CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT, dated effective as of January 1, 2000
(the "Agreement"), by and among Asset Investors Operating Partnership, L.P., a
Delaware limited partnership ("AIOP"),CADC Holding L.L.C., a Georgia limited
liability company ("CADC Holding"), and Community Acquisition and Development
Corporation, a Delaware corporation ("CADC" and, together with CADC Holding, the
"Contributors").
WHEREAS, the Contributors own membership interests (the
"Interests") in the limited liability companies listed on Schedule A hereto (the
"LLCs"); and
WHEREAS, the Contributors desire to contribute the Interests
to AIOP and AIOP desires to accept such contribution upon the terms and subject
to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements set forth in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
CONTRIBUTION; CLOSING
I.1 Contribution. The Contributors agree to contribute,
convey, assign, transfer and deliver to AIOP and AIOP agrees to accept, all of
the Seller's Interests at the Closing (as herein defined) upon the terms and
subject to the conditions set forth in this Agreement.
I.2 Consideration. In exchange for the contribution of the
Interests to AIOP, at the Closing, subject to the conditions set forth in this
Agreement, AIOP shall:
(a) issue 44,528 units of limited partnership of AIOP
("OP Units") to CADC Holding; and
(b) issue 44 OP Units to CADC.
I.3 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place effective as of January 1, 2000
(the "Closing Date") at 10:00 a.m. Denver time, or on such other date as the
parties hereto agree.
I.4 Deliveries by the Contributors at the Closing. At the
Closing, each of the Contributors shall deliver to AIOP (a) an executed
Assignment and Assumption of Limited Liability Company Interest Agreement in
substantially the same form as Exhibit 1.4 hereto and (b) a certificate executed
by an officer of each Contributor authorized to so certify on behalf of the
Contributor, to the effect that all of the representations and warranties of the
Contributor contained herein at Article II are true and correct as of the
Closing Date.
I.5 Deliveries by AIOP at the Closing. At the Closing, AIOP
shall deliver to the Contributors (a) a certificate executed by an officer of
such Purchaser authorized to so certify on behalf of such Purchaser, to the
effect that all of the representations and warranties of such Purchaser
contained herein at Article III are true and correct as of the Closing Date, and
(b) certificates representing OP Units in the amounts set forth in Section 1.2
hereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CONTRIBUTORS
Each Contributor represents and warrants individually but not
jointly to AIOP that as of the date hereof:
II.1 Authority. The Contributor has the right, power, legal
capacity and authority to enter into and perform its obligations under this
Agreement. This Agreement has been duly and validly executed and delivered by
the Contributor and, assuming the due authorization, execution and delivery
hereof by AIOP, constitutes a valid and binding obligation of the Contributor,
enforceable against it in accordance with its terms, except as such
enforceability may be subject to the effects of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting the
rights of creditors and of general principles of equity.
II.2 No Conflict; Consents and Approvals. The execution and
delivery by the Contributor of this Agreement do not, and the consummation of
the transactions contemplated hereby and compliance with the terms hereof will
not, (i) conflict with, or result in any violation of such Contributor's
constituent documents, (ii) violate or conflict with or result in a breach or
termination of or default under, any material agreement, instrument, license,
judgment, order, write, injunction, decree, statute, law, ordinance, rule or
regulation applicable to the Contributor or any of the property or assets of the
Contributor or (iii) result in a default (or an event which with notice or lapse
of time or both would become a default) or give to any third party any right of
termination, cancellation, amendment or acceleration under, or result in the
creation or imposition of any Lien on any material asset of the Contributor such
as would reasonably be expected to materially impair the validity or
enforceability of this Agreement or the ability of the Contributor to perform in
any material respect, its obligations under this Agreement. No consent, approval
or authorization of, or declaration, filing or registration with any court,
administrative agency or commission or other governmental or regulatory
authority or any other person or entity is required to be made or obtained by or
with respect to the Contributor in connection with the execution, delivery and
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performance of this Agreement or the consummation of the transactions
contemplated hereby.
II.3 Ownership. Contributor is the owner, beneficially and of
record, of all of the Interests set forth opposite such Contributor's name on
the signature pages hereto free and clear of all Liens. As used in this
Agreement, "Lien" means any mortgage, pledge, lien, encumbrance, charge, adverse
claim or restriction of any kind affecting title or resulting in an encumbrance
against the Interests or a security interest of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any third party option or other agreement to sell and any filing of or
agreement to give, any financing statement under the Uniform Commercial Code (or
equivalent statute) of any jurisdiction).
II.4 Investment Representations. Contributor:
(a) is an "Accredited Investor," as such term is
defined in Regulation D under the Securities Act of 1933, as amended (the
"Securities Act");
(b) has had access to such financial and other
information, and has been afforded the opportunity to ask questions of
representatives of AIOP and Asset Investors Corporation, a Delaware corporation
("AIC"), and to receive answers to those questions, as it has deemed necessary
in connection with its acquisition of OP Units;
(c) acknowledges that the OP Units that will be
acquired pursuant to this Agreement are being acquired in a transaction not
involving any public offering within the meaning of the Securities Act, and the
OP Units, and any Common Stock, par value $0.01, of AIC (the "AIC Stock") that
may be issued in exchange for OP Units tendered for redemption, have not been,
and may never be, registered under the Securities Act;
(d) agrees not to offer, sell, transfer or otherwise
dispose of the OP Units, or any AIC Stock issued in exchange for OP Units
tendered for redemption, in the absence of registration under the Securities Act
unless it delivers to AIOP and AIC an opinion of counsel reasonably satisfactory
to AIOP and AIC, in form and substance satisfactory to AIOP and AIC, to the
effect that the proposed sale, transfer or other disposition may be effected
without registration under the Securities Act and under applicable state
securities and blue sky laws;
(e) acknowledges that the OP Units, and any AIC Stock
issued in exchange for OP Units tendered for redemption, will be in the form of
physical certificates and that, unless and until such OP Units or AIC Stock
shall have been registered under the Securities Act, the certificates will bear
a legend to the following effect:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
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STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE COMPANY AN OPINION
OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY, IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT THE PROPOSED SALE,
TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
(f) has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of an
acquisition of the OP Units and is able to bear the economic risk of a loss of
an investment in the OP Units and is not acquiring any OP Units with a view to
the distribution thereof or any present intention of offering or selling any
thereof in a transaction that would violate the Securities Act or the securities
laws of any state or any other applicable jurisdiction; and
(g) has been advised by its own counsel with respect
to this Agreement and the tax implications of the contributions and transactions
contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AIOP
AIOP represents and warrants to the Contributors that as of
the date hereof:
III.1 Authority. It has the right, power, legal capacity and
authority to enter into and perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement by AIOP, and the issuance
by AIOP of the OP Units have been duly authorized by AIOP and no further action
is necessary on the part of AIOP. This Agreement has been duly and validly
executed and delivered by AIOP and, assuming the due execution and delivery by
the Contributors, constitutes a valid and binding obligation of AIOP,
enforceable against it in accordance with its terms.
III.2 No Conflict; Consents and Approvals. The execution and
delivery by AIOP of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will not,
(i) conflict with, or result in any violation of any provision of the limited
partnership agreement or certificate of limited partnership of AIOP, (ii)
violate or conflict with or result in a breach or termination of or default
under, any material agreement, instrument, license, judgment, order, writ,
injunction, decree, statute, law, ordinance, rule or regulation applicable to
AIOP or any of the property or assets of AIOP or (iii) result in a default (or
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an event which with notice or lapse of time or both would become a default) or
give to any third party any right of termination, cancellation, amendment or
acceleration under, or result in the creation or imposition of any Lien on any
material asset of AIOP such as would reasonably be expected to materially impair
the validity or enforceability of this Agreement or the ability of AIOP to
perform in any material respect, its obligations under this Agreement. No
consent, approval or authorization of, or declaration, filing or registration
with any court, administrative agency or commission or other governmental or
regulatory authority or any other person or entity is required to be made or
obtained by or with respect to AIOP in connection with the execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated hereby.
ARTICLE IV
COVENANTS
IV.1 Conduct of Business. From the date hereof through the
Closing, except as expressly permitted or contemplated by this Agreement, unless
AIOP shall otherwise agree in writing prior to the taking of any action
prohibited by the terms of this Section, the Contributors shall cause each of
the LLCs to conduct its operations and business in the ordinary and usual course
of business and consistent with past practice. Without limiting the generality
of the foregoing, and except as otherwise expressly permitted by this Agreement,
prior to the Closing, without the prior written consent of AIOP, to the extent
within its control, the Contributors shall not permit any of the LLCs to: (a)
issue, sell, pledge or dispose of, grant or otherwise create or agree to issue,
sell, pledge or dispose of, grant or otherwise create any equity interest, any
debt or any securities convertible into or exchangeable for any equity interest;
(b) purchase, redeem or otherwise acquire or retire, or offer to purchase,
redeem or otherwise acquire or retire, any equity interest (including any
options with respect to any equity interest and any security convertible or
exchangeable into any equity interest); (c) declare, set aside, make any
distribution, payable in cash, stock, property or otherwise, with respect to any
of its equity interests, or subdivide, reclassify, recapitalize, split, combine
or exchange any of its equity interests; (d) incur or become contingently liable
with respect to any indebtedness or guarantee any such indebtedness or issue any
debt securities or incur any other obligation or liability outside the ordinary
course of business; (e) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business entity; (f) mortgage or otherwise
encumber or subject to any lien of its properties or assets; (g) other than with
respect to tenant leases in the ordinary course of business consistent with past
practice, sell, transfer or assign any of its assets or properties; (h) other
than with respect to tenant leases in the ordinary course of business consistent
with past practice, enter into any contract not terminable within 30 days; (i)
other than with respect to tenant leases in the ordinary course of business
consistent with past practice, pay or settle any claim or liability, or enter
into, amend or terminate any transaction, contract, commitment or arrangement to
which it is a party.
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IV.2 Special Election. The parties agree that with respect to
the contributed real estate assets owned directly or indirectly by Contributors
through limited liability companies or joint ventures, at the election of the
Contributors, AIOP will either (1) use the remedial method as set out in
Treasury Regulation Section 1.704-3(d) for partnership allocation purposes, or
(2) use the traditional method as set out in Treasury Regulation Section
1.704-3(b) for partnership allocation purposes and allow the Contributors to
guarantee AIOP debt and/or elect to undertake an obligation to restore deficit
capital accounts in an amount that is sufficient to allocate an amount of either
recourse debt or partner nonrecourse debt ( as defined in Treasury Regulation
Section 1.704-2(b)(4)) that equals or exceeds such partners tax basis deficit
capital accounts.
If the contributors elect to use the remedial method as
described above, the parties agree that AIOP will maintain nonrecourse debt on
the contributed properties in an amount not less than the current amount of that
certain loan from GE Financial Assurance Corporation dated December 21, 1998 in
the original amount of $2,654,000 secured by the Sunlake Mobile Home Park, as
adjusted in the future by scheduled principal payments called for in such loan.
To the extent that any of the contributed real estate is sold
or otherwise disposed of by AIOP in a taxable transaction other than a
non-taxable like-kind exchange of property pursuant to IRC Section 1031 within
five years of the date of this agreement, the Contributors' shall have the
right, but not the obligation, for their OP Units to have the same
characteristics as other OP Units with respect to all items of income, gain,
loss, deduction and distributions other than the following: the Contributors' OP
Units will receive a special allocation of depreciation and other deductions in
the year of such sale and each year thereafter as necessary until the cumulative
amount of such depreciation and other deductions equals the amount of gain on
the taxable sale of contributed property allocated to the Contributors pursuant
to IRC Section 704 (c). In no event will such special allocation be made in a
year in which, after considering such special allocation, Asset Investors
Corporation fails to make distributions (as defined pursuant to IRC Sections 561
and 857 (b)(2)(B)) in an amount at least equal to its taxable income for such
year (as defined pursuant to IRC Section 857 (b)(2)). If the above special
allocation is made to the Contributors' OP Units, then the Contributors' OP
Units will also receive a special gain allocation provision whereby the
Contributors will receive a priority allocation of gain under IRC Section 704
(b) and the Treasury Regulations thereunder from a sale of substantially all of
AIOP's assets after five years in an amount equal to the special allocation of
depreciation and other deductions that they previously received. If a
Contributor redeems its OP Units prior to the date on which it has been
specially allocated gains equal to the special allocation of depreciation and
other deductions, the redemption consideration shall be adjusted for the
difference between the fair market value per unit of the Contributor's OP Units
and the fair market value per unit of OP Units not held by the Contributors.
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IV.3 Further Assurances. Each party hereto agrees to use its
best efforts to obtain all consents and approvals and to do all other things
necessary for the consummation of the transactions contemplated by this
Agreement. The parties agree to take such further action to deliver or cause to
be delivered to each other at the Closing and at such other times thereafter as
shall be reasonably agreed by such additional agreements or instruments as any
of them may reasonably request for the purpose of carrying out this Agreement
and the transactions contemplated hereby.
ARTICLE V
CONDITIONS
V.1 Conditions to Each Party's Obligations Under this
Agreement. The respective obligations of each party under this Agreement shall
be subject to the fulfillment at or prior to the Closing Date of the following:
(a) Injunctions. At the Closing Date, (i) there shall
be no injunction, restraining order, decision or decree of any nature of any
United States or foreign court or governmental entity or body or competent
jurisdiction that is in effect that restrains or prohibits the consummation of
the transactions contemplated hereby and (ii) there shall be no suit,
proceeding, or governmental investigation threatened or pending before any
United States or foreign governmental entity or body of competent jurisdiction
which seeks to restrain or prohibit the consummation of the transactions
contemplated hereby in whole or material part, or to obtain damages or other
relief in connection with the transactions contemplated hereby.
(b) Regulatory Approvals. All necessary approvals,
authorizations and consents of all governmental entities required to consummate
the transactions contemplated by this Agreement shall have been obtained and
shall remain in full force and effect and all waiting periods relating to such
approvals, authorizations or consents shall have expired.
V.2 Conditions to Obligations of AIOP. The obligations of AIOP
individually and not jointly are subject to the satisfaction at or prior to the
Closing of the following conditions:
(a) All proceedings to be taken by the Contributors
in connection with the transactions contemplated by this Agreement and all
documents, instruments and certificates to be delivered by each of the LLCs in
connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in form and substance to AIOP and its counsel.
(b) All representations and warranties of the
Contributors contained herein at Article II shall be true and correct at the
Closing as if made as of the Closing Date.
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(c) There shall not have occurred as of the Closing
Date any material adverse condition with respect the business, properties,
financial condition or prospects of the LLCs.
(d) There shall not be in effect as of the Closing
Date any writ, judgment, injunction, decree or similar order of any court
restraining, or enjoining or otherwise preventing consummation of any of the
transactions contemplated by this Agreement.
V.3 Conditions to Obligations of the Contributors. The
obligations of the Contributors are subject to the satisfaction at or prior to
the Closing of the following conditions:
(a) All proceedings to be taken by AIOP in connection
with the transactions contemplated by this Agreement and all documents,
instruments and certificates to be delivered by each of the LLCs in connection
with the transactions contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Contributors and its counsel.
(b) All representations and warranties of AIOP
contained herein at Article III are true and correct at the Closing as if made
as of the Closing Date.
(c) There shall not be in effect as of the Closing
Date any writ, judgment, injunction, decree or similar order of any court
restraining, or enjoining or otherwise preventing consummation of any of the
transactions contemplated by this Agreement.
ARTICLE VI
MISCELLANEOUS
VI.1 Survival. The representations, warranties, covenants and
agreements made by the Contributors and the Purchaser in this Agreement, or in
any certificate delivered by the Contributors or the Purchaser will survive
until the first anniversary of Closing.
VI.2 Notices. All notices and other communications under this
Agreement must be in writing and will be deemed to have been duly given if
delivered, telecopied or mailed, by certified mail, return receipt requested,
first-class postage prepaid, to the parties at the following address:
If to the Contributors, to:
c/o Community Acquisition and Development Corporation
0 Xxxxx Xxxx Xxxxx
X.X. Xxx 000
0
Xxxxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to AIOP, to:
Asset Investors Operating Partnership, L.P.
c/o Asset Investors Corporation
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
VI.3 Separability. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
VI.4 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
VI.5 Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
VI.6 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same Agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to each party.
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VI.7 Entire Agreement. This Agreement represents the entire
Agreement of the parties with respect to the subject matter hereof and shall
supersede any and all previous contracts, arrangements or understandings between
the parties hereto with respect to the subject matter hereof.
VI.8 Governing Law. This Agreement shall be construed,
interpreted, and governed in accordance with the laws of the State of Delaware,
without reference to rules relating to conflicts of law.
VI.9 No Third Party Beneficiaries. No person or entity other
than the parties hereto is an intended beneficiary of this Agreement or any
portion hereof.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement effective as of the date first above written.
ASSET INVESTORS OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership
By: Asset Investors Corporation
Its: General Partner
By: /s/Xxxxx X. Xxxxxx
-----------------------
Xxxxx X. Xxxxxx
Its: Chief Financial Officer
CADC HOLDING L.L.C.,
a Georgia limited liability company
By: Community Acquisition and
Development Corporation
Its: Manager
By: /s/Xxxxxx X. Xxxxxx
-----------------------
Its: President
COMMUNITY ACQUISITION AND DEVELOPMENT
CORPORATION, a Delaware corporation
By: /s/Xxxxxx X. Xxxxxx
-----------------------
Its: President
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SCHEDULE A
LIMITED LIABILITY COMPANY INTERESTS
1. AIOP Florida Properties I, L.L.C., a Delaware limited liability company
CADC Holding, L.L.C.: 100%
2. AIOP Florida Properties II, L.L.C., a Delaware limited liability
company Community Acquisition and Development Corporation: 100%
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