CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT (this "Agreement") dated as of May
21, 1997, is entered into by and among XXXXXX/XXXXXX OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership ("WDOP"), XXXXXX
RESIDENTIAL PROPERTIES, INC., a Maryland corporation ("Xxxxxx"),
the shareholders of Drever Partners, Inc., a California corporation
("Drever"), AOF, Inc., a California corporation ("AOF"), and AOF
II, Inc., a California corporation ("AOFII"), listed on Schedule
1.1 hereto (collectively, the "Shareholders," and each
individually, a "Shareholder") and each of the equity participants in
Drever, all of which participants are listed on Schedule 1.2
hereto (collectively, the "Equity Participants," and each individually,
an "Equity Participant").
Recitals
X. Xxxxxx is the general partner of each of the partnerships
listed on Schedule 1.3 hereto (collectively, the "Drever
Partnerships"), AOF is the general partner of AOF Newgen, L.P.
(the general partner of Apartment Opportunity Fund, L.P.) and AOFII is
the general partner of Apartment Opportunity Fund II, L.P. (the
Drever Partnerships, AOF Newgen, L.P., Apartment Opportunity
Fund, L.P. and Apartment Opportunity Fund II, L.P., are referred to
collectively herein as the "Partnerships").
X. Xxxxxxx X. Xxxxxx, one of the Shareholders, has assigned
to each of the Equity Participants a percentage of his right to
receive dividends, distributions and profits otherwise payable to
him pursuant to his stock ownership of Drever, as more
particularly described on Schedule 1.2 hereto (the "Equity Rights").
X. Xxxxxx has assigned to each of the individuals listed on
Schedule 2.2(b) hereto (collectively, the "Assignees," and each
individually, an "Assignee") a percentage of its rights to
distributions and profits otherwise payable to it as general
partner of certain of the Partnerships, as more particularly
described on Schedule 2.2(b) hereto (the "General Partner
Rights").
D. Certain of the Equity Participants own shares of capital
stock in certain subsidiaries of Drever (the "Subsidiary Shares").
E. Concurrently with the execution and delivery of this
Agreement, Xxxxxx, WDOP, Drever, AOF and AOFII have entered into an
Exchange Agreement (the "Exchange Agreement") pursuant to which
WDOP has agreed to offer to exchange (the "Exchange Offer") cash
and units of beneficial ownership in WDOP for the limited partner
interests in the Partnerships.
F. Pursuant to the terms and conditions set forth herein,
the Shareholders, the Equity Participants and the Assignees desire
to contribute, transfer and assign to WDOP, and WDOP desires to
acquire from the Shareholders, the Equity Participants and the
Assignees all of the issued and outstanding shares of capital
stock of Drever, AOF and AOFII (together with the Subsidiary Shares,
the "Shares"), the Equity Rights and the General Partner Rights.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained
herein, WDOP, Xxxxxx, each of the Shareholders, the Equity
Participants and the Assignees hereby agree as follows:
ARTICLE 1
Definitions
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Article 1:
Accounts Receivable: shall have the meaning set
forth in Section 3.12 hereof.
Accredited Investor: means an "accredited investor,"
as such term is defined in Rule 501 promulgated
under the Securities Act.
Acquired Companies: means Drever, AOF, AOFII, and
their respective Subsidiaries, collectively.
Acquired Company Material Adverse Effect: shall
have the meaning set forth in Section 3.1 hereof.
Agencies: means all governmental authorities,
agencies or bodies having jurisdiction with respect to
real property, including the construction, zoning and
operation of real property.
Applicable Contract: means any Contract (a) under
which any Acquired Company has or may acquire any rights,
(b) under which any Acquired Company has or may become
subject to any obligation or liability, or (c) by which
any Acquired Company or any of the assets owned or used
by it may become bound.
Assignees: shall have the meaning set forth in the
first paragraph of this Agreement.
Attributable Consideration: shall have the meaning
set forth in Section 2.4 hereof.
Breach: will be deemed to have occurred if there is
or has been (a) any inaccuracy in or breach of, or any
failure to perform or comply with, any representation,
warranty, covenant, obligation or other provision of this
Agreement or any instrument delivered pursuant to this
Agreement, or (b) any claim (by any Person) or other
occurrence or circumstance that is or was inconsistent
with such representation, warranty, covenant, obligation
or other provision, and the term "Breach" means any such
inaccuracy, breach, failure, claim, occurrence or
circumstance.
Closing: shall have the meaning set forth in
Section 2.5 hereof.
Closing Date: means the date and time as of which
the Closing actually takes place.
Code: means the Internal Revenue Code of 1986, as
amended, and the treasury regulations promulgated
thereunder.
Common Stock: means the common stock, par value
$.01 per share, of Xxxxxx.
Common Units: means common units of beneficial
interest in WDOP, which units are exchangeable for shares
of Common Stock in accordance with the terms of the WDOP
Partnership Agreement.
Contemplated Transactions: means all of the
transactions contemplated by this Agreement, including:
(a) the contribution of the Shares, the
Equity Rights and the General Partner Rights by the
Shareholders, the Equity Participants and the
Assignees to WDOP;
(b) the delivery of the Contribution
Consideration by WDOP to the Shareholders, the Equity
Participants and the Assignees, as contemplated by
Section 2.1 hereof;
(c) the execution, delivery and performance
of the Employment Agreements;
(d) the performance by WDOP, Xxxxxx, the
Shareholders, the Equity Participants and the
Assignees of their respective covenants and obliga-
tions under this Agreement; and
(e) WDOP's acquisition and ownership of the
Shares, the Equity Rights and the General Partner
Rights and exercise of control over the Acquired
Companies.
Contract: means any agreement, contract, obligation,
promise or undertaking (whether written or oral and
whether express or implied) that is legally binding.
Contribution Consideration: means, collectively,
the Share Consideration and the General Partner Interest
Consideration, which, when combined with the aggregate
amount of the Exchange Consideration (as defined in the
Exchange Agreement), shall not exceed the Maximum
Consideration.
Damages: shall have the meaning set forth in Section 8.1
hereof.
Drever: shall have the meaning set forth in the
first paragraph of this Agreement.
Drever Partnerships: shall have the meaning set
forth in the Recitals hereto.
Employment Agreements: shall have the meaning set
forth in Section 2.6(a)(iii) hereof.
Encumbrance: means any lien, security interest,
mortgage, charge or other encumbrance on title.
Equity Participant and Equity Participants: shall
have the meanings set forth in the first paragraph of
this Agreement.
Equity Rights: shall have the meaning set forth in
the Recitals of this Agreement.
ERISA: means the Employee Retirement Income
Security Act of 1974 or any successor law, and the
regulations and rules issued pursuant thereto or any
successor law.
Exchange Act: means the Securities Exchange Act of
1934, as amended.
Exchange Offer: shall have the meaning set forth in
the Recitals of this Agreement.
Facilities: means any real property, leaseholds or
other interests currently or formerly owned or operated
by any Acquired Company and any buildings, plants,
structures or equipment (including motor vehicles)
currently or formerly owned or operated by any Acquired
Company.
Financial Statements: shall have the meaning set
forth in Section 3.4 hereof.
GAAP: means generally accepted United States
accounting principles.
General Partner Interest Consideration: means that
portion of the Contribution Consideration allocable to
the General Partner Interests.
General Partner Interests: means the general
partner interests of each of Drever, AOF and AOFII in the
Partnerships.
General Partner Rights: shall have the meaning set
forth in the Recitals of this Agreement.
Holdback Consideration: shall have the meaning set
forth in Section 2.4 hereof.
Holdback Partnership: shall have the meaning set
forth in Section 2.4 hereof.
Indemnified Person: shall have the meaning set forth
in Section 8.1 hereof.
IRS: means the Internal Revenue Service.
Knowledge: means (i) in the case of Xxxxxx or WDOP,
the actual knowledge (without the necessity of
investigation) of Xxx X. Xxxxxx, Chairman of the Board and Chief
Executive Officer of Xxxxxx, Xxxxxxxx X. Xxxxxxx,
President and Chief Acquisitions Officer of Xxxxxx, or
Xxxx X. Xxxxxxxxx, Chief Financial Officer of Xxxxxx, or
(ii) in the case of a Shareholder, the actual knowledge
(without the necessity of investigation) of such
Shareholder.
Legal Requirement: means any federal, state, local,
municipal, foreign, international, multinational, or
other administrative order, constitution, law, ordinance,
principle of common law, regulation, statute or treaty.
Material Interest: means direct or indirect
beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) of voting securities or other voting
interests representing at least 20% of the outstanding
voting power of a Person or equity securities or other
equity interests representing at least 20% of the
outstanding equity securities or equity interests in a
Person.
Maximum Consideration: means, in the aggregate,
10,322,580 Common Units; 2,000,000 Preferred Units; and
$85,000,000 in cash, except as adjusted to accommodate
fractional Units.
Net General Partner Interest Consideration: means
the General Partner Interest Consideration less the
amount paid to the Assignees for the contribution of
their General Partner Rights.
Order: means any award, decision, injunction,
judgment, order, ruling, subpoena or verdict entered,
issued, made or rendered by any court, administrative
agency or other governmental body or by any arbitrator.
Organizational Documents: means (a) the articles or
certificate of incorporation and the bylaws of a
corporation; (b) the partnership agreement and any statement of
partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited
partnership of a limited partnership; (d) any charter or
similar document adopted or filed in connection with the
creation, formation or organization of a Person; and
(e) any amendment to any of the foregoing.
Partnership Agreements: means the partnership
agreements of the Partnerships.
Person: means an individual, partnership, joint
venture, corporation, trust, unincorporated organization
or other legal entity.
Plan: shall have the meaning set forth in Section
3.13 hereof.
Pledge Agreement: shall have the meaning set forth
in Section 2.6(a)(iv) hereof.
Preferred Stock: shall have the meaning set forth
in Section 4.3 hereof.
Preferred Units: means preferred units of beneficial
interest in WDOP, which units are exchangeable for
shares of Redeemable Preferred Stock and Warrants in
accordance with the terms of the WDOP Partnership
Agreement.
Property Restrictions: means rights of way, written
agreements, laws, ordinances and regulations affecting
building use or occupancy or reservations of an interest
in title.
Proration Mechanism: shall have the meaning set forth
in Section 2.2 hereof.
Proxy Statement: shall have the meaning set forth
in Section 5.6 hereof.
Redeemable Preferred Stock: means the 9.00%
Redeemable Preferred Stock of Xxxxxx.
Regulatory Filings: means any filings required
under the Securities Laws or applicable state securities
or "Blue Sky" laws.
Related Person: means, with respect to a particular
individual:
(a) each other member of such individual's
Family;
(b) any Person that is directly or indirectly
controlled by such individual or one or more members of
such individual's Family;
(c) any Person in which such individual or
members of such individual's Family hold (individually
or in the aggregate) a Material Interest; and
(d) any Person with respect to which such
individual or one or more members of such individual's
Family serves as a director, officer, partner, executor or
trustee (or in a similar capacity).
With respect to a specified Person other than an
individual, means:
(i) any Person that directly or indirectly
controls, is directly or indirectly controlled by,
or is directly or indirectly under common control
with such specified Person;
(ii) any Person that holds a Material Interest
in such specified Person;
(iii) each Person that serves as a director,
officer, partner, executor or trustee of such
specified Person (or in a similar capacity);
(iv) any Person in which such specified Person
holds a Material Interest;
(v) any Person with respect to which such
specified Person serves as a general partner or a
trustee (or in a similar capacity); and
(vi) any Related Person of any individual
described in clause (b) or (c).
For purposes of this definition, the "Family" of an
individual includes (1) the individual, (2) the individual's
spouse and former spouses, (3) any other natural
person who is related to the individual or the individual's
spouse within the second degree, and (4) any other
natural person who resides with such individual.
SEC: means the Securities and Exchange Commission.
Securities Act: means the Securities Act of 1933 or
any successor law, and the regulations and rules issued
pursuant thereto or any successor law.
Securities Laws: means the Securities Act, the
Exchange Act and the rules and regulations promulgated
thereunder.
Share Consideration: means an amount of Units and
cash with a value equal to the sum of (a) $28,023,804,
(b) the Net General Partner Interest Consideration, and
(c) the value of each limited partner interest owned by
any of Drever, AOF or AOFII, determined in accordance
with the terms of the Exchange Agreement.
Shares: shall have the meaning set forth in the
Recitals of this Agreement.
Shareholder and Shareholders: shall have the
meanings set forth in the first paragraph of this
Agreement.
Xxxxxxxxxx Litigation: means the following matters:
Drever Partners, Inc. vs. Xxxxxxxxxx, et al., Superior
Court for the State of California, County of Mavin, Case
No. 962810 and Xxxxxxxxxx vs. Drever, et al., Superior
Court for the State of California, County of Marin, Case
No. 163952; Supreme Court of the State of California,
Case No. 5057635.
Subsidiary: means with respect to any Person (the
"Owner"), any corporation or other Person of which
securities or other interests having the power to elect
a majority of that corporation's or other Person's board
of directors or similar governing body, or otherwise
having the power to direct the business and policies of
that corporation or other Person (other than securities
or other interests having such power only upon the
happening of a contingency that has not occurred) are
held by the Owner or one or more of its Subsidiaries.
Tenant Leases: means the lease agreements relating
to the Partnership Properties.
Units: means the Common Units and the Preferred
Units.
Xxxxxx: shall have the meaning set forth in the
first paragraph of this Agreement.
Xxxxxx Material Adverse Effect: shall have the
meaning set forth in Section 4.1 hereof.
Xxxxxx Permitted Liens: shall have the meaning as
defined in Section 4.12 hereof.
Xxxxxx Properties: shall have the meaning set forth
in Section 4.12 hereof.
Xxxxxx Reports: shall have the meaning set forth in
Section 4.7 hereof.
Xxxxxx Stockholders: means the holders of Common
Stock.
Warrant Agreement: means the Warrant Agreement
between Xxxxxx and The First National Bank of Boston, as
Warrant Agent, in substantially the form of Exhibit C to
the Exchange Agreement.
Warrants: means warrants issued by Xxxxxx pursuant
to the Warrant Agreement.
WDOP: shall have the meaning set forth in the first
paragraph of this Agreement.
WDOP Material Adverse Effect: shall have the
meaning set forth in Section 4.1 hereof.
WDOP Partnership Agreement: means the amended and
restated partnership agreement of WDOP in substantially
the form of Exhibit D to the Exchange Agreement.
ARTICLE 2
Contribution and Transfer of Shares, Equity Rights and General
Partner Rights; Closing
1. Contribution of Shares, Equity Rights and General Partner
Rights. Subject to the terms and conditions of this Agreement, at
the Closing, the Shareholders, the Equity Participants and the
Assignees will contribute, transfer and assign the Shares, the
Equity Rights and the General Partner Rights, Xxxxxxxx Xxxxx
shall deliver all of her shares of capital stock of Concierge Realty &
Finance Corporation (representing a 5% equity interest in such
entity) (the "CRF Shares") and Xxxxxxx X. Xxxxxxx shall deliver
all of his shares of capital stock of Concierge Management
Corporation (representing a 10% equity interest in such entity) (the "CMC
Shares") to WDOP, and WDOP will acquire the Shares, the Equity
Rights, the General Partner Rights, the CRF Shares and the CMC
Shares from the Shareholders, the Equity Participants and the
Assignees, respectively, in exchange for the delivery by WDOP to
each Shareholder, Equity Participant and Assignee of the
Contribution Consideration. Upon receipt of the Contribution
Consideration, each Equity Participant shall be deemed to have
waived all rights, whether or not written, to receive additional shares of
capital stock of any of the Acquired Companies.
2. Allocation of Contribution Consideration; Election
Procedures. The Share Consideration shall be allocated among the Shareholders
and the Equity Participants as set forth on Schedule 2.2(a)
hereto, and the General Partner Interest Consideration shall be allocated
among the Shareholders and the Assignees as set forth on
Schedule 2.2(b) hereto. Drever shall provide to WDOP, on or
prior to June 30, 1997, illustrative schedules designating the amounts
of the Share Consideration and the General Partner Interest
Consideration allocable to each Shareholder, Equity Participant
and Assignee that would be payable to each Shareholder, Equity
Participant and Assignee assuming the Closing occurs on October
15, 1997. Additionally, Drever shall provide to WDOP, on or prior to
June 30, 1997, a document setting forth a procedure (the
"Proration Mechanism") pursuant to which each Shareholder, Equity
Participant and Assignee shall be entitled to elect pursuant to a written
notice delivered to Xxxxxx the portion of such Person's Shares,
Equity Rights and General Partner Rights, as applicable, which
such Person desires to have exchanged for (a) Common Units, (b)
Preferred Units, and (c) cash and a procedure for allocating the
various types of Contribution Consideration among the
Shareholders, Equity Participants and Assignees, if the aggregate
amount of any type of consideration offered by WDOP pursuant to this
Agreement and the Exchange Agreement selected by the Shareholders, Equity
Participants and Assignees and the Interestholders (as defined in
the Exchange Agreement), exceeds the Maximum Consideration amount
of such type of consideration.
3. Fractional Units. No fractional Units shall be issued as
part of the Contribution Consideration. In lieu of a fractional
Unit, each Person contributing Shares, Equity Rights or General
Partner Rights pursuant to Section 2.1 hereof who would otherwise
have been entitled to receive a fraction of a Unit shall receive
cash (without interest) in an amount equal to the product of (i)
such fraction of a Unit and (ii) in the case of a Common Unit,
$23.25 and, in the case of a Preferred Unit, $27.50. The
aggregate amount of cash elected to be received by the Shareholders, Equity
Participants and Assignees may be increased by the Proration
Mechanism above the Maximum Consideration to be paid in cash in
order to provide for the payment of cash in lieu of fractional
Units, provided there is a corresponding reduction in the other
types of Contribution Consideration.
4. Holdback of Contribution Consideration. To the extent
any portion of the Contribution Consideration is calculated based
on a general partner interest in excess of 1% of the
distributions payable by a Partnership (the "Holdback Partnership")
and all the limited partners of the Holdback Partnership do not exchange
their partnership interests pursuant to the Exchange Agreement, the
General Partnership Interest Consideration payable to the
Shareholders and Assignees at Closing attributable to such
general partner interest (the "Attributable Consideration") shall be
reduced by an amount equal to the product of (a) the Attributable
Consideration multiplied by (b) the percentage of the Holdback
Partnership not owned by Xxxxxx, WDOP and/or any other subsidiary
immediately following the Closing and the closing of the Exchange
Offer (such amount of the Attributable Consideration is referred
to herein as the "Holdback Consideration"). At such time as Xxxxxx,
WDOP and/or any other Subsidiary acquires all of the partnership
interests of the Holdback Partnership or otherwise acquires 100%
ownership of the Partnership Properties owned by the Holdback
Partnership, WDOP shall issue to the Shareholders and Assignees,
on a pro rata basis, the Holdback Consideration.
5. Closing. The contribution, transfer and assignment of the
Shares (the "Closing") provided for in this Agreement will take
place at the offices of Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., located
at 0000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 as soon as
practicable following the Closing of the Exchange Offer, or at
such other time, date or place as WDOP and the Shareholders may agree.
Subject to the provisions of Article 7 hereof, failure to
consummate the contribution, transfer and assignment of the
Shares, the Equity Rights and the General Partner Rights on the date
and time and at the place determined pursuant to this Section 2.5 will not
result in the termination of this Agreement and will not relieve
any party of any obligation under this Agreement.
6. Closing Obligations. At the Closing:
(a) The Shareholders, Equity Participants and
Assignees will deliver to the WDOP:
(i) certificates representing the Shares;
(ii) assignment agreements transferring the Equity
Rights and the General Partner Rights;
(iii) employment agreements executed by
Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxxx,
containing the terms set forth in Schedule 2.6(a)(iii)
hereto and such other terms as the parties may agree
upon (collectively, the "Employment Agreements");
(iv) a pledge agreement in the form of
Exhibit 2.6(a)(iv) hereto executed by Xxxxxxx X. Xxxxxx
(the "Pledge Agreement"); and
(v) a certificate executed by each Shareholder
representing and warranting to WDOP that each of such
Shareholder's representations and warranties set forth
in this Agreement was accurate in all respects as of the
date of this Agreement and is accurate in all respects
as of the Closing Date as if made on the Closing Date; and
(b) WDOP will deliver to the Shareholders, Equity
Participants and Assignees;
(i) certificates representing the Units to be
delivered by WDOP to the Shareholders, Equity
Participants and Assignees pursuant to Section 2.1 hereof;
(ii) cashier's checks representing the cash
portion of the Contribution Consideration allocated to each
such Person pursuant to the Election Mechanism;
(iii) the Employment Agreements, executed by
Xxxxxx; and
(iv) a certificate executed by an authorized
officer of Xxxxxx to the effect that, except as otherwise
stated in such certificate, each of Xxxxxx'x and WDOP's
representations and warranties set forth in this Agreement was
accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the Closing Date
as if made on the Closing Date.
7. Cash Reserves. At Closing, a cash reserve account shall be
established in an amount equal to the amount of liabilities set
forth on a projected balance sheet of Drever, as of October 1,
1997, attached hereto as Schedule 2.7 (the "Cash Reserve"), to
account for the payment of such liabilities. Drever's cash on
hand on the Closing Date shall be allocated to the Cash Reserve, and
if Drever shall have insufficient cash available to fund the Cash
Reserve the Share Consideration payable at Closing to the
Shareholder of Drever and the applicable Equity Participants
shall be reduced by the amount of such shortfall. The Shareholder of
Drever and the applicable Equity Participants shall be entitled to
receive, on the 120th day following the Closing Date, an amount
of cash from WDOP equal to the additional amount they would have
received if the balances in the Cash Reserve (after paying or
accruing for the liabilities set forth on such projected balance
sheet) were added to the Share Consideration. Additionally,
Shareholders and Assignees of a general partner of a Partnership,
as to which Partnership there is a balance in the cash reserve
(established pursuant to the terms of the Exchange Agreement)
shall be entitled to receive, on the 120th day following the closing of
the Exchange Offer, an amount of cash from WDOP equal to the
additional amount each of them would have received if such
balance were added to the General Partner Interest Consideration.
ARTICLE 3
Representations and Warranties of the Shareholders
The Shareholders hereby jointly and severally represent and
warrant to WDOP and Xxxxxx as follows:
1. Existence; Good Standing; Compliance with Law-Acquired
Companies. Schedule 3.1 hereto contains a complete and accurate
list for each Acquired Company of its name, its jurisdiction of
incorporation and the other jurisdictions in which it is
authorized to do business. Each Acquired Company is a corporation duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation. Each Acquired Company is duly
licensed or qualified to do business and is in good standing
under the laws of any state of the United States in which the character
of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary,
except where the failure to be so qualified would not have a
material adverse effect on the business, results of operations or
financial condition of such Acquired Company (an "Acquired
Company Material Adverse Effect"). Each Acquired Company has all
requisite corporate power and authority to own, operate, lease and encumber
its properties and carry on its business as now conducted.
None of the Acquired Companies is in violation of any order
of any court, governmental authority or arbitration board or
tribunal or any law, ordinance, governmental rule or regulation to which
any Acquired Company or any of its respective properties or assets is
subject, where such violation would have an Acquired Company
Material Adverse Effect. Each Acquired Company has obtained all
licenses, permits and other authorizations and has taken all
actions required by applicable law or governmental regulations in
connection with its business as now conducted, where the failure
to obtain any such item or to take any such action would have an
Acquired Company Material Adverse Effect. A copy of each
Acquired Company's Organizational Documents has been delivered or made
available to Xxxxxx and its counsel and was complete and correct
when delivered or made available and, as delivered or made
available, is in full force and effect as of the date hereof.
2. Authorization; Validity and Effect of Agreement. Each of
the Shareholders and, to the Knowledge of the Shareholders, each of
the Equity Participants and the Assignees has the requisite power and
authority to execute and deliver this Agreement and to consummate
the Contemplated Transactions. Assuming the due and valid
authorization, execution and delivery of this Agreement by Xxxxxx
and WDOP, this Agreement constitutes the valid and legally
binding obligation of each Shareholder, enforceable against each
Shareholder in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights and general principles of equity.
3. No Violation. Neither the execution and delivery by the
Shareholders of this Agreement, nor the consummation by the
Shareholders of the transactions contemplated hereby in
accordance with the terms hereof, will: (a) except as set forth on
Schedule 3.3 hereto, conflict with or result in a breach of any
provisions of the Organizational Documents of any Acquired
Company; (b) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default)
under, or result in the termination or in a right of termination or
cancellation of, or accelerate the performance required by, or
result in the creation of an Encumbrance upon any of the
properties or assets of any Acquired Company under, or result in being
declared void, voidable or without further binding effect, any of
the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust or any license, franchise, permit,
lease, contract, agreement or other instrument, commitment or obligation
to which any Acquired Company is a party, or by which any
Acquired Company or any of their respective properties or assets is bound
or affected, except for any of the foregoing matters which,
individually or in the aggregate, would not have an Acquired
Company Material Adverse Effect; or (c) require any consent, approval or
authorization of, or declaration, filing or registration with,
any domestic governmental or regulatory authority, except where the
failure to obtain any such consent, approval or authorization of,
or declaration, filing or registration with, any governmental or
regulatory authority would not have an Acquired Company Material
Adverse Effect.
4. Financial Statements. The Shareholders have delivered or
caused to be delivered to WDOP true, correct and complete copies
of: (a) the unaudited balance sheets, and the related statements
of income, shareholders' equity and cash flow in each of the
years in the three-year period ended December 31, 1996 for each of
Drever, AOF and AOFII (the balance sheets for the year ended
December 31, 1996 being hereinafter referred to as the "1996
Balance Sheets" and all of the financial statements set forth in
this Section 3.4 being hereinafter collectively referred to as
the "Financial Statements"). Such Financial Statements were prepared
from the books and records of the Acquired Companies in
accordance with procedures and policies consistently applied throughout the
periods involved. At the date hereof, there are no material
debts, liabilities or obligations of any Acquired Company, whether
absolute, accrued, matured, contingent or otherwise, and
contingent liabilities or losses for unasserted claims which are probable of
assertion, except for those (i) reflected or reserved against in
the 1996 Balance Sheets, (ii) otherwise set forth in Schedule 3.4
hereto, or (iii) incurred in the ordinary course of business
since the dates of the Balance Sheets.
5. Capitalization. The authorized capital stock of (i) Drever
consists of 5,000 shares of common stock, no par value per share,
of which 4,550 shares are issued and outstanding, (ii) AOF
consists of 10,000 shares of common stock, no par value per share, of
which 10,000 shares are issued and outstanding, and (iii) AOFII
consists of 10,000 shares of common stock, no par value per share, of
which 10,000 shares are issued and outstanding, which collectively
constitute all of the Shares. The Shareholders are and will be
on the Closing Date the record and beneficial owners and holders of
the Shares, free and clear of all Encumbrances. Schedule 1.1
hereto properly identifies the name and address of each
Shareholder and the number of Shares held by each Shareholder. Set forth on
Schedule 3.5 hereto is a statement with respect to each Acquired
Company (other than Drever, AOF and AOFII) setting forth the
authorized capital stock of each such entity, the number and type
of outstanding capital stock of such entity and the holder of
such outstanding stock. With the exception of the Shares (which are
owned by the Shareholders), the CRF Shares and the CMC Shares,
all of the outstanding equity securities and other securities of each
Acquired Company are owned of record and beneficially by one or
more of the Acquired Companies, free and clear of all
Encumbrances. No legend or other reference to any purported Encumbrance
appears upon any certificate representing capital stock of any Acquired
Company. All of the outstanding shares of capital stock of each
Acquired Company have been duly authorized and validly issued and
are fully paid and nonassessable. There are no Contracts
relating to the issuance, sale or transfer of any capital stock or other
securities of any Acquired Company. None of the outstanding
capital stock or other securities of any Acquired Company was
issued in violation of the Securities Act or any other Legal
Requirement. No Acquired Company owns, or has any Contract to
acquire, any equity securities or other securities of any Person
(other than Acquired Companies) or any direct or indirect equity
or ownership interest in any other business.
6. Litigation. Except for the Xxxxxxxxxx Litigation and as
disclosed on Schedule 3.6 hereto, there are (a) no continuing
orders, injunctions or decrees of any court, arbitrator or
governmental authority to which any Acquired Company is a party
or by which any of their respective properties or assets are bound,
and (b) no actions, suits or proceedings pending against any
Acquired Company or, to the Knowledge of any Shareholder,
threatened against any Acquired Company, at law or in equity, or
before or by any federal or state commission, board, bureau, agency or
instrumentality.
7. Absence of Certain Changes. Except as disclosed on
Schedule 3.7 hereto, since the date of the Interim Balance
Sheets, (a) each Acquired Company has conducted its business only in the
ordinary course of business; (b) to the Knowledge of the
Shareholders, there has not been any Acquired Company Material
Adverse Effect; (c) no Acquired Company has incurred any liabilities,
whether or not accrued, contingent or otherwise, or suffered any
events or occurrences that, individually or in the aggregate,
would reasonably be likely to have an Acquired Company Material Adverse
Effect; and (d) there has not been any material change in any
Acquired Company's accounting principles, practices or methods.
8. Taxes. Except as set forth on Schedule 3.8 hereto,
(a) Each Acquired Company (i) has timely filed all
federal, state and foreign tax returns including, without
limitation, information returns and reports required to be
filed by it for tax periods ended prior to the date of this
Agreement or requests for extensions have been timely filed
and any such request has been granted and has not expired
and all such returns are accurate and complete in all material
respects, (ii) has paid or accrued all taxes shown to be due
and payable on such returns or which have become due and
payable pursuant to any assessment, deficiency notice,
30-day letter or other notice received by it, and (iii) has
properly accrued all taxes for such periods and periods subsequent
to the periods covered by such returns. None of the Acquired
Companies has received any notice that the federal, state
and local income and franchise tax returns of any Acquired
Company have been or will be examined by any taxing authority. None
of the Acquired Companies has executed or filed with the IRS
or any other taxing authority any agreement now in effect
extending the period for assessment or collection of any
income or other taxes.
(b) None of the Acquired Companies is a party to any
pending action or proceeding by any governmental authority
for assessment or collection of taxes and no claim for
assessment or collection of taxes has been asserted against it.
9. Books and Records. The books of account, minute books,
stock record books and other records of the Acquired Companies that are
in the possession of the Acquired Companies or the Shareholders,
all of which have been made available to Xxxxxx, are, to the
Knowledge of the Shareholders, in all material respects true and
correct. To the knowledge of the Shareholders, the minute books
of the Acquired Companies contain in all material respects accurate
of all meetings held, and corporate action taken, by the
shareholders, the Boards of Directors and committees of the Boards of
Directors of the Acquired Companies, including all action taken by Drever,
AOF and AOFII as general partners of the Partnerships, and, to
the knowledge of the Shareholders, no meeting of any such
shareholders, Board of Directors or committee has been held for which
minutes have not been prepared and are not contained in such minute
books. At the Closing, all books and records will be in the possession
of the Acquired Companies.
10. No Brokers. Except the fee that is to be paid to Xxxxxxxx
Xxxxx Xxxxxx & Xxxxx, none of Drever, AOF, AOFII or any
Shareholder has entered into any Contract with any Person which may
result in the obligation of any Acquired Company, WDOP or Xxxxxx to pay any
finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated
hereby. Except for the fees to be paid to Xxxxxxxx Xxxxx Xxxxxx &
Xxxxx and Xxxxxxx Xxxxx & Co. Incorporated, to the Knowledge of
the Shareholders there are no claims for payment of any finder's
fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
11. Insurance. The insurance policies listed and described on
Schedule 3.11 hereto are currently in force, and all such
policies or their equivalent will be maintained in force until the Closing
Date.
12. Accounts Receivable. All accounts receivable of each
Acquired Company that are reflected in the Financial Statements
(collectively, the "Accounts Receivable") represent or will
represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business. Unless
paid prior to the Closing Date, the Accounts Receivable are or will be
as of the Closing Date current and collectible net of the
respective reserves shown in the Financial Statements or on the
accounting records of such Acquired Company as of the Closing
Date (which reserves are adequate and calculated consistent with past
practice). Subject to such reserves, each of the Accounts
Receivable either has been or will be collected in full, without any
set-off, within 90 days after the day on which it first becomes due and
payable. There is no contest, claim or right of set-off, other
than returns in the ordinary course of business, under any
contract with any obligor of an Accounts Receivable relating to the amount
or validity of such Accounts Receivable.
13. Employee Benefits.
(a) As used in this Section 3.13, the following terms
have the meanings set forth below:
"Company Other Benefit Obligation" means an Other
Benefit Obligation owed, adopted or followed by an
Acquired Company or an ERISA Affiliate.
"Company Plan" means all Plans of which an
Acquired Company or an ERISA Affiliate is or was a Plan Sponsor,
or to which an Acquired Company or an ERISA Affiliate
otherwise contributes or has contributed, or in which an
Acquired Company or an ERISA Affiliate otherwise
participates or has participated. All references to Plans are
to Company Plans unless the context requires otherwise.
"Company VEBA" means a VEBA whose members include
employees of any Acquired Company or any ERISA
Affiliate.
"ERISA Affiliate" means, with respect to an Acquired
Company, any other Person that would be treated as a
single employer under Section 414 of the Code.
"Multi-Employer Plan" has the meaning given in
Section 3(37)(A) of ERISA.
"Other Benefit Obligations" means all obligations,
arrangements or customary practices, whether or not
legally enforceable, to provide benefits, other than
salary, as compensation for services rendered, to present
or former directors, employees or agents, other than
obligations, arrangements and practices that are Plans.
Other Benefit Obligations include consulting agreements
under which the compensation paid does not depend upon
the amount of service rendered, sabbatical policies,
severance payment policies and fringe benefits within the
meaning of Section 132 of the Code.
"PBGC" means the Pension Benefit Guaranty
Corporation or any successor thereto.
"Pension Plan" has the meaning given in Section
3(2)(A) of ERISA.
"Plan" has the meaning given in Section 3(3) of
ERISA.
"Plan Sponsor" has the meaning given in Section
3(16)(B) of ERISA.
"Qualified Plan" means any Plan that meets or
purports to meet the requirements of Section 401(a) of
the Code.
"Title IV Plans" means all Pension Plans that are
subject to Title IV of ERISA, 29 U.S.C. Section 1301 et
seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary
association under Section 501(c)(9) of the Code.
"Welfare Plan" has the meaning given in Section 3(1)
of ERISA.
(b) Schedule 3.13 hereto contains a complete and
accurate list of all Company Plans, Company Other Benefit
Obligations and Company VEBAs, and identifies as such all
Company Plans that are (A) defined benefit Pension Plans,
(B) Qualified Plans, (C) Title IV Plans or (D) Multi-Employer
Plans.
(i) Schedule 3.13 hereto contains a complete and
accurate list of (A) all ERISA Affiliates and (B) all
Plans of which any such ERISA Affiliate is or was a Plan
Sponsor, in which any such ERISA Affiliate participates
or has participated, or to which any such ERISA Affiliate
contributes or has contributed.
(ii) Schedule 3.13 hereto sets forth, for each
Multi-Employer Plan, as of its last valuation date, the
amount of potential withdrawal liability of the Acquired
Companies and the other ERISA Affiliates, calculated
according to information made available pursuant to
Section 4221(e) of ERISA.
(iii) Schedule 3.13 hereto sets forth a
calculation of the liability of the Acquired Companies for
post-retirement benefits other than pensions, made in accordance
with Financial Accounting Statement 106 of the
Financial Accounting Standards Board, regardless of
whether any Acquired Company is required by such
Statement to disclose such information.
(iv) Schedule 3.13 hereto sets forth the financial
cost of all obligations owed under any Company Plan or
Company Other Benefit Obligation that is not subject to
the disclosure and reporting requirements of ERISA.
(c) The Shareholders have delivered or caused to be
delivered to WDOP, or will deliver, or will cause to be
delivered, to WDOP within ten days of the date of this
Agreement:
(i) all documents that set forth the terms of each
Company Plan, Company Other Benefit Obligation or Company
VEBA and of any related trust, including (A) all plan
descriptions and summary plan descriptions of Company
Plans for which the Shareholders, the Acquired Companies
are required to prepare, file and distribute plan
descriptions and summary plan descriptions, and (B) all
summaries and descriptions furnished to participants and
beneficiaries regarding Company Plans, Company Other
Benefit Obligations and Company VEBAs for which a plan
description or summary plan description is not required;
(ii) all personnel, payroll and employment manuals
and policies;
(iii) all collective bargaining agreements
pursuant to which contributions have been made or
obligations incurred (including both pension and welfare
benefits) by the Acquired Companies and the ERISA
Affiliates, and all collective bargaining agreements
pursuant to which contributions are being made or
obligations are owed by such entities;
(iv) a written description of any Company Plan or
Company Other Benefit Obligation that is not otherwise in
writing;
(v) all registration statements filed with respect
to any Company Plan;
(vi) all insurance policies purchased by or to
provide benefits under any Company Plan;
(vii) all contracts with third party
administrators, actuaries, investment managers, consultants and
other independent contractors that relate to any Company
Plan, Company Other Benefit Obligation or Company VEBA;
(viii) all reports submitted within the four
years preceding the date of this Agreement by third party
administrators, actuaries, investment managers,
consultants or other independent contractors with respect to
any Company Plan, Company Other Benefit Obligation or
Company VEBA;
(ix) all notifications to employees of their rights
under Section 601 of ERISA et seq. and Section 4980B of
the Code;
(x) the Form 5500 filed in each of the most recent
three plan years with respect to each Company Plan,
including all schedules thereto and the opinions of
independent accountants;
(xi) all notices that were given by any Acquired
Company, any ERISA Affiliate or any Company Plan to the
IRS, the PBGC or any participant or beneficiary, pursuant
to statute, within the four years preceding the date of
this Agreement, including notices that are expressly
mentioned elsewhere in this Section 3.13;
(xii) all notices that were given by the IRS,
the PBGC or the Department of Labor to any Acquired
Company, any ERISA Affiliate or any Company Plan within
the four years preceding the date of this Agreement;
(xiii) with respect to Qualified Plans and VEBAs,
the most recent determination letter for each Plan of the
Acquired Companies that is a Qualified Plan; and
(xiv) with respect to Title IV Plans, the Form
PBGC-1 filed for each of the three most recent plan
years.
(d) Except as set forth on Schedule 3.13 hereto:
(i) The Acquired Companies have performed all of
their respective obligations under all Company Plans,
Company Other Benefit Obligations and Company VEBAs. The
Acquired Companies have made appropriate entries in their
financial records and statements for all obligations and
liabilities under such Plans, VEBAs and Obligations that
have accrued but are not due.
(ii) To the Knowledge of the Shareholders, no
statement, either written or oral, has been made by any
Acquired Company or any Partnership to any Person with
regard to any Plan or Other Benefit Obligation that was
not in accordance with the Plan or Other Benefit
Obligation and that could have an adverse economic consequence
to any Acquired Company, any Partnership or to WDOP.
(iii) The Acquired Companies, with respect to
all Company Plans, Company Other Benefits Obligations and
Company VEBAs, are, and each Company Plan, Company Other
Benefit Obligation and Company VEBA is, in full
compliance with ERISA, the IRC and other applicable laws
including the provisions of such laws expressly mentioned
in this Section 3.13, and with any applicable collective
bargaining agreement.
Except for matters disclosed in an
audited annual financial statement for a Company
Plan, no transaction prohibited by Section 406 of
ERISA and no "prohibited transaction" under Section
4975(c) of the Code have occurred with respect to
any Company Plan.
No Shareholder or Acquired Company has
any liability to the IRS with respect to any Plan,
including any liability imposed by Chapter 43 of
the Code.
No Shareholder or Acquired Company has
any liability to the PBGC with respect to any Plan
or has any liability under Section 502 or
Section 4071 of ERISA.
To the Knowledge of the Shareholders, all
filings required by ERISA and the Code as to each
Plan have been timely filed, and all notices and
disclosures to participants required by either
ERISA or the Code have been timely provided.
All contributions and payments made or
accrued with respect to all Company Plans, Company
Other Benefit Obligations and Company VEBAs are
deductible under Section 162 or Section 404 of the
Code. No amount, or any asset of any Company Plan
or Company VEBA, is subject to tax as unrelated
business taxable income.
(iv) Each Company Plan can be terminated within
thirty (30) days, and except with respect to any
Qualified Plan and except for contributions that may be
necessary for welfare benefit claims that are incurred
prior to plan termination, each Company Plan can be
terminated without payment of any additional contribution
or amount and without the vesting or acceleration of any
benefits promised by such Plan.
(v) Since October 1, 1996, there has been no
establishment or amendment of any Company Plan, Company
VEBA or Company Other Benefit Obligation.
(vi) No event has occurred or circumstance exists
that could result in a material increase in premium costs
of Company Plans and Company Other Benefit Obligations
that are insured, or a material increase in benefit costs
of such Plans and Obligations that are self-insured.
(vii) Other than claims for benefits submitted
by participants or beneficiaries, no claim against, or
legal proceeding involving, any Company Plan, Company
Other Benefit Obligation or Company VEBA is pending or,
to any Shareholder's Knowledge, is Threatened.
(viii) Except for the Drever Partners, Inc.
401(k) Plan, no Company Plan is a stock bonus, pension or
profit-sharing plan within the meaning of Section 401(a)
of the Code.
(ix) Each Qualified Plan of each Acquired Company is
qualified in form and operation under Section 401(a) of
the Code; each trust for each such Plan is exempt from
federal income tax under Section 501(a) of the Code.
Each Company VEBA is exempt from federal income tax. No
event has occurred or circumstance exists that will or
could give rise to disqualification or loss of tax-exempt
status of any such Plan or trust.
(x) Neither Drever nor any ERISA Affiliate has ever
maintained a "defined benefit plan" within the meaning of
Section 3(35) of ERISA.
(xi) No Acquired Company or ERISA Affiliate has ever
established, maintained or contributed to or otherwise
participated in, or had an obligation to maintain,
contribute to or otherwise participate in, any
Multi-Employer Plan.
(xii) No Acquired Company or ERISA Affiliate has
withdrawn from any Multi-Employer Plan with respect to
which there is any outstanding liability as of the date
of this Agreement. No event has occurred or circumstance
exists that presents a risk of the occurrence of any
withdrawal from, or the participation, termination,
reorganization or insolvency of, any Multi-Employer Plan
that could result in any liability of any Acquired
Company, Xxxxxx or WDOP to a Multi-Employer Plan.
(xiii) No Acquired Company or ERISA Affiliate has
received notice from any Multi-Employer Plan that it is
in reorganization or is insolvent, that increased
contributions may be required to avoid a reduction in
plan benefits or the imposition of any excise tax, or
that such Plan intends to terminate or has terminated.
(xiv) No Multi-Employer Plan to which any
Acquired Company or ERISA Affiliate contributes or has
contributed is a party to any pending merger or asset or
liability transfer or is subject to any proceeding
brought by the PBGC.
(xv) Except to the extent required under Section 601
of ERISA et seq. of ERISA and Section 4980B of the Code,
no Acquired Company provides health or welfare benefits
for any retired or former employee or is obligated to
provide health or welfare benefits to any active employee
following such employee's retirement or other termination
of service.
(xvi) Each Acquired Company has the right to
modify and terminate benefits to retirees (other than
pensions) with respect to both retired and active
employees.
(xvii) To the Knowledge of the Shareholders, the
Shareholders and all Acquired Companies have complied
with the provisions of Section 601 of ERISA et seq. of
ERISA and Section 4980B of the Code.
(xviii) No payment that is owed or may become due
to any director, officer, partner, employee or agent of
any Acquired Company will be non-deductible to the
Acquired Companies or subject to tax under Section 280G
or Section 4999 of the Code; nor will any Acquired
Company be required to "gross up" or otherwise compensate
any such Person because of the imposition of any excise
tax on a payment to such Person.
(xix) The consummation of the Contemplated
Transactions will not result in the payment, vesting or
acceleration of any benefit.
14. Contracts. Except as set forth on Schedule 3.14 hereto, no
Shareholder (and no Related Person of any Shareholder) has or may
acquire any rights under, and no Shareholder has or may become
subject to any obligation or liability under, any Contract that
relates to the business of, or any of the assets owned or used by,
any Acquired Company or Partnership.
15. Employees.
(a) Schedule 3.15 hereto contains a complete and
accurate list of the following information for each employee
of the Acquired Companies, including each employee on leave of
absence or layoff status: employer; name; job title; current
compensation paid or payable and any change in compensation
since December 31, 1996.
(b) Schedule 3.15 hereto contains a complete and
accurate list of the following information for each retired
employee of the Acquired Companies, or their dependents,
receiving benefits or scheduled to receive benefits in the
future: name, pension benefit, pension option election,
retiree medical insurance coverage, retiree life insurance
coverage and other benefits.
16. Labor Relations; Compliance. Since January 1, 1994, no
Acquired Company has been or is a party to any collective
bargaining or other labor Contract.
17. Relationships with Related Persons. Except as set forth on
Schedule 3.17 hereto, no Shareholder or any Related Person of any
Shareholder or any Acquired Company has, or since December 31, 1996
has had, any interest in any property (whether real, personal or
mixed and whether tangible or intangible), used in or pertaining to
the Acquired Companies' or the Partnerships' businesses. Except as
set forth in on Schedule 3.17 hereto, no Shareholder or any Related
Person of any Shareholder, any Acquired Company or any Partnership
is a party to any Contract with, or has any claim or right against,
any Acquired Company or Partnership.
18. Investment Intent. Each Shareholder is acquiring the Units
for its own account and for investment only and not with a view
toward, or for sale in connection with, any distribution thereof,
nor with any present intention of distributing or selling the Units
within the meaning of the Securities Act.
ARTICLE 4
Representations and Warranties of
WDOP and Xxxxxx
WDOP and Xxxxxx hereby represent and warrant to the
Shareholders as follows:
1. Existence; Good Standing; Authority Compliance with Law.
Xxxxxx is a corporation duly organized, incorporated, validly
existing and in good standing under the laws of the State of
Maryland. Xxxxxx is duly licensed or qualified to do business and
is in good standing under the laws of each state of the United
States in which the character of the properties owned or leased by
it therein or in which the transaction of its business makes such
qualification necessary, except where the failure to be so
qualified would not have a material adverse effect on the business,
results of operations or financial condition of Xxxxxx and its
Subsidiaries taken as a whole (a "Xxxxxx Material Adverse Effect").
Xxxxxx has all requisite power and authority to own, operate, lease
and encumber its properties and carry on its business as now
conducted. WDOP is a partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware, has
the requisite partnership power and authority to own its properties
and to carry on its business as it is now being conducted and as
contemplated by this Agreement and is duly qualified to do business
and is in good standing in each jurisdiction in which the ownership
of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be
so qualified or to be in good standing would not have a Xxxxxx
Material Adverse Effect.
Neither Xxxxxx nor any of its Subsidiaries is in violation of
any order of any court, governmental body or arbitration board or
tribunal, or any law, ordinance, governmental rule or regulation to
which Xxxxxx or any of its Subsidiaries or any of their respective
properties or assets is subject, where such violation would have a
Xxxxxx Material Adverse Effect. Xxxxxx and its Subsidiaries have
obtained all licenses, permits and other authorizations and have
taken all actions required by applicable law or governmental
regulations in connection with their business as now conducted,
where the failure to obtain any such item or to take any such
action would have a Xxxxxx Material Adverse Effect. Copies of the
Organizational Documents of Xxxxxx and WDOP have been delivered or
made available to Drever and its counsel, are complete and correct
and are in full force and effect as of the date hereof.
2. Authorization, Validity and Effect of Agreements. Xxxxxx and
WDOP have the requisite corporate and partnership power and
authority, respectively, to execute and deliver this Agreement and
to consummate the Contemplated Transactions. Subject to the
approval of the issuance of the shares of Common Stock to be issued
by Xxxxxx upon exchange of the Common Units and upon the exercise
of the Warrants by the Xxxxxx Stockholders, the consummation by
each of Xxxxxx and WDOP of this Agreement and the Contemplated
Transactions have been duly authorized by all requisite corporate
and partnership action on the part of Xxxxxx and WDOP,
respectively. Assuming the due and valid authorization, execution and
delivery of this Agreement by the Shareholders, the Equity
Participants and the Assignees, this Agreement constitutes the
valid and legally binding obligation of each of Xxxxxx and WDOP,
enforceable against them in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
3. Capitalization. The authorized capital stock of Xxxxxx
consists of 50,000,000 shares of Common Stock and 10,000,000 shares
of preferred stock, par value $.01 per share (the "Preferred
Stock"). As of March 31, 1997, there were 17,388,208 shares of
Common Stock issued and outstanding and 5,768,200 shares of
Preferred Stock, constituting the series designated as (a) the
9.16% Series A Cumulative Redeemable Preferred Stock, (b) the 9.16%
Series B Cumulative Redeemable Preferred Stock, and (c) the 9.20%
Senior Preferred Stock issued and outstanding. In addition, there
are 810,128 limited partnership interests issued and outstanding in
Xxxxxx Residential Operating L.P., a Subsidiary of Xxxxxx ("Xxxxxx
Operating"). Except as described above, Xxxxxx has no outstanding
bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the Xxxxxx
Stockholders on any matter. All such issued and outstanding shares
of Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. There are not at the
date of this Agreement any existing options, warrants, calls,
subscriptions, convertible securities or other rights, agreements
or commitments which obligate Xxxxxx or any of its Subsidiaries to
issue, transfer or sell any shares of stock or other equity
interest of Xxxxxx or any of its Subsidiaries, other than the
issuance, by Xxxxxx up to 1,644,500 shares of Common Stock upon the
exercise of stock options issued to employees and directors. There
are no agreements or understandings to which Xxxxxx is a party with
respect to the voting of any shares of Common Stock or which
restrict the transfer of any such shares, except in order to
protect its REIT status.
4. Partnership Interests. Xxxxxx is the sole general partner and
WDN Properties, Inc., a wholly-owned subsidiary of Xxxxxx, is the
sole limited partner, of WDOP. All of the interests issued to such
entities by WDOP have been duly authorized and are validly issued,
fully paid and nonassessable. Other than this Agreement and the
Exchange Agreement, there are no outstanding or authorized options,
rights, warrants, calls, convertible securities, rights to
subscribe, conversion rights or other agreements or commitments to
which WDOP is a party or which are binding on WDOP providing for
the issuance or transfer by WDOP of additional interests.
5. Subsidiaries. Except as in the next sentence provided, Xxxxxx
owns directly or indirectly each of the outstanding shares of
capital stock or all of the partnership or other equity interests
of each of its Subsidiaries free and clear of all liens, pledges,
security interests, claims or other encumbrances other than liens
imposed by local law which are not material. There are currently
outstanding 810,128 limited partnership interests in Xxxxxx
Operating owned by persons other than Xxxxxx and its
Subsidiaries. Each of the outstanding shares of capital stock of or other
equity interest in each of the Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable.
6. Other Interests. Except for interests in its Subsidiaries,
neither Xxxxxx nor any of Xxxxxx Subsidiary owns directly or
indirectly any interest or investment (whether equity or debt) in
any corporation, partnership, joint venture, business, trust or
entity (other than investments in short-term investment
securities).
7. No Violation. Neither the execution and delivery by Xxxxxx
and WDOP of this Agreement nor the consummation by Xxxxxx and WDOP
of the transactions contemplated hereby in accordance with the
terms hereof, will: (a) conflict with or result in a breach of any
provisions of the Organizational Documents of Xxxxxx or WDOP;
(b) result in a breach or violation of, a default under, or the
triggering of any payment or other material obligations pursuant
to, or accelerate vesting under, any of Xxxxxx'x stock option
plans, or any grant or award made under any of the foregoing;
(c) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under,
or result in the termination or in a right of termination or
cancellation of, or accelerate the performance required by, or
result in the creation of any Encumbrance upon any of the
properties of Xxxxxx or its Subsidiaries under, or result in being
declared void, voidable or without further binding effect, any of
the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust or any license, franchise, permit, lease,
contract, agreement or other instrument, commitment or obligation
to which Xxxxxx or any of its Subsidiaries is a party, or by which
Xxxxxx or any of its Subsidiaries or any of their properties is
bound or affected, except for any of the foregoing matters which,
individually or in the aggregate, would not have a Xxxxxx Material
Adverse Effect; or (d) other than the Regulatory Filings require
any consent, approval or authorization of, or declaration, filing
or registration with, any domestic governmental or regulatory
authority, except where the failure to obtain such consent,
approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority would not have
a Xxxxxx Material Adverse Effect.
8. SEC Documents. Xxxxxx has delivered or made available to the
Shareholders its Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 and its proxy statement relating to the
annual meeting of the Xxxxxx Stockholders to be held on June 5,
1997, each in the form (including exhibits and any amendments
thereto) filed with the SEC (collectively, the "1996 Fiscal Year
Reports"). The 1996 Fiscal Year Reports, together with all other
registration statements, prospectuses, Forms 8-K, 10-Q and 10-K,
information statements, schedules and proxy statements filed by
Xxxxxx with the SEC since January 1, 1994, each of which is listed
on Schedule 4.8 hereto (collectively, the "Xxxxxx Reports"), were
filed with the SEC in a timely manner and constitute all forms,
reports and documents required to be filed by Xxxxxx under the
Securities Laws.
As of their respective dates, the Xxxxxx Reports (a) complied
as to form in all material respects with the applicable
requirements of the Securities Laws and (b) 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
made therein, in the light of the circumstances under which they
were made, not misleading. Each of the consolidated balance sheets
of Xxxxxx included in or incorporated by reference into the Xxxxxx
Reports (including the related notes and schedules) fairly presents
the consolidated financial position of Xxxxxx and its Subsidiaries
as of its date and each of the consolidated statements of income,
retained earnings and cash flows of Xxxxxx included in or
incorporated by reference into the Xxxxxx Reports (including any related
notes and schedules) fairly presents the consolidated results of
operations, retained earnings or cash flows, as the case may be, of
Xxxxxx and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end
audit adjustments which would not be material in amount or effect),
in each case in accordance with GAAP, consistently applied during
the periods involved, except as may be noted therein and except, in
the case of the unaudited statements, as permitted by the
Securities Laws.
Except as and to the extent set forth on the consolidated
balance sheet of Xxxxxx and its Subsidiaries at December 31, 1996,
including all notes thereto, or as set forth in the Xxxxxx Reports,
neither Xxxxxx nor any of its Subsidiaries has any material
liabilities or obligations of any nature, whether absolute,
accrued, matured, contingent or otherwise, including, without
limitation, any contingent liabilities or losses for unasserted
claims which are probable of assertion, except for those (i)
reflected on an interim balance sheet filed with the SEC subsequent
to such date, (ii) otherwise disclosed on Schedule 4.8 hereto,
(iii) incurred in the ordinary course of business, and (iv)
liabilities related to the acquisition by Xxxxxx of six properties
on April 21, 1997.
9. Litigation. Except as disclosed on Schedule 4.9 hereto, there
are (a) no continuing orders, injunctions or decrees of any court,
arbitrator or governmental authority to which Xxxxxx or any of its
Subsidiaries is a party or by which any of its properties or assets
are bound, and (b) no actions, suits or proceedings pending against
Xxxxxx or any of its Subsidiaries or, to the Knowledge of Xxxxxx,
threatened against Xxxxxx or any of its Subsidiaries, at law or in
equity, or before or by any federal or state commission, board,
bureau, agency or instrumentality.
10. Absence of Certain Changes. Except and as to the extent
disclosed in the Xxxxxx Reports filed with the SEC as of the date
hereof, (a) Xxxxxx and its Subsidiaries have conducted their
businesses only in the ordinary course of such business (which, for
purposes of this Section 4.10 only, shall include all acquisitions
of real estate properties and financing arrangements made in
connection therewith); (b) to the Knowledge of Xxxxxx, there has
not been any Xxxxxx Material Adverse Effect; (c) as of the date
hereof, there has not been any declaration, setting aside or
payment of any dividend or other distribution with respect to the
Common Stock; (d) Xxxxxx and its Subsidiaries have not incurred any
liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise or suffered any events or occurrences that
would be required by GAAP to be reflected on a consolidated balance
sheet of Xxxxxx or that, individually or in the aggregate, would
reasonably be likely to have a Xxxxxx Material Adverse Effect; and
(e) there has not been any material change in Xxxxxx'x accounting
principles, practices or methods.
11. Taxes. Except as set forth on Schedule 4.11 hereto,
Xxxxxx and each of the Subsidiaries (a) has timely filed all
federal, state and foreign tax returns including, without
limitation, information returns and reports required to be filed by any
of them for tax periods ended prior to the date of this Agreement
or requests for extensions have been timely filed and any such
request has been granted and has not expired and all such returns
are accurate and complete in all material respects, (b) has paid or
accrued all taxes shown to be due and payable on such returns or
which have become due and payable pursuant to any assessment,
deficiency notice, 30-day letter or other notice received by it,
and (c) has properly accrued all taxes for such periods subsequent
to the periods covered by such returns. Neither Xxxxxx nor any of
the Subsidiaries has received any notice that the federal, state
and local income and franchise tax returns of Xxxxxx or any such
Subsidiary have been or will be examined by any taxing authority.
Neither Xxxxxx nor any of the Subsidiaries has executed or filed
with the IRS or any other taxing authority any agreement now in
effect extending the period for assessment or collection of any
income or other taxes.
Except as disclosed on Schedule 4.11 hereto, neither Xxxxxx
nor any of its Subsidiaries is a party to any pending action or
proceeding by any governmental authority for assessment or
collection of taxes, and no claim for assessment or collection of
taxes has been asserted against it. Xxxxxx (i) has qualified to be
taxed as a real estate investment trust ("REIT") pursuant to
Sections 856 through 859 of the Code for its taxable years ended
December 31, 1994 through 1996, inclusive (ii) has operated, and
intends to continue to operate, in such a manner as to qualify to
be taxed as a REIT pursuant to Sections 856 through 859 of the Code
for its taxable year ending on December 31, 1997, and (iii) has not
taken or omitted to take any action which could result in, a
challenge to its status as a REIT. For purposes of this
Section 4.11, "taxes" includes any interest, penalty or
additional amount payable with respect to any tax.
12. Books and Records.
(a) The books of account and other financial records of
Xxxxxx and its Subsidiaries, all reports (including, without
limitation, soil tests and construction inspection reports),
Tenant Leases and other documents related to the construction,
ownership, management and operation of their properties and
assets that are in the possession and control of Xxxxxx, all
of which have been made available to Drever are, to the
Knowledge of Xxxxxx, in all material respects true and
correct.
(b) The records of Xxxxxx contain in all material
respects accurate records of all meetings and accurately
reflect in all material respects all other corporate action of
the Xxxxxx Stockholders and directors and any committees of
the Board of Directors of Xxxxxx with respect to Xxxxxx.
13. Properties. Xxxxxx and its Subsidiaries own fee simple
title or leasehold estates to each of the real properties reflected
on the most recent balance sheet of Xxxxxx included in the Xxxxxx
Reports (the "Xxxxxx Properties"), which are all of the real estate
properties owned by them, and no Person has any contract, option,
right of first refusal or other agreement to purchase any Xxxxxx
Property or any part thereof. Each of the Xxxxxx Properties is
owned by Xxxxxx or its Subsidiaries free and clear of Encumbrances,
or any claim in favor of any Person that could become an
Encumbrance, and Property Restrictions, except for (a) Encumbrances and
Property Restrictions that are disclosed on Schedule 4.13 hereto,
(b) Encumbrances and Property Restrictions that would not be
reasonably likely, individually or in the aggregate, to have a
Xxxxxx Material Adverse Effect, (c) Property Restrictions imposed
or promulgated by law or any Agency, including zoning regulations,
(d) Encumbrances and Property Restrictions disclosed on existing
title reports, title policies or surveys, (e) to the knowledge of
Xxxxxx, mechanics', carriers', workmen's, repairmen's liens and
other Encumbrances, Property Restrictions and other limitations of
any kind, if any, which have heretofore been bonded or which
individually or in the aggregate, do not exceed $100,000, do not
materially detract from the value of or materially interfere with
the present use of any of the Xxxxxx Properties subject thereto or
affected thereby and do not otherwise materially impair business
operations conducted by Xxxxxx and its Subsidiaries, and (f) taxes
that are not yet delinquent (such Encumbrances, Property
Restrictions, liens, limitations and taxes set forth in clauses (a)
through (e) and the clause (f), collectively, the "Xxxxxx Permitted
Liens").
Valid policies of title insurance have been issued insuring
Xxxxxx'x or any of its Subsidiaries' fee simple title to, or
leasehold estate in the Xxxxxx Properties, subject only to the
matters disclosed above and as disclosed on Schedule 4.12 hereto,
and such policies are, at the date hereof, in full force and effect
and no material claim has been made against any such policy.
Except as disclosed on Schedule 4.13 hereto or as otherwise set
forth in Xxxxxx'x 1997 capital expenditure budget, (i) there is no
certificate, permit or license from any governmental authority
having jurisdiction over any of the Xxxxxx Properties and there is
no agreement, easement or other right which is necessary to permit
the lawful use and operation of the buildings and improvements on
any of the Xxxxxx Properties or which is necessary to permit the
lawful use and operation of all driveways, roads and other means of
egress and ingress to and from any of the Xxxxxx Properties that
has not been obtained and is not in full force and effect, or of
any pending threat of modification or cancellation of any of same
where the failure to obtain the same would not be reasonably likely
to have a Xxxxxx Material Adverse Effect; (ii) neither Xxxxxx nor
any of its Subsidiaries has received written notice of any
violation of any federal, state or municipal law, ordinance, order,
regulation or requirement affecting any portion of any of the
Xxxxxx Properties issued by any governmental authority; (iii) there
are no structural defects relating to the Xxxxxx Properties and no
Xxxxxx Properties whose building systems are not in working order
in any respect, except for such defects that, individually or in
the aggregate, would not be reasonably likely to have a Xxxxxx
Material Adverse Effect; and (iv) there is (A) no physical damage
to any Xxxxxx Property in excess of $250,000 for which there is no
insurance in effect covering the cost of the restoration, (B) no
current renovation to any Xxxxxx Property the cost of which exceeds
$250,000, and (C) no current restoration of any Xxxxxx Property the
cost of which exceeds $250,000.
Except as disclosed on Schedule 4.13 hereto, Xxxxxx or its
Subsidiaries have received no notice to the effect that and there
are no (x) condemnation or rezoning proceedings that are pending
or, to the Knowledge of Xxxxxx, threatened with respect to any of
the Xxxxxx Properties that would be reasonably likely to have a
Xxxxxx Material Adverse Effect or (y) any zoning, building or
similar laws, codes, ordinances, orders or regulations that are or
will be violated by the continued maintenance, operation or use of
any buildings or other improvements on any of the Xxxxxx Properties
or by the continued maintenance, operation or use of the parking
areas where such violation would be reasonably likely to have a
Xxxxxx Material Adverse Effect. To the Knowledge of Xxxxxx, all
work to be performed, payments to be made and actions to be taken
by Xxxxxx or its Subsidiaries prior to the date hereof pursuant to
any agreement entered into with an Agency in connection with a site
approval, zoning reclassification or other similar action relating
to the Xxxxxx Properties (e.g., Local Improvement District, Road
Improvement District, Environmental Mitigation) has been performed,
paid or taken, as the case may be, and Xxxxxx is not aware of any
planned or proposed work, payments or actions that may be required
after the date hereof pursuant to such agreements.
14. Compliance with Applicable Regulations.
(a) Except as disclosed on Schedule 4.14 hereto, all
Xxxxxx Properties and the operation thereof (including the
handling of tenant security and other deposits) currently are
in substantial compliance with the requirements of all
Agencies having jurisdiction over Xxxxxx, its Subsidiaries and
the Xxxxxx Properties, except where the failure to so comply
would not be reasonably likely to have a Xxxxxx Material
Adverse Effect; and to Xxxxxx'x Knowledge, there are no
material commitments or agreements with any of the Agencies
affecting the Xxxxxx Properties which have not been fully
disclosed to the Shareholders in writing.
(b) Except as disclosed on Schedule 4.14 hereto, neither
Xxxxxx nor any of its Subsidiaries has received any written
notice of uncured violations at any of the Xxxxxx Properties
of zoning, building, fire, rent control, tenant security or
other deposits or any other applicable statute, ordinance or
regulation, relating to any of the Xxxxxx Properties, its
construction, or any occupancy thereof except for violations
that, individually or in the aggregate, would not be reasonably
likely to have a Xxxxxx Material Adverse Effect, nor are
there presently pending against Xxxxxx, any of its
Subsidiaries or against any of the Xxxxxx Properties any judgments
relating to any of the above matters, any judicial proceedings
or administrative actions or any state of facts which, to
Xxxxxx'x Knowledge, with notice or lapse of time, could
reasonably be expected to give rise to any such proceedings or
action, in either case that could be reasonably likely to have
a Xxxxxx Material Adverse Effect.
(c) Except as disclosed on Schedule 4.14 hereto and
except as would not be reasonably likely to have a Xxxxxx
Material Adverse Effect, neither Xxxxxx nor any of its
Subsidiaries has received any written notice that any of the
Xxxxxx Properties is currently subject to (i) any existing,
pending or, to the Knowledge of Xxxxxx, threatened
investigation or inquiry by any governmental authority or (ii) any
remedial obligations, under any Applicable Environmental Laws;
and Xxxxxx nor any of its Subsidiaries has obtained any
permits, licenses or similar authorizations to occupy,
renovate, operate or use any portion of any of the Xxxxxx
Properties by reason of any Applicable Environmental Laws.
(d) Except as disclosed on Schedule 4.14 hereto and
except as would not be reasonably likely to have a Xxxxxx
Material Adverse Effect, to the Knowledge of Xxxxxx, no
Hazardous Materials are located on or about any of the Xxxxxx
Properties. To the Knowledge of Xxxxxx, and except as would
not be reasonably likely to have a Xxxxxx Material Adverse
Effect, no Xxxxxx Property contains any underground tanks for
the storage or disposal of Hazardous Materials. Further, to
the Knowledge of Xxxxxx, and except as would not be reasonably
likely to have a Xxxxxx Material Adverse Effect, (i) no Xxxxxx
Property previously has been used for the storage, manufacture
or disposal of Hazardous Materials, (ii) no written complaint,
Order, citation or notice with regard to air emissions, water
discharges, noise emissions and Hazardous Materials, if any,
or any other Applicable Environmental Laws from any Person or
Agency has been received by Xxxxxx, and (C) to Xxxxxx'x
Knowledge, Xxxxxx and its Subsidiaries in material compliance
with all Applicable Environmental Laws.
(e) Neither Xxxxxx nor any of the Subsidiaries has
received any written notices that any material permits,
licenses or consents not already obtained are required by the
Agencies in connection with the use and occupancy of any of
the Xxxxxx Properties or any material improvements thereto.
15. No Brokers. Except the fee that is to be paid to Xxxxxxx
Xxxxx & Co. Incorporated by Xxxxxx has not entered into any
contract, arrangement or understanding with any Person which may
result in the obligation of Xxxxxx, WDOP or any Shareholder to pay
any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this
Agreement or the consummation of the Contemplated Transactions.
Except for the fees payable to Xxxxxxxx Xxxxx Xxxxxx & Xxxxx and
Xxxxxxx Xxxxx & Co. Incorporated, to the Knowledge of Xxxxxx, there
is no other claim for payment of any finder's fees, brokerage or
agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
Contemplated Transactions.
16. Units. The issuance and delivery by WDOP of the Units
pursuant to the terms of this Agreement have been duly and
validly authorized by all necessary partnership action on the part of
WDOP. The Units to be issued pursuant to this Agreement, when issued in
accordance with the terms of this Agreement, will be validly
issued, fully paid and nonassessable.
17. Encumbrances on Properties. No action has been taken by
Xxxxxx or any of its Subsidiaries, nor has Xxxxxx or any of its
Subsidiaries failed to act, with respect to work performed or
delivery of material which would give rise to an Encumbrance, other
than a Xxxxxx Permitted Lien, on any of the Xxxxxx Properties or
any improvements thereto. As of the Closing, there will be no
unpaid assessments against any of the Xxxxxx Properties except for
property taxes assessed but not due and payable at the time of
Closing; and there will be no claim in favor of any person or
entity (including the present management) for any unpaid
commissions or fees for leasing of any of the Xxxxxx Properties arising
out of the acts of or through Xxxxxx or any of its Subsidiaries
otherwise than as payable in the ordinary course of business
consistent with past practice.
18. Insurance. The insurance policies listed and described
on Schedule 4.17 hereto are currently in force, and all such
policies or their equivalent will be maintained in force until
Closing. Neither Xxxxxx nor any of its Subsidiaries has received
any notice from any insurer of any of the Xxxxxx Properties or any
part thereof requesting any improvements, alterations, additions,
correction or other work in, on or about the improvements thereto,
whether related to any of the Xxxxxx Properties or to the operation
of any occupant thereof, which have not been cured or satisfied.
19. Non-foreign Status. Neither Xxxxxx nor WDOP is a
non-resident alien, foreign corporation, foreign partnership,
foreign trust or foreign estate (as those terms are defined in
Sections 1445 and 7701 of Code).
20. Information. None of the Proxy Statement or any other
document filed or to be filed by or on behalf of Xxxxxx with the
SEC or any other governmental entity or any other document required
to be prepared and distributed in connection with the Contemplated
Transactions will contain when filed, or shall contain, at the
respective times filed with the SEC or other Agency, and, in
addition, in the case of the Proxy Statement at the date it or
any amendment or supplement thereto is mailed to the Xxxxxx
Stockholders to solicit the vote of such stockholders on the
issuance of shares of Common Stock to be issued by Xxxxxx upon the exchange
of Units and upon the exercise of the Warrants, any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were
made, not misleading; provided that the foregoing shall not apply
to information supplied by the Shareholders in writing
specifically for inclusion or incorporation by reference in any such document.
The Proxy Statement shall comply as to form in all material
respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
ARTICLE 5
Covenants
1. Conduct of Business.
(a) Prior to the Closing Date, except as contemplated by
this Agreement, unless Xxxxxx or the Shareholders, as
appropriate, has consented in writing thereto, WDOP, on the one
hand, and the Shareholders, on the other hand:
(i) Shall use their reasonable efforts to preserve
intact, in all material respects, its business
organization and goodwill and the business organizations and
goodwill of the Acquired Companies;
(ii) Shall confer on a regular basis with one or
more representatives of the other to report operational
matters of materiality and, any proposals to engage in
material transactions; and
(iii) Shall promptly notify the other of any
material emergency or other material change in the
condition (financial or otherwise), business, properties,
assets, liabilities, prospects or the normal course of
their businesses or in the operation of their properties,
any material governmental complaints, investigations or
hearings (or communications indicating that the same may
be contemplated), or the breach in any material respect
of any representation, warranty, covenant or agreement
contained herein.
(b) Prior to the Closing Date, unless Xxxxxx has
consented (such consent not to be unreasonably withheld or
delayed) in writing thereto, the Shareholders agree to cause
each of Drever, AOF and AOFII to:
(i) Conduct its operations according to its usual,
regular and ordinary course in substantially the same
manner as heretofore conducted;
(ii) Not amend its articles of incorporation or
bylaws;
(iii) Not issue any additional shares of capital
stock;
(iv) Not declare, set aside or pay any distribution
or payment with respect to, or directly or indirectly
redeem, purchase or otherwise acquire, any shares of
capital stock or make any commitment for any such action,
except in the ordinary course of business;
(v) Not sell or otherwise dispose of any of its
assets which are material, individually or in the
aggregate;
(vi) Not make any loans, advances or capital
contributions to, or investments in, any other Person;
(vii) Not pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course
of business consistent with past practice or in
accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent
financial statements (or the notes thereto) of such
entity or incurred in the ordinary course of business
consistent with past practice;
(viii) Not enter into any commitment which may
result in total payments or liability by or to it in
excess of $25,000 in the case of any one commitment or in
excess of $100,000 for all commitments other than
commitments entered into in the ordinary course of
business;
(ix) By June 13, 1997, deliver to Xxxxxx the
unaudited balance sheet of each of Drever, AOF and AOFII
for the first fiscal quarter of 1997 and the related
statements of operations, shareholders' equity and cash
flow for such period and within forty-five (45) days
following the end of any subsequent fiscal quarter ending
prior to the Closing Date, deliver to Xxxxxx the
unaudited balance sheet of each of Drever, AOF and AOFII for
such quarter and the related statements of operations,
shareholders' equity and cash flow for such period;
(x) Deliver to Xxxxxx true, correct and complete
copies of all 1996 federal, state and local income or
franchise tax returns filed by each Acquired Company and
all material communications relating thereto at the time
they are filed but not later than September 15, 1997;
(xi) All contracts to which any Acquired Company is
a party; and
(xii) Shall terminate any contracts in existence
on the date hereof between Drever/XxXxxxxx, Inc. and
either of Apartment Opportunity Fund, L.P. and Apartment
Opportunity Fund II, L.P. and enter into agreements with
the same terms and conditions between Drever and
Apartment Opportunity Fund, L.P. and Apartment Opportunity
Fund II, L.P.
(c) Prior to the Closing Date, unless the Shareholders
have consented (such consent not to be unreasonably withheld
or delayed) in writing thereto, each of Xxxxxx and WDOP:
(i) Shall, and shall cause each of their respective
affiliates to, conduct their operations according to
their usual, regular and ordinary course in substantially
the same manner as heretofore conducted;
(ii) Shall not amend their respective articles of
incorporation, bylaws, partnership agreement or other
charter document;
(iii) Shall not (A) except pursuant to the
exercise of options, warrants, conversion rights and
other contractual rights (including Xxxxxx'x existing
dividend reinvestment plan and stock option plans)
existing on the date hereof, or as otherwise required by
this Agreement or the Contribution Agreement) issue any
shares of its capital stock, effect any stock split,
reverse stock split, stock dividend, recapitalization or
other similar transaction, (B) amend any employment
agreement with any of its present or future officers or
directors, or (C) adopt any new employee benefit plan
(including any stock option, stock benefit or stock
purchase plan);
(iv) Shall not (A) declare, set aside or pay any
dividend or make any other distribution or payment with
respect to any shares of its capital stock, except a
dividend not to exceed $.4825 per share of Common Stock,
$.5725 per share of Xxxxxx'x 9.16% Series A Cumulative
Redeemable Preferred Stock and 9.16% Series B Cumulative
Redeemable Preferred Stock and $.575 per share of
Xxxxxx'x 9.20% Senior Preferred Stock for the second and
third calendar quarters of 1997 and any other dividend or
distribution necessary for Xxxxxx to maintain its ability
to qualify to be taxed as a REIT under the Code, or
(B) except in connection with the use of shares of
capital stock to pay the exercise price or tax
withholding in connection with stock-based employee benefit plans
of Xxxxxx, directly or indirectly redeem, purchase or
otherwise acquire any shares of its capital stock or
capital stock of any of its affiliates, or make any
commitment for any such action;
(v) Shall not, and shall not permit any of their
respective affiliates to, sell or otherwise dispose of,
except in the ordinary course of business, any of their
assets which are material, individually or in the
aggregate;
(vi) Shall not, and shall not permit any of their
respective affiliates to, make any loans, advances or
capital contributions to, or investments in, any
unaffiliated third party other than in connection with the sale
of properties;
(vii) Shall not, and shall not permit any of
their respective affiliates to, pay, discharge or satisfy
any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction
in the ordinary course of business consistent with past
practice or in accordance with their terms, of
liabilities reflected or reserved against in, or contemplated
by, the most recent consolidated financial statements (or
the notes thereto) of Xxxxxx included in Xxxxxx'x Form
10-K for the fiscal year ended December 31, 1996 or
incurred in the ordinary course of business consistent
with past practice;
(viii) Shall not, and shall not permit any of
their respective affiliates to, enter into any
commitments which, individually or in the aggregate, may result
in total payments or liability by or to it in excess of
$1,000,000 other than commitments entered into in the
ordinary course of business; and
(ix) Shall not, and shall not permit any of their
respective affiliates to, enter into any commitment with
any officer, director or affiliate of Xxxxxx, except in
the ordinary course of business.
2. Approval of Stockholders. In connection with the
issuance of shares of Common Stock by Xxxxxx upon exchange of the
Common Units and the exercise of the Warrants, Xxxxxx, acting
through its Board of Directors, shall, in accordance with
applicable law, its articles of incorporation and bylaws and the rules and
regulations of the New York Stock Exchange, duly call, give notice
of, convene and hold a special meeting of the Xxxxxx Stockholders
as soon as practicable after the Proxy Statement is cleared by the
SEC, for the purpose of voting upon the approval of such share
issuances. Xxxxxx shall include in the Proxy Statement the
recommendation of its Board of Directors that the Xxxxxx
Stockholders vote in favor of the approval of such share issuances, unless
the Board of Directors of Xxxxxx determines in good faith that
any such action would violate such Board's fiduciary duties under
applicable law.
3. Filings; Other Action. Subject to the terms and
conditions herein provided, Xxxxxx and the Shareholders shall:
(a) use all their best efforts to cooperate with one another in
(i) determining which filings are required to be made prior to the
Closing Date with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Closing
Date from, governmental or regulatory authorities of the United
States, the several states, third party secured and unsecured
lenders and rating agencies in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby and (ii) timely making all such filings and
timely seeking all such consents, approvals, permits or
authorizations; (b) use their best efforts to obtain in writing any
consents required from third parties in form reasonably satisfactory to
Xxxxxx and the Shareholders necessary to effectuate the
Contemplated Transactions, and (c) use their best efforts to
take, or ause 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.
If, at any time after the Closing Date, any further action is
necessary or desirable to carry out the purpose of this
Agreement, the proper officers and directors of Walden, Drever, AOFII and
AOF shall take all such necessary action.
4. Inspection of Records. From the date hereof to the
Closing Date, each of Walden, Drever, AOFII and AOF shall allow all
designated officers, attorneys, accountants and other
representatives of the other access at all reasonable times to the records
and files, correspondence, audits and properties, as well as to all
information relating to commitments, contracts, titles and
financial position, or otherwise pertaining to the business and
affairs of Xxxxxx, WDOP, Drever, AOFII, AOF and their respective
affiliates.
5. Publicity. The initial press release relating to this
Agreement shall be a joint release and thereafter Walden, Drever,
AOFII and AOF shall, subject to their respective legal obligations
(including requirements of stock exchanges and other similar
regulatory bodies), consult with each other, and use reasonable
efforts to agree upon the text of any press release, before issuing
any such press release or otherwise making public statements with
respect to the transactions contemplated hereby and in making any
filings with any federal or state governmental or regulatory agency
or with any national securities exchange with respect thereto.
6. Proxy Statement. Xxxxxx shall file with the SEC as soon
as practicable a proxy statement (the "Proxy Statement") under the
Exchange Act, with respect to the meeting of the Xxxxxx
Stockholders in connection with the Contemplated Transactions and the
Exchange Offer. Xxxxxx will cause the Proxy Statement to comply as
to form in all material respects with the applicable provisions of
the Exchange Act and the rules and regulations promulgated
thereunder. Xxxxxx shall use its best efforts to make, prior to
the Closing Date, all necessary Regulatory Filings to carry out the
transactions contemplated by this Agreement and will pay all
expenses incident thereto. The Shareholders hereby agree to
cooperate with Xxxxxx in the preparation of the Proxy Statement and
to provide Xxxxxx with such information as Xxxxxx may reasonably
request.
7. Further Action. Each party hereto shall, subject to the
fulfillment at or before the Closing Date of each of the conditions
of performances set forth herein or the waiver thereof, perform
such further acts and execute such documents as may reasonably be
required to effect the Exchange Offer.
8. Expenses. All costs and expenses incurred in connection
with this Agreement and the Contemplated Transactions shall be paid
by the party incurring such expenses, including all fees and
expenses of agents, representatives, counsel and accountants.
9. Third Party Consents. Each of WDOP, Xxxxxx and the
Shareholders shall take, or cause to be taken, all necessary
corporate and other action and will use its commercially reasonable
efforts to obtain the consents and applicable approvals from third
parties that may be required to enable it to carry out the
Contemplated Transactions.
10. Efforts to Fulfill Conditions. Each of WDOP, Xxxxxx and
the Shareholders shall use their best efforts to insure that all
conditions precedent to its obligations hereunder are fulfilled at
or prior to the Closing.
11. Representations, Warranties and Conditions Prior to
Closing. Each of Xxxxxx, WDOP and the Shareholders shall use their
best efforts to cause its representations and warranties contained
in this Agreement to be true and correct on and as of the Closing
Date in all material respects. Prior to Closing, each of Xxxxxx
and the Shareholders shall promptly notify the other in writing
(a) if any representation or warranty contained in this Agreement
is discovered to be or becomes untrue or (b) if any of WDOP, Xxxxxx
or the Shareholders fails to perform or comply with any of its
covenants or agreements contained in this Agreement or it is
reasonably expected that it will be unable to perform or comply
with any of its covenants or agreements contained in this
Agreement.
12. Cooperation of the Parties. Xxxxxx and the Shareholders
each will cooperate with the other in supplying such information as
may be reasonably requested by the other in connection with
obtaining consents or approvals to the transactions contemplated by
this Agreement.
13. Stock Exchange Listing. Xxxxxx shall, as promptly as
practicable following the date hereof, prepare and submit to the
New York Stock Exchange a listing application covering the shares
of Common Stock and Preferred Stock to be issued by Xxxxxx upon
exchange of the Common Units and Preferred Units, respectively, and
shall use its best efforts to obtain, prior to the Closing Date,
approval of the listing of such shares, subject to official notice
of issuance.
ARTICLE 6
Conditions
1. Conditions to the Shareholders', the Equity
Participants', Xxxxxx'x and WDOP's Obligations to Consummate the
Contemplated Transactions. The respective obligation of each party to
effect the Contemplated Transactions shall be subject to the
fulfillment at or prior to the Closing Date of the following
conditions:
(a) The issuance of the Common Stock issuable upon
exchange of the Common Units and upon the exercise of the
Warrants shall have been approved by the Xxxxxx Stockholders.
(b) None of the parties hereto shall be subject to any
order or injunction of a court of competent jurisdiction which
prohibits the consummation of the Contemplated Transactions.
In the event any such order or injunction shall have been
issued, each party agrees to use its reasonable efforts to
have any such injunction lifted.
(c) The Exchange Offer shall have closed.
(d) All consents, authorizations, orders and approvals
of (or filings or registrations with) any governmental commission,
board, other regulatory body or third parties required
in connection with the execution, delivery and performance of
this Agreement shall have been obtained or made, except where
the failure to have obtained or made any such consent,
authorization, order, approval, filing or registration would
not have a material adverse effect on the business, results of
operations or financial condition of Xxxxxx and each of
Drever, AOF and AOFII (and their respective affiliates taken
as a whole), following the Closing.
2. Conditions to Obligations of the Shareholders and Equity
Participants to Consummate the Contemplated Transactions. The
obligations of each of the Shareholders and Equity Participants to
consummate the Contemplated Transactions shall be subject to the
fulfillment at or prior to the Closing Date of the following
conditions, unless waived by such Shareholder or Equity
Participant:
(a) WDOP and Xxxxxx shall have performed their respec-
tive agreements contained in this Agreement required to be
performed on or prior to the Closing Date and the representations
and warranties of Xxxxxx and WDOP contained in this
Agreement shall be true and correct in all material respects
as of the Closing Date (except for those representations and
warranties that address matters only as of a particular date
and time which need only be true and correct as of such date
or with respect to such period).
(b) The Shareholders shall have received the opinion of
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C. ("WSM"), dated the Closing
Date, in substantially the form attached hereto as Schedule
6.2.
(c) The shares of Common Stock and Preferred Stock
issuable upon the exchange of the Common Units and Preferred
Units, respectively, and upon the exercise of the Warrants
shall have been approved for listing on the New York Stock
Exchange subject to official notice of issuance.
3. Conditions to Obligation of WDOP to Consummate the
Contemplated Transactions. The obligation of WDOP to consummate
the Contemplated Transactions shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions, unless
waived by WDOP:
(a) The Shareholders and the Equity Participants shall
have performed their agreements contained in this Agreement
required to be performed on or prior to the Closing Date and
the representations and warranties of the Shareholders
contained in the Agreement shall be true and correct in all
material respects as of the Closing Date.
(b) Interestholders (as defined in the Exchange
Agreement) representing 50% or more of the limited partner
interests of each of Apartment Opportunity Fund, L.P. and
Interestholders representing 50.1% or more of the limited
partner interests of Apartment Opportunity Fund II, L.P. shall
have accepted the Exchange Offer.
(c) Partnership Properties (as defined in the Exchange
Agreement) representing no more than 25% of the aggregate
Property Values (as defined in the Exchange Agreement) of the
Partnership Properties held by Apartment Opportunity Fund,
L.P. and Partnership Properties representing no more than 25%
of the aggregate Property Values of the Partnership Properties
held by Apartment Opportunity Fund II, L.P. shall have been
excluded pursuant to the provisions of the Exchange Agreement
from the Partnership Properties to be held by the Partnerships
on the Closing Date.
(d) Xxxxxx shall have indicated its intention to close
the Exchange Offer by delivery of written notice to that
effect to the Shareholders.
(e) The opinion of Xxxxxxx Xxxxx & Co. Incorporated
addressed to the Board of Directors of Xxxxxx that the
Exchange Consideration payable under the Exchange Agreement is
fair, from a financial point of view, to the Xxxxxx
Stockholders shall not have been withdrawn or materially modified.
(f) Xxxxxx shall have received the opinions of Xxxxxxx
Xxxxxx, Esq., General Counsel of Drever, dated the Closing
Date, in substantially the form attached hereto as Schedule
6.3 hereto.
ARTICLE 7
Termination
1. Termination by Mutual Consent. This Agreement may be
terminated and the Contemplated Transactions may be abandoned at
any time prior to the Closing Date by the mutual written consent of
the Shareholders and Xxxxxx (with the prior approval of the Board
of Directors of Xxxxxx).
2. Termination by Either the Shareholders or Xxxxxx. This
Agreement may be terminated and the Contemplated Transactions may
be abandoned by either the Shareholders or Xxxxxx if (a) the
Contemplated Transactions shall not have been consummated by
December 31, 1997, provided that a party that has willfully and
materially breached a representation, warranty or covenant of such
party set forth in this Agreement shall not be entitled to exercise
its right to terminate under this Section 7.2(a), (b) a United
States federal or state court of competent jurisdiction or United
States federal or state governmental, regulatory or administrative
agency or commission shall have issued an Order, decree or ruling
or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this
Agreement and such Order, decree, ruling or other action shall have
become final and non-appealable, provided that the party seeking to
terminate this Agreement pursuant to this clause (c) shall have
used all reasonable efforts to remove such Order, decree, ruling or
injunction, or (d) any of the conditions set forth in Article 6
hereof shall not have been satisfied; and provided, in the case of
a termination pursuant to clause (a) or (d) above, that the
terminating party shall not have breached in any material respect
its obligations under this Agreement in any manner that shall have
proximately contributed to the occurrence of the failure referred
to in said clause.
3. Termination by the Shareholders. This Agreement may be
terminated and the Contemplated Transactions may be abandoned at
any time prior to the Closing Date if (a) there has been a breach
by Xxxxxx or WDOP of any representation or warranty contained in
this Agreement which would have or would be reasonably likely to
have a Xxxxxx Material Adverse Effect and which breach is not
curable by December 31, 1997, or (b) there has been material breach
of any of the covenants or agreements set forth in this Agreement
on the part of Xxxxxx or WDOP, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such
breach is given by any of the Shareholders to Xxxxxx.
4. Termination by Xxxxxx. This Agreement may be terminated
and the contemplated Transactions may be abandoned at any time
prior to the Closing Date, by action of the Board of Directors of
Xxxxxx, if (a) there has been a breach by the Shareholders of any
representation or warranty contained in this Agreement which would
have or would be reasonably likely to have an Acquired Company
Material Adverse Effect, which breach is not cured by December 31,
1997, or (b) there has been a material breach of any of the
covenants or agreements set forth in this Agreement on the part of
any the Shareholders, which breach is not curable or, if curable,
is not cured within 30 days after written notice of such breach is
given by Xxxxxx to the Shareholders.
5. Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the
Contemplated Transactions pursuant to this Article 7, all obligations of
the parties hereto shall terminate, except the obligations of the
parties pursuant to this Section 7.5 and except for the provisions
of Article 8 hereof (excluding Sections 9.3 and 9.12).
6. Extension; Waiver. At any time prior to the Closing
Date, either Xxxxxx or the Shareholders may, to the extent legally
allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive
any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant
hereto, and (c) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE 8
Indemnification
1. Indemnification and Payment of Damages by Xxxxxxx X.
Xxxxxx. Xxxxxxx X. Xxxxxx will indemnify and hold harmless WDOP,
Xxxxxx, the Acquired Companies, the Partnerships and their
respective representatives, stockholders, controlling persons and
affiliates (collectively, the "Indemnified Persons") for, and will
pay to the Indemnified Persons the amount of, any loss, liability,
claim, damage (including incidental and consequential damages),
expense (including costs of investigation and defense and
reasonable attorneys' fees) or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), arising,
directly or indirectly, from or in connection with the Xxxxxxxxxx
Litigation, all liabilities of Drever set forth on a balance sheet
of Drever prepared as of the Closing Date (whether or not then
currently payable) and the Contemplated Transaction. The
obligations of Xxxxxxx X. Xxxxxx under this Section 8.1 shall be secured
by a pledge of the Common Units and Preferred Units received by
Xx. Xxxxxx as Contribution Consideration under the terms and subject
to the conditions of the Pledge Agreement.
The remedies provided in this Section 8.1 will not be
exclusive of or limit any other remedies that may be available to
Xxxxxx or the other Indemnified Persons.
2. Procedure for Indemnification
(a) Promptly after receipt by an indemnified party under
Section 8.1 hereof of the commencement of any indemnified
proceeding against it, such indemnified party will, if a claim
is to be made against an indemnifying party under such
Section, give notice to the indemnifying party of the
commencement of such claim, but the failure to notify the
indemnifying party will not relieve the indemnifying party of
any liability that it may have to any indemnified party,
except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the
indemnifying party's failure to give such notice.
(b) If any indemnified proceeding referred to in Section
8.2(a) hereof is brought against an indemnified party and it
gives notice to the indemnifying party of the commencement of
such proceeding, the indemnifying party will, unless the claim
involves taxes, be entitled to participate in such proceeding
and, to the extent that it wishes (unless (i) the indemnifying
party is also a party to such proceeding and the indemnified
party determines in good faith that joint representation would
be inappropriate or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its
financial capacity to defend such proceeding and provide
indemnification with respect to such proceeding), to assume
the defense of such proceeding with counsel satisfactory to
the indemnified party and, after notice from the indemnifying
party to the indemnified party of its election to assume the
defense of such proceeding, the indemnifying party will not,
as long as it diligently conducts such defense, be liable to
the indemnified party under this Article 8 for any fees of
other counsel or any other expenses with respect to the
defense of such proceeding, in each case subsequently incurred
by the indemnified party in connection with the defense of
such proceeding, other than reasonable costs of investigation.
If the indemnifying party assumes the defense of a proceeding,
(i) it will be conclusively established for purposes of this
Agreement that the claims made in that proceeding are within
the scope of and subject to indemnification, (ii) no
compromise or settlement of such claims may be effected by the
indemnifying party without the indemnified party's consent
unless (A) there is no finding or admission of any violation
of Legal Requirements or any violation of the rights of any
Person and no effect on any other claims that may be made
against the indemnified party and (B) the sole relief provided
is monetary damages that are paid in full by the indemnifying
party, and (iii) the indemnified party will have no liability
with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an
indemnifying party of the commencement of any proceeding and
the indemnifying party does not, within ten days after the
indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of
such proceeding, the indemnifying party will be bound by any
determination made in such proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified
party determines in good faith that there is a reasonable
probability that a proceeding may adversely affect it or its
affiliates other than as a result of monetary damages for
which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the
indemnifying party, assume the exclusive right to defend,
compromise or settle such proceeding, but the indemnifying
party will not be bound by any determination of a proceeding
so defended or any compromise or settlement effected without
its consent (which may not be unreasonably withheld).
ARTICLE 9
General Provisions
1. Nonsurvival of Representations and Warranties. No
representation or warranty in this Agreement or in any instrument
delivered to this Agreement shall survive the Closing Date. This
Section 9.1 shall not limit any covenant or agreement set forth
herein that, by its terms, contemplates performance after the
Closing Date.
2. Confidentiality. Between the date of this Agreement and the
Closing Date, Xxxxxx, WDOP, the Shareholders, the Equity
Participants and the Assignees will maintain in confidence, and will cause
the Acquired Companies and the directors, officers, partners,
employees, agents and advisors of Xxxxxx, WDOP, the Acquired
Companies and the Partnerships to maintain in confidence, and not
use to the detriment of another party or an Acquired Company or
Partnership any written, oral or other information obtained in
confidence from another party or an Acquired Company or Partnership
in connection with this Agreement or the Contemplated Transactions,
unless (a) such information is already known to such party or to
others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any
filing or obtaining any consent or approval required for the
consummation of the Contemplated Transactions, or (c) the
furnishing or use of such information is required by or necessary or
appropriate in connection with legal proceedings. If the
Contemplated Transactions are not consummated, each party will return or
destroy as much of such written information as the other party may
reasonably request. Whether or not the Closing takes place, the
Shareholders, the Equity Participants and the Assignees waive, and
shall, upon Xxxxxx'x request, cause the Acquired Companies and the
Partnerships to waive, any cause of action, right or claim arising
out of the access of Xxxxxx or its representatives to any trade
secrets or other confidential information of the Acquired Companies
and the Partnerships except for the intentional competitive misuse
by Xxxxxx of such trade secrets or confidential information.
3. Notices. All notices, consents, waivers and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written
confirmation of receipt), (b) sent by telecopier (with written
confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested or (c) when received by
the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the
appropriate addresses and telecopier numbers set forth below with respect
to Xxxxxx and the Shareholders and as set forth on the signature
pages hereto with respect to the Equity Participants and the
Assignees (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
If to Xxxxxx or WDOP:
c/o Walden Residential Properties, Inc.
One Lincoln Centre
0000 XXX Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxx X. Xxxxxx
Chief Executive Officer
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
If to the Shareholders:
c/o Drever Partners, Inc.
Four Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxxx, Esq.
c/o Drever Partners, Inc.
Four Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
4. Further Assurances. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and
deliver to each other such other documents, and (c) to do such
other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
5. Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure
nor any delay by any party in exercising any right, power or
privilege under this Agreement or the documents referred to in this
Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right,
power or privilege will preclude any other or further exercise of
such right, power or privilege or the exercise of any other right,
power or privilege. To the maximum extent permitted by applicable
law, (a) no claim or right arising out of this Agreement or the
documents referred to in this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no
waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to
or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this
Agreement.
6. Entire Agreement and Modification. This Agreement supersedes
all prior agreements, oral and written, between the parties with
respect to its subject matter, including, without limitation, the
letters of intent dated March 12, 1997 and May 8, 1997 and
constitutes (along with the documents referred to in this
Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter.
This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
7. Schedules.
(a) The Schedules are incorporated by reference herein
and made a part of this Agreement.
(b) The disclosures in the Schedules hereto must relate
only to the representations and warranties in the Section of
the Agreement to which they expressly relate and not to any
other representation or warranty in this Agreement.
(c) In the event of any inconsistency between the
statements in the body of this Agreement and those in the
Schedules hereto (other than an exception expressly set forth
as such in the Schedules hereto with respect to a specifically
identified representation or warranty), the statements in the
body of this Agreement will control.
8. Assignments, Successors and No Third-Party Rights. No party
may assign any of its rights under this Agreement without the prior
consent of the other parties except that Xxxxxx may assign any of
its rights under this Agreement to any Subsidiary of Xxxxxx.
Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed
or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or
equitable right, remedy or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive
benefit of the parties to this Agreement and their successors and
assigns.
9. Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction,
the other provisions of this Agreement will remain in full force
and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
10. Section Headings; Construction. The headings of Sections in
this Agreement are provided for convenience only and will not
affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will
be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
11. Governing Law. This Agreement will be governed by the laws of
the State of Delaware without regard to its rules of conflict of
laws. Each of Xxxxxx, WDOP and the Shareholders hereby irrevocably
and unconditionally (a) consents to submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the
appropriate federal courts located in the State of Delaware (the
"Delaware Courts") for any litigation arising out of or relating to
this Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating thereto except in such
courts), (b) waives any objection to the laying of venue of any
such litigation in the Delaware Courts and agrees not to plead or
claim in any Delaware Court that such litigation brought therein
has been brought in an inconvenient forum, and (c) agrees that it
will not bring any action arising out of or relating to this
Agreement or any of the transactions contemplated hereby in a court
other than a Delaware Court.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy
of this Agreement and all of which, when taken together, will be
deemed to constitute one and the same agreement.
13. Amendment to AOF and AOFII Articles of Incorporation.
The shareholders of AOF and AOFII hereby consent to amend the
Articles of Incorporation of AOF and AOFII, respectively, effective
as of the Closing Date, to delete Article V thereof.
[Balance of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
WDOP:
XXXXXX/DREVER OPERATING
PARTNERSHIP, L.P.
By: Xxxxxx Residential Properties, Inc.
its General Partner
By:
Name:
Title:
XXXXXX:
XXXXXX RESIDENTIAL PROPERTIES, INC.
By:
Name:
Title:
SHAREHOLDERS:
DREVER FAMILY PARTNERSHIP I
By:
Xxxxxxx X. Xxxxxx, as Managing
General Partner
DREVER FAMILY PARTNERSHIP II
By:
Xxxxxxx X. Xxxxxx, as Managing
General Partner
DREVER EDUCATIONAL TRUST
By:
Xxxxxxx Xxxxxxx, Trustee
Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxxx
Xxxxx Xxxx
Xxxxxxx Xxxxxx
EQUITY PARTICIPANTS:
Xxxxxxx X. Xxxxxxxxx
Address:
Xxxxxxx Xxxxxxx
Address:
Xxxxx X. Xxxx
Address:
Xxxxxxxx Xxxxx
Address:
Xxxxxxx Xxxxxx
Address:
Xxxxx Xxxxxx
Address:
Xxxxxxx Xxxxxxx
Address:
