EXHIBIT 10.3
CONTRIBUTION AGREEMENT
BETWEEN
BELAIR CAPITAL FUND LLC
AND
NATIONAL GOLF OPERATING PARTNERSHIP, L.P.
AND
NATIONAL GOLF PROPERTIES, INC.
Dated: As of April 20, 1998
CONTRIBUTION AGREEMENT
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Contribution Agreement (this "AGREEMENT") made as of the 20th day of
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April, 1998 ("AGREEMENT DATE"), by and between BELAIR CAPITAL FUND LLC, a
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Massachusetts limited liability company (the "CONTRIBUTOR"), and NATIONAL GOLF
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OPERATING PARTNERSHIP, L.P., a Delaware limited partnership ("OPERATING
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PARTNERSHIP") and NATIONAL GOLF PROPERTIES, INC., a Maryland corporation
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("COMPANY").
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WITNESSETH:
WHEREAS, Contributor desires to contribute to Operating Partnership
cash in return for Preference Units in Operating Partnership on the terms and
conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
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shall have the meanings set forth below:
"AGREEMENT" has the meaning set forth in the initial paragraph hereof.
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"AGREEMENT DATE" has the meaning set forth in the initial paragraph
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hereof.
"AGREEMENT OF LIMITED PARTNERSHIP" means the Second Amended and
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Restated Agreement of Limited Partnership of Operating Partnership, dated as of
the date hereof substantially in the form attached hereto as EXHIBIT A, as
amended from time to time.
"AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT" means the Amended
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and Restated Registration Rights Agreement substantially in the form attached
hereto as EXHIBIT B.
"ARTICLES SUPPLEMENTARY" means the Articles Supplementary,
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substantially in the form attached hereto as EXHIBIT C.
"BYLAWS" means the Bylaws of the Company, as amended from time to
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time.
"BROKER" has the meaning set forth in PARAGRAPH 10.
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"CLOSING" has the meaning set forth in PARAGRAPH 6(a).
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"CHARTER" means the Articles of Incorporation of the Company, as
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amended and restated from time to time including, as amended by the Articles
Supplementary.
"CODE" means the Internal Revenue Code of 1986, as amended.
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"COMPANY" has the meaning set forth in the initial paragraph hereof.
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"CONTRIBUTION AMOUNT" means $15,000,000.
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"CONTRIBUTOR" has the meaning set forth in the initial paragraph
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hereof.
"CONTRIBUTOR'S CLOSING DOCUMENTS" has the meaning set forth in
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PARAGRAPH 6(c).
"EXCHANGE DATE" means, with respect to any Preferred Unit, the date on
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which the exchange of such Preferred Units for Preferred Shares shall occur in
accordance with the Partnership Agreement.
"ERISA" means the Employee Retirement Income Securities Act of 1974,
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as amended.
"GAAP" means generally accepted accounting principles consistently
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applied as in effect as of the date of the financial statements to which such
principles are applied.
"GOVERNING DOCUMENTS" means, with respect to (i) a limited
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partnership, such limited partnership's certificate of limited partnership and
the agreement of limited partnership, and any amendments or modifications of any
of the foregoing; (ii) a corporation, such corporation's articles or certificate
of incorporation, by-laws and any applicable authorizing resolutions, and any
amendments or modifications of any of the foregoing; (iii) a limited liability
company, such limited liability company's articles or certificate of
organization, by-laws and operating agreement or agreement of limited liability
company, and any amendments or modifications of any of the foregoing.
"MANAGER" means Xxxxx Xxxxx Management, a Massachusetts business
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trust, as manager of Contributor.
"OPERATING PARTNERSHIP" has the meaning set forth in the initial
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paragraph hereof.
"OPERATING PARTNERSHIP'S CLOSING DOCUMENTS" has the meaning set forth
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in PARAGRAPH 6(b).
"PARTNER" has the meaning ascribed to such term in the Agreement of
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Limited Partnership.
"PERSON" means a natural person, partnership (whether general or
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limited), trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual or
entity in its own or representative capacity.
"PREFERENCE UNITS" means Series A Preferred Units as such term is
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defined in the Agreement of Limited Partnership.
"PREFERRED SHARES" means shares of Company's 8% Series A Cumulative
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Redeemable Preferred Stock, par value $.01 per share, with the terms and
provisions set forth in the Articles Supplementary.
"PTP" means a "publicly traded partnership" within the meaning of
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Section 7704 of the Code.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"SUBSIDIARY" means with respect to any Person, any corporation,
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partnership, limited liability company, joint venture or other entity of which a
majority of (i) voting power of the voting equity securities or (ii) the
outstanding equity interests, is owned, directly or indirectly, by such Person.
"US$" means United States dollars, lawful money of the United States
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of America.
2. CONTRIBUTION OF CASH. Subject to the terms and provisions of
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this Agreement, Contributor hereby agrees to contribute to Operating Partnership
the Contribution Amount on the date of the Closing in consideration for 300,000
Preference Units in Operating Partnership. Subject to the terms and provisions
of this Agreement, Operating Partnership hereby agrees to accept the
Contribution Amount and to issue to Contributor 300,000 Preference Units in
exchange therefor.
3. CONDITIONS TO CLOSING. (a) Conditions to Operating
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Partnership's and Company's Obligations. Operating Partnership's and Company's
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obligations under this Agreement to accept the Contribution Amount, provide
Contributor with Preference Units and otherwise consummate the transactions
contemplated herein are subject to the satisfaction (or waiver in writing by
Operating Partnership and Company) of the following conditions on or before the
Closing:
(i) Accuracy of Representations and Warranties. The representations
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and warranties of Contributor contained in this Agreement shall be
true and correct in all material respects on the date of the Closing
with the same effect as though made on the date of the Closing.
(ii) Performance of Agreement. Contributor shall have performed, in
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all material respects, all of its covenants, agreements and
obligations required by this Agreement to be performed or complied
with by it prior to or at the Closing, including, without limitation,
delivery of the Contribution Amount.
(iii) Delivery of Closing Documents. Operating Partnership and
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Company shall have received the Contributor's Closing Documents.
In the event that for any reason any of the conditions set forth in
this PARAGRAPH 3(a) or elsewhere in this Agreement are not satisfied or waived
by Operating Partnership and Company at or prior to the Closing, at Operating
Partnership's or Company's option, this Agreement shall be terminated and
Operating Partnership, Company and Contributor shall be released from their
obligations under this Agreement and none of Operating Partnership, Company or
Contributor shall have any further liability hereunder.
(b) Conditions to Contributor's Obligations. Contributor's
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obligations under this Agreement to deliver the Contribution Amount and
otherwise consummate the transactions contemplated herein are subject to the
satisfaction (or waiver in writing by Contributor) of the following conditions
on or before the Closing:
(i) Pending Litigation. Contributor shall have determined in
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Contributor's sole judgement, that there is no pending litigation or
like proceeding with respect to Operating Partnership or Company
which, if successfully pursued, would prevent the consummation of the
transactions contemplated hereby.
(ii) Accuracy of Representations and Warranties. The representations
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and warranties of Operating Partnership and Company contained in this
Agreement shall be true and correct in all material respects on the
date of the Closing with the same effect as though made on the date of
the Closing.
(iii) Performance of Agreement. Operating Partnership and Company
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shall have performed, in all material respects, all of their
respective covenants, agreements and obligations required by this
Agreement to be performed or complied with by it prior to or at the
Closing.
(iv) Delivery of Closing Documents. Contributor shall have received
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the Operating Partnership's Closing Documents.
In the event that for any reason any of the conditions set forth in
this PARAGRAPH 3(b) or elsewhere in this Agreement are not satisfied or waived
by Contributor at or prior to the Closing, at Contributor's option, this
Agreement shall be terminated and Contributor, Operating Partnership and Company
shall be released from their obligations under this Agreement and none of
Contributor, Operating Partnership or Company shall have any further liability
hereunder.
4. COVENANTS. (a) On the Exchange Date, Company shall issue
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Preferred Shares in Company in a number equal to the number of Preferred Shares
into which the Preference Units are exchangeable pursuant to the terms of the
Agreement of Limited Partnership. Upon consummation of such exchange in
accordance with the terms of the Agreement of Limited Partnership, and issuance
in accordance with the Charter, the Preferred Shares shall be validly issued,
fully paid and non-assessable pursuant to the Articles Supplementary.
(b) Operating Partnership covenants to notify holders of Preference
Units promptly in the event Company or any Subsidiary of Company anticipates or
realizes either that (i) the amount of Operating Partnership's assets
constituting "stock and securities" within the meaning of Section 351(e)(1) of
the Code will equal 10% or more of Operating Partnership's total assets or (ii)
there is a material increase in the amount of Operating Partnership's assets
constituting "stock and securities" if immediately preceding such material
increase the amount of Operating Partnership's assets constituting "stock and
securities" within the meaning of Section 351(e)(1) of the Code equaled 10% or
more of the Operating Partnership's total assets.
(c) Company agrees that, from and after January 1, 1999, it will
notify holders of Preference Units promptly in the event that Company or any
Subsidiary of Company takes the position that Operating Partnership is, or upon
consummation of an identified event in the then immediate future will be, a PTP.
(d) Through the end of 1998, Operating Partnership: (i) shall take all
actions reasonably available to it under the Agreement of Limited Partnership as
presently in effect to avoid treatment as a PTP; and (ii) shall not issue, or
enter into binding agreements to issue, any Operating Partnership units to the
extent such issuance would cause it to have more than 60 partners within the
meaning of Treasury Regulation Section 1.7704-1(h)(3) immediately after such
issuance.
(e) For each taxable year, Company will promptly provide notice to the
holders of the Preference Units in the event Company or any Subsidiary of
Company anticipates or realizes that less than 90% of the gross income of
Operating Partnership for such taxable year will or likely will constitute
"qualifying income" within the meaning of Section 7704(d) of the Code.
(f) Operating Partnership covenants that it shall deliver to holders
of Preference Units the following:
(i) as soon as available, but in no event later than five
business days following the date on which Company files its annual report in
respect of a fiscal year on Form 10-K, or such other applicable form ("Form 10-
K"), with the Securities and Exchange Commission (the "COMMISSION") (or, in the
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event that Operating Partnership is required under rules and regulations
promulgated by the Commission to file with the Commission a Form 10-K separate
from Company's Form 10-K, five business days after the filing of such report by
Operating Partnership with the Commission), a complete copy of Operating
Partnership's financial statements for such fiscal year including a balance
sheet, income statement and cash flow statement for such fiscal year in
accordance with GAAP (except with respect to footnotes); and
(ii) as soon as available, but in no event later than five
business days following the date on which Company files its quarterly report in
respect of a fiscal quarter on Form 10-Q, or such other applicable form ("Form
10-Q"), with the Commission (or, in the event
the Operating Partnership is required under rules and regulations promulgated by
the Commission to file with the Commission a Form 10-Q separate from Company's
Form 10-Q, five business days after the filing of such report by Operating
Partnership with the Commission), a complete copy of Operating Partnership's
unaudited quarterly financial statements for such fiscal quarter including a
balance sheet, income statement and cash flow statement for such fiscal quarter
prepared in accordance with GAAP (except with respect to footnotes).
(g) Provided that all other conditions to Operating Partnership's and
Company's obligations set forth in this Agreement have been satisfied or
properly waived, Operating Partnership covenants that it shall record
Contributor as the holder of the Preference Units on its books and records and
shall admit Contributor as a limited partner to Operating Partnership on the
date of the Closing in accordance with the Agreement of Limited Partnership.
(h) Company or Operating Partnership shall not issue any Preference
Units to any Person other than Contributor and shall not issue any Preferred
Shares to any Person other than a holder of Preference Units upon exchange of
such Preference Units.
(i) So long as there shall be accrued and unpaid distributions in
arrears with respect to the Preference Units, Company or Operating Partnership
shall not sell, exchange, dispose of or otherwise transfer any property of the
Partnership contributed at the time of the closing of the initial public
offering of the common shares in the Company prior to the end of the fifteenth
(15th) year following the Effective Date (as defined in the Agreement of Limited
Partnership) in a manner that requires distributions to be made to Common
Limited Partners pursuant to SECTION 7.1.A(3) of the Agreement of Limited
Partnership, unless (i) all such Common Limited Partners entitled to such
distributions waive their right to receive such distributions in cash or by a
promissory note pursuant to SECTION 7.1.A(3), or (ii) any such distributions in
arrears with respect to the Preference Units are paid in full with the proceeds
of such sale, exchange, disposition or transfer.
(j) Through July 31, 1998, upon request of Contributor, Operating
Partnership and Company agree to deliver a certificate to Contributor bringing
down the representations and warranties made by Operating Partnership and
Company in PARAGRAPH 8(d), (e) and (f) to a date requested by Contributor (but
not later than July 31, 1998) if and to the extent, after due inquiry, Operating
Partnership and Company can make such representations and warranties as of date.
The covenants set forth in this PARAGRAPH 4 shall survive the Closing.
5. TRANSACTION COSTS. Except as otherwise specifically set forth
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herein, each of the parties hereto shall bear its own costs and expenses with
respect to the transaction contemplated hereby.
6. CLOSING. (a) The closing of the transactions contemplated by
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this Agreement shall be consummated on April 20, 1998 (the "CLOSING").
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(b) At the Closing, Operating Partnership and Company shall deliver to
Contributor the following documents and the following other items (the documents
and other items described in this PARAGRAPH 6(b) being collectively referred to
herein as the "OPERATING PARTNERSHIP CLOSING DOCUMENTS"):
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(i) This Agreement duly executed and delivered by Operating
Partnership and Company;
(ii) The Agreement of Limited Partnership, duly executed and delivered
by all persons necessary to make such agreement binding on and enforceable
against all Partners in Operating Partnership;
(iii) The Amended and Restated Registration Rights Agreement, duly
executed and delivered by Company;
(iv) A Certificate of the Secretary of Company, substantially in the
form set forth on EXHIBIT D together with completed exhibits attached thereto,
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executed by the secretary of the Company and dated as of the date of the
Closing;
(v) A copy of Company's Articles Supplementary, certified as filed by
the State Department of Assessments and Taxation of Maryland;
(vi) An opinion of counsel or counsels to Company and Operating
Partnership substantially in the form set forth on EXHIBIT E;
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(vii) A Cross-Receipt, substantially in the form set forth on EXHIBIT
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F, duly executed and delivered by the Company and Operating Partnership;
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(viii) A global certificate representing the Preference Units;
(ix) A Written Consent of the existing limited partners in the
Operating Partnership, substantially in the form set forth on EXHIBIT G;
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(x) A Written Consent of Operating Partnership consenting to the
pledge of the Preference Units to Xxxxxxx Xxxxx International Bank Limited and
Xxxxxxx Xxxxx Capital Services, Inc., substantially in the form set forth on
EXHIBIT H; and
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(xi) those closing documents required to be executed by it or as may
be otherwise necessary or appropriate to consummate the transaction contemplated
hereby;
(c) At the Closing, Contributor shall deliver to Operating Partnership
and Company the following documents and the following other items (the documents
and other items described in this PARAGRAPH 6(c) being collectively referred to
herein as the "CONTRIBUTOR'S CLOSING DOCUMENTS"):
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(i) counterparts of documents listed in PARAGRAPH 6(b)(i), (ii),
(iii), AND (vii) duly executed and delivered by Contributor.
(ii) those other closing documents required to be executed by it or as
may be otherwise necessary or appropriate to consummate the transaction
contemplated hereby.
7. REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR. Contributor makes
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the following representations and warranties to Operating Partnership and
Company, all of which (except as otherwise designated) are true and correct in
all material respects on the Agreement Date and shall be true and correct in all
material respects as of the date of the Closing:
(a) Contributor is duly organized and validly existing under the laws
of the state of its organization and has been duly authorized by all necessary
and appropriate action to enter into this Agreement and to consummate the
transactions contemplated hereby, and the Manager of Contributor executing this
Agreement on behalf of Contributor has been duly authorized by all necessary and
appropriate action on behalf of Contributor. This Agreement is a valid and
binding obligation of Contributor, enforceable against Contributor in accordance
with its terms, except insofar enforceability may be affected by bankruptcy,
insolvency or similar laws affecting creditor's rights generally and the
availability of any particular equitable remedy.
(b) Neither the execution nor the delivery of this Agreement nor the
consummation of the transactions contemplated hereby nor fulfillment of or
compliance with the terms and conditions hereof (a) conflict with or will result
in a breach of any of the terms, conditions or provisions of (i) the Governing
Documents of Contributor or its Manager or (ii) any agreement, order, judgement,
decree, arbitration award, statute, regulation or instrument to which
Contributor is a party or by which it or its assets are bound, or (b)
constitutes or will constitute a breach, violation or default under any of the
foregoing. No consent or approval, authorization, order, regulation or
qualification of any governmental entity or any other person is required for the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by Contributor.
(c) Contributor acknowledges that the Preference Units have not been
and will not be registered or qualified under the Securities Act or any state
securities laws and are offered in reliance upon an exemption from registration
under Regulation D of the Securities Act and similar state law exceptions. The
Preference Units to be received by Contributor hereunder and any Preferred
Shares acquired in exchange therefor shall be held by Contributor for investment
purposes only for its own account, and not with a view to or for sale in
connection with any distribution of the Preference Units or such Preferred
Shares, and Contributor acknowledges that the Preference Units and Preferred
Shares cannot be sold or otherwise disposed of by the holders thereof unless
they are subsequently registered under the Securities Act or pursuant to a
exemption therefrom; and the Preference Units may not be sold, assigned or
otherwise transferred except in compliance with the Agreement of Limited
Partnership. Contributor hereby acknowledges receipt of a copy of the Agreement
of Limited Partnership and represents that it has reviewed same and understands
the provisions thereof which have a bearing on the representations made in this
PARAGRAPH 7(c).
(d) Contributor has no contract, understanding, agreement or
arrangement with any person or entity to sell, transfer or grant a participation
to such person or entity or any other person or entity, with respect to any or
all of the Preference Units it will receive in accordance with the provisions
hereof or any Preferred Shares to be acquired in exchange therefor.
(e) Contributor is an "accredited investor" within the meaning of
Regulation D under the Securities Act and has knowledge and experience in
financial and business matters such that it is capable of evaluating the merits
and risks of receiving and owning the Preference Units and Contributor is able
to bear the economic risk of such ownership.
(f) No part of the funds to be used by Contributor to purchase the
Preference Units constitutes "plan assets", as defined in Department of Labor
Regulation Section 2510.3-101 (29 C.F.R. 2510.3-101), of any "employee benefit
plan", as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") or individual retirement account or plan which is
subject to Section 4975 of the Code (collectively, a "Benefit Plan") or of any
account or entity whose underlying assets constitute "plan assets" of a Benefit
Plan by reason of the Benefit Plan's investment in the account or entity.
Contributor is not an employee benefit plan subject to ERISA or Section 4975 of
the Code.
(g) In making this investment, Contributor is relying upon the advice
of its own personal, legal and tax advisors with respect to the tax and other
aspects of an investment in Operating Partnership.
(h) There has been made available to Contributor and its respective
advisors the opportunity to ask questions of, and receive answers from,
Operating Partnership and Company concerning the terms and conditions of the
investment in the Preference Units, and to obtain Company's Registration
Statement filed with the Securities and Exchange Commission on Form S-11, the
Agreement of Limited Partnership, and any additional information, to the extent
that any of them possess such information, or can acquire it without
unreasonable effort or expense, necessary to verify the accuracy of the
information given to it, or to otherwise make an informed investment decision,
and that Contributor has had an opportunity to consult with counsel and other
advisers about the investment in the Preference Units, and that all material
documents, records and books pertaining to such investment have, on request,
been made available to Contributor and its respective advisors. Contributor has
reviewed Company's Registration Statement, referenced above, and any other
documents filed by Company since January 1, 1997 in accordance with the
requirements of the Securities Act of 1934, including any business plans or
strategies of Company or of Operation Partnership set forth therein.
(i) None of Contributor or any of its advisors, including Xxxxxxx
Xxxxx & Co., is aware of or has engaged in any form of general solicitation or
advertising with respect to sales of the Preference Units, including (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio; and
(ii) any seminar or meeting whose attendees were invited by any general
solicitation or general advertising.
(j) Contributor shall accept an interest in a global certificate
representing the Preference Units with the following legends appearing thereon:
THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY NOT
BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT (A
COPY OF WHICH IS ON FILE WITH THE OPERATING PARTNERSHIP). EXCEPT AS
OTHERWISE PROVIDED IN THE PARTNERSHIP AGREEMENT, NO TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE PARTNERSHIP
UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR (B) IF THE OPERATING PARTNERSHIP HAS BEEN FURNISHED
WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER OF THE PARTNERSHIP
UNITS REPRESENTED BY THIS CERTIFICATE OR OTHER EVIDENCE SATISFACTORY TO THE
OPERATING PARTNERSHIP THAT SUCH TRANSFER, SALE ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION
5 OF THE ACT AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER.
Contributor and Manager of Contributor hereby expressly permit Xxxxxxx
Xxxxx Xxxxxxx & Ingersoll, as counsel to Company, and Xxxxxx & Xxxxxxx, as
counsel to Company and Operating Partnership, to rely upon representations and
warranties set forth above as if such representations and warranties were made
by Contributor and Manager of Contributor directly to Xxxxxxx Xxxxx Xxxxxxx &
Ingersoll and Xxxxxx & Xxxxxxx.
8. REPRESENTATIONS AND WARRANTIES OF OPERATING PARTNERSHIP AND
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COMPANY. Operating Partnership and Company make the following representations
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and warranties to Contributor and Xxxxx Xxxxx Management, all of which (except
as otherwise designated) are true and correct in all material respects on the
Agreement Date and shall be true and correct in all material respects as of the
date of the Closing:
(a) Operating Partnership is duly organized and validly existing under
the laws of the state of its organization and is duly registered and qualified
to do business in each jurisdiction where such registration or qualification is
material to the transactions contemplated hereby and has been duly authorized by
all necessary and appropriate action to enter into this Agreement, to issue,
sell and deliver the Preference Units and to consummate the transactions
contemplated herein, and the individuals executing this Agreement on behalf of
Operating Partnership have been duly authorized by all necessary and appropriate
action on behalf of Operating Partnership. This Agreement is a valid and
binding obligation of Operating
Partnership, enforceable against Operating Partnership in accordance with its
terms, except insofar enforceability may be affected by bankruptcy, insolvency
or similar laws affecting creditor's rights generally and the availability of
any particular equitable remedy.
(b) Company is duly organized and validly existing under the laws of
the state of its organization and is duly registered and qualified to do
business in each jurisdiction where such registration or qualification is
material to the transactions contemplated hereby and has been duly authorized by
all necessary and appropriate action to enter into this Agreement, to issue and
deliver, upon exchange of the Preference Units, the Preferred Shares and to
consummate the transactions contemplated herein, and the individuals executing
this Agreement on behalf of Company have been duly authorized by all necessary
and appropriate action on behalf of Company. This Agreement is a valid and
binding obligation of Company, enforceable against Company in accordance with
its terms, except insofar enforceability may be affected by bankruptcy,
insolvency or similar laws affecting creditor's rights generally and the
availability of any particular equitable remedy. Notwithstanding anything to the
contrary in this Agreement, Company shall not be obligated to issue Preferred
Shares in violation of the provisions on stock ownership limitations set forth
in the Charter or the Agreement of Limited Partnership.
(c) Neither the execution nor the delivery of this Agreement nor the
consummation of the transactions contemplated hereby nor fulfillment of or
compliance with the terms and conditions hereof (a) conflict with or will result
in a breach of any of the terms, conditions or provisions of (i) the Governing
Documents of Company or Operating Partnership or any of its general partners or
(ii) any agreement, order, judgement, decree, arbitration award, statute,
regulation or instrument to which Company or Operating Partnership is a party or
by which it or its assets are bound, or (b) constitutes or will constitute a
breach, violation or default under any of the foregoing. No consent or
approval, authorization, order, registration or qualification of any
governmental entity or any other person is required for the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby by Operating Partnership or Company, except for filings under state
securities or "blue sky" laws."
(d) Immediately following the issuance of the Preference Units
pursuant to this Agreement, less than 8% of Operating Partnership's assets will
consist of "stock and securities" within the meaning of Section 351(e)(1) of the
Code and Operating Partnership has no plan to increase the amount of its assets
constituting "stock and securities" to an amount equal to or greater than 10%
(except for cash equivalents and assets arising from the temporary investment of
stock or debt issuance proceeds).
(e) Operating Partnership has not been and is not presently a PTP.
(f) Neither Company nor any Subsidiary of Company has any present plan
or intention, and neither Company nor any Subsidiary of Company has any actual
knowledge of any present plan or intention of any partner in Operating
Partnership, to take any action or actions that would or likely would result in
Operating Partnership becoming a PTP in the foreseeable future. Neither Company
nor any Subsidiary of Company has actual knowledge of facts that reasonably
would cause it to expect that Operating Partnership would or likely would become
a PTP in the
foreseeable future. For purposes of the representations set forth in this
PARAGRAPH 8(f), it is understood that neither the Company nor any Subsidiary of
Company shall have any duty of inquiry.
(g) The Company has properly elected to be taxed as a real estate
investment trust (REIT) in accordance with Sections 856 to 860 of the Code,
currently qualifies for taxation as a REIT and has no plan or intention or
knowledge of facts that likely would cause it to fail to qualify for taxation as
a REIT in the foreseeable future.
(h) The Preference Units have been duly authorized and upon
contribution of the Contribution Amount to the Operating Partnership will be
validly issued, fully paid and, to the extent permitted by the Revised Uniform
Limited Partnership Act of the State of Delaware, non-assessable.
(i) The Preferred Shares issuable upon exchange of the Preference
Units in accordance with the Agreement of Limited Partnership have been duly and
validly reserved for issuance, and upon issuance in accordance with this
Agreement, the Agreement of Limited Partnership and the Charter, shall be duly
and validly issued, fully paid and non-assessable.
(j) Neither the issuance, sale or delivery of the Preference Units
nor, upon exchange, the issuance and delivery of the Preferred Shares, is
subject to any preemptive right of any Partner of Operating Partnership arising
under law or the Agreement of Limited Partnership or any stockholder of Company
arising under applicable law or the Charter or Bylaws of Company, or to any
contractual right of first refusal or other right in favor of any person. With
the exception of the Charter, the Agreement of Limited Partnership, existing
registration rights agreements, the Credit Agreement, dated as of April 25,
1997, among the Operating Partnership, the Company, the Lender Parties named
therein and NationsBank of Texas, N.A., the Restated Note Agreement, dated as of
July 1, 1996, with respect to the Operating Partnership's Series A-1, Series A-2
and Series A-3 7.9% Guaranteed Senior Promissory Notes due June 15, 2006 and
Series B 8% Guaranteed Senior Promissory Notes due December 12, 2006, and the
Note Purchase Agreement, dated as of December 15, 1994, and amended as of August
31, 1995, with respect to the Operating Partnership's Series A 8.68% Guaranteed
Senior Promissory Notes due December 15, 2004 and Series B 8.73% Guaranteed
Senior Promissory Notes due June 15, 2005, there are no agreements or
understandings in effect restricting the voting rights, the distribution rights
or any other rights or privileges of the holders of the Preference Units, or
upon exchange, the Preferred Shares.
(k) There is no action, suit, proceeding or investigation pending or,
to Operating Partnership's and Company's knowledge, currently threatened against
Operating Partnership or Company that questions the validity of this Agreement
or the right of Operating Partnership or Company to enter into this Agreement,
to consummate the transactions contemplated hereby, or that would reasonably be
expected to, either individually or in the aggregate, have a material adverse
affect on the business, operations, properties or condition (financially or
otherwise) of Operating Partnership or Company, or result in any change in the
current equity ownership of Operating Partnership or Company, nor is Company or
Operating Partnership aware that there is any basis for the foregoing.
(l) Neither Operating Partnership nor Company is in default or
violation of (i) any law, rule, regulation, order, judgement or decree
applicable to it or by which any of its properties or assets is bound or
affected, or (ii) any note, bond, mortgage, indenture or obligation to which it
is a party or by which Operating Partnership or Company or any property or asset
of Company or Operating Partnership is bound or affected, except for any such
conflicts, defaults or violations that would not reasonably be expected to,
individually or in the aggregate, have a material adverse effect on the
business, operations, properties or condition (financially or otherwise) of
Operating Partnership or Company.
(m) Operating Partnership and Company hereby consent to any pledge and
release of such pledge of the Preference Units, and to any pledge and release of
such pledge of any Preferred Shares into which such Preference Units are
exchanged, to secure the obligations of Contributor; so long as the pledge and
exercise of remedies thereunder shall be subject in all respects to the
provisions of the Agreement of Limited Partnership.
(n) 90% or more of Operating Partnership's gross income presently
constitutes "qualifying income" within the meaning of Code Section 7704(d).
Operating Partnership and Company hereby expressly permit Shearman &
Sterling, as counsel to Contributor and Xxxxx Xxxxx Management, to rely upon the
representations and warranties set forth in PARAGRAPH 8 as if such
representations and warranties were made by Operating Partnership and Company
directly to Shearman & Sterling.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
------------------------------------------
and warranties set forth in PARAGRAPHS 7 and 8 shall survive the Closing.
10. BROKERS. Each party represents and warrants to the other that it
-------
has dealt with no broker, finder or other person (collectively, "Broker") with
------
respect to this Agreement or the transactions contemplated hereby and that no
Broker is entitled to a commission as a result of this transaction, except for
Xxxxxxx Xxxxx & Co. Operating Partnership is responsible for the commission to
Xxxxxxx Xxxxx & Co. pursuant to a separate agreement. Each of (a) Operating
Partnership and Company, severally and not jointly, on the one hand, and (b)
Contributor on the other hand, agrees to indemnify and hold harmless the other
party against any loss, liability, damage, expense or claim incurred by reason
of any brokerage commission or finder's fee alleged to be payable because of any
act, omission or statement of the indemnifying party. Such indemnity
obligation shall be deemed to include the payment of reasonable attorney's fees
and court costs incurred in defending any such claim. The provisions of this
PARAGRAPH 10 shall survive the Closing.
11. COMPLETE AGREEMENT. This Agreement represents the entire
------------------
agreement between Contributor, Operating Partnership and Company covering
everything agreed upon or understood in this transaction and all other prior
agreements, written or oral, including any prior
subscription agreements or letters, are merged into this Agreement. There are no
oral promises, conditions, representations, understandings, interpretations or
terms of any kind as conditions or inducements to the execution hereof in effect
between the parties. No change or addition shall be made to this Agreement
except by a written agreement executed by Contributor, Operating Partnership and
Company.
12. AUTHORIZED SIGNATORIES. The persons executing this Agreement for
----------------------
and on behalf of Contributor, Operating Partnership and Company each represent
that they have the requisite authority to bind the entities on whose behalf they
are signing.
13. PARTIAL INVALIDITY. If any term, covenant or condition of this
------------------
Agreement is held to be invalid or unenforceable in any respect, such invalidity
or unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed as if such invalid or unenforceable provision had
never been contained herein.
14. MISCELLANEOUS. (a) Governing Law. This Agreement shall be
------------- -------------
interpreted and enforced according to the internal laws of the State of New
York.
(b) Headings; Sections. All headings and sections of this Agreement
------------------
are inserted for convenience only and do not form part of this Agreement or
limit, expand or otherwise alter the meaning of any provisions hereof.
(c) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same agreement. Facsimile signatures shall be
deemed effective execution of this Agreement and may be relied upon as such by
the other party. In the event facsimile signatures are delivered, originals of
such signatures shall be delivered to the other party within three (3) business
days after execution.
(d) No Benefit For Third Parties. The provisions of this Agreement
----------------------------
are intended to be for the sole benefit of the parties hereto and their
respective successors and permitted assigns, and none of the provisions of this
Agreement are intended to be, nor shall they be construed to be, for the benefit
of any third party.
(e) Rights and Obligations. The rights and obligations of
----------------------
Contributors, Operating Partnership and Company shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns in accordance with the provisions of Article 11 and Section
16.6 of the Agreement of Limited Partnership.
(f) Limitation of Liability. The liability of Contributor hereunder
-----------------------
shall be limited to the Contribution Amount.
15. NOTICES. All notices and other communications required or
-------
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered, delivered by nationally recognized
overnight courier with proof of delivery thereof, sent by United States
registered or certified mail (postage prepaid, return receipt requested)
addressed as hereinafter provided or via telephonic facsimile transmission with
proof of delivery in the form of a telecopier's transmission confirmation
report. Notice shall be sent and deemed given when (a) if personally delivered
or via nationally recognized overnight courier, then upon receipt by the
receiving party, or (b) if mailed, then three (3) days after being postmarked,
or (c) if sent via telephonic facsimile transmission, then at the time set forth
in the telecopier's transmission confirmation report.
Any party listed below may change its address hereunder by notice to
the other party listed below. Until further notice, notice and other
communications hereunder shall be addressed to the parties listed below as
follows:
If to Contributor: Belair Capital Fund LLC
c/o Xxxxx Xxxxx Management
00 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxx Xxxxxx
Fax: (000) 000-0000
If to Operating Partnership
or Company: National Golf Properties, Inc.
0000 00xx Xxxxxx
Xxxxx 0000
Xxxxx Xxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxx
Fax: (000) 000-0000
16. PRESS RELEASES. Contributor, Operating Partnership and Company
--------------
each agrees that it will not issue any press release, advertisement or other
public communication with respect to this Agreement or transaction contemplated
therein without the prior consent of the other party hereto, except to the
extent such communication is required by applicable law or by the New York Stock
Exchange Rules; provided, however, that in such event such party shall use best
efforts to deliver a copy of the proposed press release, advertisement or other
public communication to the other party prior to the publication thereof and
shall grant the other party an opportunity to review the same and shall make
reasonable revisions to such communication requested by such other party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day first written above.
CONTRIBUTOR:
BELAIR CAPITAL FUND LLC
By: Xxxxx Xxxxx Management, as its Manager
By: /s/ Xxxxxx Xxxx
-------------------------
Name: Xxxxxx Xxxx
Title: Vice President
OPERATING PARTNERSHIP:
NATIONAL GOLF OPERATING PARTNERSHIP, L.P.
By: NATIONAL GOLF PROPERTIES, INC., its general
partner
By: /s/ Xxxxx X. Xxxxxxx
-------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
COMPANY:
NATIONAL GOLF PROPERTIES, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
