner's Partnership
Percentage in the Belcourt Partnership times the Net Partnership Value of the
Belcourt Partnership by (ii) the Closing Market Price and (2) a proportionate
share of the Additional Closing OP Units, when and if issued, based on the
proportion (calculated to four decimal points) that (x) the number of Additional
Closing OP Units to which such Xxxxx Limited Partner would have been entitled
had no amount been deducted from the Basic Partnership Value of the Belcourt
Partnership pursuant to clause (ii) of the definition of Net Partnership Value
in determining the Net Partnership Value of the Belcourt Partnership bears to
(y) the aggregate number of Additional Closing OP Units to which all Xxxxx
Limited Partners would have been entitled had no amounts been deducted from the
Basic Partnership Value of any Partnership in determining the Net Partnership
Value of the Partnerships (collectively for all the Xxxxx Limited Partners of
the Belcourt Partnership, the "BELCOURT ADDITIONAL CLOSING OP UNITS).
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(c) To each Xxxxx Limited Partner of the Turtle Cove
Partnership (1) a number OP Units (collectively for all the Xxxxx Limited
Partners of the Turtle Cove Partnership, the "TURTLE COVE BASIC CLOSING OP
UNITS") equal to the quotient obtained by dividing (i) such Xxxxx Limited
Partner's Partnership Percentage in the Turtle Cove Partnership times the Net
Partnership Value of the Turtle Cove Partnership by (ii) the Closing Market
Price and (2) a proportionate share of the Additional Closing OP Units, when and
if issued, based on the proportion (calculated to four decimal points) that (x)
the number of Additional Closing OP Units to which such Xxxxx Limited Partner
would have been entitled had no amount been deducted from the Basic Partnership
Value of the Turtle Cove Partnership pursuant to clause (ii) of the definition
of Net Partnership Value in determining the Net Partnership Value of the Turtle
Cove Partnership bears to (y) the aggregate number of Additional Closing OP
Units to which all Xxxxx Limited Partners would have been entitled had no
amounts been deducted from the Basic Partnership Value of any Partnership in
determining the Net Partnership Value of the Partnerships (collectively for all
the Xxxxx Limited Partners of the Turtle Cove Partnership, the "TURTLE COVE
ADDITIONAL CLOSING OP UNITS).
(d) To each Xxxxx Limited Partner of the Camino Real
Partnership (1) a number OP Units (collectively for all the Xxxxx Limited
Partners of the Camino Real Partnership, the "CAMINO REAL BASIC CLOSING OP
UNITS") equal to the quotient obtained by dividing (i) such Xxxxx Limited
Partner's Partnership Percentage in the Camino Real Partnership times the Net
Partnership Value of the Camino Real Partnership by (ii) the Closing Market
Price and (2) a proportionate share of the Additional Closing OP Units, when and
if issued, based on the proportion (calculated to four decimal points) that (x)
the number of Additional Closing OP Units to which such Xxxxx Limited Partner
would have been entitled had no amount been deducted from the Basic Partnership
Value of the Camino Real Partnership pursuant to clause (ii) of the definition
of Net Partnership Value in determining the Net Partnership Value of the Camino
Real Partnership bears to (y) the aggregate number of Additional Closing OP
Units to which all Xxxxx Limited Partners would have been entitled had no
amounts been deducted from the Basic Partnership Value of any Partnership in
determining the Net Partnership Value of the Partnerships (collectively for all
the Xxxxx Limited Partners of the Camino Real Partnership, the "CAMINO REAL
ADDITIONAL CLOSING OP UNITS).
(e) To each Xxxxx Limited Partner of the Los Arboles
Partnership (1) a number OP Units (collectively for all the Xxxxx Limited
Partners of the Los Arboles Partnership, the "LOS ARBOLES BASIC CLOSING OP
UNITS") equal to the quotient obtained by dividing (i) such Xxxxx Limited
Partner's Partnership Percentage in the Los Arboles Partnership times the Net
Partnership Value of the Los Arboles Partnership by (ii) the Closing Market
Price and (2) a proportionate share of the Additional Closing OP Units, when and
if issued, based on the proportion (calculated to four decimal points) that (x)
the number of Additional Closing OP Units to which such Xxxxx Limited Partner
would have been entitled had no amount been deducted from the Basic Partnership
Value of the Los Arboles Partnership pursuant to clause (ii) of the
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definition of Net Partnership Value in determining the Net Partnership Value of
the Los Arboles Partnership bears to (y) the aggregate number of Additional
Closing OP Units to which all Xxxxx Limited Partners would have been entitled
had no amounts been deducted from the Basic Partnership Value of any Partnership
in determining the Net Partnership Value of the Partnerships (collectively for
all the Xxxxx Limited Partners of the Los Arboles Partnership, the "LOS ARBOLES
ADDITIONAL CLOSING OP UNITS).
(f) To each Xxxxx Limited Partner of the Turtle Rock
Partnership (1) a number OP Units (collectively for all the Xxxxx Limited
Partners of the Turtle Rock Partnership, the "TURTLE ROCK BASIC CLOSING OP
UNITS") equal to the quotient obtained by dividing (i) such Xxxxx Limited
Partner's Partnership Percentage in the Turtle Rock Partnership times the Net
Partnership Value of the Turtle Rock Partnership by (ii) the Closing Market
Price and (2) a proportionate share of the Additional Closing OP Units, when and
if issued, based on the proportion (calculated to four decimal points) that (x)
the number of Additional Closing OP Units to which such Xxxxx Limited Partner
would have been entitled had no amount been deducted from the Basic Partnership
Value of the Turtle Rock Partnership pursuant to clause (ii) of the definition
of Net Partnership Value in determining the Net Partnership Value of the Turtle
Rock Partnership bears to (y) the aggregate number of Additional Closing OP
Units to which all Xxxxx Limited Partners would have been entitled had no
amounts been deducted from the Basic Partnership Value of any Partnership in
determining the Net Partnership Value of the Partnerships (collectively for all
the Xxxxx Limited Partners of the Turtle Rock Partnership, the "TURTLE ROCK
ADDITIONAL CLOSING OP UNITS).
(g) To each Xxxxx Limited Partner of the Rancho Las Palmas
Partnership a proportionate share (based on the proportion (calculated to four
decimal points) that the Partnership Percentage of such Xxxxx Limited Partner
bears to the sum of the Partnership Percentages of all Xxxxx Limited Partners of
the Rancho Las Palmas Partnership) of one thousand (1,000) OP Units (rounded to
the nearest full OP Unit) (the "RANCHO BASIC CLOSING OP UNITS").
3.03 ADDITIONAL CONSIDERATION FOR CONTRIBUTION. If required by
the provisions of Section 2.10 hereof and as additional consideration for the
contribution of the Xxxxx Partnership Interests, on the Rancho Issue Date the
Operating Partnership will distribute to the Xxxxx Limited Partners the Rancho
Makeup OP Units and the Net Rancho OP Units as follows:
(a) To each Xxxxx Limited Partner of the Buena Vista
Partnership such number of OP Units (collectively for all the Xxxxx Limited
Partners of the Buena Vista Partnership, the "BUENA VISTA RANCHO MAKEUP OP
UNITS") as shall be required to be issued so that the aggregate value of the
Buena Vista Basic Closing OP Units (valued at the Closing Market Price), cash,
Additional Closing OP Units (valued at the Closing Market Price), and Rancho
Makeup OP Units (valued at the Closing Market Price) received by such Xxxxx
Limited Partner in connection with the Contribution Transaction shall equal the
aggregate value of the Buena Vista Basic Closing OP Xxxxx,
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cash, and Buena Vista Additional Closing OP Units, if any, such Xxxxx Limited
Partner would have received in connection with the Contribution Transaction if
the Net Partnership Value of the Buena Vista Partnership had been determined
without deducting any amount from said value pursuant to clause (ii) of the
definition of Net Partnership Value.
(b) To each Xxxxx Limited Partner of the Belcourt Partnership
such number of OP Units (collectively for all the Xxxxx Limited Partners of the
Belcourt Partnership, the "BELCOURT RANCHO MAKEUP OP UNITS") as shall be
required to be issued so that the aggregate value of the Belcourt Basic Closing
OP Units (valued at the Closing Market Price), cash, Additional Closing OP Units
(valued at the Closing Market Price), and Rancho Makeup OP Units (valued at the
Closing Market Price) received by such Xxxxx Limited Partner in connection with
the Contribution Transaction shall equal the aggregate value of the Belcourt
Basic Closing OP Units, cash, and Belcourt Additional Closing OP Units, if any,
such Xxxxx Limited Partner would have received in connection with the
Contribution Transaction if the Net Partnership Value of the Belcourt
Partnership had been determined without deducting any amount from said value
pursuant to clause (ii) of the definition of Net Partnership Value.
(c) To each Xxxxx Limited Partner of the Turtle Cove
Partnership such number of OP Units (collectively for all the Xxxxx Limited
Partners of the Turtle Cove Partnership, the "TURTLE COVE RANCHO MAKEUP OP
UNITS") as shall be required to be issued so that the aggregate value of the
Turtle Cove Basic Closing OP Units (valued at the Closing Market Price), cash,
Additional Closing OP Units (valued at the Closing Market Price), and Rancho
Makeup OP Units (valued at the Closing Market Price) received by such Xxxxx
Limited Partner in connection with the Contribution Transaction shall equal the
aggregate value of the Turtle Cove Basic Closing OP Units, cash, and Turtle Cove
Additional Closing OP Units, if any, such Xxxxx Limited Partner would have
received in connection with the Contribution Transaction if the Net Partnership
Value of the Turtle Cove Partnership had been determined without deducting any
amount from said value pursuant to clause (ii) of the definition of Net
Partnership Value.
(d) To each Xxxxx Limited Partner of the Camino Real
Partnership such number of OP Units (collectively for all the Xxxxx Limited
Partners of the Camino Real Partnership, the "CAMINO REAL RANCHO MAKEUP OP
UNITS") as shall be required to be issued so that the aggregate value of the
Camino Real Basic Closing OP Units (valued at the Closing Market Price), cash,
Additional Closing OP Units (valued at the Closing Market Price), and Rancho
Makeup OP Units (valued at the Closing Market Price) received by such Xxxxx
Limited Partner in connection with the Contribution Transaction shall equal the
aggregate value of the Camino Real Basic Closing OP Units, cash, and Camino Real
Additional Closing OP Units, if any, such Xxxxx Limited Partner would have
received in connection with the Contribution Transaction if the Net Partnership
Value of the Camino Real Partnership had been determined without
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deducting any amount from said value pursuant to clause (ii) of the definition
of Net Partnership Value.
(e) To each Xxxxx Limited Partner of the Los Arboles
Partnership such number of OP Units (collectively for all the Xxxxx Limited
Partners of the Los Arboles Partnership, the "LOS ARBOLES RANCHO MAKEUP OP
UNITS") as shall be required to be issued so that the aggregate value of the Los
Arboles Basic Closing OP Units (valued at the Closing Market Price), cash,
Additional Closing OP Units (valued at the Closing Market Price), and Rancho
Makeup OP Units (valued at the Closing Market Price) received by such Xxxxx
Limited Partner in connection with the Contribution Transaction shall equal the
aggregate value of the Los Arboles Basic Closing OP Units, cash, and Los Arboles
Additional Closing OP Units, if any, such Xxxxx Limited Partner would have
received in connection with the Contribution Transaction if the Net Partnership
Value of the Los Arboles Partnership had been determined without deducting any
amount from said value pursuant to clause (ii) of the definition of Net
Partnership Value.
(f) To each Xxxxx Limited Partner of the Turtle Rock
Partnership such number of OP Units (collectively for all the Xxxxx Limited
Partners of the Turtle Rock Partnership, the "TURTLE ROCK RANCHO MAKEUP OP
UNITS") as shall be required to be issued so that the aggregate value of the
Turtle Rock Basic Closing OP Units (valued at the Closing Market Price), cash,
Additional Closing OP Units (valued at the Closing Market Price), and Rancho
Makeup OP Units (valued at the Closing Market Price) received by such Xxxxx
Limited Partner in connection with the Contribution Transaction shall equal the
aggregate value of the Turtle Rock Basic Closing OP Units, cash, and Turtle Rock
Additional Closing OP Units, if any, such Xxxxx Limited Partner would have
received in connection with the Contribution Transaction if the Net Partnership
Value of the Turtle Rock Partnership had been determined without deducting any
amount from said value pursuant to clause (ii) of the definition of Net
Partnership Value.
(g) To each Xxxxx Limited Partner of the Rancho Las Palmas
Partnership a proportionate share (based on the proportion (calculated to four
decimal points) that the Partnership Percentage of such Xxxxx Limited Partner
bears to the sum of the Partnership Percentages of all Xxxxx Limited Partners of
the Rancho Las Palmas Partnership) of the Net Rancho OP Units.
3.04 CASH ELECTION. Subject to Section 2.15, the Xxxxx Limited
Partners may elect to receive cash at a rate equal to the Closing Market Price
per OP Unit in lieu of all or a portion of the Buena Vista Basic Closing OP
Units, Belcourt Basic Closing OP Units, Turtle Cove Basic Closing OP Units,
Camino Real Basic Closing OP Units, Los Arboles Basic Closing OP Units, or
Turtle Rock Basic Closing OP Units, as the case may be, to which such Xxxxx
Limited Partner is otherwise entitled pursuant to the provisions of Section 3.02
hereof by filing an election in the form of Exhibit "E-2" hereto with the
Operating Partnership prior to the issuance of the Basic Closing OP Units. In
addition if the Rancho Issue Date occurs, the Xxxxx Limited Partners of the
Xxxxxx
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Xxx Xxxxxx Partnership may elect to receive cash at a rate equal to the Rancho
Market Price per OP Unit in lieu of all or a portion of the Net Rancho OP Units
to which such Xxxxx Limited Partner is otherwise entitled pursuant to the
provisions of Section 3.03 hereof by filing an election substantially in the
form of Exhibit "E-2" (with appropriate variations to reflect the fact that it
relates to the Rancho Issue Date and the Net Rancho OP Units) with the Operating
Partnership prior to the issuance of the Net Rancho OP Units. Notwithstanding
the foregoing, Summit and the Operating Partnership shall not be required to pay
cash in connection with any such elections or any elections under this Section
3.04, Section 2.08 and Section 2.15 hereof in an aggregate amount exceeding the
Maximum Cash Amount.
3.05 FRACTIONAL OP UNITS. No certificates or scrip or OP Units
representing fractional OP Units shall be issued in connection with the
Contribution Transaction. In lieu of the issuance of fractional OP Units, the
number of OP Units issuable to each Xxxxx Limited Partner shall be rounded to
the nearest full OP Unit, provided, however, that if such rounding would
otherwise increase or decrease the aggregate number of OP Units otherwise
issuable, such rounding shall be adjusted so as not to increase or decrease such
number of OP Units.
3.06 ADJUSTMENTS. In the event of any reclassification, stock split,
combination, or stock dividend with respect to Summit Shares or the OP Units or
any change or conversion of Summit Shares or the OP Units into other securities
(or if a record date with respect to any of the foregoing should occur prior to
the Contribution Date or the Rancho Issue Date, as the case may be), appropriate
and proportionate adjustments, if any, shall be made to the number and type of
OP Units distributable pursuant to the provisions of Section 3.02 or Section
3.03, as the case may be.
ARTICLE 4. CLOSING; ESCROW DEPOSIT
4.01 CLOSING.
(a) Subject to the conditions set forth in this Agreement, the Closing
of the transactions contemplated by this Agreement (the "CLOSING") shall take
place at a closing conference ("CLOSING CONFERENCE") at the offices of Xxxxxxx
Xxxxxxxxx Xxxxxxx & Xxxxxxx, L.L.P., counsel for Summit, at NationsBank
Corporate Center, Suite 4200, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx
00000 (or at such other place as shall be agreed upon by the parties hereto) at
10:00 a.m. local time on the Closing Date. At the Closing Conference, the
parties shall deliver the agreements, documents and certificates provided for in
Articles 5 and 6 hereof, and subject to the conditions set forth in this
Agreement, the Corporate Articles of Merger and the Corporate Certificate of
Merger.
(b) In addition, at Closing, Xxxxx, the Partnerships, and the Xxxxx
Limited Partners shall deliver to Summit and the Operating Partnership the
following documents and instruments, duly executed and, if required,
acknowledged:
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(1) Executed tenant notice letters, dated the date of Closing,
containing Xxxxx'x and the Partnerships' authorization to the tenants of the
Properties (other than Rancho Las Palmas) for payment of rental directly to the
Surviving Corporation, the Operating Partnership, or their managing agents, as
applicable, in form reasonably satisfactory to Summit and the Operating
Partnership;
(2) A rent roll for the Properties containing all the matters
described in Section 8.09B(7) hereof, certified by Xxxxx and the Partnerships to
be true, complete and correct in all material respects as of the Closing Date;
and
(3) Such affidavits as the Title Company shall require to
issue its Owner's Policy of Title Insurance without exception for mechanic's or
materialmen's liens or rights of parties in possession except for apartment
tenants, as apartment tenants and a standard "GAP" indemnity covering the period
from the last date that the local rent records are currently indexed to and
including the Closing.
(c) At Closing (and at certain times subsequent to Closing),
prorations shall be made in accordance with Exhibit "J."
ARTICLE 5. CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF SUMMIT AND
THE OPERATING PARTNERSHIP
The obligations of Summit and the Operating Partnership to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction at or prior to the Closing Date of each of the following conditions
(compliance with which or the occurrence of which may be waived in whole or in
part by Summit and the Operating Partnership):
5.01 TITLE MATTERS; TITLE REPORT. The willingness of Lawyers Title
Insurance Corporation, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000,
Attention Xx. Xxxxxxx Xxxxxx (which company in its capacity as Title Insurer
hereunder is herein called the ("TITLE COMPANY") to issue to each Partnership on
the Closing Date, Owner's Title Insurance Policies in the standard Texas owners
form ("OWNER'S POLICY"), and to confirm in writing to Summit Southwest I L.P.
("SSILP") that upon SSILP's acquiring 100% of the partnership interests in such
Partnership that it is an insured under said Owner's Policy and which policies
show title to the Land and Improvements comprising a part of the Apartment
Project owned by such Partnership to be vested of record in such Operating
Partnership subject only to the following exceptions to title ("PERMITTED
EXCEPTIONS"):
(a) Real estate taxes and assessments not yet due and payable;
(b) The printed exceptions which appear in the Texas form of
owner's policy of title insurance issued by Title Company in the State of Texas;
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(c) The exceptions on Schedule B of the preliminary title
report for the particular Property included in the Land and Improvements,
attached hereto as Exhibits "L-1" through "L-7" respectively; and
(d) Such additional exceptions to title as shall not render
title to the particular Property unmarketable and do not interfere with the
current use of such Property.
Conclusive evidence of the availability of such title shall be the willingness
of Title Company to issue to the each Partnership on the Closing Date owner's
title insurance policies in the standard Texas owner's form ("OWNER'S POLICY"),
which policies show (i) title to the Land and Improvements to be vested of
record in the Operating Partnership, and (ii) the above exceptions to be the
only exceptions to title.
5.02 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Xxxxx, the Xxxxx Stockholders, the Partnerships and the Xxxxx
Limited Partners contained herein shall be true and correct on and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date.
5.03 PERFORMANCE OF AGREEMENTS. Each of Xxxxx, the Xxxxx Stockholders,
the Partnerships, and the Xxxxx Limited Partners shall have performed all
obligations and agreements and complied with all covenants and conditions
contained in this Agreement to be performed or complied with by it or them on or
prior to the Closing Date.
5.04 CHARTER DOCUMENTS. There shall have been delivered to Summit and
the Operating Partnership (i) a Certificate, dated within ten days of the
Closing date, of the Secretary of State of the State of Ohio listing all charter
documents of Xxxxx on file in the office of said Secretary of State; and (ii)
copies of the Articles of Incorporation of Xxxxx and all amendments thereto,
certified as true and correct by the Secretary of State of the State of Ohio
within ten days of the Closing Date.
5.05 CORPORATE GOOD STANDING CERTIFICATES. There shall have been
delivered to Summit and the Operating Partnership a Certificate, dated within
ten days of the Closing Date, of the Secretary of State of the State of Ohio
with respect to the incorporation, subsistence and good standing of Xxxxx.
5.06 SECRETARY'S CERTIFICATE OF XXXXX. There shall have been delivered
to Summit and the Operating Partnership a Certificate, dated the Closing Date,
of the Secretary of Xxxxx (i) to the effect that the Articles of Incorporation
of Xxxxx have not been amended since the date of the Certificate referred to in
Section 5.05(i) above; (ii) attaching a true and complete copy of the Code of
Regulations of Xxxxx as in effect on the Closing Date; (iii) attaching a true
and complete copy of the resolutions of the Board
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of Directors of Xxxxx approving the execution and delivery of this Agreement and
authorizing the consummation by Xxxxx of the transactions contemplated herein;
and (iv) attaching a true and complete copy of the resolutions of the
stockholders of Xxxxx approving this Agreement and the consummation of the
transactions contemplated herein.
5.07 INCUMBENCY CERTIFICATE OF XXXXX. There shall have been delivered
to Summit and the Operating Partnership a Certificate, dated the Closing Date,
with respect to the incumbency and signatures of all officers of Xxxxx signing
this Agreement and any other certificate, agreement or instrument delivered on
behalf of Xxxxx in connection with this Agreement or the Closing.
5.08 FORMATION DOCUMENTS. There shall have been delivered to Summit
and the Operating Partnership (i) a Certificate, dated within ten days of the
Closing date, of the Secretary of State of the State of Texas listing all
formation documents of each Partnership on file in the office of said Secretary
of State; and (ii) copies of the Certificate of Limited Partnership of each
Partnership and all amendments thereto, certified as true and correct by the
Secretary of State of the State of Texas within ten days of the Closing Date.
5.09 PARTNERSHIP GOOD STANDING CERTIFICATES. There shall have been
delivered to Summit and the Operating Partnership Certificates, dated within ten
days of the Closing Date, of the Secretary of State of the State of Texas with
respect to the formation, subsistence and good standing of the Partnerships.
5.10 GENERAL PARTNERS CERTIFICATES. There shall have been delivered to
Summit and the Operating Partnership a Certificate, dated the Closing Date, of
the General Partner for each Partnership (i) to the effect that the Certificate
of Limited Partnership of such Partnership has not been amended since the date
of the Certificate referred to in Section 5.08(i) above and (ii) attaching a
true and complete copy of the Limited Partnership Agreement of such Partnership
as in effect on the Closing Date.
5.11 ASSIGNMENTS. Each Xxxxx Limited Partner shall have executed and
delivered to the Operating Partnership an Assignment in the form of Exhibit "H"
hereto, dated the Closing Date, of its entire Partnership Interest in each
Partnership in which it is a Partner.
5.12 AMENDMENT. Each Xxxxx Limited Partner shall have executed and
delivered to the Operating Partnership an Amendment to the Summit Limited
Partnership Agreement, dated the Closing Date and in the form of Exhibit "D"
hereto.
5.13 OPINION OF COUNSEL. There shall have been delivered to Summit and
the Operating Partnership an opinion of Pircher, Xxxxxxx & Xxxxx, counsel to
Xxxxx, dated the Closing Date, and in form and substance satisfactory to Summit
and the Operating Partnership, and their counsel, to the effect specified in
Exhibit "M" hereto.
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5.14 CONSENTS AND APPROVALS. All consents and approvals of any third
parties required in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby shall have been
obtained and delivered to Summit and the Operating Partnership. Without
limitation on the foregoing, any Person holding a mortgage, deed of trust or
security agreement encumbering the Property or any part thereof, which is to
continue after the Closing Date, and whose consent to the transactions herein
provided is required in order to avoid default under such mortgage, deed of
trust or security agreement, shall have given such consent.
5.15 NO LITIGATION. No action, suit or proceeding shall be pending or
threatened by or before any court or Governmental Entity in which an unfavorable
judgment, order or decree would prevent any of the transactions contemplated
hereby or cause any such transaction to be declared unlawful or rescinded, and
no temporary restraining order or injunction shall have been issued by any such
court or Governmental Entity restraining or prohibiting the performance of this
Agreement or the consummation of any of the transactions contemplated hereby.
5.16 NO MATERIAL ADVERSE CHANGE. There shall not have occurred any
Xxxxx Material Adverse Change or any Partnership Material Adverse Change, and
Summit and the Operating Partnership shall have received certificates from Xxxxx
and the applicable Partnerships, dated the Closing Date, certifying to such
effect.
5.17 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings to
be taken by Xxxxx, the Xxxxx Stockholders, the Partnerships, or the Xxxxx
Limited Partners in connection with this Agreement and the consummation of the
transactions contemplated hereby and all documents and instruments delivered by
Xxxxx, the Xxxxx Stockholders, the Partnerships or the Xxxxx Limited Partners in
connection therewith shall be in form and substance reasonably satisfactory to
Summit and the Operating Partnership and their counsel, and Summit and the
Operating Partnership shall have received such other documents and instruments
as it may reasonably request in connection therewith.
5.18 CONDEMNATION OR DESTRUCTION OF PROPERTY. No material portion of
any Land or the related Improvements shall have been taken pursuant to eminent
domain proceedings between the Effective Date and the Closing Date, and the
Improvements shall not have been damaged or destroyed by casualty between the
Effective Date and the Closing Date where the uninsured portion of the cost of
repair of the same exceeds $500,000. In the event that the Improvements have
been damaged or destroyed by casualty between the Effective Date and the Closing
Date and the uninsured portion of the cost of repair, as reasonably determined
by Summit and Xxxxx, is equal to or less than $500,000, such uninsured portion
shall be deducted from the Net Partnership Value of the Partnership owning the
Apartment Project of which such Improvements constitute a part.
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5.19 COURT ORDERS. No temporary restraining order, preliminary
or permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Corporate Merger, the Contribution Transaction, or any of the other
transactions contemplated hereby shall be in effect.
5.20 E&P STUDY. There shall have been delivered to Summit no
later than three (3) Business Days prior to the Closing Date an earnings and
profit study on Xxxxx prepared by Deloitte & Touche, LLP, which report is in
form and substance satisfactory to Summit and which indicates that the "earnings
and profits" (within the meaning of Section 316 of the Code) of Xxxxx are not
greater than $-0- (the "E&P STUDY"). Summit shall bear and pay the cost of the
E&P Study.
5.21 ENTITY TRANSFER CERTIFICATES. There shall have been
delivered to Summit and the Operating Partnership entity transfer certificates
in substantially the same form as Exhibit "N" hereto confirming that none of
Xxxxx, the Xxxxx Stockholders, the Partnerships, and the Xxxxx Limited Partners
is a "foreign person" as defined in Section 1445(f)(3) of the Code.
5.22 REGISTRATION RIGHTS AGREEMENT. The Xxxxx Stockholders and
the Xxxxx Limited Partners shall have executed and delivered the Registration
Rights Agreement.
5.23 MASTER LEASE. Xxxxx Remainder LLC, an Ohio limited
liability company, shall have executed and delivered a Master Lease, dated the
Closing Date and substantially in the form of Exhibit "S" hereto.
5.24 FRUSTRATION OF CLOSING CONDITIONS. Neither Summit nor the
Operating Partnership may rely on the failure of any condition set forth in this
Article 5 to be satisfied if such failure was caused by Summit's or the
Operating Partnership's failure to use reasonable efforts to consummate the
Corporate Merger, the Contribution Transaction, and the other transactions
contemplated by this Agreement.
ARTICLE 6. CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF XXXXX, THE XXXXX STOCKHOLDERS,
THE PARTNERSHIPS AND THE XXXXX LIMITED PARTNERS
The obligations of Xxxxx, Xxxxx Stockholders, the Partnerships and the
Xxxxx Limited Partners to consummate the transactions contemplated by this
Agreement are subject to the satisfaction at or prior to the Closing Date of
each of the following conditions (compliance with which or the occurrence of
which may be waived in whole or in part by Xxxxx, the Xxxxx Stockholders, the
Partnerships and the Xxxxx Limited Partners):
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6.01 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Summit and the Operating Partnership contained
herein shall be true and correct on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date.
6.02 PERFORMANCE OF AGREEMENTS. Summit and the Operating Partnership
shall have performed all obligations and agreements and complied with all
covenants and conditions contained in this Agreement to be performed or complied
with by them on or prior to the Closing Date.
6.03 CHARTER DOCUMENTS OF SUMMIT. There shall have been delivered to
the Xxxxx Stockholders and the Xxxxx Limited Partners (i) a Certificate, dated
within ten days of the Closing date, of the State Department of Assessments and
Taxation of the State of Maryland listing all charter documents of Summit on
file in the office of the State Department of Assessments and Taxation of the
State of Maryland; and (ii) copies of the Articles of Incorporation of Summit
and all amendments thereto, certified as true and correct by the State
Department of Assessments and Taxation of the State of Maryland within ten days
of the Closing Date.
6.04 CORPORATE GOOD STANDING CERTIFICATES. There shall have been
delivered to the Xxxxx Stockholders and the Xxxxx Limited Partners (i) a
Certificate, dated within ten days of the Closing Date, of the State Department
of Assessments and Taxation of the State of Maryland with respect to the
incorporation, subsistence and good standing of Summit and (ii) a certificate of
the Secretary of State of the State of Ohio with respect to the registration or
qualification to transact business and good standing of Summit in such State.
6.05 SECRETARY'S CERTIFICATE OF SUMMIT. There shall have been
delivered to the Xxxxx Stockholders and the Xxxxx Limited Partners a
Certificate, dated the Closing Date, of the Secretary or an Assistant Secretary
of Summit (i) to the effect that the Articles of Incorporation of Summit have
not been amended since the date of the Certificate referred to in Section
6.03(i) above; (ii) attaching a true and complete copy of the Bylaws of Summit
as in effect on the Closing Date, and (iii) attaching a true and complete copy
of the resolutions of the Board of Directors of Summit approving the execution
and delivery of this Agreement and authorizing the issuance of the Summit Shares
and the consummation of the transactions contemplated herein.
6.06 INCUMBENCY CERTIFICATE OF SUMMIT. There shall have been delivered
to the Xxxxx Stockholders and the Xxxxx Limited Partners a Certificate, dated
the Closing Date, with respect to the incumbency and signatures of all officers
of Summit signing this Agreement and any other certificate, agreement or
instrument delivered on behalf of Summit in connection with this Agreement or
the Closing.
6.07 FORMATION DOCUMENTS OF OPERATING PARTNERSHIP. There shall
have been delivered to Xxxxx, the Xxxxx Stockholders, the Partnerships and the
Xxxxx
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Limited Partners (i) a Certificate, dated within ten days of the Closing date,
of the Secretary of State of the State of Delaware listing all formation
documents of the Operating Partnership on file in the office of said Secretary
of State; and (ii) copies of the Certificate of Limited Partnership of the
Operating Partnership and all amendments thereto, certified as true and correct
by the Secretary of State of the State of Delaware within ten days of the
Closing Date.
6.08 OPERATING PARTNERSHIP GOOD STANDING CERTIFICATE. There shall have
been delivered to Xxxxx, the Xxxxx Stockholders, the Partnerships and the Xxxxx
Limited Partners a Certificate, dated within ten days of the Closing Date, of
the Secretary of State of the State of Delaware with respect to the formation,
subsistence and good standing of the Operating Partnership.
6.09 SUMMIT CERTIFICATE. There shall have been delivered to
Xxxxx, the Xxxxx Stockholders, the Partnerships and the Xxxxx Limited Partners a
Certificate, dated the Closing Date, of an officer of Summit (i) to the effect
that the Certificate of Limited Partnership of the Operating Partnership has not
been amended since the date of the Certificate referred to in Section 6.07(i)
above; (ii) attaching a true and complete copy of the Summit Limited Partnership
Agreement as in effect on the Closing Date; and (iii) attaching a true and
complete copy of the resolutions of the Partners of such Partnership approving
the execution and delivery of this Agreement and authorizing the consummation by
such Partnership of the transactions contemplated herein.
6.10 OPINION OF COUNSEL. There shall have been delivered to
the Xxxxx Stockholders and the Xxxxx Limited Partners an opinion of Kennedy,
Covington, Xxxxxxx & Xxxxxxx, L.L.P., counsel to Summit, dated the Closing Date,
and in form and substance satisfactory to the Xxxxx Stockholders, the Xxxxx
Limited Partners, and their counsel, to the effect specified in Exhibit "O"
hereto.
6.11 CONSENTS AND APPROVALS. All consents and approvals of any third
parties required in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby shall have been
obtained and delivered to Xxxxx, the Xxxxx Stockholders, the Partnerships and
the Xxxxx Limited Partners. Without limitation on the foregoing, any Person
holding a mortgage, deed of trust or security agreement encumbering the Property
or any part thereof, which is to continue after the Closing Date, and whose
consent to the transactions herein provided is required in order to avoid
default under such mortgage, deed of trust or security agreement, shall have
given such consent.
6.12 NO LITIGATION. No action, suit or proceeding shall be pending or
threatened by or before any court or Governmental Entity in which an unfavorable
judgment, order or decree would prevent any of the transactions contemplated
hereby or cause any such transaction to be declared unlawful or rescinded, and
no temporary restraining order or injunction shall have been issued by any such
court or Governmental
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Entity restraining or prohibiting the performance of this Agreement or the
consummation of any of the transactions contemplated hereby.
6.13 RELEASE OF PERSONAL LIABILITY. In the event there is any personal
liability imposed on any of the Xxxxx Stockholders with respect to Xxxxx or any
of the Property or any of the Xxxxx Limited Partners with respect to any
Partnership or any of the Property (other than as provided in this Agreement),
whether under a guaranty or otherwise, and such personal liability relates to
principal or interest on a debt or obligation of Xxxxx or the Partnerships that
is specifically mentioned in this Agreement or which is secured by any of the
Properties, then such personal liability shall be released by agreements in form
and substance satisfactory to the Xxxxx Stockholders or the Xxxxx Limited
Partners, as the case may be. Notwithstanding the foregoing, it is not a
condition to Closing that the Xxxxx Shareholders or the Xxxxx Limited Partners
be released from liability for fraud, environmental matters and similar
nonrecourse carveout liability, but Summit shall indemnify the Xxxxx
Shareholders and Xxxxx Limited Partners from such liability arising on or after
the Closing (except that with respect to Rancho, such indemnification shall be
with respect to such liability arising on or after the Rancho Issue Date) based
on acts or omissions which occurred after such date.
6.14 ASSUMPTION FEES. Summit or the Operating Partnership shall have
paid any transfer fee, assumption fee or similar charge ("ASSUMPTION FEE")
required to be paid pursuant to the terms of the documents and instruments
evidencing Mortgage Indebtedness encumbering any Apartment Project (other than
Rancho Las Palmas and Camino Real) in connection with the consummation of the
transactions contemplated by this Agreement or as a condition precedent to
obtaining the consent of the holder of any such Mortgage Indebtedness to the
consummation of the transactions contemplated by this Agreement.
6.15 DISCHARGE OF MORTGAGE INDEBTEDNESS. Summit or the Operating
Partnership shall have paid and discharged, or made arrangements satisfactory to
the Xxxxx Stockholders and the Xxxxx Limited Partners to pay and discharge, all
Mortgage Indebtedness encumbering the Apartment Project known as Camino Real and
the Apartment Project known as Rancho Las Palmas, including the release of any
letters of credit securing the same..
6.16 PARTIAL PREPAYMENT OF MORTGAGE INDEBTEDNESS. Summit or the
Operating Partnership shall have prepaid any Mortgage Indebtedness encumbering
any of the Apartment Projects (other than Rancho Las Palmas and Camino Real) to
the extent required by the documents and instruments evidencing the same as a
result of the consummation of the transactions contemplated by this Agreement or
as a condition precedent to obtaining the consent of the holder of any such
Mortgage Indebtedness to the consummation of the transactions contemplated by
this Agreement.
6.17 NO MATERIAL ADVERSE CHANGE. There shall not have occurred any
material adverse change in the business, properties, or financial condition of
Summit or
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the Operating Partnership, taken as a whole, and the Xxxxx Stockholders and the
Xxxxx Limited Partners shall have received a certificate, dated the Closing
Date, from Summit to such effect.
6.18 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings to
be taken by Summit and the Operating Partnership in connection with this
Agreement and the consummation of the transactions contemplated hereby and all
documents and instruments delivered by Summit or the Operating Partnership in
connection therewith shall be in form and substance reasonably satisfactory to
Xxxxx and its counsel, the Xxxxx Stockholders, the Partnerships and the Xxxxx
Limited Partners and their counsel, and Xxxxx, the Xxxxx Stockholders, the
Partnerships and the Xxxxx Limited Partners shall have received such other
documents and instruments as they may reasonably request in connection
therewith.
6.19 COURT ORDERS. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Corporate Merger, the Contribution Transaction, or any of the other
transactions contemplated hereby shall be in effect.
6.20 REGISTRATION RIGHTS AGREEMENT. Summit shall have executed and
delivered the Registration Rights Agreement.
6.21 ESTIMATED XXXXX EXPENSES. Summit or the Operating Partnership
shall have paid, or made arrangements reasonably satisfactory to the Xxxxx
Stockholders and the Xxxxx Limited Partners for the payment of, all Estimated
Xxxxx Expenses.
6.22 MASTER LEASE. Xxxxx Remainder LLC, an Ohio limited liability
company, shall have executed and delivered a Master Lease, dated the Closing
Date and substantially in the form of Exhibit "S" hereto.
6.23 FRUSTRATION OF CLOSING CONDITIONS. None of Xxxxx, the Xxxxx
Stockholders, the Partnerships, or the Xxxxx Limited Partners may rely on the
failure of any condition set forth in this Article 6 to be satisfied if such
failure was caused by such party's failure to use reasonable efforts to
consummate the Corporate Merger, the Contribution Transaction, and the other
transactions contemplated by this Agreement.
ARTICLE 7. REPRESENTATIONS, WARRANTIES, AND COVENANTS
OF XXXXX AND THE XXXXX STOCKHOLDERS
Xxxxx and the Xxxxx Stockholders hereby represent and warrant to Summit
and the Operating Partnership as follows:
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7.01 ORGANIZATION AND GOOD STANDING, ETC. OF XXXXX. Xxxxx is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio and has all requisite corporate power and authority to own
and lease its properties and to carry on its business as presently conducted and
as proposed to be conducted. Xxxxx is registered or qualified to transact
business as a foreign corporation and in good standing (including tax good
standing) in each jurisdiction in which the property owned or leased by Xxxxx or
the conduct of its business requires such registration or qualification. Except
for its limited partnership interests in the Partnerships, as of the Corporate
Merger Effective Date, Xxxxx will not own, beneficially or of record, any other
material asset or any shares or capital stock of, or hold any other equity
interest in, any Person. The copies of Xxxxx'x Articles of Incorporation and
Code of Regulations which have been furnished to Summit include all amendments
made thereto at any time prior to the date of this Agreement and are correct and
complete. The corporate minute books of Xxxxx are accurate as to their content
and include therein the Articles of Incorporation and Code of Regulations of
Xxxxx with any amendments thereto; the meetings of the directors or stockholders
referred to therein were duly called and held; the signatures appearing on all
documents contained in such minute books are the true signatures of the persons
purporting to have executed the same; and no minutes of meetings or written
consents of the directors or stockholders of Xxxxx are omitted from such minute
books which would contain any resolutions or other actions which would (i) be
inconsistent with any of the representations and warranties contained in Article
7 hereof, (ii) relate to any merger, consolidation, liquidation or dissolution
of Xxxxx, or (iii) prevent or limit any of the transactions contemplated by this
Agreement.
7.02 CAPITALIZATION OF XXXXX. The authorized capital stock of Xxxxx
consists of 2,000 shares of no par Capital Stock with a stated value of $100.00
per share, of which 960 shares are issued and outstanding and 1,040 shares are
held as treasury shares. Exhibit "P" hereto sets forth a true and complete list
of all of the record stockholders of Xxxxx and the number of shares of the
Capital Stock of Xxxxx owned of record by each such stockholder. There are no
authorized, issued or outstanding options, warrants, conversion privileges,
preemptive rights or other rights or agreements (whether or not presently
exercisable) to purchase or otherwise acquire any capital stock of Xxxxx or
other securities convertible into or evidencing the right to purchase or
otherwise acquire any shares of such stock. All of the issued and outstanding
shares of the Capital Stock of Xxxxx are duly authorized, validly issued, fully
paid and non-assessable and were issued in compliance with all applicable
federal and state securities laws. There are no restrictions upon the sale,
voting or transfer of any shares of the Capital Stock of Xxxxx pursuant to
Xxxxx'x Articles of Incorporation, Code of Regulations or other governing
instruments or any agreement or other instrument to which Xxxxx is a party or by
which it may be bound. During the period from and following the date of this
Agreement to the Corporate Merger Effective Time, there will be no change in the
issued and outstanding Xxxxx Capital Stock. There are no bonds, debentures,
notes or other Indebtedness of Xxxxx having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matters
on which shareholders of Xxxxx may vote.
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7.03 AUTHORITY AND CAPACITY. Xxxxx and the Xxxxx Stockholders have all
requisite power, authority and capacity to execute and deliver this Agreement
and the other agreements and instruments to be executed and delivered by Xxxxx
and such Stockholders hereunder and to perform Xxxxx'x and such Stockholders'
obligations hereunder and thereunder. The execution and delivery of this
Agreement by Xxxxx and the consummation by Xxxxx of the transactions
contemplated hereby have been duly authorized by the Board of Directors of Xxxxx
and, except for the approval of its stockholders, no other corporate proceedings
on the part of Xxxxx are required in connection therewith.
7.04 VALIDITY AND ENFORCEABILITY. This Agreement has been duly
executed and delivered by Xxxxx and the Xxxxx Stockholders and constitutes, and
the other agreements and instruments to be executed and delivered hereunder by
Xxxxx or the Xxxxx Stockholders when executed and delivered by Xxxxx or such
Stockholders, will constitute, legal, valid and binding obligations of Xxxxx or
such Stockholders, as the case may be, enforceable against the same in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other laws relating to
or affecting the enforcement of creditors' rights generally or by general
equitable principles.
7.05 NO CONFLICT. Neither the execution and delivery of this Agreement
by Xxxxx or the Xxxxx Stockholders nor the execution and delivery by Xxxxx or
such Stockholders of the other agreements and instruments to be executed and
delivered by the same hereunder, nor the consummation of the transactions
contemplated hereunder or thereunder, will (i) conflict with or result in a
breach or violation of, or constitute a default under, or result in the creation
of any lien, charge or encumbrance upon, any of the properties or assets of
Xxxxx or such Stockholders pursuant to any indenture, mortgage, lease, loan
agreement or other agreement or instrument to which Xxxxx or such Stockholders
are parties or by which Xxxxx or such Stockholders are bound or to which Xxxxx'x
or any of such Stockholders' properties or assets are subject, or (ii) violate
any law, statute, rule, regulation, judgment or decree applicable to Xxxxx or
such Stockholders. Except as may be required by the Mortgage Indebtedness and
except as set forth in Exhibit "Q", no third party consents are required by the
terms of any indenture, mortgage, lease, loan agreement or other agreement or
instrument to which Xxxxx or such Stockholders are parties or by which Xxxxx or
such Stockholders are bound or to which Xxxxx'x or any of such Stockholders'
properties or assets are subject for the execution and delivery of this
Agreement or any other agreement or instrument to be executed and delivered by
Xxxxx or such Stockholders hereunder or the consummation of the transactions
provided for herein.
7.06 NO CONSENT OR APPROVAL REQUIRED. Except for (i) the filing of the
Corporate Articles of Merger with the State Department of Assessments and
Taxation of the State of Maryland, and (ii) the filing of the Corporate
Certificate of Merger with the Secretary of State of the State of Ohio, no
consent, approval or authorization of, or
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declaration to or filing with, any Governmental Entity is required for the valid
execution and delivery by Xxxxx or such Stockholders of this Agreement or any
other agreement or instrument to be executed and delivered by Xxxxx or such
Stockholders hereunder or the consummation by them of the transactions provided
for herein or therein.
7.07 INVESTMENT REPRESENTATION.
A. Each of the Xxxxx Stockholders is acquiring Summit Shares
for such Stockholder's own account for investment only, not as nominee or agent,
and not with a view to, or an intention of, a distribution or resale thereof, in
whole or in part, or the grant of any participation therein.
B. Each of the Xxxxx Stockholders is an "accredited investor"
as such term is defined in Rule 501(a) of Regulation D adopted by the Commission
under the Securities Act.
C. The Xxxxx Stockholders understand that the Summit Shares
have not been (1) registered under the Securities Act by reason of the reliance
by Summit on an exemption from the registration requirements of the Securities
Act pursuant to Section 4(2) thereof, or (2) qualified under any Blue Sky Laws
by reason of the reliance by Summit on an exemption from such qualification.
D. Each of the Xxxxx Stockholders (1) has such knowledge and
experience in business and financial matters that he is capable of evaluating
the risks and merits of an investment in the Summit Shares and of making an
informed investment decision, and (2) is able to bear the economic risk thereof.
Summit has delivered or made available to the Xxxxx Stockholders such documents,
materials and information pertaining to Summit as the Xxxxx Stockholders may
have requested and has afforded the Xxxxx Stockholders an opportunity to ask
questions of and receive answers from Summit and its executive officers.
E. The Xxxxx Stockholders understand that the Summit Shares
may not be sold, transferred or otherwise disposed of without registration under
the Securities Act and applicable Blue Sky Laws or an exemption therefrom, and
that in the absence of an effective registration statement covering the same or
an available exemption from registration under the Securities Act and applicable
Blue Sky Laws, the Summit Shares must be held indefinitely. In the absence of an
effective registration statement under the Securities Act and applicable Blue
Sky Laws or an exemption therefrom, the Xxxxx Stockholders will not sell,
transfer, or otherwise dispose of the Summit Shares, or any portion thereof. In
addition, any such sale, transfer or disposition shall also be in accordance
with the provisions of the Registration Rights Agreement.
F. The Xxxxx Stockholders understand and acknowledge that,
each certificate representing the Summit Shares will bear a legend to the
following effect:
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The securities represented by this certificate (1) have not
been registered under the Securities Act of 1933, as amended
(the "Act") or any state securities laws, (2) may only be
transferred pursuant to an effective registration statement
under the Act and applicable state securities laws or an
exemption from such registration and (3) are subject to
restrictions on transfer under that certain Registration
Rights and Lock-Up Agreement dated as of October 31, 1998
among the Company, the holder of this certificate and certain
other parties. A copy of such Agreement is on file with the
Secretary of the Company and is available for inspection upon
request.
7.08 FINANCIAL STATEMENTS; ABSENCE OF CERTAIN CHANGES OR
EVENTS.
(a) FINANCIAL STATEMENTS. To the knowledge of the Xxxxx
Stockholders, (1) the combined balance sheets of Xxxxx and Related Entities as
of December 31, 1996, and December 31, 1997, and the related combined statements
of operations, stockholders' and partners' capital (deficiency) and cash flows
for the years ended December 31, 1996, and December 31, 1997, accompanied by the
report of Deloitte & Touche, independent certified public accountants, true and
complete copies of which have been delivered to Summit, were prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved except as otherwise set forth therein and
present fairly, in all material respects, the combined financial condition of
Xxxxx and Related Entities as of such date and the results of operations,
changes in stockholder's equity and partners' equity and cash flows of Xxxxx and
Related Entities for the years ended December 31, 1996, and December 31, 1997;
and (2) the internally prepared unaudited interim combined balance sheet of
Xxxxx and Related Entities as of June 30, 1998, and the related unaudited
interim combined income statement for the six months ended on such date were
prepared in accordance with GAAP consistently applied throughout the period
involved except as otherwise set forth therein and present fairly, in all
material respects, the financial condition of Xxxxx and Related Entities as of
such date and the results of operations of Xxxxx and related entities for the
six months then ended, subject to normal year-end adjustments. The internally
prepared unaudited interim combined balance sheet of Xxxxx and Related Entities
as of June 30, 1998, is referred to in this Agreement as the "LATEST XXXXX
BALANCE SHEET."
(b) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Latest Xxxxx Balance Sheet, to the knowledge of the Xxxxx Stockholders,
since the date of the Latest Xxxxx Balance Sheet, Xxxxx has conducted its
business only in the ordinary course thereof and there has not been (A) any
material adverse change, event or development in the business, financial
condition or results of operations of Xxxxx, taken as a whole (a "XXXXX MATERIAL
ADVERSE CHANGE"), nor has there been any occurrence or circumstance that with
the passage of time could reasonably be expected to result in a Xxxxx Material
Adverse Change, provided, however that the declaration or payment of any
dividend or distribution of cash, property or other assets other than any
interest of
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Xxxxx in any Partnership and the sale, mortgage, pledge, grant, dividend or
other disposition, transfer or encumbrance of any property or assets of Xxxxx
other than any interest of Xxxxx in any Partner shall not constitute a Xxxxx
Material Adverse Change, (B) any declaration, setting aside or payment of any
dividend or other distribution of any interest of Xxxxx in any Partnership, with
respect to any of Xxxxx'x capital stock, (C) any split, combination or
reclassification of any of Xxxxx'x capital stock, (D) any change in accounting
methods, principles or practices by Xxxxx materially affecting its assets,
liabilities or business, except insofar as may have been disclosed in the Latest
Xxxxx Balance Sheet or required by a change in GAAP, (E) any sale, mortgage,
pledge, grant, dividend or other disposition, transfer or encumbrance of any
interest of Xxxxx in any Partnership, (F) any increase in the compensation
payable or to become payable by Xxxxx to any officer, shareholder or key
employee of Xxxxx, or any agreement therefor, (G) any change made or authorized
in Xxxxx'x Articles of Incorporation or Code of Regulations, or (H) any loans or
advances by or to Xxxxx, other than renewals or extensions of existing
indebtedness, uses of lines of credit and routine travel advances to its
employees, in each case in the ordinary course of business.
7.09 ABSENCE OF UNDISCLOSED LIABILITIES. To the knowledge of
the Xxxxx Shareholders, except to the extent reflected or reserved against in
the balance sheets referred to in Section 7.08, or constituting Permitted
Exceptions, or as referred to in this Agreement or disclosed to Summit or the
Operating Partnership in connection with their due diligence examinations of
Xxxxx, the Partnerships and the Apartment Projects, Xxxxx does not have any
material obligations or liabilities except those which arose in the ordinary
course of business.
7.10 THE PROPERTY.
A. Except as specifically set forth in Section 7.10B below,
the acquisition by Summit and the Operating Partnership of an interest in the
Property hereunder is and will be made on an "as is" basis, without
representations and warranties of any kind or nature, express, implied or
otherwise, including, but not limited to, any representation or warranty
concerning title to the Property, the physical condition of the Property
(including, but not limited to, the condition of the soil or the Improvements),
the environmental condition of the Property or Xxxxx (including, but not limited
to, the presence or absence of hazardous substances on or respecting the
Property), the compliance of the Property with applicable laws and regulations
(including, but not limited to, zoning and building codes or the status of
development or use rights respecting the Property), the financial condition of
the Property or any other representation or warranty respecting any income,
expenses, charges, liens or encumbrances, rights or claims on, affecting or
pertaining to the Property or any part thereof. Summit and the Operating
Partnership acknowledge that prior to the execution and delivery of this
Agreement, Summit and the Operating Partnership have examined, reviewed, and
inspected all matters which in Summit's and the Operating Partnership's judgment
bear upon the Properties and their value and suitability for Summit's and the
Operating Partnership's purposes. Except as to matters specifically set forth in
Section 7.10B
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below, Summit and the Operating Partnership will acquire interests in the
Property solely on the basis of their own physical and financial examinations,
reviews and inspections and the title insurance protection afforded by the
policies of title insurance herein provided. Without limitation on the
foregoing, Summit and the Operating Partnership hereby waive any and all rights
of contribution or other rights or remedies against Xxxxx or the Xxxxx
Stockholders under CERCLA or any other applicable environmental laws, rules or
regulations.
B. Subject to the provisions of Section 7.10A hereto, to the
knowledge of the Xxxxx Stockholders:
(1) LITIGATION. There is no pending action, litigation,
condemnation, investigation or other proceeding against the Property or against
Xxxxx with respect to the Property, nor is there any judgment, decree,
injunction, or order of any Governmental Entity or arbitrator outstanding
against Xxxxx with respect to the Property except any claim which has been
submitted to and is being defended by an insurance carrier.
(2) COMPLIANCE. Xxxxx has received no written notice from any
Governmental Entity having jurisdiction over the Property to the effect that the
Property is not in compliance with applicable laws and ordinances.
(3) SERVICE AGREEMENTS. Except for the Rancho Construction
Contract and the Rancho Management Agreement and those which are cancelable
without penalty on not more than 90 days' notice, Xxxxx has not entered into any
service agreements or contracts ("SERVICE AGREEMENTS") or other agreements
(other than as set forth in this Agreement) relating to the Property which will
be in force on the Closing Date, and Xxxxx has not received any written notice
of any material default thereunder that remains uncured.
(4) ENVIRONMENTAL MATTERS. Except as set forth in the reports
listed in Exhibit "R" attached hereto (the "ENVIRONMENTAL REPORTS"), Xxxxx has
received no written notice of the existence, deposit, storage, removal, burial
or discharge of any material known to Xxxxx to be a Hazardous Material at, upon,
under, within or adjacent to the Property, in an amount which, in Xxxxx'x
reasonable judgment, would, as of the date hereof, give rise to an Environmental
Compliance Cost. No notice, notification, demand, request for information,
citation, summons, complaint or order has been received from any Governmental
Entity by or is pending or threatened by, any Governmental Entity against Xxxxx,
other than where such notice, notification, demand, request for information,
citation, summons, complaint or order has been fully resolved. Xxxxx has
previously delivered or made available to Summit, the Operating Partnership or
their counsel true and complete copies of all environmental reports in the
possession or under the control of Xxxxx that relate to the Properties and/or
Xxxxx'x compliance with Environmental Laws.
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(5) TITLE TO PROPERTY. The Partnerships have title to the Personal
Property, free and clear of all liens, encumbrances or security agreements,
except for Permitted Exceptions.
(6) ALL PROPERTIES. As of the Corporate Merger Effective Date
Xxxxx will have no direct or indirect, legal or beneficial interest in any real
property other than those included in the definitions of "Apartment Projects"
and "Properties" herein.
7.11 TAXES.
(1) All Tax Returns and reports of all Taxes required to be filed by Xxxxx
have been timely filed and are true, correct and complete in all material
respects, and all Taxes, if any, owed (whether or not shown on any Tax Return)
by Xxxxx have been timely paid; (2) no audit of any Tax Return filed by Xxxxx is
in progress, and none of Xxxxx and the Xxxxx Stockholders has been notified that
any such audit is contemplated or pending; (3) no claim has ever been made by a
taxing authority in a jurisdiction where Xxxxx does not file any Tax Returns
that Xxxxx is or may be subject to taxation by that jurisdiction; (4) there is
no security interest on any of the assets of Xxxxx that arose in connection with
any failure (or alleged failure) to pay any Taxes; (5) no deficiency or
adjustment in respect of any Taxes which was assessed against Xxxxx remains
unpaid and no such claim or assessment is pending or, to Xxxxx'x knowledge,
threatened, and there are no reasonable grounds for any such assessment or
claim; (6) Xxxxx has made all withholdings of Taxes required to be made under
all applicable federal, state and local Tax regulations and such withholdings
have either been paid on a timely basis to the respective governmental agencies
or set aside in accounts for such purpose or accrued, reserved against and
entered upon the books of Xxxxx; (7) there are no outstanding agreements or
waivers extending the statutory period of limitations applicable to any Tax
Return or Tax liability of Xxxxx, and there is no proposed liability for any
Taxes for which there is not an adequate reserve reflected on the Latest Xxxxx
Balance Sheet; (8) Xxxxx has made available to Summit correct and complete
copies of all income or franchise Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by Xxxxx for all
periods commencing on or after January 1, 1993; (9) Xxxxx is not a party to any
Tax sharing agreement and does not have any liability for the Taxes of any other
Person, whether by contract or law, as a transferee or successor or otherwise;
and (10) Xxxxx has not filed any consent with the Internal Revenue Service
described in Section 341(f) of the Code. Each of the representations and
warranties of this Section 7.11 are, with respect to the Xxxxx Stockholders, to
the knowledge of the Xxxxx Stockholders.
7.12 UNIONS. None of the employees of Xxxxx are covered by any collective
bargaining agreement and, to the knowledge of the Xxxxx Stockholders, there are
no organizational efforts currently being made or threatened involving any
employees of Xxxxx.
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7.13 ERISA. To the knowledge of Xxxxx Stockholders, neither Xxxxx nor any
ERISA Affiliate of Xxxxx maintains or contributes to or is obligated to
contribute to, and has never maintained or contributed to or been obligated to
contribute to, (i) any Multi-employer Plan, (ii) any Multiple Employer Plan, or
(iii) except as set forth in Exhibit "T" hereto, any Plan. With respect to the
Plan(s) disclosed in Exhibit "T" hereto, to the knowledge of the Xxxxx
Stockholders:
A. Each such Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Any
such Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS. Xxxxx has made all
required contributions to any such Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any such Plan.
B. There are no pending claims (other than routine claims for benefits) or
action by any Governmental Entity, with respect to any such Plan, and there has
been no prohibited transaction or violation of the fiduciary responsibility
rules with respect to any such Plan.
C. (i) No ERISA Event has occurred or is reasonably expected to occur; (ii)
no such Plan which constitutes a Pension Plan has any Unfunded Pension
Liability; (iii) neither Xxxxx nor any ERISA Affiliate of Xxxxx has incurred, or
reasonably expects to incur, any material liability under Title IV of ERISA with
respect to any such Plan which constitutes a Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) neither Xxxxx nor any
ERISA Affiliate of Xxxxx has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multi-employer Plan; and (v) neither Xxxxx nor
any ERISA Affiliate of Xxxxx has engaged in a transaction that could be subject
to Section 4069 or 4212(c) of ERISA.
7.14 CERTAIN TAX RELATED MATTERS.
A. As of the Closing Date, the "earnings and profits" (within the meaning
of Section 316 of the Code) of Xxxxx are not greater than $-0-; and
X. Xxxxx has filed a valid election to be taxed as a corporation under
Subchapter S of the Code, such election has not been rescinded or revoked, and
through the end of the day immediately preceding the Closing Date, Xxxxx has
been and will be an "S Corporation", within the meaning of Section 1361 of the
Code.
X. Xxxxx GP has been properly classified as a partnership for all federal,
state and local income and franchise Tax purposes at all times since its
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formation, and Xxxxx XX has not made any election to be treated as other than a
partnership for such purposes.
Each of the representations in this Section 7.14 are, with respect to the Xxxxx
Stockholders, to the knowledge of the Xxxxx Stockholders.
7.15 KNOWLEDGE OF XXXXX STOCKHOLDERS. As used in this Agreement, the
"knowledge" of the Xxxxx Stockholders or words of similar import means only the
present actual knowledge of the Xxxxx Stockholders, after, however, having the
property managers of the Property review the relevant representations and
warranties contained herein and obtaining their advice with respect to the same,
but otherwise without any duty to investigate and with any imputed or
constructive knowledge being excluded.
7.16 NOT "INVESTMENT COMPANY." Xxxxx is not an "investment company" within
the meaning of section 368(a)(2)(F)(iii) of the Code.
7.17 NO PAYMENTS TO EMPLOYEES, OFFICERS OR DIRECTORS. Except as otherwise
provided for in this Agreement, there is no employment or severance contract, or
other agreement requiring payments, cancellation of indebtedness or other
obligation to be made on a change of control or otherwise as a result of the
consummation of any of the transactions contemplated by this Agreement, with
respect to any employee, officer or director of Xxxxx in their capacity as such
employee, officer or director.
7.18 COMPLIANCE WITH LAWS. To the knowledge of the Xxxxx Stockholders, (a)
Xxxxx has not violated or failed to comply with any law, permit, judgment,
decree or order of any Governmental Entity applicable to its business,
properties, or operations, except where such violation or failure could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, financial condition or results of operations of
Xxxxx, taken as a whole (a "XXXXX MATERIAL ADVERSE EFFECT"); (b) Xxxxx has all
permits that are required in order to permit it to carry on its business as it
is presently conducted except those permits which the failure to have could not,
individually or in the aggregate, reasonably be expected to have a Xxxxx
Material Adverse Effect; and (c) all such permits are in fully force and effect,
except those permits which the failure to have could not, individually or in the
aggregate, reasonably be expected to have a Xxxxx Material Adverse Effect.
7.19 COMPLIANCE WITH AGREEMENTS. To the knowledge of the Xxxxx
Stockholders, Xxxxx has not received a written notice that Xxxxx is in violation
of or in default under (nor does there exist any condition which upon the
passage of time or the giving of notice or both would cause such a violation of
or default under) any material loan or credit agreement, note, bond, mortgage,
indenture or other agreement evidencing indebtedness, lease, permit, concession,
franchise, management, license or any other material contract, agreement,
arrangement or understanding, to which it is a party or by which it or any of
its properties or assets is bound.
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7.20 "FOREIGN PERSON." Xxxxx is not a "foreign person" within the meaning
of the Internal Revenue Code of 1986, as amended, Sections 1445 and 7701.
7.21 PRINCIPAL BALANCE OF EXISTING LOANS. To the knowledge of the Xxxxx
Stockholders, attached hereto as Exhibit "V" is a true and correct schedule of
the principal balances of all existing indebtedness with respect to the
Properties, setting forth the principal balance for each Property as of the
Effective Date.
7.22 CAMINO REAL AND RANCHO LAS PALMAS. In connection with Camino Real and
Rancho Las Palmas, Summit shall be permitted to pay or otherwise satisfy the
Mortgage Indebtedness secured thereby by payment of the principal amount
thereof, together with interest to the date of prepayment, and without premium
or penalty.
7.23 INSURANCE. To the knowledge of the Xxxxx Stockholders, attached hereto
as Exhibit "II" is a schedule or certificate of all insurance currently in force
which relates to or covers the properties, assets, business or operations of
Xxxxx.
7.24 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. Except as
expressly set forth in this Article 7 and Section 16.01, Xxxxx and the Xxxxx
Stockholders make no representations or warranties, express or implied, at law
or in equity, with respect to Xxxxx, the Xxxxx Stockholders, the Partnerships or
the Xxxxx Limited Partners, or any of their respective assets, liabilities, or
operations, and any such other representations or warranties are hereby
expressly disclaimed.
ARTICLE 8. REPRESENTATIONS, WARRANTIES, AND COVENANTS
OF THE PARTNERSHIPS AND THE PARTNERS
Each Partnership and the Partners of such Partnership hereby represent
and warrant to Summit and the Operating Partnership as follows:
8.01 ORGANIZATION AND GOOD STANDING, ETC. OF PARTNERSHIP. Such Partnership
is a limited partnership duly formed, validly existing and, if applicable, in
good standing under the laws of the State of Texas and has all requisite
partnership power and authority to own and lease its properties and to carry on
its business as presently conducted and as proposed to be conducted. Such
Partnership does not own, beneficially or of record, any shares or capital stock
of, or hold any other equity interest in, any Person. The copies of such
Partnership's Certificate of Limited Partnership and limited partnership
agreement which have been furnished to Summit include all amendments made
thereto at any time prior to the date of this Agreement and are correct and
complete.
8.02 PARTNERS OF PARTNERSHIP. Exhibit "W" hereto sets forth following the
name of such Partnership a true and complete list of all of the general and
limited partners of such Partnership. During the period from and following the
Effective Date to the Contribution Date, there will be no change in the
ownership interests in such Partnership.
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8.03 AUTHORITY AND CAPACITY. Such Partnership has all requisite power,
authority and capacity to execute and deliver this Agreement and the other
agreements and instruments to be executed and delivered by such Partnership
hereunder and to perform such Partnership's obligations hereunder and
thereunder. The execution and delivery of this Agreement by such Partnership and
the consummation by such Partnership of the transactions contemplated hereby
have been duly authorized by the Partners of such Partnership and no other
partnership proceedings on the part of such Partnership are required in
connection therewith.
8.04 VALIDITY AND ENFORCEABILITY. This Agreement has been duly executed and
delivered by such Partnership and constitutes, and the other agreements and
instruments to be executed and delivered hereunder by such Partnership when
executed and delivered by such Partnership will constitute, legal, valid and
binding obligations of such Partnership, enforceable against the same in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other laws relating to
or affecting the enforcement of creditors' rights generally or by general
equitable principles.
8.05 NO CONFLICT. Neither the execution and delivery of this Agreement by
such Partnership nor the execution and delivery by the Partnership of the other
agreements and instruments to be executed and delivered by the same hereunder,
nor the consummation of the transactions contemplated hereunder or thereunder,
will (i) conflict with or result in a breach or violation of, or constitute a
default under, or result in the creation of any lien, charge or encumbrance
upon, any of the properties or assets of such Partnership pursuant to any
indenture, mortgage, lease, loan agreement or other agreement or instrument to
which such Partnership are parties or by which such Partnership are bound or to
which such Partnership's properties or assets are subject, or (ii) violate any
law, statute, rule, regulation, judgment or decree applicable to such
Partnership. Except as may be required by the Mortgage Indebtedness, no third
party consents are required by the terms of any indenture, mortgage, lease, loan
agreement or other agreement or instrument to which such Partnership or such
Partners are parties or by which such Partnership is bound or to which such
Partnership's properties or assets are subject for the execution and delivery of
this Agreement or any other agreement or instrument to be executed and delivered
by such Partnership hereunder or the consummation of the transactions provided
for herein.
8.06 NO CONSENT OR APPROVAL REQUIRED. Except for (i) the filing of the
Corporate Articles of Merger with the Secretary of State of the State of
Delaware, and (ii) the filing of the Corporate Certificate of Merger with the
Secretary of State of the State of Ohio, no consent, approval or authorization
of, or declaration to or filing with, any governmental or regulatory authority
is required for the valid execution and delivery by such Partnership of this
Agreement or any other agreement or instrument to be executed and delivered by
such Partnership hereunder or the consummation by it of the transactions
provided for herein or therein.
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8.07 FINANCIAL STATEMENTS.
(a) FINANCIAL STATEMENTS. To the knowledge of the Partners of such
Partnership and with respect to the financial statements set forth following
such Partnership's name on Exhibit "AA", (1) the internally prepared balance
sheets of such Partnership as of the dates indicated and the related cash flow
income statements for the years ended on such dates, true and complete copies of
which have been delivered to Summit, were prepared in accordance with GAAP
consistently applied throughout the period involved except as otherwise set
forth therein and present fairly the financial condition of such Partnership as
of such date and the results of operations of such Partnership for the years
then ended; and (2) the internally prepared unaudited balance sheet of such
Partnership as of August 31, 1998, and the related cash flow income statement
for the eight (8) months ended on such date were prepared in accordance with
GAAP consistently applied throughout the period involved except as otherwise set
forth therein and present fairly the financial condition of such Partnership as
of such date and the results of operations of such Partnership for the eight (8)
months then ended, subject to normal year-end adjustments. The internally
prepared balance sheet of such Partnership as of August 31, 1998, is referred to
in this Agreement as the "LATEST PARTNERSHIP BALANCE SHEET" of such Partnership.
(b) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the Latest
Partnership Balance Sheet of such Partnership, to the knowledge of the Partners
of such Partnership since the date of the Latest Partnership Balance Sheet of
such Partnership, such Partnership has conducted its business only in the
ordinary course thereof and there has not been (A) any material adverse change,
event or development in the business, financial condition or results of
operations of such Partnership, taken as a whole (a "PARTNERSHIP MATERIAL
ADVERSE CHANGE"), nor has there been any occurrence or circumstance that with
the passage of time could reasonably be expected to result in a Partnership
Material Adverse Change, (B) any declaration, setting aside or payment of any
distribution of the Property owned by such Partnership or any portion thereof,
with respect to any of such Partnership's partnership interests, (C) any split,
combination or reclassification of any of such Partnership's partnership
interests, (D) any damage, destruction or loss, whether or not covered by
insurance, that, individually or in the aggregate, could be reasonably expected
to have a Partnership Material Adverse Effect, (E) any change in accounting
methods, principles or practices by such Partnership materially affecting its
assets, liabilities or business, except insofar as may have been disclosed in
the Latest Partnership Balance Sheet of such Partnership or required by a change
in GAAP, (F) any sale, mortgage, pledge, grant, dividend or other disposition,
transfer or encumbrance of any asset or interest owned or possessed by such
Partnership, other than those occurring in the ordinary course of business
consistent with past practices and prior periods, (G) any change made or
authorized in such Partnership's Certificate of Limited Partnership or Limited
Partnership Agreement except for amendments, each dated as of October 14, 1998,
to the Limited Partnership Agreements of the Buena Vista Partnership, the Turtle
Cove Partnership, the Los Arboles Partnership
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and the Turtle Rock Partnership, (H) any loans or advances by or to such
Partnership, other than renewals or extensions of existing indebtedness, uses of
lines of credit and routine travel advances to its employees, in each case in
the ordinary course of business, or (J) any cancellation or payment by such
Partnership of any material indebtedness owing to it or any cancellation or
settlement by such Partnership of any material claims against others.
8.08 ABSENCE OF UNDISCLOSED LIABILITIES. To the knowledge of the Partners
of such Partnership except to the extent reflected or reserved against in the
balance sheets referred to in Section 8.07, or constituting Permitted
Exceptions, or as referred to in this Agreement or disclosed to Summit or the
Operating Partnership in connection with their due diligence examinations of
Xxxxx, the Partnerships and the Apartment Projects, such Partnership does not
have any material obligations or liabilities except those which arose in the
ordinary course of business or which, taken together, do not amount to a
material adverse change in the business, properties or financial condition of
such Partnership.
8.09 THE PROPERTY.
A. Except as specifically set forth in Section 8.09B below, the acquisition
by Summit and the Operating Partnership of an interest in the Property of such
Partnership hereunder is and will be made on an "as is" basis, without
representations and warranties of any kind or nature, express, implied or
otherwise, including, but not limited to, any representation or warranty
concerning title to such Property, the physical condition of such Property
(including, but not limited to, the condition of the soil or the Improvements),
the environmental condition of such Property, or such Partnership (including,
but not limited to, the presence or absence of hazardous substances on or
respecting such Property), the compliance of such Property with applicable laws
and regulations (including, but not limited to, zoning and building codes or the
status of development or use rights respecting such Property), the financial
condition of such Property or any other representation or warranty respecting
any income, expenses, charges, liens or encumbrances, rights or claims on,
affecting or pertaining to such Property or any part thereof. Summit and the
Operating Partnership acknowledge that prior to the execution and delivery of
this Agreement Summit and the Operating Partnership examined, reviewed and
inspected all matters which in their respective judgment bear upon such Property
and its value and suitability for Summit's or the Operating Partnership's
purposes. Except as to matters specifically set forth in Section 8.09B below,
Summit and the Operating Partnership will acquire interests in such Property
solely on the basis of their own physical and financial examinations, reviews
and inspections and the title insurance protection afforded by the policies of
title insurance herein provided. Without limitation on the foregoing, Summit and
the Operating Partnership hereby waive any and all rights of contribution or
other rights or remedies against Xxxxx, the Xxxxx Stockholders, any Partnership
or any Xxxxx Limited Partner under CERCLA or any other applicable environmental
laws, rules or regulations.
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B. Subject to the provisions of Section 8.09A hereto, to the knowledge of
the Partners of such Partnership:
(1) LITIGATION. There is no pending action, litigation, condemnation,
investigation or other proceeding against such Property or against such
Partnership with respect to such Property, nor is there any judgment, decree,
injunction, or order of any Governmental Entity or arbitrator outstanding
against such Partnership with respect to the Property.
(2) COMPLIANCE. Such Partnership has received no written notice from any
Governmental Entity having jurisdiction over such Property to the effect that
such Property is not in compliance with applicable laws and ordinances.
(3) SERVICE AGREEMENTS. Except for the Rancho Construction Contract and the
Rancho Management Agreement (in the event that such Partnership is the Rancho
Las Palmas Partnership), and those which are cancelable without penalty on not
more than 90 days' notice, such Partnership has not entered into any Service
Agreements or other agreements (other than as set forth in this Agreement)
relating to such Property which will be in force on the Closing Date, and such
Partnership has not received any written notice of any material default
thereunder that remains uncured.
(4) ENVIRONMENTAL MATTERS. Except as set forth in the Environmental
Reports, such Partnership has received no written notice of the existence,
deposit, storage, removal, burial or discharge of any material known to such
Partnership to be a Hazardous Material at, upon, under, within or adjacent to
the Property owned by such Partnership, in an amount which, in such
Partnership's reasonable judgment, would, as of the date hereof, give rise to an
Environmental Compliance Cost. No notice, notification, demand, request for
information, citation, summons, complaint or order has been received by or is
pending or threatened by, any Person against such Partnership, other than where
such notice, notification, demand, request for information, citation, summons,
complaint or order has been fully resolved. Such Partnership has previously
delivered or made available to Summit, the Operating Partnership or their
counsel, true and complete copies of all environmental reports in the possession
or under the control of such Partnership that relate to the Properties and/or
such Partnership's compliance with Environmental Laws.
(5) TITLE TO PROPERTY. Such Partnership has title to the Personal Property
related to such Property, free and clear of all liens, encumbrances or security
agreements, except for Permitted Exceptions.
(6) ALL PROPERTIES. All of the real estate properties in which such
Partnership has a direct or indirect, legal or beneficial interest are included
in the definitions of "Apartment Projects" and "Properties" herein. Such
Partnership has no direct or indirect, legal or beneficial interest in any real
property as of the date hereof other than those included in such definitions.
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(7) RENT ROLL. Except as otherwise shown on the rent rolls attached hereto
as Exhibit "FF" or the rent roll delivered at Closing:
(a) there are no other lease or rental agreements for the occupancy for any
of the units at the Property owned by such Partnership;
(b) no tenant is entitled to any free rent or similar concession;
(c) no tenant has prepaid rent for more than one month in advance;
(d) no tenant is entitled to a refund of any rent or other sums heretofore
paid by such tenant (except for security deposits and pet deposits) or to assert
any such refund or claim therefor as an offset or defense against the payment of
rent hereafter coming due which, when aggregated with refunds, offsets and
defenses alleged by other tenants, would have a material adverse effect upon the
Properties;
(e) there are no leases with an initial term in excess of thirteen months;
and
(f) no tenant has an option to renew its lease agreement.
(8) BROKERAGE COMMISSIONS. Except as incurred in the ordinary course of
business and consistent with past practice, no brokerage or leasing commission
or other compensation will be due or payable with respect to any of the leases
at the Property listed in such rent rolls. The leases are in full force and
effect and no material default or breach on the part of the landlord exists
thereunder, and there is no material default by the tenant thereunder in the
payment of rent for more than 45 days (except if such condition or fact may be
disclosed on the rent roll attached hereto or the rent roll delivered at
Closing). Except as shown in the rent rolls or in the tenant leases made
available to Summit, no commitments have been made to any tenant for material
repairs or improvements other than a general landlord requirement for normal
maintenance in the future, and painting, repairs and similar items commonly
incurred in connection with the commencement of leases. Except as aforesaid, no
commitments of a material nature have been made to any tenant for repairs or
improvements.
(9) OPTIONS ON THE PROPERTIES. No person, firm, corporation or other entity
has any right or option to acquire or possess the Properties, or any part
thereof, from such Partnership except for tenants in possession pursuant to the
tenant leases described in the rent roll attached hereto or provided to Summit
on the date of Closing.
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(10) NOTICES. Such Partnership has not received, with respect to the
Properties, any written notice from any insurance company, Governmental Entity,
adjacent landowners or any other party of (i) any condition, defect, or
inadequacy that, if not corrected, would result in termination of insurance
coverage or increase its costs, (ii) any violation of building codes or zoning
ordinances, subdivision ordinances, watershed regulations, or other governmental
laws, regulations or orders, (iii) pending or threatened condemnation
proceedings, (iv) any proceedings that could or would cause the change,
redefinition, or other modification of the zoning classification applicable to
the Properties or any part thereof, or (v) any moratorium that could or would in
any way impair such Partnership's use of the Properties for the construction and
operation of apartment complexes.
(11) MECHANIC'S AND MATERIALMEN'S LIENS. There are no unpaid charges,
debts, liabilities, claims or obligations aggregating more than $1,000 arising
from the construction, occupancy, ownership, use or operation of the Properties
prior to Closing which could give rise to any mechanic's or materialmen's or
other statutory liens against any of the Properties for which Summit or the
Operating Partnership will be responsible.
(12) UNIT APPLIANCES AND AMENITIES. Each rental unit of the Apartment
Project owned by such Partnership is fully equipped with all of the appliances
and amenities listed in Exhibit "Y" attached hereto.
(13) ACCESS. The Properties have uninterrupted access to a public street
and there are no existing or proposed plans to widen, modify or realign said
streets or any other street or highway that would have a material adverse effect
upon the Properties.
(14) UTILITIES. All water, sewer, electric, telephone and drainage
facilities and all other utilities required for the current use of the
Properties are installed to the Properties, connected with valid permits, and
are adequate to service the Properties for its current use. All utilities lines
servicing the Properties are located either within the boundaries of the
Properties or within lands dedicated to the public use, or within recorded
easements for such purpose.
(15) SERVICE CONTRACTS AND PERSONALTY LEASES. A true, correct and complete
list of all material Service Contracts (as hereinafter defined) and all material
Personalty Leases (as hereinafter defined), relating to the Properties, or any
part thereof is attached hereto as Exhibit "Z". For the purposes of this
Agreement, "SERVICE CONTRACTS" shall mean, collectively: (i) brokerage or tenant
locator contracts, (ii) management agreements, cable or subscription television
agreements, (iii) labor union contracts, (iv) maintenance, repair, service and
pest control contracts (including but not limited to janitorial, elevator and
landscaping agreements), and (v) all other contracts pursuant to which services
or goods are provided to the Properties. For the purposes of this
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Agreement, "PERSONALTY LEASES" shall mean: such Partnership's interest in all
furniture, fixture and equipment leases, to the extent the same are assignable
by such Partnership.
(16) UTILITY BONDS. There are no utility bonds or deposits for the
Properties except as set forth in Exhibit "GG".
(17) PUBLIC OBLIGATIONS. To the knowledge of such Partners, no commitments
have been made to any governmental authority, utility company, school board,
church or other religious body, or any homeowners or homeowners' association, or
any other organization, group or individual, relating to the Properties which
would impose an obligation upon Summit, the Operating Partnership, or their
successors or assigns to construct or install any improvements on Land other
than the Properties. The provisions of this subparagraph shall not apply to any
regular or nondiscriminatory local real estate or school taxes assessed against
the Properties.
(18) INSURANCE. To the knowledge of such Partners, Exhibit "II" hereto
includes a schedule or certificate of all insurance currently in force which
relates to or covers the properties, assets, business or operations of such
Partnership.
8.10 TAXES.
(1) All Tax Returns and reports of all Taxes required to be filed by such
Partnership have been timely filed and are true, correct and complete in all
material respects, and all Taxes, if any, owed by such Partnership (whether or
not shown on any Tax Return) have been timely paid; (2) no audit of any Tax
Return filed by the Partnership is in progress, and none of such Partnership and
the Partners of such Partnership has been notified that any such audit is
contemplated or pending; (3) no claim has ever been made by a taxing authority
in a jurisdiction where such Partnership does not file Tax Returns that such
Partnership is or may be subject to taxation by that jurisdiction; (4) there is
no security interest on any of the Properties or other assets of such
Partnership that arose in connection with any failure (or alleged failure) to
pay any Taxes; (5) no deficiency or adjustment in respect of any Taxes which was
assessed against such Partnership remains unpaid, no such claim or assessment is
pending or, to such Partnership's knowledge, threatened, and there are no
reasonable grounds for any such assessment or claim; (6) such Partnership has
made all withholdings of Taxes required to be made under all applicable federal,
state and local Tax regulations and such withholdings have either been paid on a
timely basis to the respective governmental agencies or set aside in accounts
for such purpose or accrued, reserved against and entered upon the books of such
Partnership; (7) there are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any Tax Return or Tax liability of
such Partnership, and there is no proposed liability for any Taxes for which
there is not an adequate reserve reflected on the Latest Balance Sheet of such
Partnership; (8) such Partnership has delivered to Summit correct and complete
copies of all income or franchise Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by such Partnership
since its formation; (9) such Partnership is not a
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party to any Tax sharing agreement and does not have any liability for the Taxes
of any other Person, whether by contract or law, as a transferee or successor or
otherwise; and (10) such Partnership has been properly classified as a
partnership for all federal, state and local income and franchise Tax purposes
at all times since its formation, and such Partnership has not made any election
to be treated as other than a partnership for such purposes. Each of the
representations in this Section 7.14 are, with respect to the Partners of each
Partnership, to the knowledge of such Partners.
8.11 EMPLOYEES. Such Partnership has no employees.
8.12 BENEFIT PLANS. Such Partnership does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Part 3 of Subtitle B of Title I of ERISA, Title
IV of ERISA or Section 412 of the Code.
8.13 KNOWLEDGE OF PARTNERS. As used in this Agreement, the "knowledge" of
the Partners of any Partnership or words of similar import means only the
present actual knowledge of Xxxxxxx X. Xxxxxxxx and S. Xxxxxx Xxxxxxx, after,
however, having the property managers of the Property review the relevant
representations and warranties contained herein and obtaining their advice with
respect to the same, but otherwise without any duty to investigate and with any
imputed or constructive knowledge being excluded.
8.14 AVAILABILITY OF DUE DILIGENCE MATERIALS. To the knowledge of the Xxxxx
Stockholders, the Partnerships have made available to Summit for review true and
complete copies of the following items pertaining to the Properties: the tenant
leases listed in the Rent Rolls; the Service Agreements; the Personalty Leases;
ad valorem tax statements for the immediately preceding three (3) tax years;
existing fire and extended coverage insurance policies; site plans, soil and
substrata reports and plans and specifications, to the extent in the possession
or under the control of the Partnerships; reports of engineers and architects
relating to structural problems or other defects; certificates of occupancy
heretofore issued; permits and licenses heretofore issued; and standard form of
tenant leases, leasing applications, marketing brochures and similar items used
in leasing the Properties.
8.15 NOT "INVESTMENT COMPANY." Such Partnership is not an "investment
company" within the meaning of section 368(a)(2)(F)(iii) of the Code.
8.16 COMPLIANCE WITH LAWS. To the knowledge of the Partners of such
Partnership, (a) such Partnership has not violated or failed to comply with any
law, permit, judgment, decree or order of any Governmental Entity applicable to
its business, properties, or operations except where such violation or failure
could not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the business, financial condition or results of
operations of such Partnership, taken as a whole (a "PARTNERSHIP MATERIAL
ADVERSE EFFECT"); (b) such Partnership has all permits that are
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required in order to permit it to carry on its business as it is presently
conducted, except those permits which the failure to have could not,
individually or in the aggregate, reasonably be expected to have a Partnership
Material Adverse Effect; and (c) all such permits are in full force and effect,
except for any such permit as to which the failure so to be in full force and
effect could not, individually or in the aggregate, reasonably be expected to
have a Partnership Material Adverse Effect.
8.17 COMPLIANCE WITH AGREEMENTS. To the knowledge of the Partners of such
Partnership , such Partnership has not received a written notice that such
Partnership is in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice or both would
cause such a violation of or default under) any material loan or credit
agreement, note, bond, mortgage, indenture or other agreement evidencing
indebtedness, lease, permit, concession, franchise, management, license or any
other material contract, agreement, arrangement or understanding, to which it is
a party or by which it or any of its properties or assets is bound.
8.18 "FOREIGN PERSON." Such Partnership is not a "foreign person" within
the meaning of the Internal Revenue Code of 1986, as amended, Sections 1445 and
7701.
8.19 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. Except as
expressly set forth in this Article 8, Article 9, and Section 16.01, each
Partnership and the Partners of such Partnership make no representations or
warranties, express or implied, at law or in equity, with respect to the
Partnerships, the Xxxxx Limited Partners, or any of their respective assets,
liabilities, or operations, and any such other representations or warranties are
hereby expressly disclaimed.
ARTICLE 9. REPRESENTATIONS, WARRANTIES, AND COVENANTS
OF THE PARTNERSHIPS AND THE PARTNERS
Each Xxxxx Limited Partner, severally and not jointly, hereby represents
and warrant to Summit and the Operating Partnership as follows:
9.01 ORGANIZATION AND GOOD STANDING, ETC. OF XXXXX LIMITED PARTNERS THAT
ARE ENTITIES. If such Xxxxx Limited Partner is a legal entity, such Xxxxx
Limited Partner is duly formed, validly existing and, if applicable, in good
standing under the laws of the jurisdiction of its formation and has all
requisite power and authority to own and lease its properties and to carry on
its business as presently conducted and as proposed to be conducted.
9.02 TITLE. Such Xxxxx Limited Partner is the owner of a Partnership
Interest in each Partnership in which such Xxxxx Limited Partner is listed as a
Partner in Exhibit "W" hereto and is the owner of all such Partnership Interests
free and clear of all liens, security interests or (subject to the Limited
Partnership Agreements of such
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Partnerships, this Agreement, and applicable securities laws) encumbrances and
other claims of any third party whatsoever. Other than this Agreement, there are
no pending agreements pursuant to which such Xxxxx Limited Partner has agreed to
sell, pledge or otherwise transfer any such Partnership Interest or any interest
therein.
9.03 VALIDITY AND ENFORCEABILITY; AUTHORITY AND CAPACITY. Such Xxxxx
Limited Partner has all requisite power, authority and capacity to execute and
deliver this Agreement and the other agreements and instruments to be executed
and delivered by such Xxxxx Limited Partner hereunder and to perform such Xxxxx
Limited Partner's obligations hereunder and thereunder. If such Xxxxx Limited
Partner is an entity, the execution and delivery of this Agreement by such Xxxxx
Limited Partner and the consummation by such Xxxxx Limited Partner of the
transactions contemplated hereby have been duly authorized by all necessary
proceedings on the part of such Xxxxx Limited Partner required in connection
therewith.. This Agreement has been duly executed and delivered by such Xxxxx
Limited Partner and constitutes, and the other agreements and instruments to be
executed and delivered hereunder by such Xxxxx Limited Partner when executed and
delivered by such Xxxxx Limited Partner will constitute, legal, valid and
binding obligations of such Xxxxx Limited Partner, enforceable against the same
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting the enforcement of creditors' rights generally or by
general equitable principles.
9.04 NO CONFLICT. Neither the execution and delivery of this Agreement by
such Xxxxx Limited Partner nor the execution and delivery by the such Xxxxx
Limited Partner of the other agreements and instruments to be executed and
delivered by the same hereunder, nor the consummation of the transactions
contemplated hereunder or thereunder, will (i) conflict with or result in a
breach or violation of, or constitute a default under, or result in the creation
of any lien, charge or encumbrance upon, any of the properties or assets of such
Xxxxx Limited Partner pursuant to any indenture, mortgage, lease, loan agreement
or other agreement or instrument to which such Xxxxx Limited Partner is a party
or by which such Xxxxx Limited Partner is bound or to which such Xxxxx Limited
Partner's properties or assets are subject, or (ii) violate any law, statute,
rule, regulation, judgment or decree applicable to such Xxxxx Limited Partner.
9.05 NO CONSENT OR APPROVAL REQUIRED. No consent, approval or authorization
of, or declaration to or filing with, any governmental or regulatory authority
is required for the valid execution and delivery by such Xxxxx Limited Partner
of this Agreement or any other agreement or instrument to be executed and
delivered by such Xxxxx Limited Partner hereunder or the consummation by him of
the transactions provided for herein or therein.
9.06 INVESTMENT REPRESENTATION.
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A. Such Xxxxx Limited Partner is acquiring OP Units and upon the issuance
of Summit Shares in exchange for OP Units, will be acquiring Summit Shares for
such Xxxxx Limited Partner's own account for investment only, not as nominee or
agent, and not with a view to, or an intention of, a distribution or resale
thereof, in whole or in part, or the grant of any participation therein.
B. Such Xxxxx Limited Partner is an "accredited investor" as such term is
defined in Rule 501(a) of Regulation D adopted by the Commission under the
Securities Act.
C. Such Xxxxx Limited Partner understands that, the OP Units and the Summit
Shares, have not been (1) registered under the Securities Act by reason of the
reliance by Summit and the Operating Partnership on an exemption from the
registration requirements of the Securities Act pursuant to Section 4(2)
thereof, or (2) qualified under any Blue Sky Laws by reason of the reliance by
Summit and the Operating Partnership on an exemption from such qualification.
D. Such Xxxxx Limited Partner (1) has such knowledge and experience in
business and financial matters that he is capable of evaluating the risks and
merits of an investment in the Summit Shares and of making an informed
investment decision, and (2) is able to bear the economic risk thereof. Summit
and the Operating Partnership have delivered or made available to the such Xxxxx
Limited Partner such documents, materials and information pertaining to Summit
and the Operating Partnership as the such Xxxxx Limited Partner may have
requested and has afforded such Xxxxx Limited Partner an opportunity to ask
questions of and receive answers from Summit and its executive officers and the
Operating Partnership.
E. Such Xxxxx Limited Partner understands that neither the OP Units nor the
Summit Shares may be sold, transferred or otherwise disposed of without
registration under the Securities Act and applicable Blue Sky Laws or an
exemption therefrom, and that in the absence of an effective registration
statement covering the same or an available exemption from registration under
the Securities Act and applicable Blue Sky Laws, the OP Units and the Summit
Shares must be held indefinitely. In the absence of an effective registration
statement under the Securities Act and applicable Blue Sky Laws or an exemption
therefrom, such Xxxxx Limited Partner will not sell, transfer, or otherwise
dispose of the OP Units or the Summit Shares, or any portion thereof. In
addition, any such sale, transfer or disposition shall also be in accordance
with the provisions of the Registration Rights Agreement.
F. Such Xxxxx Limited Partner acknowledges that he has received and
reviewed the Summit Limited Partnership Agreement and agrees to be bound by the
provisions thereof, including the provisions thereof regarding the exchange of
OP Units for Summit Shares and restrictions on transfer of OP Xxxxx.
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X. Such Xxxxx Limited Partner understands and acknowledges that, unless an
Issuance Registration Statement (as such term is defined in the Registration
Rights Agreement) has been filed and is effective, each certificate representing
any Summit Shares issued to such Partners in exchange for OP Units will bear a
legend to the effect specified in Section 7.07F.
9.07 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. Except as
expressly set forth in this Article 9, Article 8 and Section 16.01, the Xxxxx
Limited Partners make no representations or warranties, express or implied, at
law or in equity, with respect to the Partnerships, the Xxxxx Limited Partners,
or any of their respective assets, liabilities, or operations, and any such
other representations or warranties are hereby expressly disclaimed.
ARTICLE 10. REPRESENTATIONS AND WARRANTIES OF
SUMMIT AND THE OPERATING PARTNERSHIP
Summit and the Operating Partnership hereby represent and warrant to Xxxxx,
the Xxxxx Stockholders, the Partnerships and the Partners of the Partnerships as
follows:
10.01 ORGANIZATION AND GOOD STANDING OF SUMMIT. Summit is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland and has all requisite corporate power and authority to own and
lease its properties and to carry on its business as presently conducted and as
proposed to be conducted. The copies of the Articles of Incorporation and Bylaws
of Summit which have been furnished to the Xxxxx Stockholders and the Xxxxx
Limited Partners include all amendments made thereto at any time prior to the
date of this Agreement and are correct and complete.
10.02 CAPITALIZATION OF SUMMIT. The authorized capital stock of Summit
consists of 150,000,000 shares, of which 25,000,000 shares are Preferred Stock,
par value $.01 per share, 100,000,000 shares are Common Stock, par value $.01
per share, and 25,000,000 shares are Excess Stock, par value $.01 per share, of
which 25,420,846 shares of Common Stock were issued and outstanding as of
September 30, 1998. All of the issued and outstanding shares of the Common Stock
of Summit are duly authorized, were validly issued and are fully paid and
non-assessable.
10.03 ORGANIZATION AND GOOD STANDING OF THE OPERATING PARTNERSHIP. The
Operating Partnership is a limited partnership duly formed, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
partnership power and authority to own and lease its properties and to carry on
its business as presently conducted and as proposed to be conducted. The copies
of the Operating Partnership's Certificate of Limited Partnership and limited
partnership agreement (the "SUMMIT LIMITED PARTNERSHIP AGREEMENT") which have
been furnished to the Xxxxx Stockholders and the Xxxxx Limited Partners include
all amendments made thereto at any time prior to the date of this Agreement and
are correct and complete.
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10.04 REIT QUALIFICATION. Summit has met the requirements for
qualification and taxation as a real estate investment trust ("REIT") under
Sections 856 through 860 of the Code for the tax year ended December 31, 1997.
10.05 AUTHORIZATION OF SUMMIT. Summit has all requisite corporate
power and authority to execute and deliver this Agreement and the other
agreements and instruments to be executed and delivered by it hereunder and to
perform its obligations hereunder and thereunder and to issue and deliver the
Basic Closing Shares, the Additional Closing Shares, the Rancho Makeup Shares
and the Net Rancho Shares. The execution, delivery and performance by Summit of
this Agreement and such other agreements and instruments and the issuance and
delivery of the Basic Closing Shares, the Additional Closing Shares, the Rancho
Makeup Shares and the Net Rancho Shares have been duly and validly authorized by
the Board of Directors of Summit, and no other corporate action or authorization
on behalf of Summit is required in connection therewith.
10.06 AUTHORIZATION OF PARTNERSHIP. The Operating Partnership has all
requisite partnership power and authority to execute and deliver this Agreement
and the other agreements and instruments to be executed and delivered by it
hereunder and to perform its obligations hereunder and thereunder and to issue
and deliver OP Units in accordance with the provisions hereof. The execution,
delivery and performance by the Operating Partnership of this Agreement and such
other agreements and instruments and the issuance and delivery of OP Units in
accordance with the provisions hereof has been duly and validly authorized by
Summit in its capacity as general partner of the Operating Partnership, and no
other partnership action or authorization on behalf of the Operating Partnership
is required in connection therewith.
10.07 VALIDITY AND ENFORCEABILITY. This Agreement has been duly
executed and delivered by Summit and the Operating Partnership and constitutes,
and the other agreements and instruments to be executed and delivered hereunder
by Summit or the Operating Partnership, when executed and delivered by Summit or
the Operating Partnership, as the case may be, will constitute legal, valid and
binding obligations of Summit or the Operating Partnership, enforceable against
the same in accordance with their respective terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting the enforcement of creditors' rights generally or by
general equitable principles.
10.08 STATUS OF SUMMIT SHARES. The Basic Closing Shares, the
Additional Closing Shares, the Rancho Makeup Shares and the Net Rancho Shares,
when issued and delivered in accordance with the terms of this Agreement, will
constitute duly authorized, validly issued and outstanding, fully paid and
non-assessable shares of the Common Stock of Summit.
10.09 NO CONFLICT. Neither the execution and delivery of this
Agreement by Summit or the Operating Partnership nor the execution and delivery
by Summit or the
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Operating Partnership of the other agreements and instruments to be executed
and delivered by the same hereunder, nor the consummation of the transactions
contemplated hereunder or thereunder, nor the issuance and delivery of the Basic
Closing Shares, the Additional Closing Shares, the Rancho Makeup Shares and the
Net Rancho Shares or OP Units pursuant to the provisions hereof will (i)
conflict with or result in a breach or violation of, or constitute a default
under, or result in the creation of any lien, charge or encumbrance upon, any of
the properties or assets of Summit or the Operating Partnership pursuant to the
Articles of Incorporation or Bylaws of Summit, the Certificate of Limited
Partnership or limited partnership agreement of the Operating Partnership or any
indenture, mortgage, lease, loan agreement or other agreement or instrument to
which Summit or the Operating Partnership is a party or by which either of them
is bound or to which any of their respective properties or assets is subject, or
(ii) violate any law, statute, rule, regulation, judgment or decree applicable
to Summit or the Operating Partnership. No third party consents are required by
the terms of any indenture, mortgage, lease, loan agreement or other agreement
or instrument to which Summit or the Operating Partnership is a party or by
which it is bound or to which any of its respective properties or assets is
subject for the execution and delivery of this Agreement or any other agreement
or instrument to be executed and delivered by Summit or the Operating
Partnership hereunder or the consummation of the transactions provided for
herein or therein.
10.10 NO CONSENT OR APPROVAL REQUIRED. Except for (i) compliance with
any applicable Blue Sky Laws, (ii) the filing by Summit of a Listing Application
with the New York Stock Exchange, (iii) the filing by Summit of any registration
statement required by the Registration Rights Agreement, (iv) the filing of the
Corporate Articles of Merger with the State Department of Assessments and
Taxation of the State of Maryland, (v) the filing of the Corporate Certificate
of Merger with the Secretary of State of the State of Ohio, and (vi) the filing
of a Form 8-K with the Commission, no consent, approval or authorization of, or
declaration to or filing with, any Governmental Entity is required for the valid
execution and delivery by Summit or the Operating Partnership of this Agreement
or any other agreement or instrument to be executed and delivered by Summit or
the Operating Partnership hereunder or the consummation by Summit or the
Operating Partnership of the transactions provided for herein or therein.
10.11 COMMISSION FILINGS AND FINANCIAL STATEMENTS. Summit has
heretofore delivered to the Xxxxx Stockholders and the Xxxxx Limited Partners
copies of Summit's (i) Annual Report on Form 10-K for the year ended December
31, 1997, as filed with the Commission, (ii) Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1998 and June 30, 1998, as filed with the
Commission, and (iii) proxy statement for its 1998 annual meeting of
stockholders. As of their respective dates, such reports and statements did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited condensed consolidated
interim financial statements of Summit and its consolidated subsidiaries
included in such reports
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were prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of Summit and its consolidated
subsidiaries as of the dates thereof and the periods then ended, subject in the
case of the unaudited condensed consolidated interim financial statements, to
normal year-end adjustments and any other adjustments described therein.
10.12 ABSENCE OF CHANGE. Since the date of the audited consolidated
financial statements referred to in Section 10.11, there has not been any
material adverse change in the business, properties, financial condition or
results of operations of Summit or the Operating Partnership taken as a whole.
10.13 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. Except as
expressly set forth in this Article 10 and Section 16.01, Summit and the
Operating Partnership make no representations or warranties, express or implied,
at law or in equity, with respect to Summit, the Operating Partnership, or any
of their respective assets, liabilities, or operations, and any such other
representations or warranties are hereby expressly disclaimed.
ARTICLE 11. COVENANTS OF SUMMIT
11.01 PUBLIC ANNOUNCEMENTS. Summit will consult with Xxxxx before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other written public statements with respect to the
transactions contemplated by this Agreement, including the Corporate Merger and
the Contribution Transaction, and will not issue any such press release or make
any such written public statement prior to such consultation, except to the
extent it may be advised by counsel that it is required by applicable Law or
legal process. Summit agrees that the initial press release to be issued with
respect to the transactions contemplated by this Agreement will be in the form
agreed to by Summit and Xxxxx.
11.02 TRANSFER AND GAINS TAXES. Summit will cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording
registration and other fees and any similar taxes which become payable in
connection with the transactions contemplated by this Agreement (together with
any related interests, penalties or additions to tax, "TRANSFER AND GAINS
TAXES"). From and after the Corporate Merger Effective Time and the Contribution
Date, the Surviving Corporation will, or will cause the Operating Partnership,
as appropriate, to pay or cause to be paid, without deduction or withholding
from any amounts payable to the holders of Surviving Corporation Common Shares
or the OP Units of partnership interest, all Transfer and Gains Taxes.
11.03 CONSENTS. Subject to the terms and conditions herein provided,
Summit and the Operating Partnership shall (i) use reasonable efforts to
cooperate with
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the other parties in (A) determining which filings are required to be made prior
to the Closing with, and which consents, approvals, permits or authorizations
are required to be obtained prior to the Closing from, any Governmental Entity
and any third parties in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and (B)
timely making all such filings and timely seeking all such consents, approvals,
permits and authorizations, (ii) use reasonable efforts to obtain in writing any
consents required from third parties to effectuate the Corporate Merger and the
Contribution Transaction, such consents to be in such form and substance as may
be reasonably satisfactory to Xxxxx, and in connection therewith, not pay any
consent fees unless approved by Xxxxx, and (iii) use reasonable efforts to take,
or cause to be taken, all other action and do, or cause to be done, all other
things necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement.
11.04 XXXXX EXPENSES. Summit and the Operating Partnership covenant and
agree that in the event the transactions contemplated by this Agreement are
consummated, they will pay the Xxxxx Expenses.
11.05 DISCHARGE OF MORTGAGE INDEBTEDNESS. Subject to the terms and
conditions of this Agreement, Summit and the Operating Partnership covenant and
agree to pay and discharge all Mortgage Indebtedness encumbering the Apartment
Project known as Camino Real and the Apartment Project known as Rancho Las
Palmas, including the release of any letters of credit securing the same..
ARTICLE 12. COVENANTS OF XXXXX, THE XXXXX SHAREHOLDERS,
THE XXXXX LIMITED PARTNERS, AND/OR THE PARTNERSHIPS
12.01 RANCHO LAS PALMAS. The Rancho Las Palmas Partnership is, and on the
Closing Date will be, subject to a management agreement ("RANCHO MANAGEMENT
AGREEMENT") dated November 15, 1997, between such Partnership, as owner, and
Contractor/Manager, as manager, a copy of which is attached hereto as Exhibit
"DD" hereof. As of the Closing Date, the Rancho Management Agreement shall be
amended (by amendments in the form of Exhibit "EE").
12.02 MORTGAGE LOAN DOCUMENTS. Xxxxx has made available to Summit and the
Operating Partnership true and correct copies of all documents relating to any
existing indebtedness with respect to the Properties.
12.03 INTERIM COVENANTS. Until the Closing Date or the sooner termination
of this Agreement:
A OPERATION BY XXXXX. Xxxxx will operate its business in the usual, regular
and ordinary course and will not engage in any extraordinary transaction except
as disclosed to Summit and the Operating Agreement prior to the date hereof
provided, however, that any transaction which would not make the representations
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contained in Section 7.08 untrue or incorrect as of the Closing Date shall not
be deemed to be an "extraordinary transaction" as such term is used in this
Section 12.03A.
B. OPERATION BY THE PARTNERSHIPS. Each Partnership will maintain the
Apartment Project owned by it in the same manner as prior hereto pursuant to its
normal course of business (such maintenance obligations not including
extraordinary capital expenditures or expenditures not incurred in such normal
course of business), subject to reasonable wear and tear and further subject to
destruction by casualty or other events beyond the control of such Partnership.
C. SERVICE CONTRACTS.
(1) Each Partnership will not enter into any additional service contracts
or other similar agreements without the prior consent of Summit, except those
deemed reasonably necessary by such Partnership which are cancelable on sixty
(60) days' notice without penalty or termination fee.
(2) Xxxxx and the Partnerships shall punctually perform and discharge in
all material respects each and every obligation or undertaking of Xxxxx and the
Partnerships under the Service Contracts and will not change or modify any
Service Contract in any manner which is materially adverse to one or more of the
Partnerships without the express prior written consent of Summit or the
Operating Partnership.
D. LEASES. Each Partnership shall have the right to continue to offer the
Property for lease in the same manner as prior hereto pursuant to its normal
course of business except that such Partnership will not enter into any leases
subsequent to the Effective Date which do not comply with the leasing criteria
set forth in Exhibit "B" attached hereto. Each Partnership, upon request, shall
keep Summit and the Operating Partnership reasonably informed as to the status
of leasing prior to the Closing Date.
E. ACQUISITION PROPOSALS. Unless this Agreement shall have been terminated,
Xxxxx and the Partnerships agree that they shall not (and shall use their
reasonable efforts to cause all of their Representatives [as hereinafter
defined] not to), directly or indirectly, solicit, initiate, knowingly encourage
or enter into any agreement with respect to or participate in negotiations with,
provide any confidential information to, enter into any agreement with or
otherwise cooperate in any way in connection with, any Third Party (as
hereinafter defined) concerning any Competing Transaction (as hereinafter
defined). For purposes of the foregoing, the term "REPRESENTATIVES" shall mean
each of the directors, officers, employees, agents or advisers (including
without limitation attorneys, accountants, consultants, bankers and financial
advisers) of Xxxxx and the Partnerships. For purposes of this Agreement, the
term "THIRD PARTY" shall mean any individual, group (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934 (the "1934 ACT")), corporation,
partnership, or other entity other than Xxxxx and the Partnerships, any
affiliate (as such term is defined in the 0000 Xxx) of Xxxxx, the
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Partnerships, or any of their Representatives, and the term "COMPETING
TRANSACTION" shall mean any of the following involving Xxxxx or the
Partnerships: (i) any merger, consolidation, business combination, or other
similar transaction, (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of all or substantially all of the assets of Xxxxx or the
Partnerships taken as a whole, or (iii) any tender offer or exchange offer for
any of the outstanding shares of Xxxxx'x Capital Stock. or the Partnerships'
partnership interests.
F. UPDATES REGARDING OPERATIONS. Xxxxx and the Partnerships shall confer on
a regular basis with one or more representatives of Summit, Merge Sub and the
Operating Partnership to report operational matters of materiality and any
proposals to engage in material transactions.
G. BOOKS AND RECORDS. Xxxxx and the Partnerships shall maintain their books
and records in accordance with GAAP consistently applied, in which full, true
and correct entries shall be made as to all operations of the Properties. All
such books and records shall at all times during reasonable business hours and
following reasonable notice be subject to inspection by Summit, the Operating
Partnership, and their duly accredited representatives. In addition, Xxxxx and
the Partnerships shall not change in any material manner any of their methods,
principles or practices of accounting in effect as of the date of the Latest
Xxxxx Balance Sheet or the Latest Partnership Balance Sheets of the
Partnerships, respectively, except as may be required by applicable law or GAAP.
H. TAXES. Xxxxx and the Partnerships shall duly and timely file all Tax
Returns required to be filed with federal, state, local and other authorities.
I. TAX ELECTIONS. None of Xxxxx or the Partnerships shall make or rescind
any express or deemed election relative to Taxes.
J. ORGANIZATIONAL DOCUMENTS. Xxxxx shall not amend its Articles of
Incorporation or Code of Regulations; none of the Partnerships shall amend its
Certificate of Limited Partnership or Limited Partnership Agreement.
K. CAPITAL STOCK; PARTNERSHIP INTERESTS.
(1) None of Xxxxx or the Partnerships shall make a change in the number of
shares of capital stock or partnership interests issued and outstanding.
(2) None of Xxxxx or the Partnerships shall grant options or other right or
commitment relating to its capital stock or partnership interests, or any
security convertible into its capital stock or partnership interests, or any
security the value of which is measured by shares of capital stock or
partnership interests, or any security subordinated to the claim of its general
creditors.
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L. EMPLOYEE BENEFIT PLANS. None of Xxxxx or the Partnerships
shall adopt any new employee benefit plan or amend any existing plans or rights,
except for changes which are required by Law or changes which are not more
favorable to participants than provisions presently in effect.
M. SHAREHOLDER DERIVATIVE CLAIMS. Xxxxx shall not settle any shareholder
derivative claims arising out of or in connection with any of the transactions
contemplated by this Agreement.
N. NOTICES AS TO TAXES. Xxxxx and the Partnerships shall promptly notify
Summit and the Operating Partnership of any action, suit, proceeding, claim or
audit pending against or with respect to Xxxxx and the Partnerships with respect
to any Taxes, and not change any of the Tax elections, accounting methods,
conventions or principals which relate to Xxxxx or the Partnerships that could
reasonably be expected to increase such party's liabilities.
O. LICENSES AND PERMITS. Xxxxx and the Partnerships shall use reasonable
efforts to maintain all licenses and permits as may be required by any
Governmental Entity except where failure to so maintain such licenses and
permits would not result in a Xxxxx Material Adverse Effect or a Partnership
Material Adverse Effect.
P. APPLIANCES. None of Xxxxx or the Partnerships shall transfer or remove
any of the standard appliances from the Properties subsequent to the date
hereof, except for repair or replacement.
Q. ALTERATION OF THE PROPERTIES; ZONING. None of Xxxxx or the Partnerships
shall cause or permit any grading, excavation or construction upon the
Properties or any material addition, alteration or removal of any improvements
forming a part of the Properties. None of Xxxxx or the Partnerships shall use or
occupy, or knowingly allow the use or occupancy of, the Properties in any manner
which violates any governmental requirements or which constitutes waste or a
public or private nuisance or which makes void, voidable or cancelable, or
increases the premium of, any insurance then in force with respect thereto. None
of Xxxxx or the Partnerships shall initiate any zoning reclassification of the
Properties or seek any variance under existing zoning ordinances applicable to
the Properties to use the Properties in such a manner which would result in such
use becoming a nonconforming use under applicable zoning ordinances or other
governmental requirements.
R. INSURANCE. Xxxxx and the Partnerships shall use reasonable efforts to
maintain in force, fire and extended coverage insurance upon the Properties and
public liability insurance with respect to damage or injury to persons or
property occurring on the Properties in such amounts as is maintained by Xxxxx
and the Partnerships on the date of this Agreement.
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S. OTHER OFFERS TO PURCHASE. None of Xxxxx or the Partnerships shall
entertain nor accept any offers to purchase the Properties from any party other
than Summit or the Operating Partnership and will not market the Properties to
any other parties.
T. LITIGATION. Xxxxx and the Partnerships shall advise Summit and the
Operating Partnership promptly of any notice or proceeding contemplated by
Sections 7.10(B)(1) and 8.09(B)(1) herein of which Xxxxx or the Partnerships
have actual knowledge or notice.
U. EXISTING LOAN. Xxxxx and the Partnerships shall promptly take and
thereafter diligently pursue all actions reasonably necessary to obtain the
consent of any holder of any promissory note evidencing a debt of Xxxxx or the
Partnerships (each, an "EXISTING LOAN") to the Corporate Merger and the
Contribution Transaction contemplated hereunder, in writing, and without any
change in the provisions of the Existing Loan (other than principal paydowns not
to exceed 5% of the outstanding principal balance) which are not reasonably
acceptable to Summit or the Operating Partnership.
V. ACCESS TO INFORMATION; CONFIDENTIALITY. Subject to the requirements of
confidentiality agreements with third parties, Xxxxx and the Partnerships will
afford to the other parties and to the Representatives of such other parties,
reasonable access during normal business hours prior to the Closing to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, Xxxxx and the Partnerships will furnish promptly to the
other parties (a) a copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to the requirements of
federal or state securities Laws and (b) all other information concerning its
business, properties and personnel as such other parties may reasonably request.
Xxxxx and the Partnerships will hold any nonpublic information in confidence to
the extent required by, and in accordance with, and will comply with the
provisions of the Confidentiality Agreement.
W. CONSENTS. Subject to the terms and conditions herein provided, Xxxxx and
the Partnerships shall (i) use reasonable efforts to cooperate with the other
parties in (A) determining which filings are required to be made prior to the
Closing with, and which consents, approvals, permits or authorizations are
required to be obtained prior to the Closing from, any Governmental Entity and
any third parties in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and (B)
timely making all such filings and timely seeking all such consents, approvals,
permits and authorizations, (ii) use reasonable efforts to obtain in writing any
consents required from third parties to effectuate the Corporate Merger and the
Contribution Transaction, such consents to be in such form and substance as may
be reasonably satisfactory to Summit and the Operating Partnership, and in
connection therewith, not pay any consent fees unless approved by Summit and the
Operating Partnership, and (iii) use reasonable efforts to take, or cause to be
taken, all
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other action and do, or cause to be done, all other things necessary, proper or
appropriate to consummate and make effective the transactions contemplated by
this Agreement.
X. PUBLIC ANNOUNCEMENTS. Xxxxx and the Partnerships will consult with the
Summit and the Operating Partnership before issuing, and provide each other the
opportunity to review and comment upon, any press release or other written
public statements with respect to the transactions contemplated by this
Agreement, including the Corporate Merger and the Contribution Transaction, and
will not issue any such press release or make any such written public statement
prior to such consultation, except to the extent it may be advised by counsel
that it is required by applicable Law or legal process. Xxxxx and the
Partnerships agree that the initial press release to be issued with respect to
the transactions contemplated by this Agreement will be in the form agreed to by
Xxxxx and Summit.
Y. TRANSFER AND GAINS TAXES. Xxxxx and the Partnerships will cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any Transfer and Gains Taxes.
Z. MAINTENANCE OF RENTAL UNITS; "RENT READY" CONDITION OF UNITS. Xxxxx and
the Partnerships shall continue to maintain, operate and manage the Properties
in the same manner that it has heretofore maintained and operated the Properties
and all rental units shall be in rentable condition as of the Closing Date;
provided however, Xxxxx, the Partnerships, Summit and the Operating Partnership
acknowledge that rental units which are vacated within five (5) Business Days
prior to the Closing Date will be in varying conditions of make-ready for
leasing, as is ordinary in Xxxxx'x and the Partnerships' course of business. At
Closing, Summit shall receive a credit against the Net Partnership Value of each
Partnership equal to $250 multiplied by the number of rental units owned by such
Partnership which were vacated more than five (5) Business Days prior to the
Closing Date and which are not in "rent ready" condition as of the Closing Date,
as reasonably determined by Summit or the Operating Partnership.
12.04 NO SOLICITATION OF EMPLOYEES. Each Xxxxx Shareholder and each Xxxxx
Limited Partner agrees that during the period commencing on the Closing and
ending on the first anniversary thereof neither he, nor any entity which is
controlled by him (either alone or in combination with one or more other Xxxxx
Shareholders or Xxxxx Limited Partners) or any affiliate thereof will directly
or indirectly solicit for employment any Summit Employed Person (as defined
below). Nothing in this Section 12.04 shall be deemed to prohibit any Xxxxx
Shareholder or any Xxxxx Limited Partner (or any controlled entities or
affiliates) from employing a Summit Employed Person who approached such person
or entity for employment without having been first directly or indirectly
solicited thereby. For purposes hereof, a "SUMMIT EMPLOYED PERSON" shall be a
person who was employed at or in connection with one of the Apartment Projects
either by Xxxxx one of the Partnerships or any affiliate or subsidiary of Xxxxx
(including, without limitation, it's property management affiliate), and who
remained employed by
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Summit at the time of the Closing and whose employment has been not terminated
by the voluntary act of Summit.
12.05 NO TRANSFERS. Each Xxxxx Limited Partner agrees that he will not
sell, assign, transfer, pledge or otherwise dispose of any interest in his
Partnership Interest in any Partnership (except as contemplated herein); nor
will such Xxxxx Limited Partner agree to amend the limited partnership agreement
of any Partnership of which he is a partner or agree to admit any new partner to
any such Partnership (except as contemplated herein).
12.06 REPAIRS. The Xxxxx Stockholders and the Xxxxx Limited Partners agree
that they will cause the repairs to the Improvements identified on the punchlist
attached hereto as Exhibit "HH" to be completed at no cost to Summit, the
Operating Partnership or any of their Affiliates on or before December 31, 1998.
ARTICLE 13. REGISTRATION UNDER THE SECURITIES ACT
At Closing, Summit, each Xxxxx Stockholder and each Xxxxx Limited Partner
shall enter into the Registration Rights Agreement.
ARTICLE 14. CERTAIN AGREEMENTS RELATING TO TAX MATTERS
14.01 Summit hereby agrees as follows:
A. For all Federal and relevant state income or franchise Tax purposes: (i)
Summit will treat the exchange of shares in Xxxxx for the shares of Summit
pursuant to the provisions hereof as a "reorganization" described in Section
368(a)(1)(A) of the Code and comparable provisions of relevant state income or
franchise Tax law; (ii) Summit will treat each of Xxxxx and Summit as "parties
to a reorganization", within the meaning of Section 368(b)(2) of the Code; and
(iii) Summit will file any and all statements required by relevant Federal and
state law to accomplish the foregoing and in a manner that is consistent with
the foregoing.
B.For all Federal and relevant state income or franchise purposes: (i)
Summit will elect, in accordance with the provisions of Section 1362(e)(3) of
the Code and comparable provisions of relevant state income or franchise Tax
law, to close the books of Xxxxx, as of the close of the day preceding the
Closing Date, and to treat the items of income, gain, loss, deduction or credit
as reflected on such books as so closed (as determined by Deloitte & Touche or
such other accounting firm selected by the Xxxxx Stockholders and reasonably
acceptable to Summit) as being allocated to the short 1998 taxable year of Xxxxx
preceding the Closing Date, and to treat such items occurring or accruing
thereafter as being allocated to the portion of the taxable year of Summit
beginning on the Closing date ("POST-CLOSING PERIOD"); and (ii) Summit will file
any and all statements required by relevant Federal and state law to accomplish
the foregoing and in a manner that is consistent with the foregoing.
Notwithstanding the
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chronological order of the Corporate Merger and the Contribution Transaction,
the parties hereto agree that all Tax items, including income, gain, loss,
deduction and credit, of each Partnership through the Contribution Date shall be
allocated to Xxxxx and the Xxxxx Limited Partners, and in the case of items so
allocated to Xxxxx, reported on the final Tax Returns of Xxxxx.
C. Summit will file, as an attachment to its Federal income Tax Return Form
1120- REIT for its taxable year that includes the Closing Date, an election
under Notice 88-19 for the purpose of avoiding gain recognition under Section
337(d) of the Code.
D. Other than the Xxxxx Ending Returns (as defined in Section 14.02
hereof), Summit will prepare and file or cause to be prepared and filed all
Federal and relevant state income and franchise Tax Returns of Summit for 1998,
including without limitation any such returns that cover the Post-Closing
Period.
E. Summit will not file an amendment to, or otherwise agree to any
adjustment with respect to, any "Xxxxx Tax Return" (as hereinafter defined)
without the consent of the Xxxxx Stockholders (which consent may be granted or
withheld by the Xxxxx Stockholders in their sole and absolute discretion).
Notwithstanding the foregoing, in the event that Summit, in consultation with
its professional advisors, determines that it is required to file an amendment
to a Xxxxx Tax Return under applicable law, regulation, or judicial or
administrative precedent and the Xxxxx Stockholders withhold their consent to
such filing, the issue of whether such amendment is so required shall be
submitted to arbitration under the provisions of Section 16.10 hereof, and if
the arbitrator(s) determine that the filing of such amendment is so required,
Summit shall be free to file such amendment. If any relevant Tax authority shall
commence an audit of, or propose an adjustment to, a Xxxxx Tax Return, Summit
shall inform the Xxxxx Stockholders of such audit or such proposed adjustment as
soon as possible (but in any event within ten (10) days of Summit's being
informed of such audit or such proposed adjustment) and shall permit the Xxxxx
Stockholders (or their designate) to direct any and all discussions, audits,
negotiations, protests or litigation with respect thereto, at the full cost and
expense of the Xxxxx Stockholders, and all decisions made with respect thereto
shall be made by the Xxxxx Stockholders in their sole and absolute discretion.
For these purposes, a "XXXXX TAX RETURN" shall mean and include, without
duplication, all Xxxxx Ending Returns and all other Tax Returns of Xxxxx for or
in respect of Tax periods that end on or prior to the Closing Date.
14.02 The Xxxxx Stockholders hereby agree as follows:
A. The Xxxxx Stockholders will sign and/or file such statements or
elections as reasonably required by Summit, to enable Summit to satisfy its
obligations under Section 14.01 hereof.
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B. The Xxxxx Stockholders shall retain Deloitte & Touche or such other
accounting firm selected by the Xxxxx Stockholders and reasonably acceptable to
Summit, to prepare or cause to be prepared in a timely manner all Tax Returns
for Xxxxx for all periods ending on or prior to the Closing Date which are due
after the Closing Date (the "XXXXX ENDING RETURNS"), and shall timely make all
necessary payments, if any, in connection therewith. The Xxxxx Stockholders
shall promptly deliver the original of any such Xxxxx Ending Return (together
with any supporting documentation reasonably requested by Summit and any
necessary payments in connection therewith) to Summit for execution and filing
of the same by Summit. Any Xxxxx Ending Return delivered to Summit shall be
true, correct and complete in all material respects. Upon its receipt of any
Xxxxx Ending Return, Summit and its accountants shall have the right to review
and approve the form and content of the Xxxxx Tax Return prior to its execution
and filing. None of the Xxxxx Stockholders will file any amendment to any Xxxxx
Ending Return without the prior written consent of Summit. Notwithstanding the
foregoing, in the event that the Xxxxx Stockholders, in consultation with their
professional advisors, determines that they are required to file an amendment to
a Xxxxx Ending Return under applicable law, regulation, or judicial or
administrative precedent and the Summit withholds its consent to such filing,
the issue of whether such amendment is require shall be submitted to arbitration
under the provisions of Section 16.10 hereof, and if the arbitrator(s) determine
that the filing of such amendment is so required, the Xxxxx Stockholders shall
be free to file such amendment..
14.03 The Partners of each Partnership shall retain Deloitte & Touche or
such other accounting firm selected by the Partners of such Partnership and
reasonably acceptable to Summit, to prepare or cause to be prepared in a timely
manner all Tax Returns for such Partnership and its Properties for all periods
ending on or prior to the Contribution Date which are due after the Closing Date
(each a "PARTNERSHIP ENDING RETURN"), and shall timely make all necessary
payments, if any, in connection therewith. The Partners of each Partnership
shall promptly deliver the original of any such Partnership Ending Return
(together with any supporting documentation reasonably requested by Summit and
any necessary payments in connection therewith) to Summit for execution and
filing of the same by Summit. Any Partnership Ending Return delivered to Summit
shall be true, correct and complete in all material respects. Upon its receipt
of any Partnership Ending Return, Summit and its accountants shall have the
right to review and approve the form and content of the Partnership Tax Return
prior to its execution and filing. None of the Partners of any of the
Partnerships will file any amendment to any Partnership Ending Return without
the prior written consent of Summit. Notwithstanding the foregoing, in the event
that the Xxxxx Limited Partners in consultation with their professional
advisors, determines that they are required to file an amendment to a
Partnership Ending Return under applicable law, regulation, or judicial or
administrative precedent and Summit withholds its consent to such filing, the
issue of whether such amendment is require shall be submitted to arbitration
under the provisions of Section 16.10 hereof, and if the arbitrator(s) determine
that the filing of such amendment is so required, the Xxxxx Limited Partners
shall be free to file such amendment.
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14.04 Before and following the Closing, the parties to this Agreement will
cooperate fully as and to the extent reasonably requested by the other in
connection with the filing of Tax Returns, and any audit, litigation or other
proceeding with respect to Taxes, applicable to Xxxxx, the Partnerships or the
Properties.
ARTICLE 15. INDEMNIFICATION; LIMITATIONS ON LIABILITY;
SURVIVAL
15.01 CROSS INDEMNITY. Subject to the terms and conditions of this Article
15:
A. The Xxxxx Stockholders jointly and severally hereby agree to indemnify
and hold Summit, and the Operating Partnership harmless from and against all
demands, claims, causes of action, assessments, including any Federal or state
Tax audits, losses, damages, liabilities and costs and expenses, including,
without limitation, attorneys' fees and any expenses incident to the
investigation or enforcement of this Article 15 (collectively, "LOSSES"), which
Summit or the Operating Partnership may suffer, sustain or become subject to by
reason of or resulting from (i) any breach of any covenant or agreement of
Xxxxx, any Xxxxx Stockholder, or any Partnership contained in this Agreement,
(ii) any inaccuracy in any representation or warranty of Xxxxx, any Xxxxx
Stockholder, any Partnership or, except to the extent of the indemnification
provided for in Section 15.01B, any Xxxxx Limited Partner contained in this
Agreement, or any other agreement, certificate, or instrument executed by any of
them pursuant to this Agreement and (iii) in the event that the Corporate Merger
is consummated and without duplication, any liabilities or obligations of, or
claims against Xxxxx arising prior to the Corporate Merger Effective Time,
including any Taxes of Xxxxx relating to any period prior to the Corporate
Merger Effective Time, but excluding any liabilities or obligations to the
Partnerships or arising out of, or attributable to the Partnerships or the
Properties (other than Taxes of Xxxxx relating to any period prior to the
Corporate Merger Effective Time).
B.Each Xxxxx Limited Partner, severally and not jointly, hereby agrees to
indemnify and hold Summit, and the Operating Partnership harmless from and
against all Losses, which Summit or the Operating Partnership may suffer,
sustain or become subject to by reason of or resulting from (i) any breach of
any covenant or agreement by such Xxxxx Limited Partner contained in this
Agreement, and (ii) any inaccuracy in any representation or warranty of such
Xxxxx Limited Partner contained in Article 9 of this Agreement, or any other
agreement, certificate, or instrument executed by any of them pursuant to this
Agreement.
C. Summit and the Operating Partnership hereby agrees to indemnify and hold
each Xxxxx Stockholder and each Xxxxx Limited Partner harmless from and against
all Losses which such Stockholder or Partner may suffer, sustain or become
subject to by reason of or resulting from (i) any breach of any covenant or
agreement of Summit or the Operating Partnership contained in this
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Agreement, and (ii) any inaccuracy in any representation or warranty of Summit
or the Operating Partnership contained in this Agreement or in any other
agreement, certificate, or instrument executed by Summit or the Operating
Partnership pursuant to this Agreement;
D. The indemnification under this Article 15 excludes any matters covered
by the Registration Rights Agreement.
All of the foregoing are hereinafter collectively referred to as "CLAIMS"; the
party seeking indemnification pursuant to this Article 15 is hereinafter
referred to as an "INDEMNIFIED PARTY"; and the party from whom indemnification
is sought is hereinafter referred to as an "INDEMNIFYING PARTY";
E. To the extent any Tax claim is sustained by Federal or state authorities
and results in increased Tax, the amount of the Xxxxx Stockholders' or the Xxxxx
Limited Partners', as the case may be, liability under this Agreement shall be
offset to the extent of any Tax benefit derived by Summit or the Operating
Partnership as a result of such increased Tax.
15.02 CONDITIONS OF INDEMNIFICATION OF THIRD PARTY CLAIMS. The obligations
and liabilities of the parties hereunder with respect to Claims resulting from
the assertion of liability by third parties shall be subject to the following
terms and conditions:
A. The Indemnified Party shall give written notice to the Indemnifying
Party of any such Claim within 30 days after the Indemnified Party receives
notice thereof, which written notice shall state the nature and basis of such
Claim and, if determinable, the amount thereof, provided that failure to so
notify the Indemnifying Party shall in no case prejudice the rights of the
Indemnified Party under this Agreement unless the Indemnifying Party shall be
prejudiced by such failure and then only to the extent of such prejudice. Upon
receipt of notice of any such Claim from the Indemnified Party, the Indemnifying
Party will undertake the defense thereof by representatives of its own choosing.
B. In the event that the Indemnifying Party, within a reasonable time after
notice of any such Claim, fails to defend the same, the Indemnified Party shall
(upon further notice to the Indemnifying Party) have the right to undertake the
defense, compromise or settlement of such Claim on behalf of and for the account
and risk of the Indemnifying Party, subject to the right of the Indemnifying
Party to assume the defense of such Claim at any time prior to settlement,
compromise or final determination thereof.
C. Anything in this Article 15 to the contrary notwithstanding, (i) if
there is a reasonable probability that a Claim may materially and adversely
affect the Indemnifying Party other than as a result of money
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damages and other money payments, the Indemnifying Party shall have the right,
at its own cost and expense, to defend, compromise or settle such Claim, and
(ii) the Indemnifying Party shall not, without the Indemnified Party's written
consent, settle or compromise any Claim or consent to entry of any judgment
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to the Indemnified Party a release from all liability in
respect of such Claim.
15.03 LIMITATIONS ON LIABILITY. The liability under this Agreement
of the parties hereto shall be subject to the following limitations:
A. Neither Xxxxx Stockholders nor the Xxxxx Limited Partners shall be
liable for any loss or damage suffered by Summit or the Operating Partnership by
reason of any breach or default hereof or by reason of any indemnification set
forth in this Agreement unless the aggregate amount of all Losses incurred by
Summit and the Operating Partnership for which the Xxxxx Stockholders or the
Xxxxx Limited Partners are otherwise liable hereunder exceeds $250,000 and then
only for the excess over $250,000.
B.The Xxxxx Stockholders' and the Xxxxx Limited Partners' aggregate
liability under this Agreement shall be limited to $1,000,000; provided,
however, in the event that the Corporate Merger and the Contribution Transaction
shall fail to take place for any reason, then Xxxxx'x aggregate liability under
this Agreement shall be limited to $50,000, and the Xxxxx Stockholders', Xxxxx
GP's, and the Xxxxx Limited Partners' aggregate liability, under this Agreement
shall be limited to $25,000; and provided, further, that the foregoing shall not
limit (a) the Xxxxx'x Stockholders' liability pursuant to clause (iii) of
Section 15.01A hereof, (b) any Xxxxx Limited Partner's liability for any Losses
suffered by Summit or the Operating Partnership by reason of any inaccuracy in
any representation or warranty of such Xxxxx Limited Partner contained in
Section 9.02 (in which case such Xxxxx Limited Partner's aggregate liability
shall be limited to the value of the cash and OP Units (valued at the Closing
Market Price) received by such Xxxxx Limited Partner in connection with the
Contribution Transaction or (c) Summit's and the Operating Partnership's right
to specific performance of the obligations of Xxxxx, the Partnerships, the Xxxxx
Shareholders, the Xxxxx GP's and the Xxxxx Limited Partners.
C. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, IN
THE EVENT THAT SUMMIT OR THE OPERATING PARTNERSHIP (I) DEFAULTS IN THE
PERFORMANCE OF ANY OF ITS RESPECTIVE OBLIGATIONS HEREUNDER, OR (II) FAILS TO
CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY NOTWITHSTANDING THE FULFILLMENT
BY OF ALL OF THE CONDITIONS SET FORTH IN ARTICLE 6 HEREOF, THE AMOUNT OF
$2,500,000 SHALL BE PAID TO XXXXX AND THE PARTNERSHIPS IN SUCH PROPORTIONS AS
XXXXX SHALL DIRECT AS LIQUIDATED DAMAGES. THE PARTIES AGREE THAT IT WOULD BE
EXTREMELY IMPRACTICAL AND
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DIFFICULT TO ASCERTAIN THE ACTUAL DAMAGES SUFFERED BY XXXXX, THE XXXXX
STOCKHOLDERS, THE XXXXX XX, THE XXXXX LIMITED PARTNERS AND THE PARTNERSHIPS AS A
RESULT OF SUMMIT'S OR THE OPERATING PARTNERSHIP'S DEFAULT OR FAILURE TO
CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY, AND THAT UNDER THE
CIRCUMSTANCES EXISTING AS OF THE DATE OF THIS AGREEMENT, THE LIQUIDATED DAMAGES
PROVIDED FOR IN THIS SUBSECTION REPRESENTS A REASONABLE ESTIMATE OF THE DAMAGES
WHICH XXXXX, THE XXXXX STOCKHOLDERS, XXXXX XX, THE XXXXX LIMITED PARTNERS AND
THE PARTNERSHIPS WILL INCUR AS A RESULT OF SUCH DEFAULT OR FAILURE. THE PARTIES
ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A
FORFEITURE OR PENALTY UNDER APPLICABLE LAW.
D. In the event this Agreement shall terminate for any reason prior to the
Closing, then no party shall have any further rights or obligations under this
Agreement; provided, however, that subject to the limitations on liability
hereinabove set forth, the termination of this Agreement shall not relieve a
party from liability for his or its breach or default under this Agreement;
provided, further, the Confidentiality Agreement and the indemnification
obligations of the parties under Section 16.01 hereof shall survive the
termination of this Agreement.
The parties hereby agree that the rights provided for in Article 15 hereof
shall be their sole remedies in the event of any breach or default under this
Agreement or any document executed and delivered pursuant hereto. No party shall
assert any claim except in accordance with, and subject to the limitations of,
Article 15 hereof.
15.04 SURVIVAL. Except for the liabilities and obligations of Xxxxx and the
Partnerships hereunder (all of which shall terminate on the Closing Date), the
representations, warranties, covenants, obligations and indemnities of the
parties hereto shall survive the Closing and the consummation of the Corporate
Merger and the Contribution Transaction herein provided; provided, however, that
all liabilities and obligations of the Xxxxx Stockholders and the Xxxxx Limited
Partners hereunder (other than the indemnification obligations of the Xxxxx
Stockholders pursuant to the provisions of clause (iii) of Section 15.01A hereof
and the representations and warranties of the Xxxxx Limited Partners set forth
in Section 9.01) shall terminate in their entirety one (1) year after the
Closing Date, except as to items as to which Summit or the Operating Partnership
shall make a written claim during such one (1) year period and, in addition,
initiates a proceeding under Section 16.09 hereof not later than fifteen (15)
months after the Closing Date.
Notwithstanding any other provision of this Agreement, if Summit or the
Operating Partnership shall have actual knowledge as of the Closing Date that
any of the representations or warranties of Xxxxx, the Xxxxx Stockholders, the
Partnerships or the Partners contained in this Agreement or in any other
agreement,
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certificate or instrument executed by any of them in connection with this
Agreement shall be false or inaccurate in any respect or that Xxxxx, the Xxxxx
Stockholders, the Partnerships or the Partners shall be in breach of any of
their covenants or obligations under this Agreement, and Summit and the
Operating Partnership nonetheless close the transactions hereunder and effect
the Corporate Merger and the Contribution Transaction, then neither the Xxxxx
Stockholders nor the Xxxxx Limited Partners shall have any liability or
obligation respecting such false or inaccurate representations and warranties or
such breach (and any cause of action resulting therefrom shall terminate upon
the Closing).
ARTICLE 16. MISCELLANEOUS
16.01 BROKERS. The Xxxxx Stockholders, Xxxxx XX, and the Xxxxx Limited
Partners represent and warrant to Summit and the Operating Partnership, and
Summit and the Operating Partnership represent and warrant to Xxxxx, the Xxxxx
Stockholders, the Partnerships Xxxxx XX, and the Xxxxx Limited Partners that no
broker or finder has been engaged by them, respectively, in connection with the
transactions contemplated by this Agreement, except as hereinafter set forth. In
the event of a claim for broker's or finder's fee or commissions in connection
with the transactions contemplated by this Agreement, then the Xxxxx
Stockholders, Xxxxx XX, and the Xxxxx Limited Partners shall indemnify, defend
and hold harmless Summit and the Operating Partnership from and against the same
if it shall be based upon any statement or agreement alleged to have been made
by the Xxxxx Stockholders, Xxxxx XX, or the Xxxxx Limited Partners, and Summit
and the Operating Partnership shall indemnify, defend and hold harmless the
Xxxxx Stockholders and the Xxxxx Limited Partners from and against the same if
it shall be based upon any statement or agreement alleged to have been made by
Summit or the Operating Partnership. Notwithstanding the foregoing, Xxxxx has
engaged Eastdil Realty Company, L.L.C. in connection with the transactions
herein provided, and Xxxxx (if the transaction herein provided fails to close)
and except as provided in Section 11.04, the Xxxxx Stockholders and the Xxxxx
Limited Partners (if the transactions herein provided shall close) shall be
responsible for the fees and expenses (the "EASTDIL FEES") of Eastdil Realty
Company, L.L.C. in connection with the Mergers provided for in this Agreement.
16.02 EXHIBITS; ENTIRE AGREEMENT; MODIFICATION. All exhibits attached and
referred to in this Agreement are hereby incorporated herein as if fully set
forth in (and shall be deemed to be a part of) this Agreement. This Agreement
contains the entire agreement among the parties respecting the matters herein
set forth and supersedes all prior agreements between the parties hereto
respecting such matters. This Agreement may not be modified or amended except by
written agreement signed by both parties.
16.03 PROHIBITION ON "SHORT" SALES; PURCHASES. Each Xxxxx Stockholder and
each Xxxxx Limited Partner hereby agrees that during the period commencing on
the Effective Date and ending on the earlier of the Rancho Issue Date or the
Rancho Reconveyance Date such Stockholder or Partner will not, and will not
permit
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any Person controlled by him to, sell "short" any Summit Shares. Each of Summit
and the Operating Partnership agrees that during the period commencing on the
Effective Date and ending on the earlier of the Rancho Issue Date or the Rancho
Reconveyance Date it will not, and it will not permit any of its directors or
executive officers to, engage in any act with respect to Summit Shares which is
included in the term "manipulative, deceptive, or other fraudulent device or
contrivance," as such term is used in Section 15(c) of the 1934 Act. Without
limiting the foregoing, each of Summit and the Operating Partnership agrees that
during the period commencing on the Effective Date and ending on the Closing
Date it will not, and it will not permit any of its directors or executive
officers to, purchase any Summit Shares provided, however, that shares purchased
from the Company under stock option plans, deferred compensation plans, stock
bonus plans, employee stock purchase plans, dividend reinvestment plans or other
equity participation plans shall be specifically permitted..
16.04 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
However, whenever action must be taken (including the giving of notice or the
delivery of documents) under this Agreement during a certain period of time (or
by a particular date) that ends (or occurs) on a non-Business Day, then such
period (or date) shall be extended until the immediately following Business Day.
16.05 INTERPRETATION. Section headings shall not be used in construing
this Agreement. Each party acknowledges that such party and its counsel, after
negotiation and consultation, have reviewed and revised this Agreement. As such,
the terms of this Agreement shall be fairly construed and the usual rule of
construction, to the effect that any ambiguities herein should be resolved
against the drafting party, shall not be employed in the interpretation of this
Agreement or any amendments, modifications or exhibits hereto or thereto.
Whenever the words "including", "include" or "includes" are used in this
Agreement, they shall be interpreted in a non-exclusive manner. Except as
otherwise indicated, all Exhibit and Section references in this Agreement shall
be deemed to refer to the Exhibits and Sections in this Agreement.
16.06 GOVERNING LAW. Except as otherwise provided herein, this
Agreement shall be construed and enforced in accordance with the laws of the
State of Ohio.
16.07 SUCCESSORS AND ASSIGNS. No party may assign or transfer its
rights or obligations under this Agreement prior to the Closing Date without the
prior written consent of the other parties (in which event such transferee shall
assume in writing all of the transferor's obligations hereunder, but such
transferor shall not be released from its obligations hereunder). No consent
given by a party to any transfer or assignment of another party's rights or
obligations hereunder shall be construed as a consent to any other transfer or
assignment of such other party's rights or obligations hereunder. No transfer or
assignment in violation of the provisions hereof shall be valid or enforceable.
Subject to the foregoing, this Agreement and the terms and provisions hereof
shall inure to the benefit of and be binding upon the successors and assigns of
the parties.
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16.08 NOTICES. Any notice which a party is required or may desire to
give any other party shall be in writing and shall be sent by personal delivery
or by mail (either [i] by United States registered or certified mail, return
receipt requested, postage prepaid, or [ii] by Federal Express or similar
generally recognized overnight carrier regularly providing proof of delivery),
addressed as follows (subject to the right of a party to designate a different
address for itself by notice similarly given):
To Summit or the Operating Partnership:
c/o Summit Properties Inc.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
With a Copies To:
Kennedy, Covington, Xxxxxxx & Xxxxxxx, L.L.P.
NationsBank Corporate Center, Suite 4200
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
and
Xxxxxxx, Procter & Xxxx, XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, P.C.
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
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To Xxxxx, any Xxxxx Stockholder,
Any Partnership or any Partner:
000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
With Copies To:
Xxxxx Properties
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
Pircher, Xxxxxxx & Xxxxx
1999 Avenue of the Stars
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Real Estate Notices (LJP)
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
Any notice so given by mail shall be deemed to have been given as of the date of
delivery (whether accepted or refused) established by U.S. Post Office return
receipt or the overnight carrier's proof of delivery, as the case may be. Any
such notice not so given shall be deemed given upon receipt of the same by the
party to whom the same is to be given.
16.09 THIRD PARTIES. Nothing in this Agreement, whether expressed or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any other Person other than the parties hereto and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third parties any right of
subrogation or action over or against any party to this Agreement. This
Agreement is not intended to and does not create any third party beneficiary
rights whatsoever.
16.10 ARBITRATION OF DISPUTES. ANY CONTROVERSY OR CLAIM ARISING UNDER OR
RELATING TO THE TERMS OF THIS AGREEMENT
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OR ANY OF THE EXHIBITS ATTACHED TO IT, AND ANY PROCEEDINGS TO ENFORCE THIS
AGREEMENT OR RIGHTS UNDER THIS AGREEMENT AND ITS EXHIBITS SHALL BE SETTLED BY
ARBITRATION IN THE CITY OF CINCINNATI, OHIO, IN ACCORDANCE WITH THE THEN
EXISTING RULES ("RULES") OF PRACTICES AND PROCEDURE OF THE JUDICIAL ARBITRATION
& MEDIATION SERVICES ("JAMS"). EACH PARTY SHALL SELECT AN ARBITRATOR FROM THE
APPROVED LIST PROVIDED BY JAMS, SUCH SELECTION TO BE MADE BY NOTIFICATION TO THE
OTHER PARTY GIVEN IN WRITING WITHIN FIFTEEN (15) DAYS OF THE SUBMISSION OF THE
DISPUTE TO ARBITRATION HEREUNDER. FAILURE OF A PARTY TO GIVE NOTICE OF ITS
SELECTION SHALL CAUSE THE SINGLE ARBITRATOR SELECTED BY THE OTHER PARTY TO BE
THE SOLE ARBITRATOR IN CONNECTION WITH THE APPLICABLE DISPUTE HEREUNDER. IF EACH
PARTY DESIGNATES AN ARBITRATOR, THEN WITHIN FIFTEEN (15) DAYS AFTER BOTH
ARBITRATORS HAVE BEEN SO DESIGNATED, SUCH ARBITRATORS SHALL DESIGNATE A THIRD
ARBITRATOR FROM A JAMS- APPROVED LIST. THE DECISION OF A MAJORITY OF THE
ARBITRATORS HEREUNDER SHALL BE CONCLUSIVE. AS SOON AS PRACTICABLE AFTER
SELECTION OF THE ARBITRATOR(S), THE ARBITRATOR(S) SHALL DETERMINE A REASONABLE
ESTIMATE OF THE ANTICIPATED FEES AND COSTS OF THE ARBITRATOR(S), AND SHALL
RENDER A STATEMENT TO EACH PARTY SETTING FORTH SAID FEES AND COSTS. THEREAFTER
EACH PARTY SHALL, WITHIN TEN (10) DAYS OF RECEIPT OF SAID STATEMENT, DEPOSIT
ONE-HALF OF SAID SUM WITH THE ARBITRATOR(S) TO BE APPLIED AGAINST SUCH FEES AND
COSTS (SUBJECT TO THE PROVISIONS OF THIS AGREEMENT). FAILURE OF ANY PARTY TO
MAKE SUCH DEPOSIT SHALL RESULT IN A FORFEITURE BY THE NON-DEPOSITING PARTY OF
THE RIGHT TO PROSECUTE OR DEFEND THE CLAIM WHICH IS THE SUBJECT OF THE
ARBITRATION, BUT SHALL NOT OTHERWISE SERVE TO XXXXX, STAY OR SUSPEND THE
ARBITRATION PROCEEDINGS. THE ARBITRATOR(S) SHALL HAVE THE RIGHT TO DETERMINE THE
SCOPE OF THEIR JURISDICTION, THE EXTENT OF DISCOVERY AND TO GRANT EQUITABLE
RELIEF, INCLUDING, THE RIGHT TO ORDER THE EXPUNGEMENT OF ANY LIS PENDENS WHICH
THE ARBITRATOR(S) DEEM IMPROPER. THE PREVAILING PARTY SHALL BE ENTITLED TO
REASONABLE ATTORNEYS' FEES AND OTHER REASONABLE COSTS INCURRED IN CONNECTION
WITH THE ARBITRATION OR ANY OTHER LITIGATION PLUS INTEREST ON THE AMOUNT OF ANY
AWARD. JUDGMENT UPON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY BE ENTERED IN
ANY COURT HAVING JURISDICTION THEREOF.
16.11 LEGAL COSTS. Except as provided in Section 11.04 hereof, the
parties hereto agree that they shall pay directly any and all legal costs which
they have incurred on their own behalf in the preparation of this Agreement, all
deeds and other agreements pertaining to this transaction. In addition, if any
party brings any suit or other
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proceeding with respect to the subject matter or the enforcement of this
Agreement, the prevailing party (as determined by the court, agency or other
authority before which such suit or proceeding is commenced), in addition to
such other relief as may be awarded, shall be entitled to recover reasonable
attorneys' fees, expenses and costs of investigation actually incurred. The
foregoing includes attorneys' fees, expenses and costs of investigation
(including those incurred in appellate proceedings), costs incurred in
establishing the right to indemnification, or in any action or participation in,
or in connection with, any case or proceeding under Chapter 7, 11 or 13 of the
Bankruptcy Code (11 United States Code Sections 101 et seq.), or any successor
statutes. The provisions of this Section 16.11 shall survive any termination of
this Agreement.
16.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
16.13 EFFECTIVENESS. In no event shall any draft of this Agreement
create any obligation or liability, it being understood that this Agreement
shall be effective and binding only when a counterpart hereof has been executed
and delivered by each party hereto.
16.14 CONSENT AND WAIVER. Each Partner of each Partnership and each
partner of each such Partner which is a partnership hereby consents and agrees
to the Corporate Merger and the Contribution Transaction and to the substitution
of the Operating Partnership or SSILP as a limited partner in each Partnership
in connection with the Contribution Transaction and waives any option, right of
first refusal or similar right to acquire, or to designate an affiliate to
acquire, the Partnership Interest of any Partner in any Partnership or any
partner of any such Partner which is a partnership in connection with the
Corporate Merger or the Contribution Transaction.
16.15 CONSENT TO SERVICE OF PROCESS. The Surviving Corporation
Consents to be sued and served with process in the State of Ohio and hereby
irrevocably appoints the Secretary of State of the State of Ohio as its agent to
accept such service of process in connection with any proceeding in the State of
Ohio to enforce against the Surviving Corporation any obligation of Xxxxx.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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82
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
SUMMIT:
SUMMIT PROPERTIES INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
OPERATING PARTNERSHIP:
SUMMIT PROPERTIES PARTNERSHIP, L.P.
By: SUMMIT PROPERTIES INC.,
its sole general partner
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
XXXXX INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
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BUENA VISTA PARTNERSHIP:
XXXXX INDUSTRIES - BUENA VISTA
LIMITED PARTNERSHIP
By: XXXXX INDUSTRIES II, L.C.,
its sole general partner
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
BELCOURT PARTNERSHIP:
XXXX-XxXXXXXX LIMITED PARTNERSHIP
By: XXXXX INDUSTRIES II, L.C.,
its sole general partner
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
TURTLE COVE PARTNERSHIP:
XXXXX INDUSTRIES - HORIZON PARKWAY
LIMITED PARTNERSHIP
By: XXXXX INDUSTRIES II, L.C.,
its sole general partner
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
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CAMINO REAL PARTNERSHIP:
XXXXX INDUSTRIES-CAMINO REAL, L.P.
By: XXXXX INDUSTRIES II, L.C.,
its sole general partner
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
RANCHO LAS PALMAS PARTNERSHIP:
XXXXX INDUSTRIES-RANCHO LAS PALMAS,
L.P.
By: XXXXX INDUSTRIES II, L.C.,
its sole general partner
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
LOS ARBOLES PARTNERSHIP:
XXXXX PROPERTIES - LOS ARBOLES
LIMITED PARTNERSHIP
By: XXXXX INDUSTRIES II, L.C.,
its sole general partner
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
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TURTLE ROCK PARTNERSHIP:
XXXXX INDUSTRIES - OAKWELL FARMS
LIMITED PARTNERSHIP
By: XXXXX INDUSTRIES II, L.C.,
its sole general partner
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
RANCHO II:
RANCHO LAS PALMAS II, L.P.
By: XXXXX REMAINDER LLC
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx,
Member
XXXXX STOCKHOLDERS:
/s/ Xxxx Xxxxxxx Xxxxxxx
---------------------------------------------------
XXXX XXXXXXX XXXXXXX
/s/ Xxxxxx Xxxxxxxx Xxxxxxx
---------------------------------------------------
XXXXXX XXXXXXXX XXXXXXX
/s/ Xxxx X. Xxxxx
---------------------------------------------------
XXXX X. XXXXX
/s/ Xxxxx X. Xxxxx
---------------------------------------------------
XXXXX X. XXXXX
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/s/ X. Xxxx Xxxxx
---------------------------------------------------
X. XXXX XXXXX
/s/ Xxxxxxx X. Xxxxx
---------------------------------------------------
XXXXXXX X. XXXXX
/s/ Xxxxx X. Xxxxx, Xx.
---------------------------------------------------
XXXXXX X. XXXXX, XX.
/s/ Xxxx X. Xxxxxx
---------------------------------------------------
XXXX X. XXXXXX
/s/ Xxxxx X. Xxxxx
---------------------------------------------------
XXXXX X. XXXXX
/s/ Xxxxxxxx X. Xxxxxxx
---------------------------------------------------
XXXXXXXX X. XXXXXXX
XXXX XXXXX OSTEVOLL REVOCABLE TRUST
By: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------------------
Xxxxxx X. Xxxxx, Xx.,
Trustee
By: /s/ Xxxx X. Xxxxxx
------------------------------------------
Xxxx X. Xxxxxx,
Trustee
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------------------------
XXXXXX X. XXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxx, Xx.
---------------------------------------------------
XXXXXXX X. XXXXXXXX, XX.
00
00
XXXXX XX:
XXXXX INDUSTRIES II, L.C.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
XXXXX LIMITED PARTNERS:
KW PARTNERSHIP
By: /s/ Xxxxxxxx X. Xxxx, Xx.
------------------------------------------
Xxxxxxxx X. Xxxx, Xx.,
General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxxx,
General Partner
By: /s/ X.X. Xxxxxxxx, Xx.
------------------------------------------
X.X. Xxxxxxxx, Xx.,
General Partner
LAD PARTNERSHIP
By: /s/ Xxxx X. Xxxxxx
------------------------------------------
Xxxx X. Xxxxxx,
General Partner
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxx,
General Partner
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------------
Xxxx X. Xxxxxxxx,
General Partner
/s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------------------
XXXXXXX X. XXXXXXXX
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MILAN INVESTMENT TRUST
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxxx,
Trustee
/s/ S. Xxxxxx Xxxxxxx
---------------------------------------------------
S. XXXXXX XXXXXXX
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EXHIBIT LIST
"A-1" Description of Buena Vista
"A-2" Description of Belcourt
"A-3" Description of Turtle Cove
"A-4" Description of Camino Real
"X-0 Xxxxxxxxxxx xx Xxxxxx Xxx Xxxxxx
"X-0" Description of Los Arboles
"A-7" Description of Turtle Rock
"B" Leasing Criteria
"C" Form of Registration Rights Agreement
"D" Form of Amendment to Summit Limited Partnership Agreement
"E-1" Form of Stockholder Cash Election
"E-2" Form of Partner Cash Election
"F-1" Form of Rancho Issue Election
"F-2" Form of Rancho Reconveyance Election
"G" Terms of Reconveyance
"H" Form of Assignment of Partnership Interest
"I" [Reserved]
"J" Prorations
"K" [Reserved]
"L-1" Title Exceptions - Buena Vista
"L-2" Title Exceptions - Belcourt
"L-3" Title Exceptions - Turtle Cove
"L-4" Title Exceptions - Camino Real
"L-5" Title Exceptions - Rancho Las Palmas
"L-6" Title Exceptions - Los Arboles
"L-7" Title Exceptions - Turtle Rock
"M" Opinion of Counsel for Xxxxx
"N" Equity Transfer Certificates
"O" Opinion of Counsel for Summit
"P" List of Xxxxx Stockholders
"Q" Required Consents
"R" Environmental Reports
"S" Master Lease
"T" Employee Benefit Plans
"U" [Reserved]
"V" Principal Balances of Existing Indebtedness
"W" Partners of the Partnerships
"X" [Reserved]
"Y" Appliances and Amenities
"Z" Service Contracts and Personalty Leases
"AA" List of Partnership Financial Statements
"BB" [Reserved]
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"CC" [Reserved]
"DD" Rancho Management Agreement
"EE" Amendments to Rancho Management Agreement
"FF" Rent Roll
"GG" Utility Bonds and Deposits
"HH" Punch List
"II" Schedule of Insurance
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EXHIBIT "G"
TERMS OF RECONVEYANCE
92
TERMS AND CONDITIONS OF RECONVEYANCE
Rancho II's election to purchase the Apartment Project known as Rancho Las
Palmas ("RANCHO LAS PALMAS") under Section 2.11 of the Agreement and Plan of
Reorganization (the "AGREEMENT") to which the exhibit (the "EXHIBIT") is
attached shall be subject to the following terms and conditions:
1. Within thirty (30) days after receipt of the Rancho Reconveyance
Election, Summit shall convey to Rancho II all right, title and interest in and
to Rancho Las Palmas pursuant to a special warranty deed, a xxxx of sale, an
assignment of Leases, and other appropriate documents, and shall convey Rancho
Las Palmas to Rancho II in accordance with the requirements of Paragraph 2
below.
2. For purposes of this Agreement, any conveyance of Rancho Las Palmas to
Rancho II shall be in accordance with the following: (i) there shall be no liens
or encumbrances affecting Rancho Las Palmas other than those resulting solely
from the acts or omissions of Rancho II or EPI Property Development, L.P., a
Texas limited partnership ("EPI") occurring on or after the Contribution Date;
(ii) the condition of title to Rancho Las Palmas and all related collateral
shall not be materially different from such condition as of the Contribution
Date unless such change results from the act or omission of Rancho II or EPI,
and any title insurance policy for Rancho Las Palmas obtained by Rancho II as
part of the reconveyance (such title policy to be obtained at Rancho II's option
and expense) shall include only the Permitted Exceptions (excluding, however,
any exceptions therein indicating any mortgage indebtedness) and such other
exceptions arising from the actions of Rancho II or EPI occurring on or after
the Contribution Date; (iii) the environmental condition of Rancho Las Palmas
shall be the same as or no worse than the environmental condition thereof as of
the Contribution Date, unless such change occurs solely from the act or omission
of Rancho II or EPI occurring on or after the Contribution Date; and (iv) there
shall be no claims against Rancho II or Rancho Las Palmas that are the result of
actions of Summit or its agents, successors or assigns (it being agreed that EPI
is not considered an agent of Summit for this purpose) other than those which
Rancho II shall have been indemnified from and against (such indemnification
being in a form and from a party acceptable to Rancho II in its sole
discretion). The failure of Summit to comply with the conditions contained in
clauses (i) through (iv) above (the "CONDITIONS") shall not provide a reason for
Rancho II not to purchase Rancho Las Palmas. As used in this paragraph, "acts or
omissions" shall not apply to any act or omission that occurs at the direction
of Summit.
If summit is unable to comply with the Conditions, Rancho II may offset
against the Rancho Purchase Price the amount, determined in Rancho II's
reasonable judgment, necessary to compensate Rancho II for the loss of value
resulting proximately from the defect. In the event that such offset reduces the
Purchase Price to less than zero dollars, Summit shall pay Rancho II the amount
by which the Purchase price is less than zero dollars.
3. Summit and Rancho II will execute escrow instructions customary to such
a conveyance prior to the conveyance of Rancho Las Palmas from Summit to Rancho
II. Said
93
escrow instructions shall provide, without limitation, for (i) Rancho II's
delivery of the Rancho Purchase Price into escrow, (ii) the delivery into
escrow by Summit and Rancho II of all necessary documents to accomplish the
conveyance, (iii) the recordation of all necessary documents and (iv) the
delivery of the Rancho Purchase Price to Summit.
