EXCHANGE OPTION AGREEMENT
BY AND AMONG
FAC PROPERTIES, L.P.,
FAC REALTY TRUST, INC.,
AND THE OWNERS OF
THE PROPERTIES AND INTERESTS LISTED HEREIN
DATED AS OF APRIL ____, 1998
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF ANY
DOCUMENT USED IN CONNECTION WITH THE OFFERING AND ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
THE
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISK OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.
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TABLE OF CONTENTS
Page
1. Contribution of Interests................................................1
2. Payment of the Consideration.............................................2
A. Units Issued....................................................2
B. The Lock-Up.....................................................2
3. The Closing..............................................................2
A. Conditions to Closing - Generally...............................2
B. Closing; Condition to Obligations...............................3
C. Default.........................................................4
D. Documents to be Delivered at Closing............................4
E. Documents Required to be Delivered by the Operating
Partnership and the REIT at Closing.............................5
4. Holdback of Units........................................................5
Celebration Post Office Space. .........................................6
5. Representations and Warranties of Owners.................................6
A. Existence and Power.............................................6
B. Authorization: No Contravention.................................7
C. Pending Actions.................................................7
D. Investment Representations and Warranties.......................7
E. NASD Affiliation................................................9
F. Foreign Person..................................................9
6. Representations and Warranties of the Operating Partnership
and the REIT.............................................................9
7. Other Provisions........................................................10
A. Counterparts...................................................10
B. Entire Agreement...............................................10
C. Construction...................................................10
D. Applicable Law.................................................10
E. Severability...................................................10
F. Waiver of Covenants, Conditions and Remedies...................10
G. Schedules......................................................11
H. Amendment and Assignment.......................................11
I. Relationship of Parties........................................11
J. Further Acts...................................................11
K. Notice.........................................................11
L. Consent to Transfer of Interests...............................12
SCHEDULES....................................................................15
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EXCHANGE OPTION AGREEMENT
THIS EXCHANGE OPTION AGREEMENT (the "Agreement") made and entered into as
of the ___ day of April, 1998, by and among each of the persons whose names are
set forth on Schedule A hereof (each being hereinafter called an "Owner" and
collectively the "Owners"), FAC PROPERTIES, L.P., a Delaware limited partnership
("Operating Partnership") and its general partner, FAC REALTY TRUST, INC., a
Maryland corporation (the "REIT").
W I T N E S S E T H:
WHEREAS, the Operating Partnership is a Delaware limited partnership having
the REIT as its sole general partner and the REIT has elected to be qualified as
a real estate investment trust under the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations thereunder (the
"Code"); and
WHEREAS, each Owner owns an interest in one or more of the partnerships,
the limited liability companies and/or the properties listed on Schedule B
attached hereto and incorporated herein by reference (such schedule is herein
referred to as such Owner's "Acquisition Schedule"); and
WHEREAS, the Operating Partnership desires to acquire from each Owner, and
each Owner desires to transfer to the Operating Partnership, on the terms and
conditions set forth herein, all interests owned by such Owner and set forth in
such Owner's Acquisition Schedule and any other direct or indirect equity
interests such Owner may have, whether now owned or hereinafter acquired, in the
partnerships and/or limited liability companies (collectively the "Acquired
Partnerships" or "Partnerships") or the properties (the "Properties") listed on
Schedule B attached hereto, and each such direct or indirect equity interest of
an Owner in such Acquired Partnerships or Properties is referred to individually
as an "Interest" and, collectively, as such Owner's "Interests"; and
WHEREAS, the Owners have agreed to contribute their Interests to the
Operating Partnership in exchange for limited partnership interests in the
Operating Partnership (the "Partnership Units" or "Units") and the Operating
Partnership has agreed to acquire the Interests and to issue to each Owner
Partnership Units in the Operating Partnership in exchange for the contribution
of each Owner's Interest; and
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and conditions herein set forth and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties do hereby agree as follows:
1. Contribution of Interests. Subject to the terms and provisions hereof
and of the Master Agreement (as defined below), each Owner does hereby agree to
contribute to the Operating Partnership or its designee its Interests and the
Operating Partnership does hereby agree to accept such Interests (or to cause
its designee to accept such Interests) and the Operating Partnership further
agrees to issue to each Owner, in exchange for such contribution, the
Partnership Units as provided in Paragraph 2 and on Schedule B hereof. Anything
to the contrary in this Agreement or the Master Agreement notwithstanding, the
Operating Partnership shall at all times have the irrevocable right and option
to require the Owners of all of the interests in a Property to either convey to
the Operating Partnership (or its designee) such ownership interests or, in lieu
thereof, fee simple title to the Property. All such contributions and issuances
at a Closing shall otherwise be in accordance with this Agreement.
2. Payment of the Consideration.
A. Units Issued. The consideration for each Owner's Interests shall be
(i) the number of Units as set forth in such Owner's Acquisition Schedule
and (ii) a cash payment in the amount of $2,111,468, less the Withheld Cash
(as hereinafter defined), subject in each case to the provisions of
Paragraph 4 below. The number of such Units and amount of cash are subject
to adjustment at Closing due to principal payments on any mortgage loan,
prorations and post-closing adjustments as provided in the Master Agreement
(as defined below).
For the first fiscal year (or other period over which distributions
are paid) of the Operating Partnership ending after the date of Closing,
partnership distributions, if any, attributable to such year (or other
period) payable by the Operating Partnership to Owner pursuant to Section
5.1 of the Partnership Agreement (as defined at Paragraph 3.E(i) below)
shall be prorated to take into account the period of time during such year
(or other period) that the Owner or its successors in interest to the Units
is a limited partner in the Operating Partnership. The Owner shall receive,
contemporaneously with receipt by the other limited partners in the
Operating Partnership of their respective distributions for such year (or
other period), that portion of a full distribution otherwise attributable
to its Units determined by multiplying the amount of such full distribution
by a fraction the numerator of which is the number of days during such year
(or other period) that the Owner is a limited partner in the Operating
Partnership and the denominator of which is the number of days in such year
(or other period). In the event that the Owner receives a full cash
distribution for such period, it shall reimburse the Operating Partnership
the prorated portion of such distribution within five (5) days of receipt.
B. The Lock-Up. Each Owner hereby agrees that without the prior
written consent of the REIT, he will not, directly or indirectly, sell,
offer or contract to sell, grant any option for the sale of, seek
redemption of or otherwise dispose of or transfer (collectively, "dispose
of"), any Partnership Units received hereby except as set forth at Schedule
E hereof.
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3. The Closing.
A. Conditions to Closing - Generally. The Closing is conditioned upon
satisfaction of the terms and conditions for closing of the Master
Agreement dated as of even date herewith by and among the Operating
Partnership, the REIT and the Owners (the "Master Agreement").
B. Closing; Condition to Obligations. Subject to the foregoing, the
Operating Partnership will specify a closing date, which date shall be no
later than April 30, 1998, for the closing (the "Closing") of the exchange
contemplated hereby which Closing shall take place at the offices of the
REIT. At or before Closing, the Operating Partnership (or its designee) and
Owner will execute all closing documents (the "Closing Documents") required
by the Operating Partnership in accordance with Paragraph 3.D. and deposit
the same in escrow with the REIT or other escrow agent to be selected by
the REIT (the "Closing Agent").
If the Closing occurs:
(i) With respect to each Partnership or Property (or portion
thereof) acquired, the Operating Partnership shall cause to be
delivered to the Closing Agent for the benefit of each Owner the
number of Units set forth on each Owner's Acquisition Schedule, as
adjusted pursuant to the terms hereof and the Master Agreement;
(ii) Upon receipt of the consideration set forth in clause (i)
above, the Closing Agent will release the Closing Documents to the
Operating Partnership; and
(iii) The transactions described or otherwise contemplated herein
or in the Closing Documents will thereupon be deemed to have been
consummated.
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Notwithstanding the above, the Operating Partnership may, in its sole
discretion, elect not to complete the acquisition of Interests of any
Owner with an identified breach of (and failure to cure within any
relevant grace or cure period) or other exception with respect to
Paragraph 5 hereof or that has otherwise breached (and failed to cure)
this Agreement (any such Owner being hereafter referred to as a
"Non-Complying Owner"), in which case the Operating Partnership shall,
in lieu of the delivery with respect to such Owner pursuant to clause
(i) above, notify the Closing Agent of such election and direct the
Closing Agent to return such Owner's Closing Documents and any other
agreements or instruments executed in connection with the transactions
contemplated thereby (the "Ancillary Agreements") to such Owner. The
election of the Operating Partnership not to acquire the Interests of
a particular Non-Complying Owner shall not affect the obligations of
any other Owner hereunder, including any other Non-Complying Owner. If
because of such an election, the Operating Partnership would not
acquire all of the Interests in any one Partnership or Property, then
the Operating Partnership may elect not to purchase any of the
Interests in such Partnership or Property and none of the Owners in
such Partnership or Property shall contribute its respective Interest
in such Partnership or Property to the Operating Partnership.
If the Closing of a Partnership or Property does not occur as a result
of a Non-Complying Owner within the time provided by Paragraph 3.B.,
then the Closing Agent will be directed to destroy such Closing
Documents and Ancillary Agreements it holds and return to the
Operating Partnership the consideration delivered by the Operating
Partnership to the Closing Agent with respect to such Partnership or
Property in accordance with the previous paragraph.
C. Default. If any party hereto defaults with respect to its
obligations under this Agreement, the other party shall be entitled to
exercise any and all remedies provided at law or in equity, including but
to limited to, the right to specific performance. Except as otherwise
provided herein, no default by any Owner hereunder shall in any way limit
or affect the obligations of any other Owner hereunder.
D. Documents to be Delivered at Closing. At or prior to the Closing,
each Owner which is a party hereto shall execute, acknowledge where deemed
desirable or necessary by the Operating Partnership, and deliver to the
Closing Agent, in addition to any other documents mentioned elsewhere
herein, the following:
(i) As to Interests for which the Operating Partnership has
elected in its sole discretion to accept (or to cause its designee to
accept) an assignment of partnership interests constituting such
Interests at Closing, three duly executed Assignments of Interest (the
"Assignment"), which assignments shall be in a form as attached at
Schedule D and shall contain a warranty of title that such Owner owns
such Owner's Interests free and clear of all encumbrances.
(ii) As to Interests for which the Operating Partnership has
elected in its sole discretion to accept (or to cause its designee to
accept) a transfer of fee simple
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title to the Property in lieu of a transfer of all of the ownership
interests therein, a general warranty deed, xxxx of sale and
assignments of leases, contracts and intangibles.
(iii) Any other documents reasonably necessary to assign,
transfer and convey such Owner's Interests and effectuate the
transactions contemplated hereby, including any affidavits or
indemnities required by the title insurers insuring the Operating
Partnership's (or its designee's) title to a Property or the
Interests.
(iv) If requested by the Operating Partnership, a certified copy
of all appropriate corporate, limited liability company or partnership
actions authorizing the execution, delivery and performance by Owner
of this Agreement, the Closing Documents and the Ancillary Documents.
(v) Mortgage releases or consents of mortgagees, as applicable,
to the Operating Partnership's acquisition and ownership of its
Interest in such Partnership or Property, without personal liability
of the Operating Partnership or the REIT.
(vi) A settlement statement with respect to the Closing, duly
executed by such Owner.
(vii) If requested by the Operating Partnership in the case of
any Owner which is a corporation, partnership, trust or other entity,
an opinion from counsel for such Owner in form and content reasonably
acceptable to the Operating Partnership substantially to the effect
that such Owner is duly organized, validly existing and in good
standing under the laws of the state of its organization, had and has
all applicable corporate or partnership power and authority to enter
into, deliver and perform this Agreement, the Closing Documents and
the Ancillary Documents, the execution, delivery and performance of
which Agreement, Closing Documents and Ancillary Documents, and the
transactions contemplated hereby and thereby, do not and will not
constitute a breach or a violation of Owner's partnership agreement,
operating agreement, declaration of trusts, charter or bylaws, if
applicable; and that all applicable action necessary for such Owner to
execute and deliver this Agreement, the Closing Documents and the
Ancillary Documents has been taken and that the same have been validly
executed and delivered and are the valid and binding obligations of
such Owner enforceable against it, subject to creditors rights and
other normal and customary exceptions, in accordance with their terms.
E. Documents Required to be Delivered by the Operating Partnership and
the REIT at Closing. the Operating Partnership and the REIT shall deliver
to the Owners at the Closing, the following:
(i) A copy of the Agreement of Limited Partnership of the
Operating Partnership, as amended (the "Partnership Agreement").
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(ii) The amendment to the Partnership Agreement (the
"Amendment"), duly executed by the REIT and all other necessary
parties, to evidence admission of the Owners to the Operating
Partnership as limited partners.
(iii) A settlement statement with respect to the Closing, duly
executed by the Operating Partnership.
(iv) Such other documents and instruments as may be reasonably
necessary to consummate the transactions with the Owners under this
Agreement.
4. Holdback of Units. Owners hereby acknowledge and agree that certain
circumstances exist, as described in more detail below, in light of which the
Operating Partnership has (i) withheld issuance of certain Partnership Units
(the "Withheld Units") from the Owners and (ii) withheld the payment of cash in
the amount of $831,332 (the "Withheld Cash") from the Owners, provided that if
the Owners strictly satisfy certain conditions enumerated below, the Operating
Partnership shall issue such Units and pay over such cash as to which said
conditions have been satisfied. However, the Owners hereby expressly acknowledge
that (i) their contribution of their Interests is in consideration of (A) the
issuance of the Units listed in their respective Acquisition Schedules and (B)
their receipt of the amount of cash referenced in Paragraph 2A above, as
adjusted pursuant to this Agreement and the Master Agreement, and such
contribution is not dependent or contingent in any way upon the issuance of any
of the Withheld Units or receipt of any of the Withheld Cash and (ii) the
Withheld Units shall not be issued and the Withheld Cash shall not be paid
unless and until the conditions associated with the issuance of such Units and
the payment of such cash have been strictly satisfied, and unless the conditions
below are strictly satisfied within the time periods set forth below, the
Withheld Units will not be issued and the Withheld Cash will not be paid. Owners
further expressly acknowledge that the Withheld Cash is not to be held in
escrow, shall not accrue interest and the Owners will have no interest therein
or claim therefor unless and until all of the conditions precedent to its
payment shall have been strictly satisfied.
Celebration Post Office Space. Within thirty (30) days after the
earlier to occur of (i) three (3) years after the Closing or (ii) Rent
Commencement (as hereinafter defined) in respect of that certain rentable
area consisting of 13,769 square feet which is "vacant" (i.e., empty,
irrespective of whether the U.S. Post Office has surrendered its lease) on
the date of this Agreement at the Property listed on the Acquisition
Schedule as "Celebration," which vacant space is identified on Schedule C
attached hereto as the "Post Office Vacant Space," the Operating
Partnership shall issue 23,205 Partnership Units to Festival Associates
Limited Partnership. The term "Rent Commencement" shall mean, with respect
to vacant space at a Property, the date upon which the Owner of such
Property has provided to the Operating Partnership and the REIT
satisfactory evidence that such vacant space is under lease to a tenant
(other than the U.S. Post Office under the lease which may currently be in
effect) and on terms acceptable to the Operating Partnership and the REIT
(with such tenant being unaffiliated with the Owner) for an initial term of
not less than three years and at an effective annual base rent, inclusive
of CAM charges and other items commonly considered
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"additional rent" of not less than $108,000 over the term of the Lease,
exclusive of renewal options, and such tenant has accepted the demised
premises and is in occupancy and paying rent. Such evidence shall include,
without limitation, the following items which shall be satisfactory to the
REIT and the Operating Partnership in their sole discretion: (i) current
tenant estoppel certifying as to the amount and location of space demised
under the lease, that the tenant has accepted the premises and is in
occupancy and paying rent, detailing the rent payable and any rent
concessions or unfulfilled landlord construction obligations or allowances,
the existence or non-existence of defaults, the term of the lease and any
other matters reasonably required by the REIT or the Operating Partnership,
(ii) a certificate of occupancy covering the entire vacant space, duly
issued by applicable governmental authorities, and authorizing the use and
occupancy by the tenant of the demised premises for the uses contemplated
under the lease, (iii) final lien waivers from all contractors of all
mechanics' or other lien rights associated with tenant improvements
construction and (iv) a current report of title disclosing no mechanics' or
other liens have been filed in connection with the construction of such
tenant improvements.
5. Representations and Warranties of Owners. Each Owner as to his or its
Interests represents and warrants to the Operating Partnership severally as
follows:
A. Existence and Power. Owner or, if Owner is a partnership or a
limited liability company, any of Owner's partners or members which are not
individuals have been duly formed and are validly existing. Each Owner
which is not an individual has all necessary power and authority to enter
into this Agreement and to enter into and deliver the documents required to
be executed by it pursuant to the terms hereof and to perform its
obligations hereunder and thereunder.
B. Authorization: No Contravention. Each Owner represents that the
execution and delivery of this Agreement and the documents required to be
executed by such Owner, and the performance of such Owner's obligations
under this Agreement and the documents required to be executed by each such
Owner, will have been duly authorized by all requisite action, and this
Agreement will have been duly executed and delivered by such Owner. This
Agreement and the documents executed by each such Owner will constitute the
valid and binding obligation of such Owner, subject, however, to bankruptcy
and similar laws affecting the rights and remedies of creditors generally.
Execution of this Agreement and performance of its terms will not violate
any term of any agreement, order or decree to which such Owner is a party
or by which such Owner is bound.
C. Pending Actions. To each Owner's actual knowledge, there is no
existing or threatened legal action or governmental proceedings of any kind
involving such Owner, which, if determined adversely to such Owner, would
interfere with such Owner's ability to execute or deliver, or perform its
obligations under this Agreement or the documents required to be executed
by such Owner.
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D. Investment Representations and Warranties.
(i) Such Owner will be acquiring the Units to be received by him
for his own account and not with the view to the sale or distribution
of the same or any part thereof in violation of the Securities Act of
1933, as amended (the "Act");
(ii) Such Owner understands that the Units (or shares of common
stock of the REIT (the "Common Stock") issued upon exchange of the
Units) to be issued to the Owner will not be registered under the Act,
or the securities laws of any state ("Blue Sky Laws") by reason of a
specific exemption or exemptions from registration under the Act and
applicable Blue Sky Laws and that the REIT's and that the Operating
Partnership's reliance on such exemptions is predicated in part on the
accuracy and completeness of the representations and warranties of
Owner;
(iii) Such Owner understands that, for the reasons set forth in
subparagraph (ii) above, the Units (or shares of common stock issued
upon exchange of the Units) may not be offered, sold, transferred,
pledged, or otherwise disposed of by Owner except (i) pursuant to an
effective registration statement under the Act and any applicable Blue
Sky Laws, (ii) pursuant to a no-action letter issued by the Securities
and Exchange Commission (the "SEC") to the effect that a proposed
transfer of the Units (or shares of Common Stock issued upon exchange
of the Units) may be made without registration under the Act, together
with either registration or an exemption under applicable Blue Sky
Laws, or (iii) upon the Operating Partnership or the REIT, as the case
may be, receiving an opinion of counsel knowledgeable in securities
law matters and reasonably acceptable to the Operating Partnership or
the REIT, as the case may be, to the effect that the proposed transfer
is exempt from the registration requirements of the Act and any
applicable Blue Sky Laws, and that, accordingly, Owner must bear the
economic risk of an investment in the Units (and the shares of Common
Stock issued upon exchange of the Units) for an indefinite period of
time;
(iv) Such Owner will be at Closing an "accredited investor"
within the meaning of Rule 501(a) promulgated under the Act (the
standards for being "Accredited Investor" will vary depending upon the
legal form of the Owner, but Accredited Investor includes, for
individuals, any natural person whose individual net worth, or joint
net worth with that person's spouse, at the time of the purchase
exceeds $1,000,000 or who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with
that person's spouse in excess of $300,000 in each of those years and
has a reasonable expectation of reaching the same income level in the
current year);
(v) Such Owner understands that an investment in the Operating
Partnership and the REIT involves substantial risks; and such Owner
has had the opportunity to review all documents and information which
it has requested
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concerning its investment in the Operating Partnership and the REIT
and has had the opportunity to ask questions of the management of the
Operating Partnership and the REIT, which questions, if any, were
answered to its satisfaction; and
(vi) Such Owner understands that any document that evidences the
Units (and any unregistered shares of Common Stock issued upon
exchange of the Units) will bear a legend substantially to the effect
of the following:
The securities represented by this document have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or the securities laws of any state. The securities may
not be offered, sold, transferred, pledged or otherwise disposed
of without an effective registration statement under the Act and
under any applicable state securities laws, receipt of a
no-action letter issued by the Securities and Exchange Commission
(together with either registration or an exemption under
applicable state securities laws) or an opinion of counsel
acceptable to the Operating Partnership FAC Limited Partnership
that the proposed transaction will be exempt from registration
under the Act and applicable state securities laws.
and that the Operating Partnership or the REIT, as the case may be,
reserves the right to place a stop order against the transfer of the
Units (and any unregistered shares of Common Stock issued upon
exchange of the Units), and to refuse to effect any transfers thereof,
in the absence of satisfying the conditions contained in the foregoing
legend.
(vii) The address set forth under such Owner's name in Schedule A
is the address of the Owner's principal residence or principal place
of business, and such Owner has no present intention of becoming a
resident of any country, state or jurisdiction other than the country
and state in which such principal residence or principal place of
business is situated.
(viii) The Owners acknowledge and agree that they have consulted
their own corporate and tax advisors and have made their investment
decisions based upon the advice of their own consultants and advisors,
and that the number of units to which any Owner is entitled hereunder
shall be determined with reference to Schedule B irrespective of any
tax consequences of the transactions contemplated by this Agreement or
otherwise or the falsity or unreliability of any assumptions made by
such Owner or anyone else, for tax purposes or otherwise, with respect
to the valuation or worth of the Units or the Interests.
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E. NASD Affiliation. Each Owner represents severally that (i) neither
he nor any affiliate of such Owner is a member or person affiliated with a
member of the National Association of Securities Dealers, Inc. ("NASD");
and (ii) neither he nor any affiliate of such Owner owns any stock or other
securities of any NASD member not purchased in the open market, or has made
any outstanding subordinated loans to an NASD member. (A company or natural
person is presumed to control a member of the NASD and is therefor presumed
to constitute an affiliate of such a member if the company or person is the
beneficial owner of 10% or more of the outstanding securities of a member
which is a corporation. Additionally, a natural person is presumed to
control a member of the NASD and is therefore presumed to constitute an
affiliate of such a member if such person has the power to direct or cause
the direction of the management or policies of such member.)
F. Foreign Person. Each Owner represents that he is not a "foreign
person" within the meaning of Section 1445 of the Code.
6. Representations and Warranties of the Operating Partnership and the
REIT. The Operating Partnership and the REIT hereby represent and warrant to
each Owner as follows:
A. Each of the Operating Partnership and the REIT has been duly formed
and is validly existing and is duly qualified to do business in all
jurisdictions where such qualification is necessary to carry on its
business as now conducted and is duly qualified or in the process of
becoming duly qualified in all jurisdictions where the ownership of its
property would necessitate such qualification. Each of the Operating
Partnership and the REIT has all power and authority under its enabling
documents to enter into this Agreement and to enter into and deliver all of
the documents and instruments required to be executed and delivered by each
such party and to perform its respective obligations hereunder and
thereunder.
B. The execution and delivery of this Agreement and the documents
required to be executed by the Operating Partnership and the REIT
hereunder, and the performance of their obligations under this Agreement,
have been duly authorized, and this Agreement and such documents will on
the Closing date have been, duly executed and delivered by the Operating
Partnership and the REIT. This Agreement does and will, and the documents
executed by the Operating Partnership and the REIT will, constitute the
valid and binding obligation of each of them enforceable in accordance with
their terms, subject to bankruptcy and similar laws affecting the remedies
or recourse of creditors generally.
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C. The Partnership Agreement delivered to the Owner is a true and
correct copy of the agreement of the Operating Partnership. The Partnership
Agreement is in full force and effect.
7. Other Provisions.
A. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which, taken together,
shall constitute one and the same instrument.
B. Entire Agreement. Except as stated herein, this Agreement contains
the entire agreement between the parties and supersedes all prior and
contemporaneous understandings and agreements, whether oral or in writing,
between the parties respecting the subject matter hereof. Except as stated
herein, there are no representations, agreements, arrangements or
understandings, oral or in writing, between or among the parties to this
Agreement relating to the subject matter of this Agreement which are not
fully expressed in this Agreement.
C. Construction. The provisions of this Agreement shall be construed
as to their fair meaning, and not for or against any party based upon any
attribution to such party as the source of the language in question.
Headings used in this Agreement are for convenience of reference only and
shall not be used in construing this Agreement.
D. Applicable Law. This Agreement shall be governed by the laws of the
State of Delaware. Time is of the essence in the Closing of this
transaction.
E. Severability. If any term, covenant, condition or provision of this
Agreement, or the application thereof to any person or circumstance, shall
to any extent be held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, covenants, conditions or
provisions of this Agreement, or the application thereof to any person or
circumstance, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby.
F. Waiver of Covenants, Conditions and Remedies. The waiver by one
party of the performance of any covenant, condition or promise under this
Agreement shall not invalidate this Agreement nor shall it be considered a
waiver by it of any other covenant, condition or promise under this
Agreement. The waiver by either or both parties of the time for performing
any act under this Agreement shall not constitute a waiver of the time for
performing any other act or an identical act required to be performed at a
later time.
G. Schedules. All schedules to which reference is made in this
Agreement are deemed incorporated into this Agreement and made a part
hereof, whether or not actually attached.
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H. Amendment and Assignment. This Agreement may be amended at any time
by the Operating Partnership and the REIT, in their sole discretion,
without the consent of any Owners, except that this Agreement shall not be
amended without the consent of the Owners if such amendment would convert
the Owners' Units into general partnership interests or amend this
Paragraph 7.H. All amendments, changes, revisions and discharges of this
Agreement, in whole or in part, and from time to time, shall be binding
upon the parties despite any lack of legal consideration, so long as the
same shall be in writing and executed by the parties hereto. No Owner may
assign this Agreement or any interest herein without the prior written
approval of all other parties.
I. Relationship of Parties. The parties agree nothing contained herein
shall constitute either party the agent or legal representative of the
other for any purpose whatsoever, nor shall this Agreement be deemed to
create any form of business organization between the parties hereto, nor is
either party granted any right or authority to assume or create any
obligations or responsibility on behalf of the other party, nor shall
either party be in any way liable for any debt of the other.
J. Further Acts. Each party agrees to perform any further acts and to
execute, acknowledge and deliver any documents which may be reasonably
necessary to carry out the provisions of this Agreement.
K. Notice. All notices and demands which either party is required or
desires to give to the other shall be given in writing by personal
delivery, express courier service, certified mail, return receipt
requested, or by telecopy to the address or telecopy number set forth below
for the respective parties. If notice is by deposit or with an express
courier service, it shall be effective on the next business day following
such deposit or, if notice is sent by certified mail, return receipt
requested, it shall be effective upon receipt.
OWNERS: At the address and telecopy number
set forth under such Owner's name in
Schedule A hereto.
the Operating
Partnership: FAC Properties, L.P.
00000 Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxx, X.X. 00000
Telecopy No.: (000) 000-0000
With copy to: Xxxxx, Xxxxx & Xxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
12
REIT: FAC Realty Trust, Inc.
00000 Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
L. Consent to Transfer of Interests. Owners agree to and hereby do
amend the partnership agreements or operating agreements for each of the
Acquired Partnerships to allow for the transactions contemplated hereby and
each Owner consents to the transfer by the other Owners of the Interests as
herein contemplated.
13
IN WITNESS WHEREOF, the parties have duly executed this Agreement by their
hands and under seal affixed hereto as of the date and year first above written.
FAC PROPERTIES, L.P.
By: FAC Realty Trust, Inc.,
General Partner
By: _________________________________
Name:________________________________
Title: ______________________________
FAC REALTY TRUST, INC.
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
14
OWNER SIGNATURE PAGE
The undersigned, desiring to become one of the within-named Owners to that
certain Exchange Option Agreement by and among the Operating Partnership FAC
Limited Partnership and such Owners, dated as of April ____, 1998, hereby
becomes a party to such Exchange Option Agreement and agrees to the terms and
conditions thereof and makes the representations, warranties and covenants
contained therein. The undersigned agrees that this signature page may be
attached to any counterpart of said Exchange Option Agreement.
FESTIVAL ASSOCIATES LIMITED
PARTNERSHIP, a North Carolina limited
partnership
By: _____________________________ (SEAL)
Name:
General Partner
By: _____________________________ (SEAL)
Name:
General Partner
15
SCHEDULES
Schedule A List of Owners
Schedule B Acquired Partnerships or Properties
Schedule C Description of Post Office Vacant Space
Schedule D Assignment of Interests
Schedule D-1 Ownership Interests Assigned As Provided By The Assignment To
Which This Schedule D-1 Is Attached
Schedule E Partnership Unit Lock-Up Terms
16
Schedule A
LIST OF OWNERS
Festival Associates Limited Partnership
0000 Xxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxx
Telephone: (000) 000-0000
Telefax: (000) 000-0000
A-1
Schedule B
ACQUIRED PARTNERSHIPS OR PROPERTIES
Partnership or Limited Property
Liability Company Name
----------------- ----
Festival Associates Limited Partnership Celebration at Six Forks
Total Units to be
Owners Received at Closing
------ -------------------
Festival Associates Limited Partnership* 35,732
* This Schedule excludes Partnership Units held back and not issued pursuant
to, and subject to future issuance as and to the extent provided under,
Paragraph 4 of the Agreement.
B-1
Schedule C
[Description of Post Office Vacant Space]
C-1
Schedule D
ASSIGNMENT OF OWNERSHIP INTERESTS
THIS ASSIGNMENT OF OWNERSHIP INTERESTS (the "Assignment") in the
partnerships and limited liability companies listed on Schedule D-1 attached
hereto (the "Partnerships") is being executed and delivered pursuant to and in
accordance with the terms and provisions of that certain Exchange Option
Agreement dated as of the ____ day of April, 1998, by and among the undersigned
(the "Assignor") herein and FAC Properties, L.P. (the "Purchase Option
Agreement") and specifically in accordance with Paragraph 3.D. thereof.
For good and valuable consideration, the receipt, adequacy and sufficiency
of which are hereby acknowledged, the Assignor does hereby assign, transfer and
convey to FAC Properties, L.P., a Delaware limited partnership ("Assignee"), all
of Assignor's interest(s) (the "Ownership Interest(s)") in the Partnerships,
which Ownership Interest(s) consist(s) of all of the interest in the profits,
losses, distributable cash, and capital together with any and all right, title
and interest in any property, both real and personal, to which the Ownership
Interest relates and any other rights, interests in, privileges and benefits
appertaining thereto, including those provided by the applicable partnership or
operating agreement or state law. From and after the date of the Closing (as
defined in Paragraph 3.B. of the Exchange Option Agreement) the Assignee shall
be entitled to the Assignor's percentage interest in the profits, losses,
capital and distributable cash in each of the Partnerships.
This Assignment is made subject to all of the terms and conditions of the
partnership or operating agreements of each of the Partnerships, as applicable
and as amended (the "Partnership Agreement(s)").
Assignor certifies that he, she or it has full power to make this
Assignment of each of the Ownership Interests, and that this Assignment is being
made in compliance with the applicable Partnership Agreement(s), that the
Ownership Interest(s) now assigned, transferred and conveyed are free and clear
of all encumbrances (including judgments, liens and claims) and that Assignor
owns the listed Ownership Interest(s) and the interest(s) have not otherwise
been conveyed, sold, transferred, encumbered, pledged, hypothecated or assigned.
IN WITNESS WHEREOF, the Assignor has executed this Assignment as of the
_____ day of _________, 1998.
ASSIGNOR:
___________________________ (SEAL)
D-1
Schedule D
OWNERSHIP INTERESTS ASSIGNED AS
PROVIDED BY THE ASSIGNMENT
TO WHICH THIS SCHEDULE D-1 IS ATTACHED
Name of Partnership or
Limited Liability Company Income Interest %
------------------------- -----------------
D-2
Schedule E
PARTNERSHIP UNIT LOCK-UP TERMS
The Units received hereby may not be disposed of until after one year from
the Closing.
Nonetheless, (i) an Owner may dispose of Units on his or her death to such
Owner's estate, executor, administrator or personal representative or to such
Owner's beneficiaries pursuant to a devise or bequest or by the laws of descent
and distribution and (ii) an Owner may pledge his Units as security for debt
instruments, provided that, in either event, the Units shall thereafter be
subject to the restrictions set forth in the preceding paragraph for the
remainder of the restricted period; provided, however, that in the case of any
transfer of Units, the transferee or transferees shall each be an "accredited
investor" within the meaning of Rule 501(a) of Regulation D under the Securities
Act. In the event any Owner disposes of Units as described in this Paragraph,
such Units shall remain subject to this lock-up provision and, as a condition of
the validity of such disposition, the transferee shall be required to agree in
writing to the lock-up provisions set forth herein.
E-1
