1
CONTRIBUTION AGREEMENT
by and between
the TCR Parties (as defined herein),
on the one hand,
and
Merry Land & Investment Company, Inc.
and
Merry Land DownREIT I LP
together as
the Transferee,
on the other hand
Dated February 23, 1998
2
TABLE OF CONTENTS Page
----
ARTICLE 1. CERTAIN DEFINITIONS.........................................................................1
ARTICLE 2. SUBJECT OF CONVEYANCE AND ASSIGNMENT........................................................8
Section 2.1 Real Property and Related Assets..............................................8
Section 2.2 Conveyances of Partnership Interests.........................................10
Section 2.3 Several Liability............................................................11
Section 2.4 Access to Books and Records..................................................12
Section 2.5 No Contributing Partner Liability............................................12
ARTICLE 3 VALUE AND PAYMENT TERMS.....................................................................12
Section 3.1 Issuance of Equity Securities................................................12
Section 3.2 Assumption of Indebtedness...................................................12
Section 3.3 Development Property.........................................................13
Section 3.4 Cash Consideration...........................................................16
Section 3.5 Withdrawn Properties.........................................................16
Section 3.6 Guaranty.....................................................................17
Section 3.7 Management Contracts.........................................................17
ARTICLE 4 TITLE; MATTERS TO WHICH THIS CONTRIBUTION IS SUBJECT........................................17
Section 4.1 Permitted Encumbrances.......................................................17
Section 4.2 Easements, Licenses and Dedications Prior to Closing.........................18
Section 4.3 Title Matters................................................................18
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE PROPERTY
PARTNERSHIPS..................................................................................19
Section 5.1 Operating Representations and Warranties.....................................19
Section 5.2 Definition of Knowledge......................................................25
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
OPERATING PARTNERSHIP.........................................................................25
Section 6.1 Operating Representations and Warranties.....................................25
Section 6.2 Definition of Knowledge......................................................31
ARTICLE 7 COVENANTS...................................................................................31
Section 7.1 Conduct of the Business of the Property Partnerships.........................31
Section 7.2 Conduct of the Business of the Transferee....................................33
Section 7.3 Amendment of OP Agreement....................................................33
Section 7.4 Good Faith Efforts...........................................................34
Section 7.5 Good Faith Cooperation.......................................................34
Section 7.6 Public Announcements.........................................................34
Section 7.7 Government Filings...........................................................35
3
TABLE OF CONTENTS Page
----
Section 7.8 Listing of Shares............................................................35
Section 7.9 Registration of Shares.......................................................35
Section 7.10 Investor Representations.....................................................35
Section 7.11 Time of Closing..............................................................36
Section 7.12 Pledge of Units..............................................................36
Section 7.13 Partnership Agreements.......................................................36
ARTICLE 8 CLOSING.....................................................................................36
Section 8.1 The Closing..................................................................36
Section 8.2 Deliveries at the Initial Closing by the TCR Parties.........................36
Section 8.3 Deliveries at the Initial Closing by the Transferee..........................40
Section 8.4 Deliveries at the Development Property Closing by the TCR
Parties....................................................................................41
Section 8.5 Deliveries at the Development Property Closing by the Transferee
..........................................................................................43
Section 8.6 Fees and Expenses............................................................44
Section 8.7 No Warranties................................................................45
ARTICLE 9 ADJUSTMENTS.................................................................................47
Section 9.1 Adjustments at the Applicable Closing Date...................................47
Section 9.2 Reimbursement of Deposits and Out-of-Pocket Expenses.........................48
Section 9.3 Other Adjustments............................................................48
Section 9.4 Errors in Calculations.......................................................48
Section 9.5 Survival.....................................................................48
ARTICLE 10 CONDITIONS PRECEDENT TO CLOSING............................................................48
Section 10.1 Conditions to Obligations of the TCR Parties.................................48
Section 10.2 Conditions to Obligations of the Company and the Operating
Partnership................................................................................49
ARTICLE 11 NO BROKERS.................................................................................50
ARTICLE 12 CASUALTY LOSS..............................................................................50
Section 12.1 Maintenance of Insurance Policies............................................50
Section 12.2 Casualties...................................................................50
Section 12.3 Interim Repairs..............................................................51
Section 12.4 Casualties Other than Major Casualties.......................................51
ARTICLE 13 CONDEMNATION...............................................................................51
ARTICLE 14 TERMINATION................................................................................52
Section 14.1 Termination..................................................................52
4
TABLE OF CONTENTS Page
----
Section 14.2 Payment of Certain Fees and Expenses.........................................53
Section 14.3 Break-Up Fee and Break-Up Expenses...........................................54
Section 14.4 Effect of Termination........................................................55
Section 14.5 Specific Performance for the Development Property............................55
ARTICLE 15 INDEMNIFICATION............................................................................55
Section 15.1 By the TCR Parties...........................................................55
Section 15.2 By the Transferee............................................................56
Section 15.3 Cooperation..................................................................57
Section 15.4. Claims for Indemnification...................................................57
ARTICLE 16 TAX MATTERS................................................................................58
Section 16.1 Payment of Taxes by the Property Partnerships...............................58
Section 16.2 Payment of 1998 Taxes......................................................59
Section 16.3 Allocation Method............................................................59
Section 16.4 Survival.....................................................................59
ARTICLE 17 EMPLOYEE MATTERS...........................................................................59
ARTICLE 18 NOTICE.....................................................................................60
ARTICLE 19 MISCELLANEOUS..............................................................................61
Section 19.1 Limited Survival of Representations and Warranties...........................62
Section 19.2 Entire Agreement: Third-Party Rights.........................................62
Section 19.3 Amendment....................................................................62
Section 19.4 Assignment...................................................................62
Section 19.5 Governing Law................................................................62
Section 19.6 Section Headings.............................................................62
Section 19.7 Severability.................................................................62
Section 19.8 No Other Rights or Obligations...............................................62
Section 19.9 Counterparts.................................................................62
Section 19.10 Construction.................................................................63
Section 19.11 Representatives..............................................................63
Section 19.12 Attorneys' Fees..............................................................63
Section 19.13 Interpretation...............................................................63
Section 19.14 Schedules....................................................................63
Section 19.15 Radon Disclosure.............................................................63
5
SCHEDULES
Schedule A Property Partnerships
Schedule B TCR-Affiliated Contributing Partners
Schedule 2.1(a) Real Property
Schedule 2.1(c) Excluded Personal Property
Schedule 2.1(e)(i) Excluded Permits and Licenses
Schedule 2.1(e)(ii) Service Contracts
Schedule 2.1(g) Excluded Trademarks and Trade Names
Schedule 2.2(a) Contributing Partners
Schedule 2.2(d) JV Property Partnership
Schedule 3.1(a) TCR Representatives
Schedule 3.1(b) Net Value Attributable to the Development Property and Allocation of
Consideration
Schedule 3.2 Assumed Loans
Schedule 3.3 Development Property
Schedule 3.3(b)(iv) Development Property Environmental Reports
Schedule 3.3(c) Project Criteria Memorandum
Schedule 3.3(d) Operating and Leasing Budgets
Schedule 3.5 Grouped Withdrawn Properties
Schedule 4.1(c) Preliminary Title Reports
Schedule 4.1(e) Surveys
Schedule 5.1(b) Consents Required by Property Partnerships
Schedule 5.1(f) Litigation
Schedule 5.1(g) Proceedings Related to the Real Property
Schedule 5.1(h) Notices of Violations of Legal Requirements from Governmental
Authorities
Schedule 5.1(j) Liens on Personal Property
Schedule 5.1(n) Tax Audits
Schedule 5.1(r) Certain Modifications to Tax-Exempt Bonds
Schedule 5.2 Property Partnerships' Knowledge Designees
Schedule 6.1(j) Transferee Subsidiaries
Schedule 6.1(k) Transferee Changes
Schedule 6.1(l) Undisclosed Liabilities
Schedule 6.1(m)(iii) Transferee Options, Warrants and Convertible Securities
Schedule 6.1(q) Transferee Shareholder Agreements
Schedule 6.1(r) Transferee Loan Defaults
Schedule 6.2 Transferee's Knowledge Designees
Schedule 10.2(d) Limited Withdrawn Properties
Schedule 17 Rehired Employees
Schedule 19.11 Transferee Representatives
6
EXHIBITS
Exhibit I Form of Addendum A
Exhibit II Form of Addendum B
Exhibit III Form of Registration Rights Agreement
Exhibit IV(a) Form of Architect's Certificate for Vinings at Lenox Place
Exhibit IV(b) Form of Architect's Certificate for Vinings Club at MetroWest
Exhibit V Form of Land Use Certificate and Certificate of Completion
Exhibit VI Form of Contractor's Certificate
Exhibit VII Form of OP Agreement Terms
Exhibit VIII Form of Distributee Agreement
7
CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT (the "AGREEMENT") dated February 23, 1998
(the "EFFECTIVE DATE") is made and entered into by and between (i) each of the
parties identified on Schedule A (a "PROPERTY PARTNERSHIP"), for the purposes of
Section 7.1 (i), Article 15, and Article 17 only, Florida RS, Inc., a Texas
corporation ("Florida RS"), and any Contributing Partner (as defined below) that
becomes a party to this Agreement pursuant to Section 2.2 (collectively, the
Property Partnerships, and any such Contributing Partners that become parties to
this Agreement being referred to as the "TCR PARTIES"), on the one hand; and
(ii) Merry Land & Investment Company, Inc., a Georgia corporation (the
"COMPANY"), and Merry Land DownREIT I LP, a Georgia limited partnership (the
"OPERATING PARTNERSHIP" and, together with the Company, the "TRANSFEREE"), on
the other hand; it being understood with respect to any Property Partnership
identified in Schedule B as a non-signing Property Partnership (each a
"Non-Signing Property Partnership"), the applicable TCR-Affiliated Contributing
Partner listed adjacent to the Non-Signing Property Partnership's name on such
Schedule is executing this Agreement on behalf of such Non-Signing Property
Partnership and agrees to cause such Non- Signing Property Partnership to fully
perform its obligations under this Agreement as if such Non-Signing Property
Partnership were executing the Agreement. Accordingly, in all instances in this
Agreement where a Non-Signing Property Partnership is representing, warranting,
covenanting or agreeing, such action is being performed by the applicable
TCR-Affiliated Contributing Partner with respect to the relevant Non-Signing
Property Partnership.
WHEREAS, the TCR Parties desire to transfer, convey, contribute and
assign to the Transferee the interests and assets specified herein and the
Transferee desires to acquire the same from the TCR Parties, each in accordance
with the terms and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and of other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound hereby, do hereby agree as follows:
ARTICLE 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
following meanings:
"ADDENDUM A" shall mean an agreement substantially in the form attached
hereto as Exhibit I.
1
8
"ADDENDUM B" shall mean an agreement substantially in the form attached
hereto as Exhibit II.
"AFFECTED PROPERTY" shall have the meaning set forth in Section 4.3.
"AGREEMENT" shall have the meaning set forth in the introduction
hereto.
"ARBITRATOR" shall have the meaning set forth in Section 3.5.
"ASSIGNED VALUE" shall have the meaning set forth in Section 3.5.
"ASSIGNMENTS OF PARTNERSHIP INTEREST" shall have the meaning set forth
in Section 8.2 (b).
"ASSUMED LOANS" shall have the meaning set forth in Section 3.2(a).
"ASSUMED LOAN DOCUMENTS" shall have the meaning set forth in Section
5.1(m).
"AUDIT" shall have the meaning set forth in Section 16.1.
"BASE AMOUNT" shall have the meaning set forth in Section 14.3(b).
"BOOKS AND RECORDS" shall have the meaning set forth in Section 2.1(f).
"BREAK-UP FEE" shall have the meaning set forth in Section 14.3(b).
"BREAK-UP FEE TAX OPINION" shall have the meaning set forth in Section
14.3(b).
"BREAK-UP EXPENSES" shall have the meaning set forth in Section
14.3(c).
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in Orlando, Florida are authorized or required by law to
close.
"CASH CONSIDERATION" shall have the meaning set forth in Section 3.4.
"CASUALTY" shall have the meaning set forth in Section 12.2.
"CASUALTY NOTICE" shall have the meaning set forth in Section 13.2.
"CHANGE IN CONTROL" shall mean (i) if the existing Board of Directors
of the Company no longer constitutes a majority of such board or (ii) the
acquisition of voting securities of the
2
9
Company by any "person" (as such term is used in Section 13(d) of the Exchange
Act) (other than the Company or any of its subsidiaries) or "group" (as defined
in Section 13(d) of the Exchange Act) with the result that after such
acquisition, such person or group has "beneficial ownership" (as defined in the
Exchange Act) of more than 20% of the Company's then outstanding voting
securities.
"CLAIM" shall have the meaning set forth in Section 15.4.
"CLAIM NOTICE" shall have the meaning set forth in Section 15.4.
"CLOSING" shall mean the Initial Closing and the Development Property
Closing.
"CLOSING DATE" shall mean the Initial Closing Date and the Development
Property Closing Date.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY" shall have the meaning set forth in the introduction hereto.
"CONDEMNED PROPERTY" shall have the meaning set forth in Article 14.3.
"CONTRACT ASSUMPTION AGREEMENT" shall have the meaning set forth in
Section 8.2(a).
"CONTRIBUTING PARTNER" shall have the meaning set forth in Section
2.2(a).
"COVERED PROPERTY PARTNERSHIP PARTY" shall have the meaning set forth
in Section 15.1.
"DAMAGED PROPERTY" shall have the meaning set forth in Section 12.2.
"DAMAGES" shall have the meaning set forth in Section 15.1(a).
"DEVELOPMENT PROPERTY" shall have the meaning set forth in Section
3.3(a).
"DEVELOPMENT PROPERTY CLOSING" shall have the meaning set forth in
Section 3.3(a).
"DEVELOPMENT PROPERTY CLOSING DATE" shall have the meaning set forth in
Section 3.3.
"DEVELOPMENT PROPERTY PARTNERSHIP" shall have the meaning set forth in
Section 3.3(a).
3
10
"DISTRIBUTEE" shall mean any person who receives Equity Securities
pursuant to this Agreement or (i) in the case of a TCR Party that is an entity,
pursuant to a distribution to its constituent shareholders, partners or members
or (ii) pursuant to a distribution of Equity Securities received by a TCR Party
as a nominee for a constituent partner or member of a Property Partnership.
"DISTRIBUTEE AGREEMENT" shall have the meaning set forth in Section
7.10.
"EFFECTIVE DATE" shall have the meaning set forth in the introduction
hereto.
"EQUITY SECURITIES" means Shares and Units collectively.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FLORIDA RS" shall have the meaning set forth in the introduction
hereto.
"GOVERNMENTAL AUTHORITY" shall mean, with respect to any party or the
Real Property, any applicable agency, board, bureau, commission, department or
body of any municipal, county, state or federal government unit, or any
subdivision thereof, having, asserting or acquiring jurisdiction over such party
or over all or any part of the Real Property or the management, operation, use
or improvement thereof.
"GUARANTY" shall have the meaning set forth in Section 3.6.
"IMPROVEMENTS" shall have the meaning set forth in Section 2.1(a).
"INCOME TAX RETURNS" shall have the meaning set forth in Section 16.1.
"INDEBTEDNESS" shall mean, with respect to any person, without
duplication, (i) all indebtedness of such person for borrowed money, whether
secured or unsecured, (ii) all obligations of such person under conditional sale
or other title retention agreements relating to property purchased by such
person, (iii) all capitalized lease obligations of such person, (iv) all
obligations of such person under interest rate or currency hedging transactions
(valued at the termination value thereof) and (iv) all guarantees of such person
of any such indebtedness of any other person.
"INITIAL CLOSING" shall have the meaning set forth in Section 8.1.
"INITIAL CLOSING DATE" shall have the meaning set forth in Section 8.1
"INITIAL CONTRIBUTION" shall have the meaning set forth in Section 3.1.
4
11
"INSURANCE COVERAGE" shall have the meaning set forth in Section 12.1.
"INTANGIBLE PROPERTY" shall have the meaning set forth in Section
2.1(e).
"JV CONSENT" shall have the meaning set forth in Section 2.2(d).
"JV PROPERTY PARTNERSHIP" shall mean that Property Partnership set
forth on Schedule 2.2(d) which may cease to be a Property Partnership on or
prior to the Initial Closing Date as described in Section 2.2(d) and with
respect to which the Transferee acknowledges that, as of the Effective Date, the
TCR Parties have not obtained the JV Consent required for the inclusion of the
JV Property Partnership as a Property Partnership under this Agreement.
"LAND" shall have the meaning set forth in Section 2.1(a).
"LEASES" shall have the meaning set forth in Section 2.1(d).
"LEGAL REQUIREMENTS" shall have the meaning set forth in Section
4.1(d).
"LIABILITIES" shall mean liabilities, indebtedness, obligations,
commitments, expenses, claims or guarantees of any nature (whether absolute,
accrued, contingent or otherwise.)
"LOAN ASSUMPTION DOCUMENTS" shall have the meaning set forth in
Section 8.2(o).
"MAJOR CASUALTY" shall have the meaning set forth in Section 12.2.
"MATERIAL ADVERSE EFFECT," with respect to any Property Partnership or
the Transferee, shall mean a material adverse effect (or any development that,
insofar as reasonably can be foreseen, in the future is reasonably likely to
have a material adverse effect) on the business, results of operations or
financial condition of such entity or its ability to consummate the transactions
contemplated by this Agreement; with respect to any Real Property, shall mean a
material adverse effect (or any development that, insofar as reasonably can be
foreseen, in the future is likely to have a material adverse effect) on the use
or occupancy of such Real Property; and, with respect to any Contributing
Partner, shall mean a material adverse effect on the ability of such
Contributing Partner to consummate the transactions contemplated by this
Agreement.
"MATERIAL TAKING" shall have the meaning set forth in Article 13.
"NET VALUE" shall mean an amount equal to $248,000,000, reduced by the
sum of (i) the outstanding principal balance plus all accrued and unpaid
interest thereon outstanding on the Initial Closing Date on the Assumed Loans,
(ii) the Cash Consideration, (iii) the Assigned Value of each Property
Partnership that owns a Withdrawn Property, (iv) the amount of any reduction
5
12
in the Net Value made pursuant to Section 2.2(c) hereof in the event of a
transfer of less than 100% of the Partnership Interests in a Property
Partnership, and (v) the amount set forth on Schedule 2.2(d) if the JV Property
Partnership ceases to be a Property Partnership hereunder as provided in Section
2.2(d).
"NON-SIGNING PROPERTY PARTNERSHIP" shall have the meaning set forth in
the introduction hereto.
"OBJECTION NOTICE" shall have the meaning set forth in Section 4.3(b).
"OP AGREEMENT" shall mean the Agreement of Limited Partnership of the
Operating Partnership.
"OPERATING PARTNERSHIP" shall have the meaning set forth in the
introduction hereto.
"PARTNERSHIP INTERESTS" shall have the meaning set forth in Section
2.2(a).
"PERMITS AND LICENSES" shall have the meaning set forth in Section
2.1(e).
"PERMITTED ENCUMBRANCES" shall have the meaning set forth in Section
4.1.
"PERSONAL PROPERTY" shall have the meaning set forth in Section 2.1(c).
"PHYSICAL INSPECTIONS" shall have the meaning set forth in Section
8.7(c).
"PROJECT CRITERIA MEMORANDUM" shall have the meaning set forth in
Section 3.3(c).
"PROPERTY" shall have the meaning set forth in Section 2.1.
"PROPERTY FINANCIALS" shall have the meaning set forth in Section
5.1(l).
"PROPERTY PARTNERSHIP" shall have the meaning set forth in the
introduction hereto.
"PROPERTY PARTNERSHIP TAX PERIOD" shall have the meaning set forth in
Section 16.1.
"PROPOSED ACQUISITION TRANSACTION" shall have the meaning set forth in
Section 7.1(l).
"QUALIFYING INCOME" shall have the meaning set forth in Section
14.3(b).
"REAL PROPERTY" shall have the meaning set forth in Section 2.1(b).
6
13
"RECIPIENT" shall have the meaning set forth in Section 14.3(c).
"REGISTRATION RIGHTS AGREEMENT" shall mean the registration rights
agreement to be entered into by the Company, the Operating Partnership and the
Investors (as defined therein) on or prior to the Initial Closing Date,
substantially in the form of Exhibit III.
"REHIRED EMPLOYEES" shall have the meaning set forth in Article 17.
"REIT REQUIREMENTS" shall have the meaning set forth in Section
14.3(b).
"RENT ROLL" shall have the meaning set forth in Section 5.1(c).
"SEC" shall mean the Securities and Exchange Commission.
"SEC DOCUMENTS" shall have the meaning set forth in Section 6.1(g).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITY DEPOSITS" shall have the meaning set forth in Section 2.1(d).
"SERVICE CONTRACTS" shall have the meaning set forth in Section 2.1(e).
"SHARE PRICE" shall mean the average of the closing prices of the
Shares on the New York Stock Exchange during the period of fifteen (15) trading
days concluding with the last trading day that is three (3) days prior to the
Initial Closing Date.
"SHARE" shall mean a share of common stock of the Company issued
pursuant to this Agreement.
"SUBMISSION DATE" shall have the meaning set forth in Section 3.5.
"SUBSIDIARY" shall mean (i) any entity of which the Company (or other
specified entity) shall own directly or indirectly through a subsidiary, a
nominee arrangement or otherwise (x) at least a majority of the outstanding
capital stock (or other shares of beneficial interest) or (y) at least a
majority of the partnership, joint venture or similar interests, and (ii) any
entity in which the Company (or other specified entity) is a general partner or
joint partner, including, without limitation, the Operating Partnership.
"SUBSTANTIAL COMPLETION" shall mean, as to any specific building within
a Development Property, the point in time at which a certificate of occupancy is
issued for such building.
7
14
"SURVEYS" shall have the meaning set forth in Section 4.1(e).
"TAXES" shall mean all federal, state, county, local, foreign and other
taxes of any kind whatsoever (including, without limitation, income, profits,
premium, estimated, excise, sales, use, occupancy, gross receipts, franchise, ad
valorem, severance, capital levy, production, transfer, license, stamp,
environmental, withholding, employment, unemployment compensation, payroll
related and property taxes, import duties and other governmental charges or
assessments), whether or not measured in whole or in part by net income, and
including deficiencies, interest, additions to tax or interest, and penalties
with respect thereto, and including expenses associated with contesting any
proposed adjustment related to any of the foregoing.
"TCR" means Xxxxxxxx Xxxx Residential Company.
"TCR-AFFILIATED CONTRIBUTING PARTNER" shall have the meaning set forth
in Schedule 2.2(a).
"TCR CURE PERIOD" shall have the meaning set forth in Section 4.3(b).
"TCR INDEMNIFIED PARTY" shall have the meaning set forth in Section
15.2.
"TCR PARTIES" shall have the meaning set forth in introduction hereto.
"TCR PROPRIETARY NAMES" shall have the meaning set forth in Section
2.1(g).
"TCR REPRESENTATIVES" shall have the meaning set forth in Section 3.1.
"TENANTS" shall have the meaning set forth in Section 2.1(d).
"TITLE OBJECTION" shall have the meaning set forth in Section 4.3(b).
"TITLE POLICIES" shall have the meaning set forth in Section 4.3(a).
"TRADEMARKS" shall have the meaning set forth in Section 2.1(g).
"TRANSFEREE" shall have the meaning set forth in the introduction
hereto.
"TRANSFEREE INDEMNIFIED PARTY" shall have the meaning set forth in
Section 15.1(a).
"TRANSFEREE REPRESENTATIVE" shall have the meaning set forth in
Section 19.11.
"UNIT" shall mean a unit of limited partnership interest in the
Operating Partnership.
8
15
"WITHDRAWN PROPERTY" shall have the meaning set forth in Section 3.5.
ARTICLE 2. SUBJECT OF CONVEYANCE AND ASSIGNMENT.
Section 2.1 Real Property and Related Assets. Each Property Partnership
represents that immediately prior to the applicable Closing, it owns each of the
assets listed below (collectively, the "PROPERTY," which term may mean all of
the Property of the Property Partnerships collectively, or, when so indicated by
the context, may refer only to that portion of the Property owned by an
individual Property Partnership), which Property will remain an asset of such
Property Partnership after the applicable Closing Date:
(a) the real property listed adjacent to the Property
Partnerships name on Schedule 2.1(a) (the "LAND") and all of the improvements
located on the Land, whether completed or under construction (the
"IMPROVEMENTS");
(b) all rights, privileges, grants and easements appurtenant
to the Property Partnership's interest in the Land and the Improvements, if any,
including, without limitation, all of the Property Partnership's right, title
and interest in and to all land lying in the bed of any public street, road or
alley, all mineral and water rights and all easements, licenses, covenants and
rights-of-way or other Improvements (the Land and the Improvements and all such
rights, privileges, easements, grants and appurtenances are sometimes referred
to herein as the "REAL PROPERTY");
(c) except as set forth on Schedule 2.1(c) and except for
proprietary software owned or licensed by TCR, all personal property, fixtures,
equipment, inventory, computer hardware and computer programming and software
owned or licensed by the Property Partnership and located on the Real Property
(the "PERSONAL PROPERTY"); provided, however, that the Property Partnership
shall have the right to continue to use the proprietary software owned or
licensed by TCR, in a manner consistent with its prior usage, for a period of
eight weeks after the Initial Closing Date, subject to any conditions for such
continued usage required by any unrelated third party licensors;
(d) all leases and other agreements with respect to the use
and occupancy of the Real Property, together with all amendments and
modifications thereto and any guaranties provided thereunder (the "LEASES"), and
all rents, additional rents, reimbursements, profits, income, receipts and any
amounts deposited under the Leases in the nature of refundable security (the
"SECURITY DEPOSITS") for the performance of the obligations of the parties
occupying space at the Real Property pursuant to the Leases (the "TENANTS");
(e) (i) except to the extent terminable upon a change in
control of the Property Partnership or as set forth on Schedule 2.1(e)(i), all
permits, licenses, guaranties, approvals,
9
16
certificates and warranties relating to the Real Property and the Personal
Property (collectively, the "PERMITS AND LICENSES"); and (ii) all of the
Property Partnership's right, title and interest in and to those contracts and
agreements on Schedule 2.1(e)(ii) for the servicing, maintenance and operation
of the Real Property, including, without limitation, equipment leases and other
agreements affecting the Real Property and all such contracts and agreements
entered into subsequent to the Effective Date (the "SERVICE CONTRACTS" and,
together with the Permits and Licenses, the "INTANGIBLE PROPERTY");
(f) all books, records, promotional material, tenant data,
leasing material and forms, past and current rent rolls, files, statements, Tax
returns, market studies, keys, plans, specifications, reports, tests and other
materials of any kind owned by the Property Partnership that are or may be used
by the Property Partnership in the use and operation of the Real Property or the
Personal Property; provided, however, that nothing contained in this Agreement
shall grant the Transferee agrees that it shall not reuse any architectural
plans or specifications in any manner other than for the maintenance and repair
of the Real Property (collectively, the "BOOKS AND RECORDS");
(g) except as set forth on Schedule 2.1(g), all trademarks,
trade names or symbols, if any, under which the Real Property (or any part
thereof) is operated (the "TRADEMARKS"); provided, however, that the Transferee
acknowledges and agrees that the right to use the names "Xxxxxxxx Xxxx" or
"Xxxxxxxx Xxxx Residential Services," the acronyms "TCR" or "TCRS", or any name
containing "Xxxxxxxx Xxxx", "TCR" or "TCRS" (collectively, the "TCR PROPRIETARY
NAMES") is not included within the Trademarks and, accordingly, the Transferee
shall have no right to the use of any TCR Proprietary Names, but shall be
allowed a period of ninety (90) days after the applicable Closing Date to change
any signage on the Real Property containing any TCR Proprietary Name; provided,
further, that the Transferee acknowledges and agrees that the right to use the
names "Oaks" or "Vinings" is not included within the Trademarks and,
accordingly, the Transferee shall have no right to the use of the names "Oaks"
or "Vinings", except for a period of one-hundred and eighty (180) days after the
applicable Closing Date, during which period a Property Partnership may continue
to use such names in a manner consistent with its current usage;
(h) all other rights, privileges and appurtenances owned by
the Property Partnership, if any, related in any way to the rights and interests
described above in Section 2.1, including, but not limited to, all warranties
from landscaping contractors or any other third parties, but excluding in all
cases all warranties from all persons or entities affiliated with TCR except to
the extent provided in Section 3.3(c), provided, that such TCR affiliates assign
to the Property Partnerships all warranties it may have with respect to the
Property from unrelated third parties.
10
17
Section 2.2 Conveyances of Partnership Interests.
(a) The Property Partnerships (i) shall at the election of the
Company, (x) cause each of its constituent partners (each, a "CONTRIBUTING
PARTNER") to transfer to the Operating Partnership 100% of its respective
partnership interests in the Property Partnership, (the "PARTNERSHIP INTERESTS")
or (y) be merged with and into the Operating Partnership and (ii) shall cause
each of its Contributing Partners to satisfy the following conditions:
(i) each Contributing Partner that is identified on
Schedule 2.2(a) as a TCR-affiliated entity shall execute and deliver to the
Operating Partnership an Addendum A; and
(ii) each of the Property Partnership's Partners that
is identified on Schedule 2.2(a) as a third-party equity investor shall execute
and deliver to the Operating Partnership an Addendum B; provided that if, prior
to the applicable Closing, a TCR-affiliated entity acquires the Partnership
Interest of the Property Partnership's third-party equity investor, such
TCR-affiliated entity shall execute and deliver to the Operating Partnership an
Addendum A, in which case the Property Partnership's third-party equity investor
shall no longer be required to execute and deliver to the Operating Partnership
an Addendum B.
(b) Prior to the transfer of all of the Partnership Interests
of a Property Partnership pursuant to this Section 2.2, notwithstanding any
contrary provision in this Agreement, such Property Partnership reserves the
right to distribute all cash on hand and in its accounts to its partners prior
to the applicable Closing, except to the extent the Property Partnership has any
Liabilities (other than the Assumed Loans or the Liabilities adjusted at the
applicable Closing under Article 9) that will not be satisfied at the applicable
Closing.
(c) With the prior written consent of the Company (which it
may give or withhold in its sole discretion), the partners of a Property
Partnership may transfer less than 100% of their respective Partnership
Interests to the Operating Partnership, in which event the Net Value shall be
reduced by an amount mutually agreeable to the Company and such partners or
members. If the Company and such partners are unable to agree on such amount
prior to five (5) Business Days prior to the applicable Closing Date, then any
such party may request binding arbitration of such amount by the method set
forth in Section 3.5.
(d) Notwithstanding anything to the contrary contained herein,
the TCR Parties agree to use their good faith commercially reasonable efforts to
obtain, as soon as reasonably possible, the necessary consent (the "JV CONSENT")
of the third-party equity investor in the Property listed on Schedule 2.2(d)
(the "JV PROPERTY PARTNERSHIP") required for inclusion of the JV Property
Partnership as a Property Partnership under this Agreement and the conveyance of
the Property Partnership related thereto pursuant to this Section 2.2 at the
Initial Closing. The TCR Representative shall inform the Transferee within two
(2) Business Days of their receipt of the JV Consent. In the event that the JV
Consent is not received on or before ten (10) days (or such shorter period as
may be acceptable to the Transferee) prior to the Initial
11
18
Closing Date, the JV Property Partnership shall no longer constitute a Property
for purposes of this Agreement and the Net Value shall be reduced at the Initial
Closing by the applicable amount set forth on Schedule 2.2(d).
(e) It is understood that, with respect to any Property or
Partnership Interests transferred in consideration for the issuance of Shares by
the Company, the conveyance shall be deemed to be a conveyance to the Company,
followed by a contribution by the Company to the Operating Partnership, and the
conveyance by the Contributing Partner to the Operating Partnership shall be
deemed made for the convenience of consolidating those transfers.
Section 2.3 Several Liability. Except as provided in Article 15, none
of the TCR Parties shall have joint and several liability hereunder. Instead,
each TCR Party shall have several liability hereunder for the covenants,
agreements, representations and warranties made by it hereunder to the extent
and only to the extent that any such covenant, agreement, representation or
warranty relates to itself or to the Property or Partnership Interests, as the
case may be, owned or transferred by it.
Section 2.4 Access to Books and Records. The Transferee agrees that
(a) the TCR Representatives shall have access after the applicable Closing to
the Books and Records relating to periods prior to the applicable Closing for
inspection or duplication at the offices of the Transferee at reasonable times
and upon reasonable notice and (b) through the eighth (8th) anniversary of the
applicable Closing Date, before any Property Partnership's Books and Records
relating to periods prior to the applicable Closing are destroyed or disposed of
by the Transferee, the Transferee shall offer to return such Books and Records
(and the computer programs necessary to retrieve the same) to the TCR
Representatives, at the TCR Representatives' cost and expense, if the TCR
Representatives affirmatively respond to such offer within ten (10) Business
Days after receipt of same.
Section 2.5 No Contributing Partner Liability. Except as otherwise
expressly provided in Section 2.3, nothing herein shall create any Liability of
any Contributing Partner or any of their employees, directors, shareholders,
partners, members or other affiliates. Notwithstanding the foregoing, no
Contributing Partner shall have any Liability under this Agreement
(notwithstanding references in this Agreement to covenants or representations
and warranties being made by a Contributing Partner) unless the Contributing
Partner (i) is a signatory to this Agreement or (ii) executes an Addendum A or
an Addendum B, and then, in either circumstance, the Liability of such
Contributing Partner shall be several, and not joint, and limited exclusively to
the terms of this Agreement and Addendum A or Addendum B, as applicable.
12
19
ARTICLE 3 VALUE AND PAYMENT TERMS.
Section 3.1 Issuance of Equity Securities. At the Initial Closing, the
Transferee shall issue and deliver to the persons set forth on Schedule 3.1(a),
as the designated representatives of the TCR Parties (the "TCR
REPRESENTATIVES"), that number of Equity Securities attributable to the Property
or Partnership Interests then being transferred (such transferred assets, the
"INITIAL CONTRIBUTION") determined by dividing (i) the aggregate amount of the
Net Value less the Net Value attributable to the Development Property as set
forth on Schedule 3.1(b) by (ii) the Share Price. At the Development Property
Closing, the Transferee shall issue and deliver to the TCR Representatives that
number of Equity Securities attributable to the Development Property determined
by dividing the Net Value set forth on Schedule 3.1(b) by the Share Price. The
TCR Representatives shall give the Transferee notice at least ten (10) Business
Days before the Initial Closing Date of the name, address and other reasonable
information required by the Company or the Operating Partnership of or relating
to the Distributees.
Section 3.2 Assumption of Indebtedness.
(a) With respect to all transfers of Partnership Interests
pursuant to this Agreement, (i) the Transferee acknowledges and agrees that each
of the obligations listed on Schedule 3.2 (collectively, the "ASSUMED LOANS")
will remain a Liability relating to the respective Property after the Initial
Closing Date and (ii) the Operating Partnership agrees that it will pay and
perform any and all indebtedness and obligations of the TCR Parties under each
of the Assumed Loans after the Initial Closing Date.
(b) The Transferee further agrees that, (x) at the Initial
Closing, the TCR Parties and their affiliates and any of their constituent
owners who have guaranteed any amount with respect to any of the Assumed Loans
shall be released from any and all liability for the Assumed Loans and (y) if
the Transferee is unable for any reason to consummate any assumption or release
contemplated by this Section 3.2 (other than due to any breach by the Transferee
of any of its agreements or covenants contained in this Agreement, in which case
the Transferee shall not be relieved of its obligations pursuant to the
provisions of clause (a) of this Section 3.2), the Operating Partnership shall
cause such Assumed Loan to be paid in full at the Initial Closing, and such
payment, in lieu of assumption, shall not affect the determination of Net Value
or the Cash Consideration. Each Property Partnership (and each Contributing
Partner) shall be responsible for the payment at the Initial Closing of any
prepayment premium or penalty due in connection with the Operating Partnership's
prepayment of any Assumed Loan of that Property Partnership (or, in the case of
a Contributing Partner, the Assumed Loan of the Property Partnership of which
that Contributing Partner is a partner or a member).
Section 3.3 Development Property.
(a) The Real Property described in Schedule 3.3 (the
"DEVELOPMENT PROPERTY") is presently under construction. The Net Value allocated
to the Development
13
20
Property and the means of payment (Cash Consideration or Equity Securities) is
set forth on Schedule 3.1(b). The Closing (the "DEVELOPMENT PROPERTY CLOSING")
with respect to the contribution of Partnership Interests for the Property
Partnership that owns the Development Property (the "DEVELOPMENT PROPERTY
PARTNERSHIP") shall occur on the date which is forty-five (45) days after
issuance of final unconditional certificates of occupancy (or their functional
equivalents) for all elements of the Development Property or at such later date
as may be selected by the Development Property Partnership, but in no event
later than twelve (12) months after the Initial Closing Date (the "DEVELOPMENT
PROPERTY CLOSING DATE");
(b) In addition to all other applicable provisions of this
Agreement, the Development Property Closing shall be conditioned upon the
following:
(i) issuance of the final unconditional certificates of
occupancy (or their functional equivalents) for all elements of the Development
Property;
(ii) a certificate of final completion issued by the
Property Partnership's architect for the Development Property, addressed to the
Development Property Partnership and the Transferee, substantially in the form
of Exhibit IV(a);.
(iii) an as-built survey of the Development Property
prepared in accordance with the minimal technical requirements of the State of
Florida showing no encroachments or violations of any recorded instruments and
reflecting no matter (not disclosed on the Surveys) that insofar as can
reasonably be foreseen, is likely to result in a Material Adverse Effect on the
Development Property;
(iv) an update to the environmental report of the
environmental consultant that prepared the Phase I environmental reports listed
on Schedule 3.3(a)(iv) with respect to the Development Property, which update
shall be at the Transferee's cost and shall be prepared by the same
environmental consultant, reflecting no change that, insofar as can reasonably
be foreseen, is likely to result in a Material Adverse Effect in the
environmental condition of the Development Property from the date of such Phase
I report, the receipt and sufficiency of which Phase I report is hereby
acknowledged by the Transferee;
(v) certification to the Operating Partnership from the
TCR-affiliated Contributing Partner of the Development Property Partnership that
(I) to the best of its knowledge, the project has been completed in all material
respects in a workmanlike manner and in substantial accordance with the
standards established by the Project Criteria Memorandum and all applicable land
use laws; provided that, with respect to landscaping, deviations from such
standards as a result of field conditions may have been made; provided further
that the expenditures relating to landscaping shall be substantially as set
forth in the Project Criteria
14
21
Memorandum, and (II) the general contractor has been paid in full or any claims
or liens have been bonded, substantially in the form of Exhibit V;
(vi) certification to the Operating Partnership from the
general construction contractor that the project has been completed
substantially in accordance with the plans and specifications contained in the
general construction contract and that the general construction contractor and
all contractors, subcontractors, materialmen and suppliers have been paid in
full or any claims or liens have been bonded, substantially in the form of
Exhibit VI;
(vii) final lien waivers from the general construction
contractor, all subcontractors, all materialmen, and all other individuals or
entities that have furnished labor or materials to the Development Property;
(viii) affidavits and indemnity agreements from the
general partner of the Development Property Partnership and the Development
Property's general construction contractor in such standard form as the title
insurer and the Operating Partnership may reasonably require representing that
the agreed price or reasonable value of all labor and materials furnished to the
Development Property has been paid in full and indemnifying the Development
Property Partnership and the title insurer against all losses arising from a
breach of the representation, along with such other documents sufficient to
enable the title insurer to agree to remove from the title policy all exceptions
for unfiled mechanics' and materialmen's liens; and
(ix) certification from the Development Property's
general construction contractor that all utilities and amenities customary in
the operation of new Class A multi-family apartment complexes are operational
and servicing the Development Property and that all applicable connection and
impact fees have been paid in full.
(x) evidence of the warranty described in Section
3.3(c) from the general construction contractor.
In addition, the Development Property Partnership agrees to replace all
dead landscaping planted on the Land related to the Development Property with
live landscaping at least two (2) Business Days prior to the Development
Property Closing Date.
In the event any of the foregoing conditions are not satisfied,
Transferee may (i) terminate this Agreement with respect to the Development
Property (and the Development Property Partnership), (ii) extend the Development
Property Closing Date for up to an additional one hundred twenty (120) days or
(iii) waive any conditions and proceed to the Development Property Closing. Such
election shall be made by Transferee by written notice to the
15
22
Development Property Partnership at least two (2) Business Days prior to the
Development Property Closing Date.
(c) The Development Property Partnership agrees to proceed
diligently to complete construction of the Development Property in a good and
workmanlike manner, substantially in accordance with the plans and
specifications set forth on Schedule 3.3(c) (the "PROJECT CRITERIA MEMORANDUM"),
and in accordance with all applicable laws as currently enforced by applicable
government officials. The Development Property Partnership shall permit a
construction representative from the Transferee to inspect the work from time to
time during normal business hours and after notice to and coordination with the
site superintendent and attend job meetings. The Transferee shall approve the
work on a monthly basis as it proceeds, such approval limited solely to items
readily visible and customarily included in a once-a-month job-site inspection.
In addition to any other provisions of this Agreement, the
Development Property Partnership, after the Development Property Closing, shall
be the beneficiary of a warranty from the general construction contractor of the
Development Property (which is a TCR affiliated entity) for a period of one (1)
year from Substantial Completion of each building within the Development
Property that such building is free from any and all material defects in
material and workmanship and has been completed in all material respects in
accordance with the Project Criteria Memorandum other than with respect to
landscaping. Evidence of this warranty shall be delivered at the Development
Property Closing.
(d) Commencing on the Initial Closing Date, the Transferee
shall assume responsibility for the management and leasing of the Development
Property pursuant to a Management and Leasing Agreement which provides for (i) a
management fee equal to the greater of 3 1/2% of gross receipts or $4,000 per
month (prorated for any partial month by the number of days in such month)
commencing on the Initial Closing Date, (ii) the mutual agreement of an
operating and leasing budget sufficient to diligently maintain such levels of
advertising, promotion, maintenance and preservation appropriate to new
construction and initial lease up (consistent with the Development Property
Partnership's current budget attached hereto as Schedule 3.3 (d)) and to
maintain insurance covering the Development Property against loss by fire,
windstorm, explosion or other casualty in an amount not less than its full
insurable value, and (iii) the termination thereof upon termination of this
Agreement.
(e) The parties and the TCR Representatives agree that the
consideration at the Initial Closing shall be distributed to the Property
Partnerships with the exception of the Development Property Partnership which
shall not receive any consideration prior to the Development Property Closing.
16
23
Section 3.4 Cash Consideration. At each Closing, the Transferee shall
pay the TCR Representatives, for the accounts of the TCR Parties, an amount of
cash designated as the "CASH CONSIDERATION," which amount shall not exceed
$115,000,000 in the aggregate for both of the Closings. The TCR Representatives
shall give the Transferee written notice of the amount of the Cash Consideration
to be delivered to the TCR Representatives at the Initial Closing at least ten
(10) days before the Initial Closing Date and of the amount of Cash
Consideration to be delivered to the TCR Representatives at the Development
Property Closing no later than the Initial Closing Date
Section 3.5 Withdrawn Properties. A "WITHDRAWN PROPERTY" shall be any
Affected Property, Damaged Property or Condemned Property as to which this
Agreement has been terminated pursuant to Sections 4.3 or 12.2 or Article 13,
respectively, or any Real Property that has tax exempt bond financing associated
therewith, the interest payable on which would cease to be tax exempt as a
result of the transactions contemplated by this Agreement; provided, however,
that if any one of the Properties listed on Schedule 3.5 becomes a Withdrawn
Property, then all of the Properties listed on Schedule 3.5 shall be Withdrawn
Properties. In the event any Real Property becomes a Withdrawn Property,
Schedule 3.2 shall be revised to delete the Assumed Loan associated with such
Withdrawn Property from the definition of Assumed Loans and the TCR
Representatives and the Transferee shall each use good faith efforts to mutually
agree upon the assigned value for the Property Partnership that owns such Real
Property (the "ASSIGNED VALUE"), taking into account the relation of the
Withdrawn Property to the value of the entire portfolio being acquired as a
result of the transactions contemplated by this Agreement. If the parties are
unable to agree on the Assigned Value by the fifth (5th) Business Day prior to
the applicable Closing Date, then either party may request binding arbitration
of the Assigned Value by the following method. Xxxxxx Xxxxxxxx LLP is hereby
appointed by the parties as the neutral arbitrator (the "ARBITRATOR") of the
Assigned Value; provided that if, for any reason Xxxxxx Xxxxxxxx LLP is unable
to act as Arbitrator, Xxxxxx Xxxxxxxx LLP shall appoint an arbitrator to serve
in its place. The party electing determination by the Arbitrator shall give
written notice to the Arbitrator and the other party of such election. On the
date (the "SUBMISSION DATE") that is five (5) Business Days from the date of
such notice, each party shall submit to the Arbitrator its proposed Assigned
Value, together with any materials it wishes to submit in support of its
position. The Arbitrator shall then make its own determination of value and,
within ten (10) Business Days after the Submission Date, shall select, in the
Arbitrator's sole discretion, the value proposed by one or the other of the
parties (the Arbitrator not being authorized to select any other value), which
selected value shall then be the Assigned Value. In making its decision, the
Arbitrator may make such investigation of the Real Property (including the value
of any tax exempt financing) and the transactions contemplated by this
Agreement, and hold such hearings, as it deems appropriate.
17
24
Section 3.6 Guaranty. At the Initial Closing, the Company shall
execute and deliver to the TCR Representatives a guarantee (the "GUARANTY") in
form and substance satisfactory to the TCR Representatives whereby the Company
guarantees the full and complete performance of the obligations of the Operating
Partnership under this Agreement.
Section 3.7 Management Contracts. At the Initial Closing, the Property
Partnerships shall cause each management contract between a Property Partnership
and a TCR-affiliated entity to be terminated.
ARTICLE 4 TITLE; MATTERS TO WHICH THIS CONTRIBUTION IS SUBJECT.
Section 4.1 Permitted Encumbrances. The Real Property to be owned by
the Property Partnerships immediately following the applicable Closing may be
subject to the following encumbrances (collectively, the "PERMITTED
ENCUMBRANCES"):
(a) any liens of real estate taxes, personal property taxes,
water charges and sewer charges provided the same are not due and payable, but
subject to adjustment as provided herein;
(b) the rights of the Tenants under leases of fifteen (15)
months or less (or under no more than ten (10) leases of between fifteen (15)
and twenty-four (24) months), as residential tenants only;
(c) any and all restrictions, covenants, agreements,
easements, matters and things which are set forth in the preliminary title
reports listed on Schedule 4.1(c) affecting title to the Real Property (except
for loans or mortgages that are not Assumed Loans);
(d) any and all laws, statutes, ordinances, codes, rules,
regulations, requirements, or executive mandates affecting the Real Property,
including, without limitation, those related to zoning and land use ("LEGAL
REQUIREMENTS");
(e) the state of facts shown on the surveys described on
Schedule 4.1(e) for each individual Real Property (collectively, the "SURVEYS")
and any other state of facts that a recent and accurate survey of the Real
Property would actually show;
(f) the Service Contracts;
(g) any installment of assessments affecting the Real
Property or any portion thereof due and payable after the applicable Closing
Date, but subject to adjustment as provided herein;
18
25
(h) any utility company's right, easement or franchise to
maintain poles, lines, wires, cables, pipes, boxes or other fixtures and
facilities in, over, under or upon the Real Property;
(i) any prohibition against the interference with the natural
and unobstructed flow of any applicable brook crossing the Real Property or
other riparian rights;
(j) such matters as a title insurance company acceptable to
the Company shall be willing (without special premium to the Transferee) to omit
as exceptions to coverage including minor variations between record lines and
tax lot lines; and
(k) the liens of the Assumed Loans on those parcels of Real
Property encumbered by the Assumed Loans.
Section 4.2 Easements, Licenses and Dedications Prior to Closing. From
and after the Effective Date, no Property Partnership will voluntarily grant,
create or enter into any encumbrance, covenant, easement or restriction on any
Real Property without the prior written consent of the Operating Partnership,
which consent will not be unreasonably withheld, conditioned or delayed.
Section 4.3 Title Matters.
(a) Title Matters. It shall be a condition to the
Transferee's obligations hereunder that the Operating Partnership be able to
obtain (or following the Operating Partnership's acquisition of the Partnership
Interests of a Property Partnership, that the Property Partnership be able to
obtain or maintain and increase coverage under an existing) owner's policies of
title insurance (the "TITLE POLICIES") insuring good and marketable title to
each Real Property in an amount designated by the Transferee (at a standard rate
for such insurance) in the name of the Operating Partnership or its designees,
upon delivery of the Assignment of Partnership Interest, written on a standard
extended coverage 1970 ALTA Owner's Policy, free and clear of all liens,
encumbrances and other matters, other than Permitted Encumbrances.
(b) Objections. In the event that the Transferee is
unable to obtain or maintain a Title Policy in the form described above as to
one or more of the Real Properties (each an "AFFECTED PROPERTY") by reason of a
matter other than a Permitted Encumbrance (a "TITLE OBJECTION"), the Transferee
shall give the TCR Parties written notice (the "OBJECTION NOTICE") of such Title
Objections as to each Affected Property no later than three (3) Business Days
after the Effective Date, or, in the case of matters that Transferee becomes
aware of after the Effective Date, five (5) Business Days after the date that
Transferee receives written notice of the same. Any such lien, encumbrance or
other matter not raised as a Title Objection in a timely
19
26
submitted Objection Notice shall be a Permitted Encumbrance. The TCR Parties
shall have the option, but not the obligation, for a period of twenty (20) days
following receipt of the Objection Notice (the "TCR CURE PERIOD") to cure or
remedy such Title Objection whether by fully bonding off or addressing otherwise
so long as such item is removed or insured on the Title Policy in a manner
reasonably satisfactory to Transferee. If any Title Objection as to an Affected
Property remains uncured at the end of the TCR Cure Period, the Transferee may,
as its sole and exclusive remedy in such event, either (i) terminate this
Agreement as to such Affected Property by written notice to the TCR
Representatives not less than five (5) days after the expiration of the TCR Cure
Period or (ii) waive any such uncured Title Objection, which shall thereupon
become a Permitted Encumbrance. The Transferee's failure to terminate the
Agreement as to any such Affected Property in the manner and within the time
provided in the preceding sentence shall constitute its waiver of any uncured
Title Objection relating to or affecting such Affected Property. In the event of
a termination of this Agreement as to one or more of the Affected Properties
under this Section 4.3, such Affected Properties shall be treated as "WITHDRAWN
PROPERTY" under Section 3.5 and, subject to the provisions of Section 3.5, this
Agreement shall continue in full force and effect as to all other Property.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE PROPERTY PARTNERSHIPS.
Section 5.1 Operating Representations and Warranties. In order to
induce the Company and the Operating Partnership to enter into this Agreement
and to perform their respective obligations hereunder, each Property Partnership
hereby severally warrants and represents with respect to itself the following:
(a) Organization, Good Standing and Corporate/Partnership
Power. The Property Partnership is a limited partnership or general partnership
duly formed and validly existing under the laws of the jurisdiction in which it
was organized, is duly authorized to transact business under the laws of each
state 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 Property Partnership, has all requisite partnership power and
authority to execute and deliver this Agreement and all other documents and
instruments to be executed and delivered by it hereunder, and to perform its
obligations hereunder and thereunder in accordance with the terms and conditions
hereof and thereof.
(b) Authorization; No Violation. Assuming the due and valid
authorization, execution and delivery of this Agreement by the Transferee, this
Agreement, and the other agreements and documents to be executed by the Property
Partnership hereunder, will be the legal, valid and binding obligation of the
Property Partnership, enforceable against the Property
20
27
Partnership in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or similar laws relating to creditors' rights
and general principles of equity. The performance by the Property Partnership,
as applicable, of its duties and obligations and the consummation of the
transactions contemplated under this Agreement and the documents and instruments
to be executed and delivered by it hereunder will not (i) conflict with, or
result in a breach of, or default under, any provision of any of the
organizational documents of the Property Partnership or any agreement,
instrument, decree, judgment, injunction, order, writ, law, rule or regulation,
or any determination or award of any court or arbitrator, to which the Property
Partnership is a party or by which its assets are or may be bound, except for
any of the foregoing matters that, individually or in the aggregate, would not
have a Material Adverse Effect on the Property Partnership, or (ii) require any
consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Authority or any other person or entity, except as set
forth on Schedule 5.1(b) and except where the failure to obtain any such
consent, approval or authorization of, or filing or registration with, any
governmental or regulatory authority or other person or entity would not have a
Material Adverse Effect on the Property Partnership. Evidence of all necessary
consents from the Partners of the Property Partnership has been shown to the
Transferee prior to the execution hereof.
(c) Rent Roll. The Property Partnership (other than the
Development Property Partnership ) has delivered or caused to be delivered to
the Operating Partnership a rent roll (a "RENT ROLL") for each Real Property
that it owns immediately prior to the Effective Date that is current as of the
date of the normal closing of the books and records of such Real Property. To
the Property Partnership's knowledge, the information set forth in the Rent Roll
is true and correct as of such date in all material respects. To the Property
Partnership's knowledge, the Rent Roll reflects all of the leases, tenancies or
occupancies materially affecting the Real Property as of such date.
(d) Work on Real Property. To the Property Partnership's
knowledge, no work has been performed on the Real Property that it owns
immediately prior to the applicable Closing that would require an amendment to
the certificate of occupancy for such Real Property for which an amendment has
not been obtained, and, to the Property Partnership's knowledge, any and all
work performed at such Real Property has been performed in all material respects
in accordance with all Legal Requirements of all applicable Governmental
Authorities.
(e) Validity of Service Contracts. To the Property
Partnership's knowledge, there are no service contracts, equipment leases, union
contracts, employment agreements, management agreements or other agreements
materially affecting its Property or the operation thereof other than the
Service Contracts. To the Property Partnership's knowledge, all of the Service
Contracts of which it is a party or that affect in any way its Property are in
full force and effect without any material default or claim of material default
by any party thereto. To the Property Partnership's knowledge, all sums
presently due and payable by it under such Service
21
28
Contracts have been fully paid. There are no management contracts with respect
to the Property except contracts with TCR-affiliated entities (which will be
terminated at Initial Closing in accordance with Section 3.7).
(f) No Litigation. Except as set forth on Schedule 5.1(f) or
except as covered by insurance, there is no action, suit, claim, investigation,
labor dispute, litigation or proceeding currently pending or, to the Property
Partnership's knowledge, threatened, at law or in equity, against or related to
the Property Partnership or to all or any part of its Property, the
environmental condition thereof, or the operation thereof before or by any
applicable Governmental Authority.
(g) No Actions Relating to Real Property. Except as set forth
on Schedule 5.1(g), the Property Partnership has received no written notice nor
does it otherwise have knowledge of (i) pending or contemplated annexation or
condemnation proceedings, or private purchase in lieu thereof, affecting or
which may affect its Real Property, or any part thereof, (ii) proposed or
pending proceedings to change or redefine the zoning classification of all or
any part of its Real Property, (iii) proposed or pending special assessments
affecting its Real Property or any portion thereof, (iv) penalties or interest
due with respect to real estate taxes assessed against its Real Property and (v)
proposed changes in any road or grades with respect to the roads providing a
means of ingress and egress to its Real Property.
(h) No Violations of Legal Requirements. Except as set forth
on Schedule 5.1(h), the Property Partnership has not received written notice
from any Governmental Authority of any violations (including environmental) of
any Legal Requirements affecting the Real Property nor does the Property
Partnership have knowledge that any such Governmental Authority contemplates the
issuance thereof. To the Property Partnership's knowledge, except as disclosed
on Schedule 5.1(h), there are no outstanding orders, judgments, injunctions,
decrees or writ of any Governmental Authority against or involving the Property
Partnership or its Real Property that, individually or in the aggregate, would
have a Material Adverse Effect on the Property Partnership.
(i) Solvency. There does not exist in effect with respect to
the Property Partnership (i) any general assignment for the benefit of
creditors, (ii) any voluntary petition in bankruptcy, (iii) any involuntary
petition filed by the creditors of the Property Partnership, (iv) any
appointment of a receiver to take possession of all, or substantially all, of
the assets of the Property Partnership, (v) any attachment or other judicial
seizure of all, or substantially all, of the assets of the Property Partnership,
(vi) any admission in writing of the inability of the Property Partnership to
pay its debts as they come due, or (vii) any offer of settlement, extension or
composition to the creditors generally. The Property Partnership has been and
will be solvent at all times prior to and immediately following the transactions
provided for in this Agreement.
22
29
(j) Title to Personal Property. Except as set forth on
Schedule 5.1(j), the Property Partnership's Personal Property will on the
applicable Closing Date be owned by the Property Partnership free and clear of
any conditional xxxx of sale, chattel mortgage, security agreement or financing
statement or other security interest of any kind, other than liens securing any
of the Assumed Loans.
(k) Insurance/Casualty Losses. The Property Partnership has
not received written notice of any outstanding requirements or recommendations
by (i) any insurance company currently insuring its Property, (ii) any board of
fire underwriters or other body exercising similar functions or (iii) the holder
of any Assumed Loan encumbering any of its Property, which in any case require
or recommend any repairs or work to be done on its Property of a material
nature. There has been no damage to any portion of the Property Partnership's
Property caused by fire or casualty that has not been fully repaired or
restored. The Property Partnership has delivered to the Transferee prior to the
execution hereof a listing of liability insurance coverage maintained by the
Property Partnership at all times since 1987.
(l) Property Financials. The operating statements of the
Property Partnership representing the results of operations of the Property
Partnership (the "PROPERTY FINANCIALS"), fairly present the operating results of
the Property Partnership and its Property, in each case in accordance with
accounting practices applied on a basis consistent with the historical operating
statements of the Property Partnership (except as otherwise indicated thereon or
in the notes thereto). The Property Financials for the period ended September
30, 1997 are subject to normal year-end adjustments.
(m) Validity of Assumed Loan Documents. All documents,
instruments and agreements evidencing, governing, securing and guaranteeing the
Assumed Loans that relate to the Real Property owned by the Property Partnership
(the "ASSUMED LOAN DOCUMENTS") are in full force and effect, and the Property
Partnership has not received written notice from the holder of any such Assumed
Loan, nor does it otherwise have knowledge, of any default or event of default
thereunder.
(n) Taxes. To the Property Partnership's knowledge, the
Property Partnership has paid all Taxes, other than sales taxes in an immaterial
amount, due and payable prior to the applicable Closing and timely filed (after
giving effect to any filing extension properly granted by a Governmental
Authority having authority to do so) all material returns and reports required
to be filed by the Property Partnership or with respect to the ownership and
operation of its Real Property and for which the Operating Partnership or any of
its Subsidiaries (including the Property Partnership) could be held liable or a
claim made against such Real Property. Except as set forth on Schedule 5.1(n),
to the Property Partnership's knowledge, there are no audits or other
proceedings by any Governmental Authority pending or threatened with respect to
Taxes or the Property Partnership or resulting from the ownership and operation
of its Property for which the
23
30
Operating Partnership or any of its Subsidiaries (including the Property
Partnership) could be held liable or against which a claim could be made and no
agreement extending the period for assessment and collection has been executed
with respect thereto. The Property Partnership has filed all returns and reports
with respect to all Taxes as a partnership for federal tax purposes and has
never elected to be treated or classified in a different manner. The Property
Partnership agrees in good faith that if it is determined that immediately prior
to the applicable Closing the adjusted basis of its personal property exceeds or
will exceed 15% of the combined total adjusted basis of the Property
Partnership's real and personal property, then the Property Partnership agrees
to assist the Company to find a reasonable solution to eliminate this excess;
provided that the TCR Parties shall not be obligated to take any action that
could materially adversely impact the TCR Parties tax attributes.
(o) Restrictions on Sale; Legend. The Property Partnership
hereby acknowledges that the Equity Securities are being issued and sold in a
transaction not involving any public offering within the meaning of the
Securities Act and that the Equity Securities have not been registered under the
Securities Act. Except for any distributions of Equity Securities to the
Distributees and without prejudice to the Property Partnership's and its
Distributees' rights at all times to sell or otherwise dispose of all or any
part of the Equity Securities pursuant to an effective Registration Statement
under the Securities Act or under an exemption from registration available under
the Securities Act, the Property Partnership hereby agrees not to offer, sell,
transfer or otherwise dispose of any of the Equity Securities it is issued
pursuant to this Agreement in the absence of registration unless the Property
Partnership delivers to the Company and the Operating Partnership an opinion of
a lawyer experienced in securities matters and reasonably satisfactory to the
Company and the Operating Partnership, in form and substance reasonably
satisfactory to the Company and the Operating Partnership, to the effect that
the proposed sale, transfer or other disposition may be effected without
registration under the Securities Act and under applicable state securities or
"blue sky" laws. The Property Partnership hereby further acknowledges that each
certificate representing the Equity Securities shall bear a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION UNLESS THE COMPANY AND THE OPERATING PARTNERSHIP
HAVE BEEN FURNISHED WITH AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY AND THE OPERATING PARTNERSHIP, IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE COMPANY AND THE OPERATING PARTNERSHIP,
TO THE EFFECT THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION MAY BE
24
31
EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS."
The provisions of this Section 5.1(o) shall survive the applicable Closing
indefinitely.
(p) Accredited Investor; Investment Intent. The Property
Partnership and each of its partners as applicable, that is a Distributee is an
"accredited investor" as defined in Regulation D promulgated under the
Securities Act. Any Equity Securities acquired by the Property Partnership or
such Distributees will be so acquired for the Property Partnership's and such
Distributees' own accounts for investment only and not with a view to, or with
any intention of, a distribution or resale thereof, in whole or in part, in
violation of the Securities Act or state securities or "blue sky" laws, without
prejudice, however, to the Property Partnership's and such Distributees' rights
at all times to sell or otherwise dispose of all or any part of the Equity
Securities pursuant to an effective registration statement under the Securities
Act or under an exemption from registration available under the Securities Act.
The provisions of this Section 5.1(p) shall survive the applicable Closing
indefinitely.
(q) Employees. The Property Partnership does not have any
employees. The provisions of this Section 5.1 (q) shall survive the applicable
Closing for three (3) years.
(r) Tax Exempt Bonds. Except as set forth on Schedule 5.1 (r)
, no modifications of any tax exempt bonds or other tax exempt indebtedness
relating to any Property have been made during the six (6) month period ending
on the applicable Closing Date. None of the modifications set forth on Schedule
5.1(r) constituted a significant modification (within the meaning of Treasury
Regulation 1.1001-3) that resulted in a reissuance of such bonds for federal
income tax purposes.
(s) Environmental Matters. To the Property Partnership's
knowledge, the Property Partnership has made available to Transferee true and
complete copies of all environmental reports prepared for, or in the possession
or control of Property Partnership. Except as set forth therein, to the Property
Partnership's knowledge, its Real Property does not contain any hazardous
materials in violation of applicable law.
(t) Home Owner's Associations. The Property Partnership is in
compliance with all material requirements and is current on all dues of any Home
Owner's Associations affecting the Property.
(u) Liabilities. The Property Partnership is a single purpose
entity organized solely to hold its Real Property and has held no other assets
and has engaged in no other business activity. The Property Partnership has no
Liability, including, without limitation, any Liability to the person or entity
from whom or which the Property Partnership acquired any of its Real
25
32
Property, except (i) Permitted Encumbrances, (ii) prepaid rents, (iii)
refundable security deposits, (iv) Assumed Loans, (v) obligations to be repaid
in full by the Property Partnership at or prior to the applicable Closing, (vi)
Liabilities covered by liability insurance coverage, and (vii) Liabilities that
would be covered by a title insurance policy described in Section 4.3. The
provisions of this Section 5.1 (u) shall survive the applicable Closing for
three (3) years.
Section 5.2 Definition of Knowledge. As used in this Agreement, the
terms to the "Property Partnership's knowledge" or "knowledge of the Property
Partnership" shall mean only the "current actual knowledge" of the persons
listed on Schedule 5.2 after consultation with the district manager with
oversight responsibilities for Property that is the subject of the
representation being made concerning the subject matter of the representation
being made. As used herein, the term "current actual knowledge" shall mean only
the actual, current, conscious (and not constructive, imputed or implied)
knowledge of such designees, and current actual knowledge does not include
constructive, imputed or implied knowledge of any employee, partner or agent or
other representative of any Property Partnership other than such designees.
Anything herein to the contrary notwithstanding, none of the persons listed on
Schedule 5.2 shall have any personal liability or obligation whatsoever with
respect to any of the matters set forth in this Agreement or any of the
representations made by the Property Partnership being or becoming untrue,
inaccurate or incomplete in any respect.
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
OPERATING PARTNERSHIP.
Section 6.1 Operating Representations and Warranties. In order to
induce the Property Partnerships and the Contributing Partners to enter into
this Agreement and to perform their respective obligations hereunder, the
Company and the Operating Partnership hereby jointly and severally warrant and
represent the following:
(a) Organization, Good Standing and Corporate Power of the
Company. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia, is duly authorized to
transact business under the laws of any state 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 Company, has all
requisite corporate power and authority to execute and deliver this Agreement
and all other documents and instruments to be executed and delivered by it
hereunder, and to perform its obligations hereunder and thereunder in accordance
with the terms and conditions hereof and thereof. The Board of Directors of the
Company has approved this Agreement and the transactions contemplated hereby.
26
33
(b) Organization, Good Standing and Partnership Power of the
Operating Partnership. The Operating Partnership is a limited partnership duly
organized and validly existing under the laws of the State of Georgia, is duly
authorized to transact business under the laws of any state 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
Operating Partnership, has all requisite corporate power and authority to
execute and deliver this Agreement and all other documents and instruments to be
executed and delivered by it hereunder, and to perform its obligations hereunder
and thereunder in accordance with the terms and conditions hereof and thereof.
(c) Authorization; No Violation. Assuming the due and valid
authorization, execution and delivery of this Agreement by the TCR Parties, this
Agreement and the other agreements and documents to be executed and delivered by
each of the Company and the Operating Partnership hereunder, when duly executed
and delivered, will be the legal, valid and binding obligation of each of the
Company and the Operating Partnership, enforceable against the Company and the
Operating Partnership in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to creditors' rights and general principles of equity. The performance
by each of the Company and the Operating Partnership of its respective duties
and obligations under this Agreement and the documents and instruments to be
executed and delivered by each of them hereunder will not (i) conflict with, or
result in a breach of, or default under, any provision of any of the
organizational documents of either of the Company or the Operating Partnership
or any agreements, instruments, decrees, judgments, injunctions, orders, writs,
laws, rules or regulations, or any determination or award of any court or
arbitrator, to which either of the Company or the Operating Partnership is a
party or by which the assets of either are or may be bound, except for any of
the foregoing matters that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company or the Operating Partnership, or (ii)
require any consent, approval or authorization of, or declaration, filing or
registration with, any applicable Governmental Authority or other person or
entity, except for customary disclosure filings with the SEC, the SEC filings
required under Section 7.9, listing applications with the New York Stock
Exchange and state "Blue Sky" filings and except where the failure to obtain
such consent, approval or authorization of, or filing or registration with, any
governmental or regulatory authority or other person or entity would not have a
Material Adverse Effect on the Company or the Operating Partnership.
(d) No Shareholder Approval Required. The approval of the
Company's shareholders of the transactions contemplated by this Agreement is not
a prerequisite to the Company's corporate power to execute and deliver this
Agreement or any other documents and instruments to be executed and delivered by
it hereunder or to perform its obligations hereunder and thereunder, including,
without limitation, the issuance of the Equity Securities. The Company's wholly
owned subsidiaries are the only partners of the Operating Partnership, and the
Company agrees to cause such partners to approve any amendment to the OP
Agreement as
27
34
described in Section 7.3, and such approval is the only vote of the holders of
any security of the Operating Partnership or any Subsidiary necessary (under
applicable law or otherwise) to approve any of the transactions contemplated
hereby.
(e) OP Agreement. The Operating Partnership has furnished to
the TCR Representatives a true and complete copy of the OP Agreement, as amended
to the Effective Date. The OP Agreement is in full force and effect and has not
been further amended. No action has been taken or is pending as of the Effective
Date, nor, as of the Closing Date, will have been taken, to amend the OP
Agreement (except as required by Section 7.3) or for the termination or
dissolution of the Operating Partnership.
(f) Equity Securities. The Equity Securities to be issued
hereunder are or prior to the Closing will be duly authorized and, when issued
by the Transferee, will be, in the case of Units, validly issued under the terms
of the OP Agreement and, in the case of the Shares, fully paid and
non-assessable, free and clear of any mortgage, pledge, lien, encumbrance,
security interest, claim or rights of interest of any third party of any nature
whatsoever, other than restrictions under federal and applicable state
securities laws. The Shares to be issued by the Company, including those issued
upon exchange of the Units, are, or prior to the Closing will be, reserved for
future listing with the New York Stock Exchange prior to the date of issuance,
and, upon such issuance, will be fully paid and non-assessable, free and clear
of any mortgage, pledge, lien, encumbrance, security interest, claim or rights
of interest of any third party of any nature whatsoever.
(g) SEC Documents. The Company has caused to be delivered to
the TCR Representatives copies of the Company's Annual Reports on Form 10-K for
the years ended December 31, 1995 and 1996 as filed with the SEC pursuant to the
Exchange Act, the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997 as filed with the SEC
pursuant to the Exchange Act, all current reports on Form 8-K (if any) filed
with the SEC pursuant to the Exchange Act subsequent to December 31, 1996 and
descriptions of all registration statements and related prospectuses and
supplements filed by the Company and declared effective under the Securities Act
since January 1, 1994 (collectively, the "SEC DOCUMENTS"). The Company will
cause to be delivered to the TCR Representatives copies of such additional
documents as may be filed by the Company with the SEC pursuant to the Securities
Act or the Exchange Act between the Effective Date and the Closing Date. The SEC
Documents were, and those additional documents filed between the Effective Date
and the Closing Date will be, (i) prepared and filed in material compliance with
the rules and regulations promulgated by the SEC and applicable to such SEC
Documents, (ii) did not and will not, as of their respective dates, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein in order to make the statements contained therein, in light
of the circumstances under which they were made or will be made, not misleading
(except to the extent that such statements have been modified by subsequently
28
35
filed SEC Documents), and (iii) include all the documents (other than
preliminary material) that the Company was required to file with the SEC since
December 31, 1994.
(h) Financial Statements. The consolidated financial
statements included in the SEC Documents have been prepared in all material
respects in accordance with generally accepted accounting procedures applied on
a consistent basis during the period involved (except as may be indicated in the
notes thereto or, in the case of the unaudited statements, as permitted by
applicable rules and regulations of the SEC) and present fairly (subject, in the
case of the unaudited statements, to normal year-end audit adjustments) the
consolidated financial position of the Company and its consolidated Subsidiaries
at the dates thereof and the consolidated results of operations and cash flows
for the periods then ended.
(i) No Litigation. Except as described in the SEC Documents,
there is no action, suit, claim, investigation or proceeding, whether legal or
administrative or in mediation or arbitration, pending or, to the Company's and
the Operating Partnership's knowledge, threatened, at law or in equity, against
either of the Company or the Operating Partnership before or by any Governmental
Authority that would prevent either of the Company or the Operating Partnership
from performing its respective obligations pursuant to this Agreement or which,
if determined adversely, would have a Material Adverse Effect on either the
Company or the Operating Partnership. There are no judgments, decrees or orders
entered on a suit or proceeding against the Company or the Operating
Partnership, an adverse decision with respect to which might, or which judgment,
decree or order does, adversely affect the Company's or the Operating
Partnership's ability to perform its respective obligations pursuant to, or the
TCR Parties' rights under this Agreement, or that seeks to restrain, prohibit,
invalidate, set aside, rescind, prevent or make unlawful this Agreement or the
performance of this Agreement or the transactions contemplated hereby.
(j) Subsidiaries. Except as set forth on Schedule 6.1(j), the
Transferee has no Subsidiaries. Each Subsidiary of the Transferee listed on
Schedule 6.1(j) has been or will be duly organized, is validly existing and in
good standing under the laws of the jurisdiction in which it was organized, has
the power and authority to own its properties and to conduct its business and is
duly registered, qualified and authorized to transact business and is in good
standing in each jurisdiction under the laws of any state 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 Operating
Partnership, the Company or such Subsidiary. All of the outstanding equity or
other participating interests of each Subsidiary listed on Schedule 6.1(j) have
been duly authorized and validly issued, are fully paid and non-assessable.
29
36
(k) Absence of Certain Changes or Events. Except as
disclosed in the SEC Documents filed with the SEC prior to the Effective Date
or on Schedule 6.1(k), since September 30, 1997, the Company, the Operating
Partnership and each of their respective Subsidiaries has conducted its business
only in the ordinary course of such business (taking into account prior
practices, including the acquisition and disposition of properties and the
issuance of securities), and there has not been any change, circumstance or
event that has resulted in a Material Adverse Effect on the Company, the
Operating Partnership and their Subsidiaries, taken as a whole.
(l) No Undisclosed Liabilities. Except as set forth on
Schedule 6.1(l), none of the Company, the Operating Partnership nor any
Subsidiary has any material Liabilities except for (i) Liabilities reflected or
reserved against in its September 30, 1997 unaudited consolidated balance sheet,
(ii) Liabilities relating to outstanding leases that are not required to be
disclosed under GAAP or (iii) current Liabilities incurred in the ordinary
course of business since the date of such balance sheet (taking into account
prior practices, including the acquisition and disposition of properties and the
incurrence of liabilities in connection therewith).
(m) Capital Structure.
(i) As of January 30, 1998: (A) the authorized capital stock of
the Company consisted of 100,000,000 shares of common stock, without par value,
and 20,000,000 shares of preferred stock, without par value, (B) the issued and
outstanding shares of capital stock of the Company consisted of 39,176,587
shares of common stock (excluding no more than 3,200,000 shares of common stock
reserved for issuance under the Company's stock option plans), 187,666 shares of
Series A preferred stock, 4,000,000 shares of Series B preferred stock,
4,599,600 shares of Series C preferred stock and 1,000,000 shares of Series D
preferred stock, and (c) all the outstanding shares of capital stock of the
Company have been duly and validly issued and are fully paid and non-assessable.
(ii) As of the Effective Date two Units are outstanding.
(iii) Except for the Units, the conversion or exchange rights that
attach to warrants and convertible securities that are listed on Schedule
6.1(m)(iii), shares of common stock reserved for issuance under any employee or
director stock option or dividend reinvestment plan and shares of preferred
stock, there are no shares of common stock or any other equity security of the
Company issuable upon conversion or exchange of any security of the Company or
the Operating Partnership or any Subsidiary of either of them. No shareholder of
the Company is entitled to any preemptive or similar rights to subscribe for
shares of capital stock of the Company.
(n) Taxes. The Company (A) for all taxable years commencing
with 1987 through the most recent December 31, has been subject to taxation as a
REIT within the meaning of the Code and has satisfied all requirements to
qualify as a REIT for such years, (B) has operated, and intends to continue to
operate, in such a manner as to qualify as a REIT for the tax
30
37
year ending December 31, 1998, and (c) has not taken or omitted to take any
action which would reasonably be expected to result in a challenge to its status
as a REIT, and to the Company's knowledge, no such challenge is pending or
threatened. Each Subsidiary which is a partnership, joint venture or limited
liability company has been treated since 1993 and continues to be treated for
federal income tax purposes as a partnership, a qualified REIT subsidiary or
disregarded for federal tax purposes, and not as a corporation or as an
association taxable as a corporation. Each Subsidiary which is a corporation for
federal income tax purposes and with respect to which all of the outstanding
capital stock is owned solely by the Company (or solely by a Subsidiary that is
a corporation wholly-owned by the Company) is a "qualified REIT subsidiary" as
defined in Section 856(i) of the Code.
(o) No Default. Neither the Company nor the Operating
Partnership nor any of their respective Subsidiaries is in default under, or in
violation of, any provision of its organizational documents.
(p) Solvency. There is not in effect with respect to either
the Company or the Operating Partnership, nor has the Company or the Operating
Partnership made (i) any general assignment for the benefit of creditors, (ii)
any voluntary petition in bankruptcy, (iii) any involuntary petition in
bankruptcy, (iv) any appointment of a receiver to take possession of all, or
substantially all, of the Company's or the Operating Partnership's assets, (v)
any attachment or other judicial seizure of all, or substantially all, of the
Company's or the Operating Partnership's assets, (vi) any admission in writing
of its inability to pay its debts as they come due or (vii) any offer of
settlement, extension or composition to its creditors generally.
(q) No Restrictions on Equity Securities. Except for the OP
Agreement, this Agreement and as set forth on Schedule 6.1(q), there are no
shareholders' agreements, partners' agreements, voting trust agreements or other
restrictive agreements relating to the sale or voting of the Units or the
Shares.
(r) Debt Instruments. Neither the Transferee nor any of its
Subsidiaries is in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice or both would
cause such a violation of or default under) any material loan or credit
agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other material contract, agreement, arrangement or
understanding, to which it is a party or by which it or any of its properties or
assets is bound, except as set forth on Schedule 6.1(r) and except for
violations or defaults that would not, individually or in the aggregate, result
in a Material Adverse Effect on the Company.
(s) Form S-3. The Company meets all requirements and
conditions of the SEC for eligibility of its common stock as applicable on Form
S-3.
31
38
Section 6.2 Definition of Knowledge. As used in this Agreement, the
terms "Company's knowledge" or "Operating Partnership's knowledge" or "knowledge
of the Company" or "knowledge of the Operating Partnership" shall mean only the
"current actual knowledge" of the persons listed on Schedule 6.2. As used
herein, the term "current actual knowledge" shall mean only the actual, current,
conscious (and not constructive, imputed or implied) knowledge of such
designees, and current actual knowledge does not include constructive, imputed
or implied knowledge of any employee, agent or other representative of the
Company or the Operating Partnership other than such designees. Anything herein
to the contrary notwithstanding, none of the persons listed on Schedule 6.2
shall have any personal liability or obligation whatsoever with respect to any
of the matters set forth in this Agreement or any of the representations made by
the Company or the Operating Partnership being or becoming untrue, inaccurate or
incomplete in any respect.
ARTICLE 7 COVENANTS.
Section 7.1 Conduct of the Business of the Property Partnerships. The
Property Partnerships and the Contributing Partners severally, and not jointly,
covenant and agree that between the Effective Date and the applicable Closing
Date, unless the Transferee has consented in writing to any other act or
omission (such consent not to be unreasonably withheld, conditioned or delayed),
they shall perform or observe the following with respect to the Property for
which such party is responsible for conveying pursuant to this Agreement:
(a) Each Property Partnership will, or the Contributing
Partners of each Property Partnership will cause it to, operate and maintain its
Property in the ordinary course of business and use reasonable efforts to
preserve for the Operating Partnership the relationships of such Property
Partnership's Tenants, suppliers, managers, employees and others having on-going
relationships with the Property. The Property Partnership and the Contributing
Partners of such Property Partnership will not defer taking any actions or
spending any of its funds, or otherwise manage the Property differently, due to
the transactions contemplated by this Agreement.
(b) No Property Partnership, nor any Contributing Partner of
the Property Partnership, will enter into, renew, extend or modify any of its
Service Contracts except in the ordinary course of its business and unless any
such Service Contract so entered into, renewed, extended or modified grants to
the Property Partnership and its successors and assigns a right to terminate on
thirty (30) days' notice with no material cost to exercise such right.
(c) No Property Partnership, nor any Contributing Partner of
the Property Partnership, shall remove any Personal Property located in or on
its Real Property, except as may be required for repair and replacement or
discarded in the ordinary course of business. All replacements shall be free and
clear of liens and encumbrances except to the extent the original Personal
Property was so encumbered and shall be of quality at least equal to the
replaced items
32
39
and shall be deemed included in Personal Property to be contributed pursuant to
this Agreement, without cost or expense to the Operating Partnership, other than
as expressly provided herein.
(d) Each Property Partnership and each Contributing Partner of
the Property Partnership shall, upon request of the Transferee at any time after
the Effective Date, assist the Transferee in its preparation of audited
statements of income and expense and such other documentation as the Transferee
may reasonably request, covering the period of the Property Partnership's
ownership of its Real Property.
(e) Each Property Partnership will make all required payments
within any applicable grace period under any Indebtedness secured by a lien on
its Real Property, including, without limitation, the Assumed Loans, and will
comply with all material terms, covenants and conditions under any such
Indebtedness, the leases on Personal Property and the Service Contracts. Each
Property Partnership will pay all other accounts payable, including trade debt,
when due in accordance with its past business practices.
(f) Except for the Permitted Encumbrances and as permitted by
Section 4.2, no Property Partnership shall cause or permit its Real Property, or
any interest therein, to be alienated, mortgaged, licensed, encumbered or
otherwise be transferred.
(g) Each Property Partnership will maintain and keep in full
force and effect the hazard, liability and casualty insurance it is currently
maintaining with respect to its Real Property. Each Property Partnership will
take good faith efforts to locate liability insurance policies that have been
maintained by such Property Partnership prior to Closing.
(h) Each Property Partnership shall promptly give the
Transferee written notice of, and promptly deliver to the Transferee, a true and
complete copy of any written notice such Property Partnership may receive, on or
before the applicable Closing Date, from any Governmental Authority concerning a
violation of any applicable Legal Requirements pertaining to its Property or of
any written notice of default from the holder of any Assumed Loan.
(i) Except for actions taken in the ordinary course of
business or in connection with the transactions contemplated by this Agreement
(including, without limitation, one time compensation benefits related hereto),
no Property Partnership (nor any Contributing Partner of the Property
Partnership) shall increase compensation or benefits paid to any of the Rehired
Employees or adopt, enter into, amend or terminate any employment, consulting,
termination, severance or retention agreement to which a Rehired Employee is a
party. Florida RS specifically agrees to be bound by the covenants in this
Section 7.1(i).
(j) Each Development Property Partnership shall diligently
prosecute all work in progress in connection with construction of the
Development Property in a good and
33
40
workmanlike manner and in accordance with all applicable Legal Requirements and
all documents and instruments governing or relating to such construction and
will comply with the terms and conditions of Section 3.3.
(k) No Property Partnership (nor any Contributing Partner of
the Property Partnership) shall make any modification to the terms of any of its
tax exempt bonds or other tax exempt indebtedness relating to its Property.
(l) No Solicitation. Except in connection with the
reorganization of the ownership structure of the Partnership Interests of a
Property Partnership among its current partners or members and/or any
TCR-affiliated entities to facilitate the transactions contemplated by this
Agreement, none of the TCR Parties shall, nor shall any of their partners,
shareholders, members, affiliates or representatives cause or permit the TCR
Parties to, in each and any case directly or indirectly, enter into, solicit,
initiate or continue any discussions or negotiations with, or encourage or
respond to any inquires or proposals by, or participate in any negotiations
with, or provide any information to, or otherwise cooperate in any other way
with, any person or entity other than Transferee and its respective officers,
directors and representatives, concerning any sale of all or a portion of the
TCR Parties' assets or the interests in a Property Partnership, or any merger,
consolidation, liquidation, dissolution or similar transaction involving any of
the TCR Parties (each such transaction being referred to herein as a "PROPOSED
ACQUISITION TRANSACTION"). None of the TCR Parties is currently engaged in
discussions or negotiations with any person or entity other than the Transferee
with respect to any Proposed Acquisition Transaction.
Section 7.2 Conduct of the Business of the Transferee. The Operating
Partnership and the Company covenant and agree that:
(a) Between the Effective Date and the Initial Closing Date,
there shall be no Change in Control of the Company or the Operating Partnership;
and
(b) Between the Effective Date and the Development Property
Closing Date, the Company shall continue to qualify as a REIT for federal income
tax purposes .
Section 7.3 Amendment of OP Agreement. The Company and the Operating
Partnership shall cause the OP Agreement to be amended, modified or restated as
necessary to contain such terms and conditions as are satisfactory to the TCR
Representatives and the Company, including, without limitation, those terms set
forth on Exhibit VII.
Section 7.4 Good Faith Efforts. Each of the TCR Parties, on the one
hand, and the Company and the Operating Partnership, on the other hand, shall
act in good faith and shall not
34
41
take, and shall use commercially reasonable efforts to cause its respective
Subsidiaries, if any, to refrain from taking, any action that would result in
(i) any of the representations and warranties of such party set forth in this
Agreement that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) any of the conditions precedent to Closing set forth
in Article 10 not being satisfied.
Section 7.5 Good Faith Cooperation. Subject to the terms and
conditions herein provided, the parties to this Agreement shall (a) use their
commercially reasonable efforts to cooperate with each other 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 Authorities, third party secured and
unsecured lenders and rating agencies in connection with the execution and
delivery of this Agreement and the transactions contemplated hereby, (ii) timely
making all such filings and timely seeking all such consents, approvals, permits
or authorizations and (iii) preparing such financial statements (including pro
forma financial statements) as may be required by the Company or the Operating
Partnership for incorporation in any registration statement contemplated by
Section 7.9 hereof, or any filing required to be made with the SEC or as may
otherwise be required to enable the Company to satisfy its obligations under
applicable law or regulations; (b) use their commercially reasonable efforts to
obtain in writing any consents required from third parties necessary to
effectuate the transactions contemplated hereby; and (c) use their commercially
reasonable efforts to take, or cause to be taken, all other actions 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 and other duly authorized representatives of the parties hereto shall
take all such necessary action.
Section 7.6 Public Announcements. The initial press release relating
to this Agreement shall be a joint press release, approved by all the parties
hereto and thereafter the parties shall, subject to their respective legal
obligations (including requirements of stock exchanges and similar regulating
bodies), consult with each other, and use commercially 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 filing with any federal or state
governmental or regulatory agency or with any national securities exchange with
respect thereto.
Section 7.7 Government Filings. The Company and the TCR Parties shall
use their commercially reasonable efforts to make, prior to the Initial Closing
Date, all necessary filings with all Governmental Authorities to carry out the
transactions contemplated by this Agreement and will pay their own expenses
incident thereto, subject to Section 8.6 regarding the allocation
35
42
of Closing costs. The TCR Parties have provided to the Florida Housing Finance
Corporation documentation reasonably thought to be sufficient to enable such
entity to approve the transactions contemplated by this Agreement.
Section 7.8 Listing of Shares. Within ten (10) days following the
Effective Date, the Company shall prepare and file with the New York Stock
Exchange a listing application covering the Shares to be issued hereunder and
upon exchange of the Units and shall use its commercially reasonable efforts to
obtain, prior to the Initial Closing Date, approval of the listing of such
Shares, subject to official notice of issuance, which approval is a condition
precedent to the obligations of the TCR Parties to consummate the transactions
contemplated by this Agreement. The obligations of this Section 7.8 shall
survive each Closing.
Section 7.9 Registration of Shares. Within six (6) months following
the Initial Closing Date, the Company shall cause to be filed with the SEC a
shelf registration statement and related prospectus that comply in all material
respects with applicable SEC rules providing for registration under the
Securities Act of the offer and sale by the Investors (as defined in the
Registration Rights Agreement) of the total number of Shares that the Investors
would own if they were to convert all Units owned by them into Shares, and,
within ten (10) Business Days following the Initial Closing Date, the Company
shall cause to be filed with the SEC a shelf registration statement and related
prospectus that comply in all material respects with applicable SEC rules
providing for registration under the Securities Act of the offer and sale by the
Investors of all Shares received hereunder. The Company shall use its
commercially reasonable efforts to cause such registration statements to be
declared effective by the SEC as soon as practicable and to keep such
registration statements effective thereafter to the extent specified in the
Registration Rights Agreement. The obligations of this Section 7.9 shall survive
each Closing indefinitely.
Section 7.10 Investor Representations. Each of the TCR Parties
covenants and agrees (a) that before any Equity Securities are distributed,
either directly or indirectly, to a Distributee, the TCR Party initially
receiving such Equity Securities from the Company or the Operating Partnership
as contemplated by this Agreement will obtain from each Distributee (and deliver
to the Company and the Operating Partnership a fully executed copy of) an
acknowledgment to and agreement with the Company and/or the Operating
Partnership in the form attached hereto as Exhibit VIII (the "DISTRIBUTEE
AGREEMENT"); and (b) the Equity Securities distributed to each Distributee will
be so distributed to the Distributee in accordance with the interest of the
Distributee in a Property Partnership, a Contributing Partner or any other
entity owning, directly or indirectly, any interest in a Property Partnership or
Contributing Partner. The provisions of this Section 7.10 shall survive each
Closing indefinitely.
36
43
Section 7.11 Time of Closing. Each of the parties hereto shall use
its commercially reasonable efforts and act in good faith to take all actions
necessary to consummate the transactions contemplated hereby on or prior to the
applicable Closing Date.
Section 7.12 Pledge of Units. The Transferee shall cooperate with any
Contributing Partner or Distributee to whom the Units are issued pursuant to
this Agreement in connection with the pledge of such Units to a financial
institution. Such cooperation shall include delivery, within ten (10) days of
request therefor, to such financial institution of (i) one or more certificates
as to the organizational documents of the Operating Partnership or the Company,
as the case may be, and as to any changes thereto since the date of delivery of
the most recent certificate, (ii) good standing certificates of the Operating
Partnership and the Company, (iii) an acknowledgment letter confirming the
pledge of any applicable Units and the registration thereof in the records of
the Operating Partnership, and (iv) opinions of counsel for the Operating
Partnership that are customary in similar transactions. The Contributing Partner
or the Distributee shall reimburse the Company or the Operating Partnership for
all out-of-pocket costs and expenses incurred in connection with the foregoing.
Each Distributee receiving Units shall be a third party beneficiary of the
provisions of this Section 7.12, which shall survive as to each Distributee as
long as such Distributee holds Units.
Section 7.13 Partnership Agreements. The Property Partnerships shall
deliver to the Transferee, as soon as reasonably practicable after the Effective
Date (but at least 26 days before the Initial Closing), true and complete copies
of the partnership agreements and any other organizational documents of the
Property Partnerships.
ARTICLE 8 CLOSING.
Section 8.1 The Closing. The consummation of the transactions
contemplated hereunder relating to the Initial Contribution (the "INITIAL
CLOSING"), shall take place at the offices of Xxxxxxxxx Xxxxxxx, Xxxxxxx Xxxxxx
Xxxxx & Xxxxxxx P.A., 000 X. Xxxxxx Xxx., Xxxxx 0000, Xxxxxxx, Xxxxxxx, on March
31, 1998 (to be effective for purposes of pro rations and allocations as of
11:59 p.m. March 31, 1998) (the "INITIAL CLOSING DATE"), or at such other place
as the parties hereto shall mutually agree; provided, however, that the Company
or the TCR Representatives shall have the option (which each may exercise only
once) to extend the Initial Closing Date for a period not to exceed thirty five
(35) days.
Section 8.2 Deliveries at the Initial Closing by the TCR Parties. At
the Initial Closing, each of the TCR Parties, as applicable, will deliver or
cause to be delivered to the Operating Partnership the following with respect to
the Initial Contribution and, where appropriate, duly executed on behalf of all
necessary parties thereto other than the Company and the Operating Partnership:
37
44
(a) An assumption agreement (collectively, the "CONTRACT
ASSUMPTION AGREEMENTS") in a form reasonably satisfactory to the Company
assigning to the Operating Partnership or its designee, as applicable, the
Leases, the Service Contracts and the Trademarks, and whereby the Operating
Partnership or its designee will assume and agree to perform all of the TCR
Parties', and release the TCR Parties from all, duties and obligations under the
Leases, the Service Contracts and the Trademarks from and after the Initial
Closing Date.
(b) Assignments of partnership interest (the "ASSIGNMENT OF
PARTNERSHIP INTERESTS") in a form reasonably satisfactory to the Company
assigning to the Operating Partnership the Partnership Interests and whereby the
Operating Partnership will agree to perform all of the TCR Parties', and release
the TCR Parties from, all duties and obligations related to the TCR Parties or
the Partnership Interests from and after the applicable Closing Date.
(c) All original Leases and all other documents pertaining
thereto or copies of same if the Property Partnership, using its commercially
reasonable efforts, is unable to deliver originals.
(d) All other original documents or instruments referred to
herein, including, without limitation, the Service Contracts, the Licenses and
Permits and the Books and Records, or copies of same if the Property
Partnership, using its commercially reasonable efforts, is unable to deliver
originals; and keys to the Improvements.
(e) A letter to Tenants in a form reasonably satisfactory to
the Company advising the Tenants of the transactions to be consummated hereunder
and directing that rent and other payments thereafter be sent to the Operating
Partnership or its designee, as the Operating Partnership shall so direct.
(f) Any affidavits and such other documents or instruments
required by the Title Company to consummate the transactions contemplated hereby
other than the transactions contemplated by Section 3.3.
(g) Affidavits and other instruments, including but not
limited to all organizational documents of the Property Partnerships and their
general partners and the Contributing Partners as applicable, including
partnership agreements, operating agreements, bylaws, articles of incorporation
and certificates of good standing and/or existence reasonably requested by the
Company or the Title Company evidencing the power and authority of such entities
to enter into and perform this Agreement and any documents to be delivered
hereunder.
(h) A list of all Security Deposits delivered by Tenants
under the Leases.
38
45
(i) A certificate executed by a duly authorized
representative of each of the TCR Parties, in a form reasonably satisfactory to
the Company, stating that the representations and warranties made by the TCR
Parties in this Agreement are true and correct in all material respects as of
the Initial Closing Date, or if there have been any changes, a description
thereof.
(j) A Rent Roll for each Real Property, current as of the
normal closing of the books and records of such Real Property, certified by a
duly authorized representative of the appropriate Property Partnership as being
true and correct in all material respects.
(k) All proper instruments, in a form reasonably
satisfactory to the Company, as shall be reasonably required for the conveyance
to the Operating Partnership of all right, title and interest, if any, of any
Property Partnership in and to any award or payment made, or to be made, (i) for
any taking in condemnation, eminent domain or agreement in lieu thereof of land
adjoining all or any part of the Real Property, (ii) for damage to the Land or
the Improvements or any part thereof by reason of change of grade or closing of
any such street, road, highway or avenue, and (iii) for any taking in
condemnation or eminent domain of any part of the Land or the Improvements.
(l) In order to avoid the imposition of the withholding tax
payment pursuant to Section 1445 of the Code, a certificate signed by a duly
authorized representative of each of the TCR Parties to the effect that it is
not a "foreign person" as that term is defined in Section 1445 (f)(3) of the
Code.
(m) All such transfer and other tax declarations and returns
and information returns, duly executed and sworn to by each Property Partnership
or Contributing Partner and in a form reasonably satisfactory to the Company, to
the extent required by law in connection with the conveyance of the Real
Property or the Partnership Interests as the case may be to the Operating
Partnership.
(n) Possession of the Real Property, subject only to the
Leases and the Permitted Encumbrances.
(o) The documents and instruments reasonably requested by,
and in a form satisfactory to, the TCR Representatives to evidence Transferee's
assumption of the Assumed Loans, and the release of the Contributing Partners'
obligations thereunder (collectively, the "LOAN ASSUMPTION DOCUMENTS").
(p) The Distributee Agreements of the Distributees
receiving Equity Securities at the Initial Closing.
39
46
(q) An opinion of counsel to the TCR Parties reasonably
satisfactory to the Transferee, in a form to be mutually agreed upon by the
Transferee and the TCR Representatives.
(r) Any documents necessary to maintain in effect or, to the
extent transferable, to transfer any warranty from a landscaping contractor or
other third party, but excluding in all cases all warranties from all persons or
entities affiliated with TCR, except as otherwise provided herein.
(s) With respect to the Vinings Club at Metro West Property,
the documents or actions required pursuant to Sections 3.3(b)(i), (iii), (iv),
(v), (vi), (vii), (viii), (ix) and (x), and the landscaping provisions of the
penultimate paragraph of Section 3.3(b), as if such Property was a Development
Property. The TCR Parties shall use commercially reasonable efforts to deliver
the certificate required by Sections 3.3(b)(ii), as if such Property was a
Development Property. In the event that any of the foregoing conditions are not
satisfied, the Transferee may (i) terminate this Agreement with respect to the
Vinings Club at Metro West Property (and the Property Partnership thereof) in
which event such Property shall be treated as a Withdrawn Property, (ii) extend
the Closing Date for such Property for up to an additional one hundred and
twenty (120) days, or (iii) waive any condition and proceed to the Closing of
such Property . Such election shall be made by the Transferee by written notice
to the TCR Representatives at least two (2) Business Days prior to the Initial
Closing Date. The failure of the TCR Parties to satisfy any condition of this
Section 8.2(s) shall not affect the obligations of the Transferee to consummate
the Initial Closing with respect to any Property (or the Partnership Interests
thereof) other than Vinings Club at Metro West, except to the extent the failure
causes a failure to satisfy the closing condition with respect to Withdrawn
Properties in Section 10.2(d); provided, however, that the Transferee shall have
the right to xxx for specific performance (plus attorneys' fees and expenses) to
require the applicable TCR Parties to consummate the Closing with respect to
such Property Partnership.
(t) An opinion of Liddell, Sapp, Zivley, Hill & XxXxxx,
L.L.P., as counsel to the Property Partnerships, that such Property Partnerships
qualify and are treated as partnerships for federal tax purposes, with customary
exceptions, assumptions and qualifications and based upon customary
representations, which may be relied upon by the Transferee.
(u) Affidavits from the applicable Property Partnerships
reflecting that there has been no change in the Property's conditions than is
set forth in the Surveys and to the best of the Property Partnership's knowledge
no change of conditions has occurred on the adjacent properties that encroach
upon the Property.
(v) Affidavits from the applicable Property Partnerships
reasonably sufficient for the title company to delete exception to materialmen
and mechanic liens.
40
47
(w) Such other documents as may be reasonably required or
appropriate to effectuate the consummation of the transactions contemplated by
this Agreement other than the transactions contemplated by Section 3.3, in forms
reasonably satisfactory to the Company.
Section 8.3 Deliveries at the Initial Closing by the Transferee. At
the Initial Closing, the Company and the Operating Partnership shall deliver or
cause to be delivered to the TCR Representatives the following with respect to
the Initial Contribution and, where appropriate, duly executed by all necessary
parties thereto other than the Property Partnerships or the Contributing
Partners.
(a) The Cash Consideration payable at the Initial Closing.
(b) The certificates representing the Units to be issued at
the Initial Closing properly issued to the appropriate party.
(c) The certificates representing Shares to be issued at
the Initial Closing properly issued to the appropriate party.
(d) The Contract Assignment and Assumption Agreements.
(e) The Assignments of Partnership Interests.
(f) The Loan Assumption Documents.
(g) The Guaranty.
(h) A certificate executed by a duly authorized
representative of the Company and the Operating Partnership, in a form
reasonably satisfactory to the TCR Representatives, stating that the
representations and warranties made by the Company and the Operating Partnership
in this Agreement are true and correct in all material respects as of the
Initial Closing Date, or if there have been any changes, a description thereof.
(i) Affidavits and other instruments, including but not
limited to all organizational documents of the Company and the Operating
Partnership including limited partnership agreements, filed copies of limited
partnership certificates, articles of organization, and certificates of good
standing and existence, reasonably requested by the TCR Representatives
evidencing the power and authority of the Company and the Operating Partnership
to enter into and perform this Agreement and any documents to be delivered
hereunder.
41
48
(j) An opinion of counsel to the Company reasonably
satisfactory to the TCR Representatives and in a form to be mutually agreed upon
by the Transferee and the TCR Representatives.
(k) The OP Agreement as amended, modified or restated as
necessary to contain such terms and conditions as are satisfactory to the TCR
Representatives and the Company, including, without limitation, those terms set
forth on Exhibit VII.
(l) The Registration Rights Agreement.
(m) Evidence satisfactory to the TCR Representatives of
approval of the listing of the Shares to be issued hereunder and upon exchange
of the Units by the New York Stock Exchange, subject to official notice of
issuance.
(n) Such other documents as may be reasonably required or
appropriate to effectuate the consummation of the transactions contemplated by
this Agreement other than the transactions contemplated by Section 3.3, in forms
reasonably satisfactory to the TCR Representatives.
Section 8.4 Deliveries at the Development Property Closing by the
TCR Parties. At the Development Property Closing, the Development Property
Partnership will deliver or cause to be delivered to the Operating Partnership
the following with respect to the Development Property and the transactions
contemplated by Section 3.3 and, where appropriate, duly executed on behalf of
all necessary parties thereto other than the Company and the Operating
Partnership:
(a) A Contract Assumption Agreement in a form reasonably
satisfactory to the Company assigning to the Operating Partnership or its
designee, as applicable, the Leases and the Service Contracts, and whereby the
Operating Partnership or its designee, will assume and agree to perform all of
the TCR Parties', and release such TCR Parties from all, duties and obligations
under the foregoing assigned documents from and after the Closing Date.
(b) With respect to all Partnership Interests conveyed to
the Operating Partnership by the Development Property Partnership as
contemplated in Section 2.2(a) hereof, Assignments of Partnership Interest.
(c) All original Leases and all other documents pertaining
thereto or copies of same if the Development Property Partnership, using its
commercially reasonable efforts, is unable to deliver originals.
(d) All other original documents or instruments referred to
herein, including, without limitation, the Service Contracts, the Licenses and
Permits and the Books and Records,
42
49
or copies of same if the Development Property Partnership, using its
commercially reasonable efforts, is unable to deliver originals; and keys to the
Improvements.
(e) A letter to Tenants in a form reasonably satisfactory to
the Company advising the Tenants of the transactions to be consummated hereunder
and directing that rent and other payments thereafter be sent to the Operating
Partnership or its designee, as the Operating Partnership shall so direct.
(f) Any affidavits and such other documents or instruments
required by the Title Company to consummate the transactions contemplated by
Section 3.3.
(g) Affidavits and other instruments, including but not
limited to all organizational documents of the Development Property Partnership
and its general partners and the Contributing Partners as applicable, including
partnership agreements, operating agreements, bylaws, articles of incorporation
and certificates of good standing and/or existence reasonably requested by the
Company or the Title Company evidencing the power and authority of such entities
to enter into and perform this Agreement and any documents to be delivered
hereunder.
(h) A list of all Security Deposits delivered by Tenants
under the Leases.
(i) A certificate executed by a duly authorized
representative of the Development Property Partnership, in a form reasonably
satisfactory to the Company, stating that the representations and warranties
made by such Development Property Partnership in Section 5.1 (except Sections
5.1(m) and (r)) of this Agreement are true and correct in all material respects
as of the Development Property Closing Date, or if there have been any changes,
a description thereof.
(j) A Rent Roll for the Development Property, current as of
the normal closing of the books and records of such Real Property, certified by
a duly authorized representative of the Development Property Partnership as
being true and correct in all material respects.
(k) All proper instruments, in a form reasonably
satisfactory to the Company, as shall be reasonably required for the conveyance
to the Operating Partnership of all right, title and interest, if any, of the
Development Property Partnership in and to any award or payment made, or to be
made, (i) for any taking in condemnation, eminent domain or agreement in lieu
thereof of land adjoining all or any part of the Development Property, (ii) for
damage to the Land or the Improvements or any part thereof by reason of change
of grade or closing of any such street, road, highway or avenue, and (iii) for
any taking in condemnation or eminent domain of any part of the Land or the
Improvements.
43
50
(l) In order to avoid the imposition of the withholding tax
payment pursuant to Section 1445 of the Code, a certificate signed by a duly
authorized representative of the Development Property Partnership to the effect
that it is not a "foreign person" as that term is defined in Section 1445(f)(3)
of the Code.
(m) All such transfer and other tax declarations and returns
and information returns, duly executed and sworn to by the Development Property
Partnership or Contributing Partner and in a form reasonably satisfactory to the
Company, to the extent required by law in connection with the conveyance of the
Development Property or the Partnership Interests as the case may be to the
Operating Partnership.
(n) Possession of the Development Property, subject only to
the Leases and the Permitted Encumbrances.
(o) The Distributee Agreements of those Distributees
receiving Equity Securities at the Development Property Closing.
(p) An opinion of Liddell, Sapp, Zivley, Hill & XxXxxx,
L.L.P., as counsel to the Development Property Partnership, that such
Development Property Partnership qualifies and is treated as a partnership for
federal tax purposes, with customary exceptions, assumptions and qualifications
and based upon customary representations, which may be relied upon by the
Transferee.
(q) Affidavits from the applicable Property Partnerships
reflecting that there has been no change in the Property's conditions than is
set forth in the Surveys and to the best of the Property Partnership's knowledge
no change of conditions has occurred on the adjacent properties that encroach
upon the Property.
(r) Affidavits from the applicable Property Partnerships
reasonably sufficient for the title company to delete exception to materialmen
and mechanic liens.
(s) Such other documents as may be reasonably required or
appropriate to effectuate the consummation of the transactions contemplated by
Section 3.3, in forms reasonably satisfactory to the Company.
Section 8.5 Deliveries at the Development Property Closing by the
Transferee. At the Development Property Closing, the Company and the Operating
Partnership shall deliver or cause to be delivered to the TCR Representatives
the following and, where appropriate, duly executed by all necessary parties
thereto other than the Property Partnership or the Contributing Partners.
44
51
(a) The Cash Consideration payable at the Development
Property Closing.
(b) The certificates representing the Units to be issued at
the Development Property Closing properly issued to the appropriate party.
(c) The certificates representing Shares to be issued at the
Development Property Closing properly issued to the appropriate party.
(d) The Contract Assumption Agreements.
(e) The Assignment of Partnership Interests.
(f) A certificate executed by a duly authorized
representative of the Company and the Operating Partnership, in a form
reasonably satisfactory to the TCR Representatives, stating that the
representations and warranties made by the Company and the Operating Partnership
in this Agreement are true and correct in all material respects as of the
Development Property Closing Date, or if there have been any changes, a
description thereof.
(g) Affidavits and other instruments, including but not
limited to all organizational documents of the Company and the Operating
Partnership including limited partnership agreements, filed copies of limited
partnership certificates, articles of organization, and certificates of good
standing and existence, reasonably requested by the Property Partnership
evidencing the power and authority of the Company and the Operating Partnership
to enter into and perform this Agreement and any documents to be delivered
hereunder.
(h) The Registration Rights Agreement with respect to those
Distributees receiving Equity Securities at the Development Property Closing.
(i) Such other documents as may be reasonably required or
appropriate to effectuate the consummation of the transactions contemplated by
Section 3.3, in forms reasonably satisfactory to the Property Partnership.
Section 8.6 Fees and Expenses. All documentary stamp taxes payable
in connection with the transfer of the Property and the Transferee's assumption
of the Assumed Loans shall be paid by the Company. The Company shall pay all
fees and expenses of third party lenders and other unrelated third parties
related to the Transferee's assumption of all obligations under the Assumed
Loans, including but not limited to fees paid to substitute credit enhancers for
tax exempt bonds, the assumption fee payable to Northwestern Mutual Life
Insurance Company with respect to the Assumed Loan on Vinings Club at Boot Ranch
(net of any credit against such fee attributable to Northwestern Mutual's
interest as a partner in such Property Partnership), legal fees and other
expenses necessary for any consents, amendments, or other matters related to
such
45
52
assumption, and documentary stamp, intangible or other fees or taxes related to
any of the foregoing. The Company shall not pay any fees and expenses related to
the termination of the existing credit enhancers for tax exempt bonds.
All other customary recordation and transfer charges payable with
respect to a Real Property shall be paid by the Company. The Company shall pay
all title insurance premiums, title examination fees and survey costs. All other
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such expenses, including all fees and expenses of agents,
representatives, counsel and accountants. The provisions of this Section 8.6
shall survive the Closing.
Section 8.7 No Warranties.
(a) THE COMPANY AND THE OPERATING PARTNERSHIP ACKNOWLEDGE
AND AGREE THAT THE OPERATING PARTNERSHIP IS ACQUIRING THE PROPERTY IN ITS "AS
IS" CONDITION "SUBJECT TO ALL FAULTS" AND SPECIFICALLY AND EXPRESSLY WITHOUT ANY
WARRANTIES, REPRESENTATIONS OR GUARANTEES, EITHER EXPRESS OR IMPLIED, OF ANY
KIND, NATURE, OR TYPE WHATSOEVER FROM OR ON BEHALF OF THE TCR PARTIES. THE
COMPANY AND THE OPERATING PARTNERSHIP ACKNOWLEDGE THAT, EXCEPT AS SET FORTH IN
THIS AGREEMENT, NEITHER THE OPERATING PARTNERSHIP NOR THE COMPANY HAS RELIED AND
IS NOT RELYING ON ANY INFORMATION, DOCUMENT, REPORT, SALES BROCHURE OR OTHER
LITERATURE, MAPS OR SKETCHES, FINANCIAL INFORMATION, PROJECTIONS, PRO FORMAS OR
STATEMENTS, THAT MAY HAVE BEEN GIVEN BY OR MADE BY OR ON BEHALF OF THE TCR
PARTIES. THE COMPANY AND THE OPERATING PARTNERSHIP FURTHER ACKNOWLEDGE THAT ALL
MATERIALS RELATING TO THE PROPERTY WHICH HAVE BEEN PROVIDED BY THE PROPERTY
PARTNERSHIPS HAVE BEEN PROVIDED WITHOUT ANY WARRANTY OR REPRESENTATION,
EXPRESSED OR IMPLIED, AS TO THEIR CONTENT, SUITABILITY FOR ANY PURPOSE,
ACCURACY, TRUTHFULNESS OR COMPLETENESS AND NEITHER THE OPERATING PARTNERSHIP NOR
THE COMPANY SHALL HAVE ANY RECOURSE AGAINST THE TCR PARTIES OR THEIR COUNSEL,
ADVISORS, AGENTS, OFFICERS, DIRECTORS OR EMPLOYEES FOR ANY INFORMATION IN THE
EVENT OF ANY ERRORS THEREIN OR OMISSIONS THEREFROM. THE COMPANY AND THE
OPERATING PARTNERSHIP EACH REPRESENT THAT THEY ARE SOPHISTICATED AND EXPERIENCED
IN ALL MATTERS RELATING TO THE PROPERTY AND ARE RELYING SOLELY ON SUCH
EXPERIENCE AND SOPHISTICATION IN MAKING ALL DECISIONS WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED HEREIN.
46
53
(b) EXCEPT AS SPECIFICALLY PROVIDED WITH RESPECT TO THE
DEVELOPMENT PROPERTY AND VININGS CLUB AT METROWEST, THE COMPANY AND THE
OPERATING PARTNERSHIP HEREBY ACKNOWLEDGE AND AGREE THAT THE TCR PARTIES HAVE NOT
MADE, DO NOT MAKE AND SPECIFICALLY DISCLAIM ANY REPRESENTATION OR WARRANTY,
PROMISE, COVENANT, AGREEMENT OR GUARANTEE OF ANY NATURE, EXPRESS OR IMPLIED,
ORAL OR WRITTEN, AS TO OR REGARDING: (i) THE QUALITY, NATURE, ADEQUACY OR
PHYSICAL CONDITION, WHETHER LATENT OR PATENT, OF THE PROPERTY, INCLUDING, BUT
NOT LIMITED TO, THE STRUCTURAL ELEMENTS, FOUNDATION, ROOF, APPURTENANCES,
ACCESS, LANDSCAPING, PARKING FACILITIES OR THE ELECTRICAL, MECHANICAL, HVAC,
PLUMBING, SEWAGE OR UTILITY SYSTEMS, FACILITIES OR APPLIANCES AT OR IN
CONNECTION WITH THE PROPERTY, IF ANY; (ii) THE EXISTENCE, QUALITY, NATURE,
ADEQUACY, PHYSICAL CONDITION, OR LOCATION OF ANY UTILITIES SERVING THE PROPERTY;
(iii) THE DEVELOPMENT POTENTIAL OF THE PROPERTY, ITS HABITABILITY,
MERCHANTABILITY OR FITNESS, SUITABILITY OR ADEQUACY FOR ANY PARTICULAR PURPOSE;
(iv) THE ZONING OR OTHER LEGAL STATUS OF THE PROPERTY OR THE POTENTIAL USE OF
THE PROPERTY; (v) THE PROPERTY'S OR ITS OPERATIONS' COMPLIANCE WITH ANY
APPLICABLE LEGAL REQUIREMENTS; (vi) THE QUALITY OF ANY LABOR OR MATERIALS
RELATING IN ANY WAY TO THE PROPERTY; (vii) COMPLIANCE WITH ANY ENVIRONMENTAL
PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR
REQUIREMENTS, INCLUDING THE EXISTENCE IN, ON OR UNDER THE PROPERTY OF ANY
HAZARDOUS MATERIALS; OR (viii) THE CONDITION OF TITLE TO THE PROPERTY OR THE
NATURE, STATUS AND EXTENT OF ANY RIGHT, ENCUMBRANCE, LICENSE, RESERVATION,
COVENANT, CONDITION, RESTRICTION OR ANY OTHER MATTER AFFECTING TITLE TO THE
PROPERTY. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, ALL REPRESENTATIONS,
WARRANTIES, PROMISES, COVENANTS, AGREEMENTS AND GUARANTEES RELATING TO THE
DEVELOPMENT PROPERTY AND VININGS CLUB AT METROWEST SHALL EXPIRE, TERMINATE AND
BE VOID AB INITIO ON THE EARLIER OF THE DATE SET FORTH IN THIS AGREEMENT OR ONE
(1) YEAR AFTER THE FINAL CERTIFICATE OF OCCUPANCY IS RECEIVED FOR THE
DEVELOPMENT PROPERTY AND VININGS CLUB AT METROWEST, AND THE PROVISIONS OF THIS
SECTION 8.7 SHALL BECOME APPLICABLE AND GOVERN WITHOUT EXCEPTION FOR THE
DEVELOPMENT PROPERTY AND VININGS CLUB AT METROWEST.
(c) The Company and the Operating Partnership acknowledge
that, to the extent they have deemed necessary or appropriate, they have
conducted appropriate environmental and soil tests, physical inspections and
other due diligence with respect to the Real Property (collectively, the
"PHYSICAL INSPECTIONS") and have relied upon the Physical
47
54
Inspections in electing whether or not to enter into and perform this
Agreement. The Company and the Operating Partnership further acknowledge that
the Properties have been available for that purpose. Should the transactions
contemplated by this Agreement fail to close for any reason, whether by reason
of the Transferee's default or otherwise, the Transferee will (i) indemnify,
defend and hold harmless the TCR Parties from and against all claims, damages,
losses, costs, liabilities and expenses (including attorneys' fees and
expenses) asserted against or incurred by the TCR Parties and (ii) repair any
damage to the Property, in each case to the extent caused by, resulting from or
arising out of the Physical Inspections conducted by the Transferee. At the TCR
Parties' option, the Transferee will reimburse the TCR Parties for all
reasonable expenses incurred by the TCR Parties in repairing such damages if
the Transferee does not promptly repair such damages after written notice of
such damages has been delivered by the TCR Parties to the Transferee.
ARTICLE 9 ADJUSTMENTS.
Section 9.1 Adjustments at the Applicable Closing Date. The following
items shall be prorated as of midnight on the date preceding the applicable
Closing Date based on the actual number of days in the month, and shall be made
in cash at the applicable Closing, with the Property Partnerships making a cash
payment to the Transferee of the net amount due the Transferee or vice versa
(which adjustments shall have no effect on the calculation of Net Value under
Section 3.1):
(a) Rents shall be prorated based upon the Rent Rolls to be
prepared by each Property Partnership at the applicable Closing showing current
Tenants. If any Tenant is more than, five (5) days delinquent in payment of
current rent, such Tenant shall not be included in the proration. All moneys
received from Tenants from and after the applicable Closing shall be applied by
the Operating Partnership first to current rents and other charges and then to
any past due rents during the Operating Partnership's ownership; any balance
representing past due rents prior to the applicable Closing Date shall be
remitted to the TCR Representatives. After any Closing, the Property
Partnerships shall be entitled to initiate and prosecute proceedings to collect
their respective rents delinquent as of the applicable Closing Date.
(b) At the applicable Closing, each Property Partnership
shall pay to the Operating Partnership an amount equal to all Security Deposits
and any prepaid rents relating to its Real Property.
(c) Utility charges payable by the Property Partnerships,
including, without limitation, electricity, water and sewer bills. If there are
meters on the Real Property, the Property Partnerships will cause readings of
all said meters to be performed not more than ten (10) Business Days prior to
the Closing Date. To the extent said meters are not read prior to such
48
55
Closing, the Operating Partnership will cause same to be read promptly
thereafter and a pro-rata adjustment shall be made upon said reading.
(d) Amounts payable under the Service Contracts.
(e) Real estate and personal property taxes and assessments
due or payable for the calendar year or fiscal year, as applicable. If the
applicable Closing Date shall occur before the tax rate is fixed, the
apportionment of real estate taxes shall be upon the basis of the tax rate for
the preceding year applied to the latest assessed valuation plus 10%; provided,
however, that the apportionment of real estate taxes with respect to the Vinings
Club at Metrowest property shall be based upon an annual tax of $553,641, and
the apportionment of real estate taxes with respect to the Vinings at Lenox
Place property shall be based upon an annual tax of $549,624. No further
adjustment shall be made even if, subsequent to any Closing Date, real estate
taxes (by reason of change in either assessment or rate or for any other reason)
for the Real Property should be determined to be higher or lower than those that
are apportioned.
Section 9.2 Reimbursement of Deposits and Out-of-Pocket Expenses. At
the applicable Closing, the Operating Partnership shall refund and replace all
letters of credit, bond deposits and other amounts relating to the Real
Properties. All of the foregoing payments shall be made in cash at such Closing
and none of the foregoing shall have any effect on the calculation of Net Value.
Section 9.3 Other Adjustments. Except as otherwise provided in this
Agreement, all other adjustments and prorations to be made with respect to any
Real Property shall be made in cash and in accordance with customary title
closing practices in the State in which the Real Property is located.
Section 9.4 Errors in Calculations. Any errors in calculations or
adjustments shall be corrected or adjusted within sixty (60) days after the
Closing.
Section 9.5 Survival. The provisions of this Article 9 shall survive
the applicable Closing Date for one hundred and twenty (120) days.
ARTICLE 10 CONDITIONS PRECEDENT TO CLOSING.
Section 10.1 Conditions to Obligations of the TCR Parties. The
obligations of each of the Property Partnerships to convey its Property, each of
the Contributing Partners to convey its Partnership Interests and to perform the
other covenants and obligations to be performed by the Property Partnerships and
the Contributing Partners on the Closing Date shall be subject to satisfaction
of the following conditions (all or any of which may be waived, in whole or in
part, by the TCR Representatives):
49
56
(a) The representations and warranties made by the Company
and the Operating Partnership herein shall be true and correct in all material
respects with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date; provided, however, that
a failure of any representations or warranties to be true and correct in all
material respects shall not give rise to a claim or right of termination by the
Property Partnerships or the Contributing Partners hereunder so long as such
matters do not have a Material Adverse Effect on the transactions contemplated
herein.
(b) The Company and the Operating Partnership shall have
executed and delivered to the TCR Representatives, the Property Partnerships and
the Contributing Partners all of the items and documents provided herein for
said delivery.
(c) The Company and the Operating Partnership shall have
performed all covenants and obligations undertaken by the Company and the
Operating Partnership herein in all material respects and materially complied
with all conditions required by this Agreement to be performed or complied with
by them on or before the Closing Date.
(d) The Company shall have been treated as a real estate
investment trust for tax purposes in its most recent federal income tax return,
and shall be in compliance with all applicable laws rules and regulations,
including the Code, necessary to permit it to be so treated. The Company shall
not have taken any action or have failed to take any action which could be
expected to, alone or in conjunction with any other factors, result in the loss
of its status as a real estate investment trust for federal income tax purposes.
(e) The Operating Partnership shall become a partnership upon
the Initial Closing for federal income tax purposes, assuming that at least one
Contributing Partner (or Distributee) acquires Units at the Initial Closing.
(f) The Shares to be issued hereunder and upon exchange of
the Units shall have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance.
(g) The Share Price is not below $21.50 per share.
(h) The Transferee shall have arranged for and presented
substitute credit enhancements for the tax exempt bonds that constitute Assumed
Loans in accordance with the provisions for alternate security under the terms
of such Assumed Loans.
Section 10.2 Conditions to Obligations of the Company and the
Operating Partnership. The obligations of the Company and the Operating
Partnership to accept title to the Property and the Partnership Interests and
the Company's and the Operating Partnership's obligations to
50
57
perform the other covenants and obligations to be performed by the Company and
the Operating Partnership on the Closing Date shall be subject to satisfaction
of the following conditions (all or any of which may be waived, in whole or in
part, by the Company or the Operating Partnership):
(a) The representations and warranties made by the Property
Partnerships and the Contributing Partners herein shall be true and correct in
all material respects with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date;
provided, however, that a failure of a representation or warranty to be true and
correct in all material respects shall not give rise to a claim or right of
termination by the Company or the Operating Partnership hereunder so long as
such matters do not have a Material Adverse Effect on the transactions
contemplated herein.
(b) The Property Partnerships and the Contributing Partners
shall have performed all covenants and obligations undertaken by the Property
Partnerships and Contributing Partners herein in all material respects and
materially complied with all conditions required by this Agreement to be
performed or complied with by them on or before the applicable Closing Date.
(c) The Property Partnerships and the Contributing Partners
shall have executed and delivered to the Company and the Operating Partnership
all of the items and documents provided herein for said delivery.
(d) The sum of the Assigned Values of all the Withdrawn
Properties, as determined pursuant to Section 3.5, shall be no more than $75
million, there shall be no more than three (3) Withdrawn Properties, and no more
than one of the properties listed on Schedule 10.2(d) may be Withdrawn
Properties.
(e) All consents or other actions, from the Florida Housing
Finance Corporation or any other entity, required for the assumption by
Transferee of the tax exempt bonds have been delivered to Transferee or
otherwise accomplished; provided, however, that any failure to satisfy this
condition arising out of the Transferee's failure to use commercially reasonable
efforts to secure all required consents related to the Assumed Loans from the
applicable creditors, lenders or, with respect to tax exempt indebtedness,
governmental authorities or similar agencies or to pay the fees and expenses
required pursuant to Section 8.6 shall not relieve the Transferee of its
obligations to accept title to the Partnership Interests.
(f) The Share Price is not below $21.50 per share.
51
58
ARTICLE 11 NO BROKERS.
The TCR Parties, severally and not jointly, on the one hand, and the
Transferee, on the other hand, covenant and agree one with the other that, no
real estate commissions, fees or brokers fees have been or will be incurred in
connection with this Agreement or the transactions contemplated hereby. The TCR
Parties, severally and not jointly, on the one hand, and the Transferee, on the
other hand, shall indemnify, defend and hold each other harmless from and
against any claims, liabilities, obligations or damages for commissions,
finders' or brokers' fees resulting from or arising out of the Transferee's
acquisition of the Property hereunder asserted against either party by any
broker or other person claiming by, through or under the indemnifying party or
whose claim is based on the indemnifying party's acts or omissions. The
provisions of this Article 11 shall survive the Closing or other termination of
this Agreement.
ARTICLE 12 CASUALTY LOSS.
Section 12.1 Maintenance of Insurance Policies. The Property
Partnerships shall continue to maintain, in all material respects, the fire and
extended insurance coverage with respect to the Property (the "INSURANCE
COVERAGE") which are currently in effect, through the Closing Date.
Section 12.2 Casualties. If at any time prior to the Closing Date all
or any portion of any Property (each, a "DAMAGED PROPERTY") is destroyed or
damaged as a result of fire or any other casualty (a "CASUALTY"), the TCR
Representatives shall promptly give written notice thereof (the "CASUALTY
NOTICE") to the Transferee. If the estimated cost to repair or restore the
Damaged Property following such Casualty equals or exceeds Five Million Dollars
($5,000,000), such Casualty is herein called a "MAJOR CASUALTY." Notwithstanding
the occurrence of a Major Casualty, the Transferee shall not have the right to
terminate this Agreement as to the Damaged Property, provided that (a) the
damage resulting from the Casualty is covered by the Insurance Coverage, (b)
subject to the rights of any holders of existing debt, the proceeds of any
applicable Insurance Policy, together with credits equal to the deductible under
the Insurance Coverage and any amount by which the damage is not covered by such
insurance, shall be paid to the Operating Partnership at the Closing, (c) all
unpaid claims and rights in connection with the Casualty shall be assigned to
the Operating Partnership at Closing without in any manner affecting the
consideration payable to the TCR Representatives hereunder, (d) there is rent
interruption insurance in place for a period of at least six (6) months
sufficient to cover any anticipated loss in revenue from the Damaged Property
resulting from such Casualty, and (f) there is no known impediment to obtaining
all Governmental Approvals to permit the Damaged Property to be rebuilt or
repaired. Upon the occurrence of a Major Casualty, if any provision set forth in
the preceding sentence is not satisfied, the Transferee may terminate this
Agreement as to the Damaged Property only by written notice to the TCR
Representatives within fifteen (15) days after receipt of the Casualty Notice.
In that event, such Damaged Property shall be treated as a Withdrawn Property
under Section 3.5, and this Agreement shall continue in full force and effect as
to all other Property.
52
59
Section 12.3 Interim Repairs. If a Property is the subject of a Major
Casualty but the Transferee either is not entitled to or does not terminate this
Agreement as to such Damaged Property pursuant to the provisions of this Article
12, then the appropriate Property Partnership shall prior to the Closing Date
cause all temporary repairs to be made to the Damaged Property as shall be
required to prevent further deterioration and damage to the Damaged Property and
to protect public health and safety; provided, that the cost of any such repairs
shall not exceed the amount of proceeds made available to such Property
Partnership. The appropriate Property Partnership shall have the right to be
reimbursed from the proceeds of any insurance with respect to the Damaged
Property for the cost of such temporary repairs.
Section 12.4 Casualties Other than Major Casualties. If a Property is
the subject of a Casualty which is not a Major Casualty, this Agreement shall
continue in full force and effect, and (a) subject to the rights of any holders
of existing debt, the proceeds of any applicable Insurance Coverage, together
with credits equal to the deductible under such Insurance Coverage and any
amount by which the damage is not covered by such insurance, shall be paid to
the Operating Partnership at Closing, and (b) all unpaid claims and rights in
connection with the Casualty shall be assigned to the Operating Partnership at
Closing without in any manner affecting the consideration payable to the TCR
Representatives hereunder.
ARTICLE 13 CONDEMNATION.
In the event of a Material Taking of any Property (the "CONDEMNED
PROPERTY"'), the Transferee shall have the right, at its sole option, to either
(a) terminate this Agreement as to the Condemned Property only by giving the
appropriate Property Partnership written notice to such effect within fifteen
(15) days after its receipt of written notification of any such occurrence or
(b) accept title to the Condemned Property without reduction of any
consideration to be given to the appropriate Property Partnership hereunder.
Should the Transferee so terminate this Agreement as to Condemned Property in
accordance with this Article 13, such Condemned Property shall be treated as a
Withdrawn Property under Section 3.5 and this Agreement shall continue in full
force and effect as to all other Property. In the event that the Transferee
either is not entitled to or elects not to terminate this Agreement under this
Article 13, or in the event of a taking which is not a Material Taking, the
appropriate Property Partnership shall, subject to the rights of the holder of
any existing mortgage, assign all proceeds of such taking to the Operating
Partnership, and same shall be the Operating Partnership's sole property, and
the Operating Partnership shall have the sole right to settle any claim in
connection with the Condemned Property. The term "MATERIAL TAKING" as to a
Condemned Property or any portion thereof shall be defined to mean the
institution of any proceedings, judicial, administrative or otherwise, which (a)
causes access to the Real Property to be taken or materially diminished (i.e.,
following such taking the Real Property no longer has access to a publicly
dedicated street or traffic flow from and to the Real Property is materially
impaired), (b) results in parking no longer being in
53
60
compliance with applicable zoning laws, or (c) results in a taking of any
portion of any buildings constituting the Improvements.
ARTICLE 14 TERMINATION.
Section 14.1 Termination. This Agreement may be terminated by the
written agreement of the Company and the TCR Representatives or by written
notice given by the terminating party to the other party as follows:
(a) by the Company if any of the conditions to the
obligations of the Company and the Operating Partnership set forth in Sections
10.2(a) through (e) are not satisfied at the applicable Closing for any reason
other than a breach by any of the TCR Parties of any of the covenants or
obligations of the TCR Parties set forth in Section 7.4 or Section 7.5;
(b) by the Company if any of the conditions to the
obligations of the Company and the Operating Partnership set forth in Sections
10.2(a) through (d) are not satisfied at the applicable Closing because of a
breach by any TCR Party of any of the covenants or obligations of the TCR
Parties set forth in Section 7.4 or Section 7.5;
(c) by the TCR Representatives if any of the conditions to
the obligations of the TCR Parties set forth in Sections 10.1(a) through (f) are
not satisfied at the applicable Closing for any reason other than a breach by
the Company or the Operating Partnership of the covenants or obligations of the
Company or the Operating Partnership set forth in Section 7.4 or Section 7.5;
(d) by the TCR Representatives if any of the conditions to
the obligations of the TCR Parties set forth in Sections 10.1 (a) through (f)
are not satisfied at the applicable Closing because of a breach by the Company
or the Operating Partnership of the covenants or obligations of the Company or
the Operating Partnership set forth in Section 7.4 or Section 7.5;
(e) by the TCR Representatives if the condition to the
obligations of the TCR Parties set forth in Section 10.1(h) is not satisfied at
the Initial Closing for any reason;
(f) by either the Company or the TCR Representatives if the
condition set forth in Section 10.1(g) or Section 10.2(f) is not met;
(g) automatically at 12:01 a.m., Atlanta time, on the second
Business Day following the Initial Closing Date or such later date permitted
pursuant to Section 8.1 if (i) the Initial Closing shall not have occurred on or
before the Initial Closing Date or such later date, and (ii) this Agreement has
not previously been terminated pursuant to this Section 14.1.
54
61
Notwithstanding the foregoing, neither the Company nor the TCR Representatives
(i) shall be entitled to terminate this Agreement pursuant to the foregoing
clauses (a) or (c) if the Transferee or any of the TCR Parties, respectively,
shall then be in breach of any representation, warranty or covenant set forth in
this Agreement, or (ii) shall be entitled to terminate this Agreement pursuant
to the foregoing clauses (b) or (d) if the Transferee or any of the TCR Parties,
respectively, shall be in breach or shall have breached any of their covenants
or obligations under Section 7.4 or Section 7.5.
Section 14.2 Payment of Certain Fees and Expenses. If this
Agreement shall be terminated:
(a) by the Company pursuant to Section 14.1(a), then the TCR
Parties jointly and severally agree to pay the Company, within seven (7) days
following receipt of a request for payment by the Company and in immediately
available funds, the Break-Up Expenses (as defined in Section 14.3(c));
(b) by the Company pursuant to Section 14.1(b), then the TCR
Parties jointly and severally agree to pay the Company, within seven (7) days
following such termination, an amount in immediately available funds equal to
the Break-Up Fee (as defined in Section 14.3(b));
(c) by the TCR Representatives pursuant to Section 14.1(c),
then the Company agrees to pay to the TCR Representatives, as representatives of
the TCR Parties, within seven (7) days following receipt of a request for
payment by the TCR Representatives and in immediately available funds, the
Break-Up Expenses;
(d) by the TCR Representatives pursuant to Sections 14.1(d)
or (e) then the Company agrees to pay to the TCR Representatives, as
representatives of the TCR Parties, within seven (7) days following such
termination, an amount in immediately available funds equal to the Break-Up Fee.
Section 14.3 Break-Up Fee and Break-Up Expenses.
(a) Payment. The payment of the Break-Up Fee shall be
compensation and liquidated damages for loss suffered by the party or parties
receiving the liquidated damages, and is not a penalty. The parties to this
Agreement have agreed that the amount of the Break-Up Fee is a reasonable
estimate of the amount of the damages that the party or parties receiving the
fee would be likely to sustain as the actual amount of the damages would be
difficult or impracticable to determine, and no party shall have any liability
to any other after payment of the Break-Up Fee.
55
62
(b) Break-Up Fee. As used in this Agreement, "BREAK-UP FEE"
shall be an amount, when payable to the TCR Representatives, equal to
$5,000,000, and an amount, when payable to the Company, equal to the lesser of
(i) $5,000,000 (the "BASE AMOUNT"), or (ii) the sum of (A) the maximum amount
that can be paid to the Company without causing it to fail to meet the
requirements of Sections 856(c)(2) and (3) of the Code determined as if the
payment of such amount did not constitute income described in Sections
856(c)(2)(A)-(H) and 856(c)(3)(A)- (I) of the Code ("QUALIFYING INCOME"), as
determined by independent accountants to the Company, and (B) in the event the
Company receives a letter from legal counsel (the "BREAK-UP FEE TAX OPINION")
opining that (or indicating that the Company has received a ruling from the
Internal Revenue Service holding that) the Company's receipt of the Base Amount
would either constitute Qualifying Income or would be excluded from gross income
within the meaning of Sections 856(c)(2) and (3) of the Code (the "REIT
REQUIREMENTS") or that the receipt by the Company of the remaining balance of
the Base Amount following the receipt of and pursuant to such opinion (or
ruling) would not be deemed constructively received prior thereto, the Base
Amount less the amount payable under clause (A) above. In the event that the
Company is not able to receive the full Base Amount, the TCR Parties shall place
the unpaid amount in escrow and shall not release any portion thereof to the
Company unless and until the TCR Parties receive either one or a combination of
the following: (i) a letter from the Company's independent accountants
indicating the maximum amount that can be paid at that time to the Company
without causing the Company to fail to meet the REIT Requirements, or (ii) a
Break-Up Fee Tax Opinion, in either of which events the TCR Representatives
shall pay to the Company the lesser of the unpaid Base Amount or the maximum
amount stated in the letter referred to in (i) above. All funds remaining in the
escrow account shall be released to the TCR Representatives on the third
anniversary of the Effective Date. Notwithstanding the foregoing, if this
Agreement is terminated after the Initial Closing Date, but prior to the
Development Property Closing Date, the Break-Up Fee shall equal to $5,000,000.
(c) Break-Up Expenses. The "BREAK-UP EXPENSES" payable to
the Company or the TCR Representatives, as the case may be (the "RECIPIENT"),
shall be an amount equal to the lesser of (i) $1,000,000, (ii) the Recipient's
out-of-pocket expenses incurred in connection with this Agreement and the
transactions contemplated hereby (including, without limitation, all attorneys'
and accountants' expenses), and (iii) if the Recipient is the Company, the
maximum amount that can be paid to the Company without causing it to fail to
meet the requirements of Sections 856(c)(2) and (3) of the Code determined in
the manner set forth above in Section 14.3(b). Notwithstanding the foregoing, if
this Agreement is terminated after the Initial Closing Date but prior to the
Development Property Closing Date, the Break-Up Expenses shall be an amount
equal to the lesser of (1) $100,000 or (2) the Recipient's out-of-pocket
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, all attorneys' and
accountants' expenses) reasonably allocable to the Development Property.
56
63
Section 14.4 Effect of Termination. In the event of termination of
this Agreement as provided in this Article 14, this Agreement shall terminate
and have no further force and effect, without any liability or obligation of any
of the parties hereto, other than under Section 8.6, Articles 11 and 18 and this
Article 14.
Section 14.5 Specific Performance for the Development Property.
Notwithstanding the foregoing, if either the TCR Parties or the Transferee
breaches this Agreement after the Initial Closing with respect to the
Development Property, the non-breaching party may, as its sole and exclusive
remedy, in lieu of the Break-Up Fee or the Break-Up Expenses, elect to seek
specific performance to require the other parties to consummate the Development
Property Closing in accordance with this Agreement. The party seeking specific
performance shall also be entitled to recover its attorneys' fees and expenses
if successful in its suit for specific performance, and if it is not successful,
then it shall not be deemed to have waived any rights to the Break-Up Fees or
Break-Up Expenses.
ARTICLE 15 INDEMNIFICATION.
Section 15.1 By the TCR Parties.
(a) The Contributing Partners and, prior to Closing, the
Property Partnerships shall jointly and severally indemnify, save and hold
harmless the Company, the Operating Partnership and their respective directors,
officers, employees, agents, representatives and affiliates (each of which is a
"TRANSFEREE INDEMNIFIED PARTY"), from and against any and all costs, losses
(including, without limitation, diminution of value), taxes, liabilities,
obligations, damages, lawsuits, deficiencies, claims demands, and expenses
(whether or not arising out of third-party claims), including, without
limitation, interest, penalties, lost profits and other losses, attorneys' fees
and all amounts paid in investigation, defense or settlement of any of the
foregoing ("DAMAGES"), incurred in connection with, arising out of, resulting
from or incident to (a) the inaccuracy of any representation made by, or the
failure to comply with any agreement of any TCR Party set forth in Section 5.1
(o), (p) or (u) of this Agreement, Section 3 (o), (p), (r) or (s) of Addendum A
or any other provision of this Agreement that survives the Closing or in the
certificate or certificates delivered to the Transferee pursuant to Section 7.10
hereof, (b) the breach by a TCR Party of any of its fiduciary duties (including
duties of disclosure) to any other person or entity arising in connection with
the transactions contemplated by this Agreement, (c) any liability with respect
to the matters listed on Schedule 5.1(f), or (d) any document filed or to be
filed by or on behalf of any Property Partnership, Contributing Partner or any
direct or indirect shareholder, partner, member or affiliate of a Property
Partnership or Contributing Partner (the "COVERED PROPERTY PARTNERSHIP PARTY")
with any Governmental Authority or any other document prepared or distributed by
or on behalf of any Covered Property Partnership Party in connection with the
transactions contemplated hereby, including any document distributed in
connection with the solicitation of consents to the consummation by the Property
57
64
Partnership or the Contributing Partner of the transactions contemplated by this
Agreement, (provided, however, that the foregoing shall not apply to information
supplied by the Company or the Operating Partnership in writing to the Covered
Property Partnership Party specifically for inclusion or incorporation by
reference in any such document or to any document prepared or filed by the
Company or the Operating Partnership). Notwithstanding the foregoing, with
respect to Section 7.1 (j) and Article 17, the obligations of the Property
Partnerships and the Contributing Partners shall be joint and several with
Florida RS.
(b) In addition to the obligations set forth in Section
15.1(a) above, Florida RS shall indemnify, save and hold harmless each
Transferee Indemnified Party from and against any and all Damages incurred in
connection with, arising out of, resulting from or incident to the inaccuracy of
any representation made by any TCR Party set forth in Section 5.1 (q) of this
Agreement or Section 3 (q) of Addendum A.
(c) The Transferee agrees that, after one (1) year from the
Initial Closing Date, any or all of the indemnitors named in this Section 15.1
may assign its obligations to any third party who agrees to be bound to the
provisions of this Section 15.1 as if it were a party hereto; provided, however,
that the Transferee is reasonably satisfied that such assignee's financial
condition is sufficient to meet such obligations.
Section 15.2 By the Transferee. Transferee shall indemnify and save
and hold harmless each of the Property Partnerships, the Contributing Partners
and their respective directors, officers, employees, agents, representatives and
affiliates (each of which is a "TCR INDEMNIFIED PARTY") from and against any and
all Damages incurred in connection with, arising out of, resulting from or
incident to (a) the inaccuracy of any representation made by, or the failure to
comply with any covenant or agreement of, the Transferee in Sections 7.8 or 7.9
of this Agreement or in any other provision of this Agreement that survives the
Closing or (b) any Liability of the Property Partnerships incurred after the
applicable Closing.
Section 15.3 Cooperation. Each indemnified party shall cooperate in
all reasonable respects with each indemnifying party and its representatives
(including without limitation its attorneys) in the investigation, trial and
defense of any lawsuit or action and any appeal arising therefrom; provided,
however, that the indemnified party may, at its own cost, participate in
negotiations, arbitrations and the investigation, trial and defense of such
lawsuit or action and any appeal arising therefrom. The parties shall cooperate
with each other in any notifications to insurers.
Section 15.4. Claims for Indemnification. If a claim for Damages (a
"CLAIM") is to be made by a party entitled to indemnification hereunder against
the indemnifying party, the party claiming such indemnification shall give
written notice (a "CLAIM NOTICE") to the indemnifying party as soon as
practicable after the party entitled to indemnification becomes aware of any
fact,
58
65
condition or event which may give rise to Damages for which indemnification may
be sought under this Article 15. Such Claim Notice shall specify the nature and
amount of the Claim asserted, if actually known to the party entitled to
indemnification hereunder. If any lawsuit or enforcement action is filed against
any party entitled to the benefit of indemnity hereunder, written notice thereof
shall be given to the indemnifying party as promptly as practicable (and in any
event within 15 calendar days after the service of the citation or summons). The
failure of any indemnified party to give timely notice hereunder shall not
affect rights to indemnification hereunder, except to the extent that the
indemnifying party demonstrates actual damage caused by such failure. After such
notice, if the indemnifying party shall acknowledge in writing to the
indemnified party that the indemnifying party shall be obligated under the terms
of its indemnity hereunder in connection with such lawsuit or action, then the
indemnifying party shall be entitled, if it so elects at its own cost, risk and
expense, (i) to take control of the defense and investigation of such lawsuit or
action, (ii) to employ and engage attorneys of its own choice to handle and
defend the same unless the named parties to such action or proceeding (including
any impleaded parties) include both the indemnifying party and the indemnified
party and the indemnified party has been advised in writing by counsel that
there may be one or more legal defenses available to such indemnified party that
are different from or additional to those available to the indemnifying party,
in which event the indemnified party shall be entitled, at the indemnifying
party's cost, risk and expense, to separate counsel of its own choosing, and
(iii) to compromise or settle such Claim, which compromise or settlement shall
be made only with the written consent of the indemnified party, such consent not
to be unreasonably withheld. If the indemnifying party fails to assume the
defense of such Claim within 15 calendar days after receipt of the Claim Notice,
the indemnified party against which such Claim has been asserted will (upon
delivering notice to such effect to the indemnifying party) have the right to
undertake, at the indemnifying party's cost and expense, the defense, compromise
or settlement of such claim on behalf of and for the account and risk of the
indemnifying party; provided, however, that such Claim shall not be compromised
or settled without the written consent of the indemnifying party, which consent
shall not be unreasonably withheld. In the event the indemnified party assumes
the defense of the Claim, the indemnified party will keep the indemnifying party
reasonably informed of the progress of any such defense, compromise or
settlement. The indemnifying party shall be liable for any settlement of any
action effected pursuant to and in accordance with this Article 15 and for any
final judgment (subject to any right of appeal), and the indemnifying party
agrees to indemnify and hold harmless an indemnified party from and against any
Damages by reason of such settlement or judgment.
ARTICLE 16 TAX MATTERS.
Section 16.1 Payment of Taxes by the Property Partnerships. At
Closing, the TCR Representatives will pay or provide for payment of all Taxes
due and payable on or after the Closing and will file or provide for the filing
of all returns and reports required to be filed on or after the Closing with
respect to Taxes imposed in connection with the ownership and operation
59
66
of its Property for all taxable periods (or portions thereof) ending on or prior
to such Closing for which the Property Partnership (after such Closing), the
Company or the Operating Partnership could be held liable on a claim made
against the Property Partnership (after such Closing), Company or the Operating
Partnership; provided, however, that real estate and personal property taxes for
1998 shall be prorated at the applicable Closing in accordance with the terms
and provisions of this Agreement and the TCR Parties shall have no liability
therefore after such Closing or have any obligation to file any returns or
reports relating thereto. No later than six months after the Closing, the
Property Partnerships or their agents shall cause to be filed any and all state
and federal income tax returns and reports required to be filed by the Property
Partnerships for the taxable period ending upon the Closing (collectively, the
"INCOME TAX RETURNS"). Under no circumstances shall any Property Partnership (or
its successors and assigns) amend any Income Tax Return of such Property
Partnership for any taxable period during which any TCR Party owned an interest
in any such Property Partnership ("PROPERTY PARTNERSHIP TAX PERIOD") unless (i)
such amendment shall not result in any additional Taxes, fees, penalties or
interest being assessed against or owed by any such TCR Party, or (ii) the TCR
Representatives shall provide their prior written consent to any such amendment.
The parties agree and acknowledge that upon the applicable Closing, (i) the then
current taxable year of each Property Partnership for federal [and state] income
tax purposes shall conclude, (ii) each such Property Partnership shall terminate
for federal [and state] income tax purposes effective upon the applicable
Closing and (iii) there shall be a closing of the books of each such Property
Partnership and the profits, losses, credits and other partnership items of each
Property Partnership shall be allocated among the constituent partners of each
such Property Partnership for the taxable period ending upon the applicable
Closing. The Transferee agrees that it shall cooperate and shall cause each
Property Partnership to cooperate with the TCR Representatives and their agents
with regard to the preparation and filing of any and all Tax returns and reports
hereunder and further agrees that it shall execute or cause to be executed any
and all such Tax returns and reports promptly after delivery of such Tax returns
and reports by the TCR Representatives to Transferee. In the event that any
Governmental Authority shall initiate an audit or investigation (collectively,
an "AUDIT") of any Property Partnership or any Income Tax Return of any such
Property Partnership which pertains to any Property Partnership tax period, the
Transferee shall immediately notify the TCR Representatives of such Audit. The
Transferee shall provide the TCR Representatives and their agents with the
opportunity to participate in the resolution of any such Audit and the
Contributing Partners shall cooperate with the Transferee in the furnishing of
information and other activities relating to any such Audit; provided however,
without the prior written consent of the TCR Representatives, neither the
Transferee nor any Property Partnership (or any successor or assign thereof) (i)
shall extend the statute of limitations or period of assessment with regard to
any Taxes payable by any Property Partnership and attributable to any Property
Partnership tax period or any constituent partner of any such Property
Partnership, or (ii) compromise or settle any Audit, investigation or Tax
controversy which would result in any additional Taxes, fees, penalties or
interest being assessed against or owed by any TCR Party.
60
67
Section 16.2 Payment of 1998 Taxes. The Operating Partnership is
hereby authorized by each of the Property Partnerships with respect to its
respective Property, in the Operating Partnership's sole discretion, to file any
applicable proceeding for the 1998 tax roll for a reduction of the assessed
valuation of the Property. The refund of Taxes, net of all expenses incurred in
connection therewith, if any, for any tax year for which the TCR Parties or the
Operating Partnership shall be entitled to share in the refund shall be retained
by the Operating Partnership in accordance with the apportionment of Taxes
pursuant to the provisions hereof.
Section 16.3 Allocation Method. The Operating Partnership will use
the "traditional method" (as defined in Treas. Reg. Section 1 .704-3(b)) of
allocating income, gain, loss and deduction to account for the variation between
the fair market value and adjusted basis of the Partnership Interests for
federal income tax purposes with respect to (i) the contribution of the
Partnership Interests, and (ii) any revaluation of the Partnership Interests in
accordance with the provisions of Treas. Reg. Sections 1.704-1(b)(2)(iv)(f),
1.704-1(b)(2)(iv)(g) and 1.704-3(a)(6).
Section 16.4 Survival. The provisions of this Article 16 shall
survive the applicable Closing Date for three (3) years.
ARTICLE 17 EMPLOYEE MATTERS.
Those employees that the Transferee desires to hire after the Initial
Closing Date are listed on Schedule 17 (the "REHIRED EMPLOYEES"). The Transferee
shall extend offers of employment to each of the Rehired Employees, which offers
shall be on terms and conditions which Transferee shall determine in its sole
discretion. Immediately prior to the Initial Closing, each of the TCR Parties
shall terminate the employment of Rehired Employees pursuant to this Article 17
and shall cooperate with and use its commercially reasonable efforts to assist
Transferee in its efforts to secure satisfactory employment arrangements with
the Rehired Employees. The Transferee shall not assume any of the TCR Parties'
or their affiliates' employee benefit plans or any obligation or liability
thereunder. Nothing contained in this Agreement shall confer upon any Rehired
Employee any right with respect to continuance of employment by the Transferee,
nor shall anything herein interfere with the right of the Transferee to
terminate the employment of any of the Rehired Employees at any time, with or
without cause, or restrict the Transferee in the exercise of its independent
business judgment in modifying any of the terms and conditions of the employment
of the Rehired Employees. No provision of this Agreement shall create any third
party beneficiary rights in any Rehired Employee, any beneficiary or dependents
thereof, or any collective bargaining representative thereof, with respect to
the compensation, terms and conditions of employment and benefits that may be
provided to any Rehired Employee by the Transferee or under any benefit plan
which the Transferee may maintain.
61
68
For a period of two years following the Initial Closing, none of the
TCR Parties nor Florida RS shall, directly or indirectly, hire or offer
employment to, or seek to hire or offer employment to any Rehired Employee who
is listed on Schedule 17, unless such Rehired Employee initiates unsolicited
discussions for employment.
ARTICLE 18 NOTICE.
All notices, demands, requests, or other writings in this Agreement
provided to be given, made or sent, or which may be given, made or sent, by any
party hereto to another, shall be in writing and shall be delivered by
depositing the same with any nationally recognized overnight delivery service,
or by telecopy or fax machine, in either event with all transmittal fees
prepaid, properly addressed, and sent to the following addresses:
If to the Transferee:
Merry Land & Investment Company, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
ATTN: Xx. Xxxx X. Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Hull, Xxxxxx, Xxxxxx & Xxxxxxx, P. C.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
ATTN: Xxxx X. Xxxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
If to the TCR Parties:
Xxxxxxxx Xxxx Residential Company
000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
ATTN: Xxxxx Xxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
62
69
and
Xxxxxxxx Xxxx Residential
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
ATTN: Xxxxxxx X. Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Liddell, Sapp, Zivley, Hill & XxXxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
ATTN: R. Xxxxx Xxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other address as either party may from time to time designate by
written notice to the other. Notices given by (i) overnight delivery service as
aforesaid shall be deemed received and effective on the first Business Day
following such dispatch with confirmation of delivery from the delivery service
and (ii) telecopy or fax machine shall be deemed given at the time and on the
date of machine transmittal provided same is sent prior to 5:00 p.m., Orlando,
Florida time, on a Business Day (if sent later, then notice shall be deemed
given on the next Business Day) and if the sending party receives a written send
confirmation on its machine and forwards a copy thereof by regular mail
accompanied by such notice or communication. Notices may be given by counsel for
the parties described above, and such notices shall be deemed given by said
party, for all purposes hereunder.
ARTICLE 19 MISCELLANEOUS.
Section 19.1 Limited Survival of Representations and Warranties.
Unless otherwise expressly provided herein that a representation or warranty
will survive the Closing, no representation or warranty in this Agreement or in
any instrument delivered pursuant to this Agreement (other than the warranty of
title to the Partnership Interests in Addendum A and Addendum B) shall survive
the Closing.
Section 19.2 Entire Agreement: Third-Party Rights. This Agreement
constitutes the entire agreement between the parties and incorporates and
supersedes all prior negotiations and discussions between the parties. This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto and their successors and assigns, and, except as provided in Section
63
70
7.12, nothing in this Agreement, express or implied, is intended to confer upon
any other person any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
Section 19.3 Amendment. This Agreement cannot be amended, waived or
terminated orally, but only by an agreement in writing signed by each party
hereto; provided, however, that the TCR Representatives may sign on behalf of
all TCR Parties.
Section 19.4 Assignment. Except as expressly provided or contemplated
herein, no party may assign this Agreement or any interest therein to any other
person without the prior written consent of the other parties hereto; provided,
however, that the Operating Partnership may assign to an affiliate its right to
receive up to 1% of the Partnership Interests of each Property Partnership.
Section 19.5 Governing Law. This Agreement shall be interpreted and
governed by the laws of the State of Florida, without regard to its rules of
conflicts of laws and shall be binding upon the parties hereto and their
respective successors and assigns.
Section 19.6 Section Headings. The caption headings in this Agreement
are for convenience only and are not intended to be part of this Agreement and
shall not be construed to modify, explain or alter any of the terms, covenants
or conditions herein contained.
Section 19.7 Severability. If any term, covenant or condition of this
Agreement is held to be invalid, illegal or unenforceable in any respect, this
Agreement shall be construed without such provision.
Section 19.8 No Other Rights or Obligations. Nothing contained in this
Agreement shall be deemed to create any rights or obligations of partnership,
joint venture or similar association between any of the TCR Parties and the
Transferee.
Section 19.9 Counterparts. This Agreement may be executed by the
parties hereto in counterparts, all of which together shall constitute a single
Agreement. In addition, the parties agree to accept facsimile signatures and to
treat the same as originals.
Section 19.10 Construction. All references herein to any Article,
Section, Schedule or Exhibit shall be to the Articles and Sections of this
Agreement and to the Schedules and Exhibits annexed hereto unless the context
clearly dictates otherwise. All of the Schedules and Exhibits annexed hereto
are, by this reference, incorporated herein.
Section 19.11 Representatives. Any approval, consent, mutual
satisfaction or similar determination required to be made hereunder by the TCR
Parties or any person included within such terms shall be granted exclusively by
any one of the TCR Representatives. Any approval,
64
71
consent, mutual satisfaction or similar determination required to be made
hereunder by the Transferee or any person included in such term shall be granted
exclusively by the "TRANSFEREE REPRESENTATIVE," who for purposes of this
Agreement, until further notice to the TCR Representatives, shall be the persons
listed on Schedule 19.11.
Section 19.12 Attorneys' Fees. In the event of any litigation or
alternative dispute resolution between the Transferee and any of the TCR
Parties, in connection with this Agreement or the transactions contemplated
herein, the non-prevailing party in such litigation or alternative dispute
resolution shall be responsible for payment of all expenses and reasonable
attorneys' fees incurred by the prevailing party. The provisions of this Section
19.12 shall survive the Closing.
Section 19.13 Interpretation. Whenever used herein, the singular
number shall include the plural, the plural shall include the singular, and the
use of any gender shall be applicable to all genders.
Section 19.14 Schedules. Each representation and warranty made herein
by (a) the Property Partnerships and (b) the Company and the Operating
Partnership is qualified by the disclosures made by such party in the Schedules.
Each schedule hereto may be amended prior to Closing by the party responsible
therefor. If the party receiving such schedule does not object in writing to the
amended schedule within ten (10) days upon receipt thereof (or, if such
amendment is received less than ten (10) days prior to the Closing Date, then at
least one (1) day prior to the Closing Date), such party shall be deemed to have
approved the amended schedule.
Section 19.15 Radon Disclosure. In accordance with the requirements of
Florida Statutes Section 404.056(8), the following notice is hereby given to the
Transferee:
RADON GAS: Radon is a naturally occurring radioactive gas that, when it
has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of
radon that exceed federal and state guidelines have been found in
buildings in Florida. Additional information regarding radon and radon
testing may be obtained from your County Public Health Unit.
65
72
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
VININGS CLUB AT METROWEST LIMITED
PARTNERSHIP, A Texas limited partnership
By: TCR METROWEST LIMITED PARTNERSHIP, a Texas
limited partnership
Its: General Partner
By: TCR METRO, INC., a Texas corporation
Its: General Partner
By:
-----------------------------------
Xxxxx X. Xxxx
Its: Vice President
73
LENOX PLACE LIMITED PARTNERSHIP, a Texas
limited partnership
By: TCR LENOX PLACE LIMITED PARTNERSHIP, a Texas limited
partnership
Its: General Partner
By: TCR LENOX, INC., a Texas corporation
Its: General Partner
By:
-----------------------------------
Xxxxx X. Xxxx
Its: Vice President
00
XXXXXXX XXXXX JOINT VENTURE, a Florida general
partnership
By: TCR SEAGULL DRIVE LIMITED PARTNERSHIP, a Texas
limited partnership
By: TCR SEAGULL, INC., a Texas corporation
Its: General Partner
By:
-----------------------------------
Xxxxx X. Xxxx
Its: Vice President
75
CARROLLWOOD PLACE LIMITED
PARTNERSHIP, a Texas limited partnership
By: TCR CARROLLWOOD PLACE LIMITED PARTNERSHIP, a Texas
limited partnership
Its: General Partner
By: TCR NORTH FLORIDA APARTMENTS, INC., a
Texas corporation
Its: General Partner
By:
-----------------------------------
Xxxxx X. Xxxx
Its: Vice President
76
CROW HORIZON PLACE ASSOCIATES,
LTD., a Florida limited partnership
By: CROW, XXXXXXXXXXX AND XXXX, INC.,
a Florida corporation
Its: General Partner
By:
-----------------------------------
Xxxxx X. Xxxx
Its: Vice President
By: XXXX-XXXXXXXXXXX COMPANY, a Georgia
corporation
Its: General Partner
By:
-----------------------------------
Xxxxx X. Xxxx
Its: Vice President
00
XXXX XXXX XXXXXX ASSOCIATES, LTD.,
a Florida limited partnership
By: CROW, XXXXXXXXXXX AND XXXX, INC., a Florida
corporation
Its: General Partner
By: -----------------------------------
Xxxxx X. Xxxx
Its: Vice President
By: XXXX-XXXXXXXXXXX COMPANY, a Georgia
corporation
Its: General Partner
By:
-----------------------------------
Xxxxx X. Xxxx
Its: Vice President
00
XXXX XXXX XX XXXXXX XXXX
ASSOCIATES, LTD., a Florida limited partnership
By: CTW OAKS AT ORANGE PARK ASSOCIATES,
LTD., a Florida limited partnership
Its: General Partner
By: CROW, XXXXXXXXXXX AND XXXX, INC., a
Florida corporation
Its: General Partner
By:
-----------------------------------
Xxxxx X. Xxxx
Its: Vice President
00
XXXX XXXXXXXXX ASSOCIATES, LTD.,
a Florida limited partnership
By: CROW, XXXXXXXXXXX AND XXXX, INC., a Florida
corporation
Its: General Partner
By:
--------------------------------
Xxxxx X. Xxxx
Its: Vice President
00
XXXX XXXX XX XXXXXXXXXX
ASSOCIATES, LTD., a Florida limited partnership
By: XXXX-XXXXXXXXXXX COMPANY, a Georgia
corporation
Its: General Partner
By:
--------------------------------
Xxxxx X. Xxxx
Its: Vice President
81
CROW OAKS AT REGENCY ASSOCIATES, LTD.,
a Florida limited partnership
By: CROW, XXXXXXXXXXX AND XXXX, INC., a
Florida corporation
Its: General Partner
By:
--------------------------------
Xxxxx X. Xxxx
Its: Vice President
By: XXXX-XXXXXXXXXXX COMPANY, a Georgia
corporation
Its: General Partner
By:
--------------------------------
Xxxxx X. Xxxx
Its: Vice President
By: XXXX-XXXXXXXXXXX PARTNERS, INC., a Georgia
corporation
Its: General Partner
By:
--------------------------------
Xxxxx X. Xxxx
Its: Vice President
00
XXXX XXXXXX XXXXX ASSOCIATES, LTD.,
a Florida limited partnership
By: CROW, XXXXXXXXXXX AND XXXX, INC., a
Florida corporation
Its: General Partner
By:
--------------------------------
Xxxxx X. Xxxx
Its: Vice President
By: XXXX-XXXXXXXXXXX COMPANY, a Georgia
corporation
Its: General Partner
By:
--------------------------------
Xxxxx X. Xxxx
Its: Vice President
00
XXXX XXXXX XXXXX XXXXX LIMITED
PARTNERSHIP, a Florida limited partnership
General Partner
By: CTSF DEVELOPMENT CORPORATION, a
Florida corporation
Its: General Partner
By:
--------------------------------
Xxxxx X. Xxxx
Its: Vice President
84
SARASOTA BENEVA PLACE ASSOCIATES,
LTD., a Florida limited partnership
By: XXXX XXXXXX PLACE ASSOCIATES, LTD., a
Florida limited partnership
Its: General Partner
By: CROW, XXXXXXXXXXX AND XXXX, INC.,
a Florida corporation
Its: General Partner
By:
--------------------------------
Xxxxx X. Xxxx
Its: Vice President
85
AS TO SECTION 7.1(I), ARTICLE 15 AND
ARTICLE 17, ONLY:
FLORIDA RS, INC., A TEXAS
CORPORATION
By:
--------------------------------
As Its:
-----------------------------
86
MERRY LAND & INVESTMENT
COMPANY, INC. a Georgia
Corporation
By:
--------------------------------
As Its Senior Vice President
Attest:
------------------------------
As Its Assistant Secretary
(Corporate Seal)
87
MERRY LAND DOWNREIT I LP,
a Georgia limited partnership
By: MERRY LAND APARTMENT
COMMUNITIES, INC., a Maryland
corporation, its sole general partner
By:
------------------------------------
As Its Senior Vice President
Attest:
--------------------------------
As Its Assistant Secretary
(Corporate Seal)
