STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT is made and entered into as of the ____
day of May, 2000, by and between Stonehaven Realty Trust f/k/a Wellington
Properties Trust, a Maryland real estate investment trust ("Seller") and
Wellington Management Corporation, a Wisconsin corporation ("Buyer").
R E C I T A L S:
A. Stonehaven owns all of the issued and outstanding uncertificated
common stock ("Lake Pointe Shares") of Lake Pointe Apartment Homes, Inc., a
Wisconsin corporation ("Lake Pointe"), which owns an apartment living community
in Schofield, Wisconsin ("Lake Pointe Project");
B. Seller also owns 18 units or member interests ("Highlander Member
Interest") of Highlander Acquisition Company, LLC, a Wisconsin limited liability
company ("Highlander") which owns an apartment living community in Des Moines,
Iowa ("Highlander Project");
C. Buyer owns 95,000 shares of Class B 9% Convertible Preferred Shares
of Seller ("Class B Preferred Shares");
D. Buyer desires to acquire Seller's interest in Lake Pointe and the
Lake Pointe Project represented by the Lake Pointe Shares and Seller's interest
in Highlander and the Highlander Project represented by the Highlander Member
Interest in exchange for the transfer of the Class B Preferred Shares owned by
Buyer, all in accordance with the terms of this Agreement.
AGREEMENT
1. PURCHASE OF INTERESTS. At the Closing (as hereinafter defined)
Seller shall sell and transfer the Lake Pointe Shares and
Highlander Member Interest to Buyer and Buyer hereby agrees to
acquire the Lake Pointe Shares and Highlander Member Interest
on the terms and conditions set forth in this Agreement.
2. EXCHANGE OF STOCK AS CONSIDERATION. In exchange for the Lake
Pointe Shares and Highlander Member Interest, Buyer shall
transfer the Class B Preferred Shares owned by Buyer to
Seller.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents,
warrants and covenants to Buyer that as of the date hereof and
as of the Date of Closing:
3.1: AUTHORITY. Seller has all requisite power and authority
to enter into this Agreement and each agreement, document and
instrument to be executed and delivered by Seller pursuant to
this Agreement and to carry out the transactions contemplated
hereby and thereby. This Agreement and each agreement,
document and instrument to be executed and delivered by Seller
pursuant to this Agreement constitutes, or when executed and
delivered will constitute, the legal, valid and binding
obligation of Seller each enforceable in accordance with their
respective terms.
3.2: LAKE POINTE SHARES. The Lake Pointe Shares are and when
delivered to Buyer will be free and clear of any and all
pledges, claims, restrictions, charges, liens, security
interests, encumbrances or other interests of third parties of
any nature whatsoever created by Seller, except for
restrictions imposed by federal or state securities laws.
3.3: HIGHLANDER MEMBER INTEREST. The Highlander Member
Interest when delivered to Buyer will be free and clear of any
and all pledges, claims, restrictions, charges, liens,
security interests, encumbrances or other interests of third
parties of any nature whatsoever created by Seller, except for
restrictions imposed by federal or state securities laws.
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3.4: "AS IS" CONDITION. Buyer agrees and acknowledges that
Buyer (or an affiliate) is the prior owner of the Lake Pointe
Shares and/or Lake Pointe Project and the current manager of
the Lake Pointe Project. Buyer is also the organizer and
syndicator of Highlander and the current manager of the
Highlander Project. As such, Buyer agrees, acknowledges and
represents that Buyer is accepting the Lake Pointe Shares,
Lake Pointe Project, Highlander Member Interest and Highlander
Project on a "as is" "where is" basis without any
representations or warranties whatsoever with respect to the
value of the Lake Pointe Shares and Highlander Member
Interest, the value or financial viability of the Lake Pointe
Project or Highlander Project, the physical condition of Lake
Pointe Project or Highlander Project and any other matter
whatsoever except as specifically set forth in this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents,
warrants and covenants to Seller that as of the date hereof and as of the Date
of Closing:
4.1: AUTHORITY. Buyer has the full right, power and authority
to enter into this Agreement and each agreement, document and
instrument to be executed and delivered by Buyer pursuant to
this Agreement and to carry out the transactions contemplated
hereby and thereby. This Agreement and each agreement,
document and instrument to be executed and delivered by Buyer
pursuant to this Agreement constitutes, or when executed and
delivered will constitute, the legal, valid and binding
obligation of Buyer each enforceable in accordance with their
respective terms.
4.2: CLASS B PREFERRED SHARES. The Class B Preferred Shares
are, and when delivered to Seller pursuant to this Agreement
will be, free and clear of any and all pledges, claims,
restrictions, charges, liens, security interests, encumbrances
or other interests of third parties of any nature whatsoever
created by Buyer, except for restrictions imposed by federal
or state securities laws.
5. CLOSING. The Closing of the transaction contemplated hereby
(the "Closing") shall take place at a time mutually acceptable to both Seller
and Buyer which is within five (5) days after receiving written acknowledgment
from First Union Bank as servicer for Credit Suisse First Boston ("Lender")
consenting to the transfer of the Lake Pointe Shares and Lake Pointe Project
from Seller to Buyer as contemplated hereunder. The Closing shall take place at
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the offices of Wellington Management Corporation or at such other place as may
be mutually agreed upon by the parties.
5.1: CLOSING PRORATIONS. At the Closing, the following items
shall be prorated or adjusted (as appropriate) as of the close
of business on the Date of Closing: (i) city, state, county
and school district ad valorem taxes and other taxes
(including Lender escrows) and assessments which are actually
due and payable in the year of closing (all taxes and
assessments due and payable in years subsequent to the Date of
Closing shall be the responsibility of Buyer); (ii) all
utility or other charges which may become a lien upon the Lake
Pointe Project and all service and other related contracts;
(iii) casualty insurance premiums (including Lender escrows);
(iv) the interest due and owing the Lender (including Lender
escrows); (v) all rents, including past due rents; (vi) any
other income or expense items properly attributable to the
operation of the property and agreed upon by Seller and Buyer.
In no event, however, shall prorations include any funds held
or set aside for capital improvements, repairs or deferred
maintenance which shall remain the property of Seller.
5.2: PAYMENTS. At the Closing, Seller shall be entitled to all
funds held in any Lake Pointe account and all receivables and
other assets of Lake Pointe, except the Lake Pointe Project.
The cash balance owing, if any, by either Buyer or Seller
pursuant to the prorations as provided in Section 5.1 above,
shall be paid directly by Seller to Buyer or Buyer to Seller,
as the case may be, by cashier's check, in certified funds, or
by wire transfer on the Date of Closing.
5.3: SECURITY DEPOSITS. At the Closing, Seller shall transfer
its interest in, and Buyer shall assume all obligations under
the leases and Seller shall transfer, in cash, all tenant
security deposits with respect to the Lake Pointe Project.
6. ADDITIONAL ISSUES.
6.1: DIVIDEND. Subject to Closing (or upon a breach of this
Agreement by Buyer), Buyer waives all claims to any
distributions, dividends, or other sums payable, or claimed
payable to Buyer in connection with the Class B Preferred
Shares.
6.2: CONTINUED MANAGEMENT. Buyer shall continue to perform
real estate-related management and bookkeeping services with
respect to Lake Pointe pursuant to the certain management
agreement dated March 3, 1998. Notwithstanding the foregoing,
Seller shall have the right to implement such financial
controls as Seller deems prudent from and after execution
hereof and prior to the Date of Closing and Buyer agrees to
cooperate with Seller to
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implement such procedures and controls. In addition thereto,
Buyer shall not expend any funds with respect to the Lake
Pointe Project nor make any capital or other improvements
without the prior written consent or approval of Seller, which
consent may be withheld, by Seller in its sole discretion. If
the Closing has not occurred on or before August 1, 2000, the
Seller shall have the right to terminate the management
agreement, without any demonstration of cause, upon no less
than thirty (30) days written notice to the Buyer, in
accordance with the terms of the management agreement.
6.3: TERMINATION OF LISTING AGREEMENT. Upon Closing of the
transaction contemplated hereunder, Seller and Buyer and WMC
Realty, Inc. agree that that certain Commercial Listing
Contract - Exclusive Right to Sell Agreement dated January 15,
1998, is hereby terminated in all respects and neither Seller
nor WMC Realty, Inc. shall have any rights or obligations
thereunder including, without limitation, any rights or
obligations with respect to any listing, brokerage or transfer
fees. It is agreed that WMC Realty, Inc. shall not receive a
brokerage commission upon the closing of the transaction
contemplated hereunder and Buyer will indemnify Seller and
hold Seller harmless from any claim for commissions by WMC
Realty, Inc. and/or any other person or entity claiming a
commission by or through Buyer, and its affiliates, including
WMC Realty, Inc
6.4: RETENTION OF RIGHTS. Notwithstanding anything contained
in this Agreement to the contrary, Seller and Buyer agree that
Seller retains all rights to conduct a financial accounting or
audit and any sums owing by Buyer to either Lake Pointe or
Seller as disclosed in any such accounting or audit shall be
and remain the property of Seller notwithstanding the transfer
or agreement to transfer the Lake Pointe Shares as provided
herein. In this regard, Lake Pointe shall be deemed to have
assigned such claims, if any, to Seller as of the Date of
Closing. Seller reserves and retains all claims of Lake Pointe
arising for the period through the Date of Closing and the
execution of this Agreement and the subsequent transfer of the
Lake Pointe Shares shall not operate as a release of any such
claims.
6.5: RELEASES.
6.5.1 Release of Seller. Upon Closing, Buyer, for it,
its officers, directors, shareholders, principals, affiliated
corporations and businesses, successors and assigns, and all
other related or affiliated persons or entities, does hereby
release and forever discharge Seller and its officers,
trustees, shareholders, employees, advisors, attorneys,
agents, insurers, affiliated corporations and businesses,
successors and assigns, and all other related or affiliated
persons or entities, as the case may be, from and against any
all claims, demands, causes of actions or rights which Buyer
had, now has or could
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hereinafter have or assert in any manner associated with
Seller, its ownership of an equity interest in Seller
(including without limitation the Class B Preferred Shares
except future rights arising after Closing which Buyer may
have as a holder of the Seller's common shares), the business
of Seller including the Lake Pointe Project and Highlander
Project, and any other matter or thing whatsoever involving
Seller and Buyer; notwithstanding the foregoing, the release
provisions of this section shall be inapplicable to any breach
of this Agreement by Seller, and to any right of
indemnification provided by Seller's declaration of trust or
bylaws afforded as a result of service as an employee, officer
or trustee of Seller. Seller is not released from any
obligations to reimburse Buyer for salary and other expenses
associated with the employment of Xxxxxx X. Xxxx and sums due
and owing for the management of the Lake Pointe Project. The
sum of $12,036.82 shall be paid on or before June 2, 2000 and
the sum of $58,155.74 shall be paid on or before June 30,
2000.
6.5.2 Release of Buyer. Upon Closing, Seller, for it, its
officers, trustees, shareholders, principals, affiliated
corporations and businesses, successors and assigns, and all
other related or affiliated persons or entities, does hereby
release and forever discharge Buyer and its officers,
directors, shareholders, employees, advisors, attorneys,
agents, insurers, affiliated corporations and businesses,
successors and assigns, and all other related or affiliated
persons or entities, as the case may be, from and against any
all claims, demands, causes of actions or rights which Seller
had, now has or could hereinafter have or assert in any manner
associated with Buyer, the business of Buyer including Buyer's
management of and interest in the Lake Pointe Project and
Highlander Project, and any other matter or thing whatsoever
involving Buyer and Seller; notwithstanding the foregoing, the
release provisions of this section shall be inapplicable to
any breach of this Agreement by Buyer, and to the right to an
accounting with respect to the Lake Pointe Project as provided
in Section 6.4.
6.6: SURVIVAL. The provisions of Sections 6.2, and 6.4 will be
operative upon execution hereof and shall not be affected by
any termination of this Agreement for failure of the
conditions precedent set forth in Sections 7.1 and 7.3 hereof
or any termination pursuant to Section 10 hereof.
6.7: INDEMNITY. Buyer agrees to indemnify Seller and hold
Seller harmless from and against all liabilities and
obligations involving Lake Pointe, the Lake Pointe Shares, the
Lake Pointe Project, Highlander, the Highlander Member
Interest and the Highlander Project, whether such obligations
arise prior to, on or after the closing of the transactions
contemplated hereunder. As to any claim arising prior to the
closing of the transactions contemplated hereunder, Buyer
reserves its rights to seek indemnification from Seller
pursuant to the management agreement. Buyer specifically
agrees to assume and hold Seller harmless from all liabilities
to the Lender in connection with that certain
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mortgage loan with the Lake Pointe Project. Buyer shall pay
any and all fees, expenses or charges imposed by the Lender or
otherwise in connection with the transfer of the Lake Pointe
Shares, the Lake Pointe Project, the Highlander Member
Interest and Highlander Project to Buyer.
7. CONDITION PRECEDENT; DELIVERY OF DOCUMENTS AT CLOSING.
7.1: SELLER'S CONDITIONS PRECEDENT. The obligation of Seller
to consummate this Agreement and the transactions contemplated
hereby is subject to fulfillment prior to or at the Closing of
the following conditions precedent:
7.1.1 Representations and Warranties. Each of the
representations and warranties of the Buyer
in Section 4 hereof shall be true and
correct on the Date of Closing as though
made on such date and all action necessary
to authorize the execution, delivery and
performance by the Buyer of this Agreement
and each agreement, document and instrument
to be executed and delivered pursuant hereto
and the consummation of the transaction
contemplated hereby and thereby shall have
been duly taken by Buyer.
7.1.2 Covenants. Buyer shall have performed all of
its obligations hereunder which by the terms
hereof are to be performed on or before the
Date of Closing.
7.2: SELLER'S DELIVERABLES. On the Date of Closing, Seller
shall execute, deliver or cause to be executed and delivered
to Buyer the following: (i) a xxxx of sale representing
Seller's interest in the Lake Pointe Shares, which are
uncertificated shares; (ii) resignations of all officer and
director positions with respect to Lake Pointe as Buyer may
request in its sole discretion; (iii) any and all documents
regarding Lake Pointe and the Lake Pointe Project in the
possession of Seller, it being acknowledged that Buyer is in
possession of substantially all of such documents; (iv)
resolutions of the Board of Trustees of Seller authorizing the
execution, delivery and performance by Seller pursuant to this
Agreement and the agreements, documents and instruments to be
executed and delivered pursuant hereto, including the
consummation of the transactions contemplated hereby, and
thereby certified by an officer of Seller; (v) a xxxx of sale
representing Seller's interest in the Highlander Member
Interest; (vi) any and all documents regarding Highlander and
the Highlander Project in the possession of Seller, it being
acknowledged that Buyer is in possession of substantially all
of such documents; (vii) such other instruments and documents
as may be reasonably be required by any of the provisions of
this Agreement or reasonably necessary in the opinion of Buyer
or Buyer's counsel, to reflect the performance of this
Agreement and all other agreements contemplated hereby.
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7.3: BUYER'S CONDITIONS PRECEDENT. The obligations of Buyer to
consummate this Agreement and the transactions contemplated
hereby is subject to fulfillment prior to or at the Closing of
the following conditions precedent:
7.3.1: Representations and Warranties. Each of the
representations and warranties of Seller in Section 3
hereof shall be true and correct on the Date of
Closing as though made on such date.
7.3.2: Covenants. Seller shall have performed all
of its obligations hereunder which by the terms
hereof are to be performed on or before the Date of
Closing.
7.3.3: Lender Consent. Buyer shall have received
the written acknowledgment of Lender consenting to
the assignment and transfer of the Lake Pointe Shares
and the Lake Pointe Project.
7.4: BUYER'S DELIVERABLES. On the Date of Closing, Buyer shall
execute, deliver or cause to be executed and delivered to
Seller the following: (i) stock certificates for the Class B
Preferred Shares, together with all necessary stock powers
endorsed by Buyer; (ii) such other instruments and documents
as may be required by any other provisions of this Agreement
or reasonably necessary, in the opinion of Seller or Seller's
counsel, to reflect the performance of this Agreement and all
other agreements contemplated hereby.
8. EXPENSES. Each of the parties to this Agreement shall bear its own
expenses in connection with the negotiation and consummation of the transactions
contemplated by this Agreement.
9. GENERAL PROVISIONS.
9.1 INCORPORATION OF RECITALS. The Recitals set forth above
are incorporated herein and are made a part of this Agreement
as if fully set forth herein and shall constitute an
expression of the intent of the parties and as an aid in the
construction of this Agreement.
9.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes
the entire agreement between Seller and Buyer pertaining to
the subject matter hereof and supersedes any and all prior or
contemporaneous agreements or understandings of the parties
relating to the subject matter hereof, whether written or
oral. This Agreement may not be modified or amended except
pursuant to a written agreement signed by Seller and Buyer.
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9.3 FURTHER ASSURANCES. The parties agree that after the date
of Closing they will from time to time, upon the reasonable
request of the other, execute, acknowledge and deliver in
proper form any instruments of conveyance or further assurance
necessary or reasonably desirable to meet such parties'
obligations, liabilities and agreements contemplated
hereunder.
9.4 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
original.
9.5 NOTICES. All notices, requests, demands or other
communications required or permitted by this Agreement shall
be in writing, and delivery shall be deemed to be sufficient
if delivered personally or by registered or certified mail,
return receipt requested, postage-prepaid, addressed as
follows:
If to the Seller: Xxxxx X. Xxxx, CEO
Stonehaven Realty Trust
0000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx 000X
Xx. Xxxx, XX 00000
With a copy to: Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxxxx & Xxxxxx P.A.
0000 Xxxxx Xxxxxx Towers
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
If to the Buyer: Xxxxxx X. Xxxx
Wellington Management Corporation
00000 X. Xxxxxxxxx Xxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
With a copy to: Xxxxxxx Xxxx, Esq.
Wellington Management Corporation
00000 X. Xxxxxxxxx Xxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
or such other addresses as may be specified pursuant
to notice given by either party in accordance with
the provisions of this subsection.
9.6 HEADINGS. The headings used in this Agreement are for
convenience only and shall not be deemed to constitute a part
hereof, and shall not be
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deemed to limit, characterize or in any way affect the
provisions of this Agreement.
9.7 SURVIVAL OF TERMS. The agreements, representations and
warranties contained in this Agreement shall be deemed to be
remade at and survive the Closing.
9.8 GOVERNING LAW. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of
Minnesota.
9.9 BINDING AGREEMENT. Except as otherwise provided herein,
this Agreement and the terms, conditions and covenants
contained herein and the transactions contemplated hereunder
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, representatives and
assigns.
10. TERMINATION. This Agreement may be terminated and the
transactions contemplated herein may be abandoned after the date of this
Agreement, but not later than the Closing:
(a) by mutual written consent of all parties hereto;
(b) by Buyer if any of the conditions provided for in Section
7.3 of this Agreement have not been met and have not been
waived in writing by Buyer on or before the date of Closing;
(c) by Seller if any of the conditions provided for in Section
7.1 of this Agreement have not been met and have not been
waived in writing by Seller on or before the date of Closing;
or
(d) by either Seller or Buyer, if the Closing has not occurred
by August 1, 2000.
In the event of termination or abandonment by any parties provided in
this Section 10, written notice shall be given to the other party(ies)
and each party shall pay its own expenses incident to preparation for
consummation of this Agreement and the transactions contemplated
hereunder and neither party shall have any liability or
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obligation to the other party hereunder except such liabilities or
obligations as may arise as a result of a breach hereof.
[Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SELLER: BUYER:
STONEHAVEN REALTY TRUST WELLINGTON MANAGEMENT CORPORATION
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxxxxx Xxxx
----------------------------------- ---------------------------------
Its: Chief Executive Officer Its: Executive Vice President
------------------------ -------------------------
[Agreed as to Section 6.3 only]
WMC REALTY, INC.
By: /s/ Xxxxxxx Xxxx
-----------------------------
Its: Executive Vice President
------------------------
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