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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
MARCH 16, 1998
GABLES REALTY LIMITED PARTNERSHIP
(Exact name of Registrant as specified in its charter)
DELAWARE 000-22683 58-2077966
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
2859 PACES FERRY ROAD, SUITE 1450
ATLANTA, GEORGIA 30339
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
770-436-4600
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ITEM 5. OTHER EVENTS.
Gables Residential Trust ("GRT") and Gables Realty Limited Partnership, the
operating partnership of GRT (the "Operating Partnership," and together with
GRT, the "Company"), have entered into a Contribution Agreement with an
effective date of March 16, 1998 (the "Contribution Agreement") to acquire the
properties and operations of Trammell Crow Residential South Florida ("TCR/SF"),
which consist of up to 15 multifamily apartment communities (the "South Florida
Communities") containing a total of 4,197 apartment homes (assuming completion
of three South Florida Communities currently under construction), and all of
TCR/SF's residential construction and development and third-party management
activities in South Florida (the "South Florida Transaction"). The South
Florida Communities are located in Palm Beach County, Broward County and Dade
County and encompass the metropolitan areas of Palm Beach, Fort Lauderdale and
Miami, respectively.
Under the terms of the Contribution Agreement, the Company will acquire
the South Florida Communities, the third-party management business and other
properties and assets of TCR/SF in exchange for (i) approximately $149.0
million in cash, (ii) the assumption of approximately $135.9 million of
tax-exempt debt (subject to certain required consents) and (iii) the initial
issuance of limited partnership units of the Operating Partnership ("Units")
valued at approximately $71.1 million based on an agreed upon price of $27.625
per Unit (the "Share Price"). The Share Price is subject to decrease in
certain circumstances as set forth in the Contribution Agreement. In addition,
approximately $12.5 million of the purchase price will be retained by the
Company until January 1, 2000, at which time the Company will issue to the
sellers a number of Units (the "Deferred Units") equal in value to such
retained amount (subject to possible decrease pursuant to the terms of the
Contribution Agreement). The Deferred Units will be valued based on the
average of the closing prices of GRT's common shares of beneficial interest,
par value $.01 per share ("Common Shares"), on the New York Stock Exchange (the
"NYSE") during a 15 trading day period preceding the date of issuance.
In the event that the South Florida Communities are not contributed by
TCR/SF in accordance with the terms of the Contribution Agreement, the Company
or TCR/SF may elect to terminate the Contribution Agreement in its entirety,
subject to certain payments specified in the Contribution Agreement. In
addition, if the average of the closing prices of the Common Shares on the NYSE
during a 15 trading day period preceding the closing is less than $23.50,
either TCR/SF or the Company may elect to terminate the Contribution Agreement.
The Company currently expects the South Florida Transaction to close early
in the second quarter of 1998. However, there can be no assurance that all of
the South Florida Communities will be included in the South Florida Transaction
or that the South Florida Transaction will be consummated at all.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED:
Not Applicable
(b) PRO FORMA FINANCIAL INFORMATION:
Not Applicable
(c) EXHIBITS:
Exhibit No.
1. Contribution Agreement dated March 16, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 20, 1998 GABLES REALTY LIMITED PARTNERSHIP
By: Gables GP, Inc., its general partner
/s/ Marvin R. Banks, Jr.
----------------------------------
By: Marvin R. Banks, Jr.
Chief Financial Officer
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CONTRIBUTION AGREEMENT
by and between
The Parties Identified on Schedule A
as
the TCR Parties,
on the one hand,
and
Gables Residential Trust
and
Gables Realty Limited Partnership
together as
the Transferee,
on the other hand
Dated March 16, 1998
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TABLE OF CONTENTS
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PAGE
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ARTICLE 1.CERTAIN DEFINITIONS................................................................. 2
ARTICLE 2.SUBJECT OF CONVEYANCE ANDASSIGNMENT................................................. 12
Section 2.1 Conveyance of the Real Property and Related Assets........... 12
Section 2.2 Conveyances of Partnership Interests......................... 14
Section 2.3 JV Real Estate Properties.................................... 16
Section 2.4 Assignment of Property....................................... 16
Section 2.5 Several Liability............................................ 19
Section 2.6 Access to Books and Records.................................. 19
Section 2.7 Excluded Assets.............................................. 19
Section 2.8 No Contributing Partner Liability............................ 20
ARTICLE 3.VALUE AND PAYMENT TERMS............................................................. 20
Section 3.1 Issuance of Equity Securities................................ 20
Section 3.2 Assumption of Indebtedness................................... 21
Section 3.3 Assumption of Assigned Property.............................. 23
Section 3.4 Assignment and Assumption of Construction-Related Warranties
and Guaranties............................................... 23
Section 3.5 Completion Costs............................................. 23
Section 3.6 Cash Consideration........................................... 24
Section 3.7 Withdrawn Properties......................................... 24
Section 3.8 Management Contracts and Brokerage Business.................. 25
Section 3.9 Retained Amount.............................................. 26
ARTICLE 4.TITLE; MATTERS TO WHICH THIS CONTRIBUTION IS SUBJECT................................ 26
Section 4.1 Permitted Encumbrances....................................... 26
Section 4.2 Easements, Licenses and Dedications Prior to Closing......... 27
Section 4.3 Title Insurance.............................................. 28
ARTICLE 5.REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS.................................. 28
Section 5.1 Operating Representations and Warranties..................... 28
Section 5.2 Definition of Knowledge...................................... 34
ARTICLE 6.REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE OPERATING PARTNERSHIP......... 35
Section 6.1 Operating Representations and Warranties..................... 35
Section 6.2 Definition of Knowledge...................................... 41
ARTICLE 7.REPRESENTATIONS AND WARRANTIES OF THE ASSIGNORS..................................... 41
Section 7.1 Operating Representations and Warranties..................... 41
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ARTICLE 8. COVENANTS ................................................................44
Section 8.1 Conduct of the Business of the Contributors and the Assignors...44
Section 8.2 Conduct of the Business of the Transferee.......................47
Section 8.3 Good Faith Efforts..............................................47
Section 8.4 Good Faith Cooperation..........................................47
Section 8.5 Public Announcements............................................48
Section 8.6 Government Filings..............................................48
Section 8.7 Listing of Shares...............................................48
Section 8.8 Registration of Shares..........................................48
Section 8.9 Investor Representations........................................49
Section 8.10 Time of Closing.................................................49
Section 8.11 Pledge of Equity Securities.....................................49
Section 8.12 No Solicitation.................................................50
Section 8.13 Prohibited Activities...........................................50
Section 8.14 Confidentiality.................................................50
ARTICLE 9.CLOSING ................................................................50
Section 9.1 The Closing.....................................................50
Section 9.2 Deliveries at the Closing by the TCR Parties....................51
Section 9.3 Deliveries at the Closing by the Transferee.....................54
Section 9.4 Fees and Expenses...............................................56
Section 9.5 No Warranties...................................................56
ARTICLE 10. ADJUSTMENTS ................................................................58
Section 10.1 Adjustments at the Closing Date.................................58
Section 10.2 Adjustment for Assessments......................................59
Section 10.3 Reimbursement of Deposits and Out-of-Pocket Expenses............59
Section 10.4 Other Adjustments...............................................59
Section 10.5 Errors in Calculations..........................................59
Section 10.6 Survival........................................................59
ARTICLE 11. CONDITIONS PRECEDENT TO CLOSING.................................................... 60
Section 11.1 Conditions to Obligations of the TCR Parties................... 60
Section 11.2 Conditions to Obligations of the Company and the Operating
Partnership.................................................... 61
ARTICLE 12. NO BROKERS ............................................................... 62
ARTICLE 13. CASUALTY LOSS ................................................................62
Section 13.1 Maintenance of Insurance Policies...............................62
Section 13.2 Casualties......................................................62
Section 13.3 Interim Repairs.................................................63
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Section 13.4 Casualties Other than Major Casualties....................... 63
ARTICLE 14. CONDEMNATION..................................................................... 63
ARTICLE 15. TERMINATION...................................................................... 64
Section 15.1 Termination by the TCR Parties............................... 64
Section 15.2 Termination by the Transferee................................ 64
Section 15.3 Minimum Share Price.......................................... 65
Section 15.4 Effect of Termination........................................ 65
ARTICLE 16. TAX MATTERS...................................................................... 65
Section 16.1 Payment of Taxes by the Contributors......................... 65
Section 16.2 Payment of 1997 Taxes........................................ 66
Section 16.3 Allocation Method............................................ 66
Section 16.4 Survival..................................................... 66
ARTICLE 17. EMPLOYEE MATTERS................................................................. 67
ARTICLE 18. INDEMNIFICATION.................................................................. 68
Section 18.1 By the TCR Parties........................................... 68
Section 18.2 By the Transferee............................................ 69
Section 18.3 Cooperation.................................................. 69
Section 18.4 Claims for Indemnification................................... 69
Section 18.5 Right of Offset.............................................. 70
Section 18.6 Limitation on Obligations.................................... 71
ARTICLE 19. NOTICE........................................................................... 71
ARTICLE 20. MISCELLANEOUS.................................................................... 73
Section 20.1 Limited Survival of Representations and Warranties.......... 73
Section 20.2 Entire Agreement; Third-Party Rights....................... 73
Section 20.3 Amendment................................................... 73
Section 20.4 Assignment.................................................. 73
Section 20.5 Governing Law............................................... 73
Section 20.6 Section Headings............................................ 73
Section 20.7 Severability................................................ 73
Section 20.8 No Other Rights or Obligations.............................. 73
Section 20.9 Counterparts................................................ 73
Section 20.10 Construction................................................ 73
Section 20.11 Representatives............................................. 74
Section 20.12 Attorneys' Fees............................................. 74
Section 20.13 Interpretation.............................................. 74
Section 20.14 Schedules................................................... 74
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Section 20.15 Radon........................................................ 74
Section 20.16 Waiver of Jury Trial......................................... 74
Section 20.17 Forum........................................................ 75
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SCHEDULES
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Schedule A TCR Parties
Schedule B Assignors
Schedule 1.87(a) Net Value Adjustments
Schedule 1.120 Share Price Adjustment
Schedule 2.1(a) Contributors and Real Property
Schedule 2.1(c) Excluded Personal Property Located at the Real Property
Schedule 2.1(e)(i) Excluded Permits and Licenses Related to the Real Property
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(c) Certain Funds
Schedule 2.3 Procedures Regarding JV Real Estate Properties
Schedule 2.4(a) Assigned Office Leases and New Office Lease Floor Plan
Schedule 2.4(a)(ii) Excluded Office Personal Property from Assigned Offices
Schedule 2.4(a)(iii) Excluded Telephone Numbers
Schedule 2.4(a)(iv) Excluded Construction and Development Property
Schedule 2.4(b)(i) Property Acquisition Contracts and Development and Acquisition Expenditures
Schedule 2.4(b)(ii) Method of Assignment of Property Acquisition Contracts
Schedule 2.4(c) Third-Party Management Contracts and Annualized Gross Fees
Schedule 2.4(d) Construction Contracts (including descriptions of subcontracts)
Schedule 2.7 Excluded Assets and Entities Not Participating
Schedule 3.1(a)(i) TCR Representatives
Schedule 3.1(a)(ii) Shares and Units
Schedule 3.1(b) Permitted Pledges
Schedule 3.2 Assumed Loans
Schedule 3.2(b) Allocation of Certain Costs Associated with Tax Exempt Indebtedness
Schedule 3.4 Assumed Warranties and Guarantees
Schedule 3.5(a) Development Properties - Estimated Completion Costs
Schedule 3.6(b)(ii)(B) Indebtedness to be Repaid at Closing
Schedule 3.7(a) Certain Real Estate Properties to be Withdrawn as a Group Only
Schedule 3.7(b) Certain Real Estate Properties to be Withdrawn as a Group Only
Schedule 4.1(c) Preliminary Title Reports
Schedule 4.1(e) Surveys
Schedule 5.1(b) Consents Required by Contributors
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)(i) Modifications to Tax Exempt Indebtedness
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Schedule 5.1(t) Certain Changes or Events
Schedule 5.1(u) Capital Structure
Schedule 5.2(a) Contributors' Knowledge Designees
Schedule 5.2(b) Additional Contributors' Knowledge Designees
Schedule 6.1(j) Transferee Subsidiaries
Schedule 6.1(k) Transferee Changes
Schedule 6.1(l) Transferee Undisclosed Liabilities
Schedule 6.1(m)(iii) Transferee Options, Warrants and Convertible Securities
Schedule 6.1(n)(i) Transferee Tax Deficiencies
Schedule 6.1(q) Transferee Shareholder Agreements
Schedule 6.1(r)(i) Transferee Loan Defaults
Schedule 6.1(r)(ii) Transferee Indebtedness
Schedule 6.1(t) Transactions With Affiliates
Schedule 6.2 Transferee's Knowledge Designees
Schedule 7.1(b) Consents Required by Assignors
Schedule 7.1(f) Exceptions to Contract Entity Interests
Schedule 7.1(h) Capital Structure of Contract Entities
Schedule 8.1(j)(i) Development Property Plans and Specifications
Schedule 8.1(j)(ii) Warranty Properties
Schedule 8.2 Exceptions to Transferee's Conduct of its Business
Schedule 10.2 Assessments
Schedule 10.3(a) Receivables
Schedule 10.3(b) Reimbursement of Deposits
Schedule 11.1(h) Persons to be Subject to Employment Agreements
Schedule 17(a) Rehired Employees
Schedule 17(b) Certain Rehired Employees
Schedule 20.11 Transferee Representatives
Schedule 20.15 Terms of Escrow Fund
EXHIBITS
Exhibit I Form of Addendum A
Exhibit II Form of Addendum B
Exhibit III Form of Registration Rights Agreement
Exhibit IV Required OP Agreement Terms
Exhibit V Form of Distributee Agreement
Exhibit VI Form of Master Lease
Exhibit VII Form of Employment Agreement
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CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT (the "AGREEMENT") dated March 16, 1998 (the
"EFFECTIVE DATE") is made and entered by and between (i) subject to the next
two sentences of this paragraph, each of the entities identified on Schedule
2.1(a) (individually, a "CONTRIBUTOR" and collectively, the "CONTRIBUTORS"),
(ii) each Contributing Partner (as hereinafter defined) who becomes a party to
this Agreement pursuant to Section 2.2 hereof or otherwise or executes and
delivers an Addendum A or Addendum B and (iii) each of the parties identified
on Schedule B hereto (the "ASSIGNORS", and together with the Contributors and
the Contributing Partners, the "TCR PARTIES"), on the one hand; and (iv) Gables
Residential Trust, a Maryland real estate investment trust (the "COMPANY"), and
Gables Realty Limited Partnership, a Delaware limited partnership (the
"OPERATING PARTNERSHIP" and, together with the Company, the "TRANSFEREE"), on
the other hand. It is understood and agreed that with respect to any
"Contributor" identified on Schedule 2.1(a) and Schedule 2.2(a) as a
non-signing Contributor (each, a "NON-SIGNING CONTRIBUTOR"), the TCR-Affiliated
Contributing Partner (as defined herein) listed adjacent to such Non-Signing
Contributor's name on such schedules is executing this Agreement on behalf of
such Non-Signing Contributor and agrees to cause such Non-Signing Contributor
to fully perform its obligations under this Agreement as if such Non-Signing
Contributor were executing the Agreement. Accordingly, in all instances in
this Agreement where a "Contributor" is representing, warranting, covenanting
or agreeing, and the particular "Contributor" is a Non-Signing Contributor,
such action is being performed by the applicable TCR-Affiliated Contributing
Partner with respect to such Non-Signing Contributor. Schedule A hereto
reflects all Contributors, TCR-Affiliated Contributing Partners (with respect
to Non-Signing Contributors) and Assignors who have executed this Agreement as
of the Effective Date, and such schedule will be updated as of Closing to also
include all Contributing Partners who become parties to this Agreement pursuant
to Section 2.2 or otherwise or execute and deliver an Addendum A or Addendum B.
WHEREAS, the TCR Parties own and/or operate a real estate development,
operating and management business involving multifamily residential properties
located in the Dade, Broward, Palm Beach and Martin counties of the State of
Florida (the "SOUTH FLORIDA MARKET"). The Company and the Operating
Partnership, of which a wholly-owned subsidiary of the Company is the sole
general partner, own and manage various multifamily properties located
throughout the Southeastern and Southwestern United States;
WHEREAS, the TCR Parties and the Transferee have determined that it is in
their respective best interests to combine their respective businesses and
operations pursuant to the terms and subject to the conditions contained
herein.
WHEREAS, the TCR Parties desire to transfer, convey, contribute and assign
to the Transferee the properties 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.
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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:
Section 1.1 "1954 CODE" shall have the meaning set forth in Section
5.1(r)(iii).
Section 1.2 "ADDENDUM A" shall mean an agreement substantially in the form
attached hereto as Exhibit I.
Section 1.3 "ADDENDUM B" shall mean an agreement substantially in the form
attached hereto as Exhibit II.
Section 1.4 "ADDITIONAL DEVELOPMENT AND ACQUISITION EXPENDITURES" shall
have the meaning set forth in Section 2.4(b)(iii).
Section 1.5 "ADJUSTED MANAGEMENT FEES" shall have the meaning set forth in
Section 3.8(b).
Section 1.6 "AGREEMENT" shall have the meaning set forth in the
introduction hereto.
Section 1.7 "ANDERSEN" shall have the meaning set forth in Section 3.7.
Section 1.8 "ARBITRATOR" shall have the meaning set forth in Section 3.7.
Section 1.9 "ASSIGNED PROPERTY" shall mean the Office Leases, the Office
Personal Property, the Telephone Numbers, the Construction and Development
Property, the Contract Entity Interests in the Contract Entities, the Property
Acquisition Contracts, the Management Contracts, the Construction Contracts and
all other rights, assets and interests being assigned or conveyed pursuant to
Section 2.4.
Section 1.10 "ASSIGNED PROPERTY ASSUMPTION DOCUMENTS" shall have the
meaning set forth in Section 9.2(p).
Section 1.11 "ASSIGNED VALUE" shall have the meaning set forth in Section
3.7
Section 1.12 "ASSIGNORS" shall mean the TCR Parties identified on
Schedule B, each of which will assign and convey to the Transferee or its
designee the Assigned Property pursuant to this Agreement.
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Section 1.13 "ASSUMED LOANS" shall have the meaning set forth in Section
3.2(a).
Section 1.14 "ASSUMED LOAN DOCUMENTS" shall have the meaning set forth in
Section 5.1(m).
Section 1.15 "AUDIT" shall have the meaning set forth in Section 16.1.
Section 1.16 "BASE MANAGEMENT FEES" shall have the meaning set forth in
Section 3.8(a).
Section 1.17 "BILLS OF SALE" shall have the meaning set forth in Section
9.2(a).
Section 1.18 "BONDS" shall have the meaning set forth in Section 5.1
(r)(iii).
Section 1.19 "BOOKS AND RECORDS" shall have the meaning set forth in
Section 2.1(f).
Section 1.20 "BROKERAGE REVENUES" shall have the meaning set forth in
Section 3.8(c).
Section 1.21 "BUSINESS DAY" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to close.
Section 1.22 "CASH CONSIDERATION" shall have the meaning set forth in
Section 3.6.
Section 1.23 "CASUALTY" shall have the meaning set forth in Section 13.2.
Section 1.24 "CASUALTY NOTICE" shall have the meaning set forth in
Section 13.2.
Section 1.25 "CHANGE IN CONTROL" shall mean (i) if the existing Board of
Trustees of the Company no longer constitutes a majority of such board or (ii)
the acquisition of voting securities of the 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)(3) 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 40% of
the Company's then outstanding voting securities.
Section 1.26 "CLAIM" shall have the meaning set forth in Section 18.4.
Section 1.27 "CLAIM NOTICE" shall have the meaning set forth in Section
18.4.
Section 1.28 "CLOSING" shall have the meaning set forth in Section 9.1.
Section 1.29 "CLOSING DATE" shall have the meaning set forth in Section
9.1.
Section 1.30 "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
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Section 1.31 "COMPANY" shall have the meaning set forth in the
introduction hereto.
Section 1.32 "COMPLETION COST ARBITRATOR" shall have the meaning set forth
in Section 3.5(a).
Section 1.33 "COMPLETION COSTS" shall mean the aggregate development and
construction costs that are estimated or incurred, as the case may be, for a
Development Property.
Section 1.34 "CONDEMNED PROPERTY" shall have the meaning set forth in
Article 14.
Section 1.35 "CONSTRUCTION AND DEVELOPMENT PROPERTY" shall have the
meaning set forth in Section 2.4(a)(iv).
Section 1.36 "CONSTRUCTION CONTRACTS" shall have the meaning set forth in
Section 2.4(d).
Section 1.37 "CONTRACT ASSIGNMENT AND ASSUMPTION AGREEMENTS" shall have
the meaning set forth in Section 9.2(a).
Section 1.38 "CONTRACT ENTITIES" shall have the meaning set forth in
Section 2.4(b).
Section 1.39 "CONTRACT ENTITY INTERESTS" shall have the meaning set forth
in Section 2.4(b).
Section 1.40 "CONTRIBUTING PARTNER" shall have the meaning set forth in
Section 2.2(a).
Section 1.41 "CONTRIBUTOR" shall have the meaning set forth in the
introduction hereto.
Section 1.42 "CONTRIBUTOR TAX PERIOD" shall have the meaning set forth in
Section 16.1.
Section 1.43 "COVERED CONTRIBUTOR PARTY" shall have the meaning set forth
in Section 18.1(b).
Section 1.44 "CURRENT ANNUALIZED GROSS FEES" shall have the meaning set
forth in Section 3.8(a).
Section 1.45 "DAMAGED PROPERTY" shall have the meaning set forth in
Section 13.2.
Section 1.46 "DAMAGES" shall have the meaning set forth in Section 18.1
(a).
Section 1.47 "DEEDS" shall have the meaning set forth in Section 9.2(a).
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Section 1.48 "DEVELOPMENT AND ACQUISITION EXPENDITURES AMOUNT" shall mean
the sum of (i) the aggregate Initial Development and Acquisition Expenditures
associated with all Property Acquisition Contracts the Transferee elects to
assume pursuant to Section 2.4(b), (ii) the aggregate Additional Development
and Acquisition Expenditures and (iii) the De Minimis Development and
Acquisition Expenditures; provided that, in the case of clause (iii), the TCR
Parties have updated Schedule 2.4(b) to reflect the De Minimis Development and
Acquisition Expenditures it has so incurred no less than five (5) Business Days
before Closing.
Section 1.49 "DEVELOPMENT PROPERTIES" shall have the meaning set forth in
Section 3.5(a).
Section 1.50 "DE MINIMIS DEVELOPMENT AND ACQUISITION EXPENDITURES" shall
mean any expenditure relating to the development of the raw land or the
acquisition of existing operating properties that is the subject of the
Property Acquisition Contracts incurred by any of the TCR Parties between the
Effective Date and the Closing Date for which the Transferee's prior approval
is not required by Section 8.1(l).
Section 1.51 "DISTRIBUTEE" shall mean any person who receives Equity
Securities pursuant to this Agreement or (i) in the case of any of the TCR
Parties 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 any of the TCR Parties as a nominee for a Partner of a
Contributor.
Section 1.52 "DISTRIBUTEE AGREEMENT" shall have the meaning set forth
in Section 8.9.
Section 1.53 "EFFECTIVE DATE" shall have the meaning set forth in the
introduction hereto.
Section 1.54 "EMPLOYMENT AGREEMENT" shall have the meaning set forth
in Section 11.1(h).
Section 1.55 "ENCUMBRANCES" shall have the meaning set forth in Section
7.1(f).
Section 1.56 "EQUITY SECURITIES" means Shares and Units collectively.
Section 1.57 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
Section 1.58 "ESTIMATED COMPLETION COSTS" shall have the meaning set forth
in Section 3.5(a).
Section 1.59 "EXCESS MANAGEMENT REVENUES" shall have the meaning set forth
in Section 3.8(c).
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Section 1.60 "EXCESS SPACE" shall have the meaning set forth in Section
2.4(a)(i).
Section 1.61 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
Section 1.62 "FIRST ANNIVERSARY ANNUALIZED GROSS MANAGEMENT FEES" shall
have the meaning set forth in Section 3.8(b).
Section 1.63 "GAAP" shall have the meaning set forth in Section 6.1(h).
Section 1.64 "GUARANTORS" shall have the meaning set forth in Section
3.2(a).
Section 1.65 "GUARANTY AGREEMENTS" shall have the meaning set forth in
Section 3.2(a).
Section 1.66 "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 governmental
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.
Section 1.67 "IMPROVEMENTS" shall have the meaning set forth in Section
2.1(a).
Section 1.68 "INCOME TAX RETURNS" shall have the meaning set forth in
Section 16.1.
Section 1.69 "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.
Section 1.70 "INITIAL DEVELOPMENT AND ACQUISITION EXPENDITURES" shall have
the meaning set forth in Section 2.4(b).
Section 1.71 "INSURANCE COVERAGE" shall have the meaning set forth in
Section 13.1.
Section 1.72 "INTANGIBLE PROPERTY" shall have the meaning set forth
in Section 2.1(e).
Section 1.73 "JOINT VENTURE AGREEMENTS" shall have the meaning set
forth in Section 2.1.
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Section 1.74 "JV CONSENT NOTIFICATION DATE" shall have the meaning set
forth in Section 2.1.
Section 1.75 "JV CONSENTS" shall have the meaning set forth in Section 2.1.
Section 1.76 "JV PARTNERS" shall have the meaning set forth in Section 2.1.
Section 1.77 "JV REAL ESTATE PROPERTIES" shall mean those properties set
forth on Schedule 1.87(a), which may cease to be Real Estate Properties on or
prior to the Closing Date as described in Section 2.1 and with respect to which
the Transferee acknowledges that, as of the Effective Date, the TCR Parties
have not obtained JV Consents required for the inclusion of such JV Real Estate
Properties as Real Estate Properties under this Agreement.
Section 1.78 "LAND" shall have the meaning set forth in Section 2.1(a).
Section 1.79 "LEASES" shall have the meaning set forth in Section 2.1(d).
Section 1.80 "LEGAL REQUIREMENTS" shall have the meaning set forth in
Section 4.1(d).
Section 1.81 "LIABILITIES" shall mean liabilities, Indebtedness,
obligations, commitments, expenses, claims or guarantees of any nature (whether
absolute, accrued, contingent or otherwise).
Section 1.82 "LOAN ASSUMPTION DOCUMENTS" shall have the meaning set forth
in Section 9.2(o).
Section 1.83 "MAJOR CASUALTY" shall have the meaning set forth in Section
13.2.
Section 1.84 "MANAGEMENT CONTRACTS" shall have the meaning set forth
in Section 2.4(c).
Section 1.85 "MATERIAL ADVERSE EFFECT," with respect to any entity or
group of entities, as applicable, 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,
properties, assets, results of operations or financial condition of such entity
or entities or its or their ability to consummate the transactions contemplated
by this Agreement and, with respect to any individual, shall mean a material
adverse effect on the ability of the individual to consummate the transactions
contemplated by this Agreement.
Section 1.86 "MATERIAL TAKING" shall have the meaning set forth in Article
14.
Section 1.87 "NET VALUE" shall mean an amount equal to $368,500,000, (a)
reduced by the applicable amount(s) set forth on Schedule 1.87(a) if one or
more of the JV Real Estate Properties cease to be Real Estate Properties
hereunder as provided in Section 2.1 hereof and (b)
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reduced by the sum of (i) the outstanding principal balance plus all accrued
and unpaid interest thereon as of the Closing Date on the Assumed Loans, (ii)
the Cash Consideration (before making the deductions described in Section
3.6(b)(ii)), (iii) the Assigned Value of each Withdrawn Property, (iv) the
amount of any reduction in the Net Value made pursuant to Section 2.2(d) hereof
in the event of a transfer of less than 100% of the Partnership Interests in a
Contributor, (v) the amount of any prepayment premium or penalties as set forth
in Section 3.2(c)(y), if applicable and without duplication, and (vi) the
amount of any reduction in the Net Value made pursuant to Section 4.3(b);
provided, however, that (x) in no event shall the Net Value exceed $100,000,000
and (y) the Retained Amount shall be retained by the Transferee for payment
pursuant to Section 3.9.
Section 1.88 "NEW OFFICE LEASE" shall have the meaning set forth in
Section 2.4(a)(i).
Section 1.89 "NON-SIGNING CONTRIBUTOR" shall have the meaning set forth in
the introduction hereto.
Section 1.90 "OFFICE PERSONAL PROPERTY" shall have the meaning set forth
in Section 2.4(a)(ii).
Section 1.91 "OFFICE SPACE" shall have the meaning set forth in Section
2.4(a)(i).
Section 1.92 "OLD OFFICE LEASE" shall have the meaning set forth in
Section 2.4(a)(i).
Section 1.93 "OP AGREEMENT" shall mean the Agreement of Limited
Partnership of the Operating Partnership.
Section 1.94 "OPERATING PARTNERSHIP" shall have the meaning set forth in
the introduction hereto.
Section 1.95 "OTHER EMPLOYEES" shall have the meaning set forth
in Section 17.
Section 1.96 "PARTNER" shall have the meaning set forth in Section
2.2(a).
Section 1.97 "PARTNERSHIP INTERESTS" shall have the meaning set forth
in Section 2.2(a).
Section 1.98 "PERMITS AND LICENSES" shall have the meaning set forth
in Section 2.1(e).
Section 1.99 "PERMITTED ENCUMBRANCES" shall have the meaning set forth
in Section 4.1.
Section 1.100 "PERSONAL PROPERTY" shall have the meaning set forth in
Section 2.1(c).
Section 1.101 "PHYSICAL INSPECTIONS" shall have the meaning set forth
in Section 9.5(c).
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Section 1.102 "PROPERTY" shall mean the Real Estate Property and the
Assigned Property.
Section 1.103 "PROPERTY ACQUISITION CONTRACTS" shall have the meaning set
forth in Section 2.4(b).
Section 1.104 "PROPERTY FINANCIALS" shall have the meaning set forth in
Section 5.1(l).
Section 1.105 "PROPOSED ACQUISITION TRANSACTION" shall have the meaning
set forth in Section 8.12.
Section 1.106 "REAL ESTATE PROPERTY" shall have the meaning set forth
in Section 2.1.
Section 1.107 "REAL PROPERTY" shall have the meaning set forth in
Section 2.1(b).
Section 1.108 "REGISTRATION RIGHTS AGREEMENT" shall meant the registration
rights agreement to be entered into by the Company, the Operating Partnership
and the Holders (as defined therein) on or prior to the Closing date,
substantially in the form of Exhibit III.
Section 1.109 "REHIRED EMPLOYEES" shall have the meaning set forth in
Article 17.
Section 1.110 "RENT ROLL" shall have the meaning set forth in Section
5.1(c).
Section 1.111 "REQUIRED OFFICE SPACE" shall have the meaning set forth
in Section 2.4(a)(i).
Section 1.112 "RESTRICTED PARTIES" shall have the meaning set forth in
Section 8.12.
Section 1.113 "RETAINED AMOUNT" shall have the meaning set forth in
Section 3.9.
Section 1.114 "SEC" shall mean the Securities and Exchange Commission.
Section 1.115 "SEC DOCUMENTS" shall have the meaning set forth in
Section 6.1(g).
Section 1.116 "SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
Section 1.117 "SECURITY DEPOSITS" shall have the meaning set forth in
Section 2.1(d).
Section 1.118 "SERVICE CONTRACTS" shall have the meaning set forth in
Section 2.1(e).
Section 1.119 "SHARE" shall mean a common share of beneficial interest,
par value $.01 per share, of the Company.
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Section 1.120 "SHARE PRICE" shall mean $27.625, subject to possible
adjustment as set forth on Schedule 1.120.
Section 1.121 "SOUTH FLORIDA MARKET" shall have the meaning set forth in
the introduction hereto.
Section 1.122 "SUBMISSION DATE" shall have the meaning set forth in
Section 3.7.
Section 1.123 "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.
Section 1.124 "SUBSTANTIAL COMPLETION" shall mean, as to any specific
Development Property, the point in time at which an unconditional, final
certificate of occupancy is issued for the final building constructed on the
Development Property.
Section 1.125 "SURVEYS" shall have the meaning set forth in Section
4.1(e).
Section 1.126 "SURVIVAL PERIOD" shall mean a period of twelve (12) months
after the Closing and such further period necessary to resolve any claim for
indemnification made within such twelve (12) month period.
Section 1.127 "TAX PERIOD" shall have the meaning set forth in Section
16.1.
Section 1.128 "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.
Section 1.129 "TCR" means Trammell Crow Residential Company.
Section 1.130 "TCR-AFFILIATED CONTRIBUTING PARTNERS" shall have the
meaning set forth in Section 2.2(a).
Section 1.131 "TCR DEFAULT" shall have the meaning set forth in
Section 15.2.
Section 1.132 "TCR PARTIES" shall have the meaning set forth in the
introduction hereto.
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Section 1.133 "TCR PROPRIETARY NAMES" shall have the meaning set forth
in Section 2.1(g).
Section 1.134 "TCR REPRESENTATIVES" shall have the meaning set forth
in Section 3.1(a).
Section 1.135 "TELEPHONE NUMBERS" shall have the meaning set forth in
Section 2.4(a)(iii).
Section 1.136 "TENANTS" shall have the meaning set forth in Section
2.1(d).
Section 1.137 "THIRD-PARTY AGREEMENT" shall have the meaning set forth in
Section 2.2(a)(ii).
Section 1.138 "THIRD-PARTY CONTRIBUTING PARTNERS" shall have the meaning
set forth in Section 2.2(a).
Section 1.139 "TITLE COMPANY" shall have the meaning set forth in
Section 4.3.
Section 1.140 "TRADEMARKS" shall have the meaning set forth in Section
2.1(g).
Section 1.141 "TRANSFEREE" shall have the meaning set forth in the
introduction thereto.
Section 1.142 "TRANSFEREE INDEMNIFIED PARTY" shall have the meaning set
forth in Section 18.1(a).
Section 1.143 "TRANSFEREE REPRESENTATIVE" shall have the meaning set forth
in Section 20.11.
Section 1.144 "UNAPPROVED PROPERTY" shall have the meaning set forth in
Sections 2.2(b)(ii) and 3.2(c).
Section 1.145 "UNIT" shall mean a unit of limited partnership interest in
the Operating Partnership.
Section 1.146 "WARRANTY ASSUMPTION DOCUMENTS" shall have the meaning set
forth in Section 9.2(q).
Section 1.147 "WITHDRAWN PROPERTY" shall have the meaning set forth
in Section 3.7.
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ARTICLE 2. SUBJECT OF CONVEYANCE AND ASSIGNMENT.
Section 2.1 Conveyance of the Real Property and Related Assets. In
accordance with the terms and conditions of this Agreement and subject to the
Transferee's performance and satisfaction of the conditions, covenants and
obligations contained herein, each of the Contributors (or the Contributing
Partners to the extent and in the manner set forth in Section 2.2 hereof) shall
convey to the Operating Partnership all of its right, title and interest in and
to the following assets (or the equity interests in entities owning all rights,
title and interest to such assets as described in Section 2.2 hereof, as
applicable) (it being understood that, with respect to the following assets
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 Contributor to the Operating Partnership shall be deemed made for the
administrative convenience of consolidating those transfers):
(a) the real property on Schedule 2.1(a) (collectively, 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
Contributor's interest in the Land and the Improvements, if any, including,
without limitation, all of the Contributor'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 appurtenances used in connection with the beneficial use and enjoyment of
the Land and the 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), all personal property,
fixtures, equipment, inventory and computer programming and software owned or
licensed by the Contributor, in each case located on or used in connection with
any of the Real Property or located on or in the Office Space (as hereinafter
defined) (the "PERSONAL PROPERTY");
(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 as set forth on Schedule 2.1(e)(i), all permits, licenses,
guaranties, approvals, certificates and warranties relating to the Real
Property and the Personal Property to the extent that any of the foregoing are
assignable (including with such consents to assignment as may be required and
obtained pursuant to this Agreement) (collectively, the "PERMITS AND
LICENSES"); and (ii) all of the Contributor'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
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<PAGE> 20
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, in each case to the extent
assignable (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 Contributor that are or may be used by the
Contributor in the use and operation of the Real Property or the Personal
Property (collectively, the "BOOKS AND RECORDS");
(g) except as set forth on Schedule 2.1(g), (i) all trademarks, trade
names or symbols containing the name "Vinings" within the South Florida Market,
(ii) all trademarks, trade names or symbols containing the acronym "CTS" and
related names and (iii) to the extent assignable, all trademarks, trade names
or symbols, if any, under which the Real Property (or any part thereof) is
operated (all trademarks, trade names and symbols encompassed by the preceding
clauses (i), (ii) and (iii) are collectively referred to herein as the
"TRADEMARKS"); provided, however, that the Transferee acknowledges and agrees
that (x) the right to use the name "Trammell Crow," the acronym "TCR" or any
name containing "Trammell Crow" or "TCR" (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 in connection with
any of the Real Property, but shall be allowed a period of one hundred eighty
(180) days after the Closing Date to change any signage on the Real Property
containing any TCR Proprietary Names and (y) in the event the Transferee has
not used any trademark, trade name or symbol containing the name "Vinings" for
a period of three (3) years in the South Florida Market, the Transferee shall
convey to an entity affiliated with TCR all of the Transferee's right, title
and interest in the trademarks, trade names or symbols containing the name
"Vinings" within the South Florida Market;
(h) all other rights, privileges and appurtenances owned by the
Contributor, if any, related in any way to the rights and interests described
above in this Section 2.1.
The Real Property, the Personal Property, the Leases, the Security
Deposits, the Intangible Property, the Books and Records, the Trademarks and
the other property interests being transferred pursuant to this Section 2.1 are
hereinafter collectively referred to as the "REAL ESTATE PROPERTY," which term
may mean all the Real Estate Property of the Contributors collectively, or,
when so indicated by the context, may refer only to that portion of the Real
Estate Property owned by an individual Contributor.
Notwithstanding anything to the contrary contained herein, the TCR Parties
hereby agree to use all commercially reasonable efforts to obtain all necessary
or applicable consents or other agreements of the third-party equity investors
in the applicable Contributors required for the inclusion of the JV Real Estate
Properties as Real Estate Properties under this Agreement on or prior to the
Closing Date and the conveyance of all such properties to the Transferee
pursuant to
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Section 2.2 at the Closing. All such consents and agreements are
referred to herein as the "JV CONSENTS" and all such third-party equity
investors are referred to herein as the "JV PARTNERS." The TCR Representatives
shall keep the Transferee informed of the progress of negotiations with the JV
Partners and in any event shall inform the Transferee within two (2) Business
Days of their receipt of any JV Consents with respect to any JV Real Estate
Property. In the event JV Consents with respect to any or all JV Real Estate
Properties are not received on or before ten (10) days (or such shorter period
as may be acceptable to the Transferee) prior to the Closing Date (the "JV
CONSENT NOTIFICATION DATE"), (i) such JV Real Estate Properties shall no longer
constitute Real Estate Properties for purposes of the consummation at the
Closing of the transactions contemplated by this Agreement insofar as it
relates to the JV Real Estate Properties, except as contemplated by Section
2.3, (ii) the Net Value shall be reduced at the Closing by the applicable
amount set forth in Schedule 1.87(a), and (iii) the TCR Parties and the
Transferee shall comply with the provisions of Section 2.3 and Schedule 2.3 to
the extent permitted by the applicable joint venture and partnership agreements
with JV Partners (the "JOINT VENTURE AGREEMENTS").
Section 2.2 Conveyances of Partnership Interests.
(a) The parties hereto have agreed that it is a material term of this
Agreement that the Real Estate Properties be acquired by the Transferee through
the conveyance and assignment to the Operating Partnership by each constituent
partner or member of each Contributor (each, a "CONTRIBUTING PARTNER" and
collectively, such Contributors' "PARTNERS") of 100% of such Partners'
respective partnership interests or member interests in such Contributors, as
applicable (the "PARTNERSHIP INTERESTS"), rather than through the conveyance,
assignment or transfer by the Contributors of their respective Real Estate
Property to the Operating Partnership. The Contributing Partners that are
identified on Schedule 2.2(a) as TCR-affiliated entities (the "TCR-AFFILIATED
CONTRIBUTING PARTNERS") have on or prior to the date hereof obtained the
irrevocable consent and valid, legal and binding commitment of the Contributing
Partners identified on Schedule 2.2(a) as third-party equity investors (the
"THIRD-PARTY CONTRIBUTING PARTNERS") to the conveyance and assignment of the
Third-Party Contributing Partners' Partnership Interests in all Contributors to
the TCR-Affiliated Contributing Partners or to the Operating Partnership, other
than the JV Consents. The TCR Parties hereby agree that, except with respect
to the JV Real Estate Properties, the TCR-Affiliated Contributing Partners
shall have a valid, legal and enforceable obligation to convey and assign to
the Operating Partnership on the Closing Date their respective Partnership
Interests in the Contributors on the terms and subject to the conditions of
this Agreement, and the Transferee shall have the right to seek specific
performance of such obligation in accordance with Section 15.2 hereof.
Subject, in the case of the JV Real Estate Properties, to the receipt of JV
Consents, on or before the Closing the TCR Parties shall use all commercially
reasonable efforts to cause each Contributing Partner to consummate the
conveyance and assignment of its respective Partnership Interests in accordance
with the following conditions:
(i) each TCR-Affiliated Contributing Partner shall duly execute and
deliver to the Operating Partnership an Addendum A pursuant to which each such
TCR-Affiliated Contributing Partner (x) agrees to be bound by the terms of this
Agreement with the same force
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and effect as if it were an original signatory hereto and (y) makes the
representations and warranties set forth in Addendum A; and
(ii) each Third-Party Contributing Partner shall execute and deliver to
the Operating Partnership an Addendum B; provided that if, prior to the
Closing, (A) a TCR-Affiliated Contributing Partner acquires the Partnership
Interest of the Third-Party Contributing Partner in the applicable Contributor
and (B) such Third-Party Contributing Partner executes and delivers to such
TCR-Affiliated Contributing Partner an agreement with substantially the same
representations, warranties, covenants, agreements and indemnification
provisions set forth in Addendum B (the "THIRD-PARTY AGREEMENT"), such
TCR-Affiliated Contributing Partner shall then execute and deliver to the
Operating Partnership an Addendum A, in which case the Contributor's
Third-Party Contributing Partner shall no longer be required to execute and
deliver to the Operating Partnership an Addendum B, so long as (X) the
Operating Partnership receives a copy of the duly executed and delivered
Third-Party Agreement in form and substance reasonably satisfactory to the
Operating Partnership and (Y) such TCR-Affiliated Contributing Partner
concurrently assigns its rights under the Third-Party Agreement to the
Operating Partnership. Notwithstanding the foregoing, in no event shall a
TCR-Affiliated Contributing Partner cause a Contributor to terminate by
operation of law as a result of such Contributor no longer having two or more
partners.
(b) In the event the conveyance and assignment of the Partnership
Interests in a Contributor cannot be consummated in accordance with Section
2.2(a) hereof, the Transferee may at its election (which it may exercise in its
sole discretion):
(i) exercise any available remedies hereunder or under applicable law if
such failure is due to a breach of contract by a Contributing Partner; or
(ii) terminate this Agreement as to such Contributor's Real Estate
Property by giving prompt notice of such termination to the TCR Representatives
and such Real Estate Property shall thereupon become "UNAPPROVED PROPERTY."
(c) Immediately prior to the transfer of all of the Partnership Interests
of a Contributor pursuant to this Section 2.2 to the Operating Partnership,
notwithstanding any contrary provision in this Agreement, such Contributor
shall have the right to distribute all cash on hand and in its accounts to its
Partners; provided, however, that the foregoing right to distribute shall in no
event extend to (i) any funds then in the possession of any trustee under the
terms of any bond indenture with respect to any of the Assumed Loans and (ii)
the escrow, reserve, collateral or similar funds, listed on Schedule 2.2(c).
(d) With the prior written consent of the Company (which it may give or
withhold in its sole discretion), the Partners of a Contributor may transfer
less than 100% of their respective Partnership Interests to the Operating
Partnership in lieu of the transfer of the Contributor's Partnership Interests
to the Operating Partnership as provided in Section 2.2(a), in which event the
Net Value shall be reduced by an amount mutually agreeable to the Company and
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the TCR Representatives. If the Company and the TCR Representatives are unable
to agree on such amount prior to ten (10) Business Days prior to the Closing
Date, then any such party may request binding arbitration of such amount by the
method set forth in Section 3.7 hereof.
Section 2.3 JV Real Estate Properties. In the event that the TCR Parties
are not able, after using all commercially reasonable efforts, to obtain the JV
Consents on or before the JV Consent Notification Date, (i) the applicable
Contributor or Contributors and the Transferee shall use all commercially
reasonable efforts to obtain all necessary or applicable consents of the JV
Partners required to execute and deliver on the Closing Date an assignment to
the Transferee of the existing property management agreement with respect to
each JV Real Estate Property for which JV Consents have not been obtained, with
such changes as may be mutually acceptable to the Transferee and the TCR
Representatives (subject to the applicable terms of any Joint Venture Agreement
or consent of JV Partner), (ii) from and after the Closing Date, with respect
to all such JV Real Estate Properties, the Contributors shall comply with the
covenants set forth in Section 8.1 hereof and otherwise not cause or permit any
action which would impair or otherwise reduce the value of any JV Real Estate
Property or the Contributors' interests therein and (iii) the TCR Parties and
the Transferee shall comply with the provisions set forth in Schedule 2.3
subject, in the case of clauses (i), (ii) and (iii) above, to the Joint Venture
Agreements.
Section 2.4 Assignment of Property.
(a) Each of the TCR Parties set forth on Schedule 2.4(a) shall assign to
the Transferee or its designee all of its right, title and interest as tenant
or lessee in and to the following:
(i) that certain lease of management office space (the "OFFICE SPACE")
listed on Schedule 2.4(a) (the "NEW OFFICE LEASE"); provided that with respect
to the New Office Lease, the Transferee will assume liability as tenant or
lessee only for approximately 18,000 square feet, as more fully described in
the floor plan attached as Appendix A to Schedule 2.4(a) (the "REQUIRED OFFICE
SPACE"). Between the Effective Date and the Closing Date, the TCR Parties
shall use all commercially reasonable efforts (x) to cause the New Office Lease
to be amended so that it covers only the Required Office Space at the same
rental rate per square foot (calculated as a simple average rate for the
Required Office Space and the Excess Space (as defined below) as a whole), for
the same term and subject to the same conditions as are currently applicable
and (y) to substitute, as of the Closing Date, the Transferee as tenant or
lessee under the New Office Lease; it being understood that in the event the
Operating Partnership is substituted as the tenant or lessee under the New
Office Lease pursuant to the foregoing, the Company shall, to the extent
required by the landlord thereunder, guarantee the Operating Partnership's
obligations under such lease. Anything to the contrary herein notwithstanding,
(A) in the event the business and operations to be acquired by the Transferee
hereunder have not relocated to the Office Space under the New Office Lease as
of the Closing Date, the Transferee agrees to pay to the landlord under the TCR
Parties' existing lease of management office space at 6400 Congress Avenue,
Boca Raton, Florida (the "OLD OFFICE LEASE") its pro rata portion of the rent
and all other amounts due under the Old Office Lease from the Closing Date
until the date of such
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relocation and (B) in the event the TCR Parties are unable to eliminate the
square footage in excess of the Required Office Space (the "EXCESS SPACE") from
the New Office Lease as of the Closing Date, the TCR Parties agree to pay to
the landlord (or cause a subtenant with the consent of the landlord if required
by the New Office Lease to pay to the landlord), and indemnify, save and hold
harmless the Transferee from and against, any and all liabilities for rent and
all other amounts due and any other liabilities or obligations arising from the
Excess Space for the term of the New Office Lease;
(ii) except as set forth on Schedule 2.4(a)(ii), all of the personal
property, removable fixtures, equipment, inventory and computer programming and
software owned or licensed by the TCR Parties and located on or used in
connection with each of the management office spaces used by the TCR Parties in
the southern Florida area (collectively, the "OFFICE PERSONAL PROPERTY");
(iii) except as set forth on Schedule 2.4(a)(iii), all of the telephone
numbers in use at such management office spaces (the "TELEPHONE NUMBERS"); and
(iv) except as set forth on Schedule 2.4(a)(iv), all of the personal
property, equipment, vehicles, trailers, fixtures, warranties, training
materials, manuals, checklists, tools, computer programming and software owned
or licensed by any of the TCR Parties and used in connection with the
Assignors' construction and development operations, including, but not limited
to, the concrete forms and related equipment, materials and know-how (the
"CONSTRUCTION AND DEVELOPMENT PROPERTY").
(b) Each of the TCR Parties set forth on Schedule 2.4(b)(i) shall convey
and assign to the Transferee or its designee all of its right, title and
interest in and to the contracts and agreements (the "PROPERTY ACQUISITION
CONTRACTS") for the purchase of (i) raw land intended for development and (ii)
any existing operating properties, in each case as set forth below such TCR
Party's name on Schedule 2.4(b)(i), and all entitlements related thereto, as
such Schedule shall be revised as described below and which Schedule shall also
set forth the amount of all escrow deposits and other actual expenditures to
non TCR-affiliated third parties, including, without limitation, costs of
inspections, tests, surveys, title commitments, legal and engineering fees and
expenses incurred as of the Effective Date under or in connection with the
Property Acquisition Contracts (collectively, the "INITIAL DEVELOPMENT AND
ACQUISITION EXPENDITURES"). With respect to each Property Acquisition Contract
and, in some cases, the property underlying such contract, such conveyance and
assignment shall be performed substantially in the manner set forth on Schedule
2.4(b)(ii), including, without limitation, through conveyance and assignment of
100% of the equity interests (the "CONTRACT ENTITY INTERESTS") in each of the
entities set forth on such Schedule (the "CONTRACT ENTITIES"), which as of the
Closing Date replaces a TCR Party as a party to the applicable Property
Acquisition Contract, or through such other methods as may effectively vest in
the Transferee the economic benefits of all Property Acquisition Contracts.
The Property Acquisition Contracts are all of the TCR Parties' contracts,
arrangements and agreements for the purchase of (x) raw land intended for
development and (y) any existing operating properties, and, in each case, all
entitlements thereto, in the South Florida Market.
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(i) Within ten (10) Business Days of the Effective Date, the Transferee
shall determine which, if any, of the Property Acquisition Contracts it elects
to assume and shall notify the TCR Representatives of the same, at which time
Schedule 2.4(b)(i) shall be revised to delete any and all Property Acquisition
Contracts the Transferee has elected not to assume.
(ii) In addition to the foregoing, the TCR Parties shall promptly present
to the Transferee for its consideration any additional contracts and agreements
for the purchase of (A) raw land intended for development and (B) any existing
operating properties, and any entitlements related thereto, that any of the TCR
Parties enters into or obtains subsequent to the Effective Date, which, if
approved by the Transferee, shall be added to Schedule 2.4(b)(i) and thereby
included within the meaning of the defined term "Property Acquisition
Contracts."
(iii) Schedule 2.4(b)(i) shall be further updated to reflect any
additional expenditure relating to the development of the raw land or the
acquisition of the existing properties that, in either case, is the subject of
any Property Acquisition Contract incurred by any of the TCR Parties between
the Effective Date and the Closing Date and, in the case of amounts in excess
of the De Minimis Development and Acquisition Expenditures, approved by the
Transferee as provided in Section 8.1(l) (the "ADDITIONAL DEVELOPMENT AND
ACQUISITION EXPENDITURES").
(iv) At the Closing, (A) after giving effect to the revisions to Schedule
2.4(b)(i) contemplated by paragraphs (i), (ii) and (iii) of this Section
2.4(b), each of the TCR Parties identified on Schedule 2.4(b)(i) shall assign
to the Transferee or its designee all of its right, title and interest in and
to each of the Property Acquisition Contracts listed under its name on Schedule
2.4(b)(i) substantially in the manner set forth on Schedule 2.4(b)(ii) and (B)
the Transferee shall pay to the TCR Representatives the Development and
Acquisition Expenditures Amount.
(v) If prior to Closing the Transferee elects not to proceed with any
Property Acquisition Contract, the right to such contract will revert to the
appropriate TCR Party if the TCR Representatives so elect and, if the TCR
Representatives so elect, the Transferee shall then have no obligation to
reimburse the TCR Parties for the Development and Acquisition Expenditures
Amount related to such contract.
(c) Each of the TCR Parties set forth on Schedule 2.4(c) shall assign to
the Transferee or its designee all of its right, title and interest in and to
the contracts relating to its management of each of the third-party owned
properties listed under its name on Schedule 2.4(c) and any additional
contracts relating to the management of third-party owned properties that any
of the TCR Parties enters into subsequent to the date hereof in the ordinary
course of business that are approved by the Transferee and that are added to
Schedule 2.4(c) (collectively, the "MANAGEMENT CONTRACTS"). The Management
Contracts are all of the TCR Parties' contracts relating to their management of
third-party owned properties in the southern Florida area. Notwithstanding
anything to the contrary contained herein, in no event shall any property
management agreements assigned to the Transferee or its designee pursuant to
Section 2.3 hereof
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be included within the definition of Management Contracts for any purposes
hereunder, including, without limitation, Section 3.8 hereof.
(d) Each of the TCR Parties set forth on Schedule 2.4(d) shall assign to
the Transferee or its designee all of its right, title and interest in and to
the construction contracts listed under its name on Schedule 2.4(d), all
subcontracting agreements relating to the completion of improvements at each of
the Development Properties and any additional construction contracts or
subcontracting agreements relating to the completion of improvements at the
Development Properties that any of the TCR Parties enters into subsequent to
the date hereof in the ordinary course of business that are approved by the
Transferee and that are added to Schedule 2.4(d) (collectively, the
"CONSTRUCTION CONTRACTS"). The Construction Contracts are all of the TCR
Parties' construction contracts and subcontracting agreements relating to the
completion of improvements at each of the Development Properties with respect
to the South Florida Market.
Section 2.5 Several Liability. Except as otherwise expressly provided in
this Agreement, none of the TCR Parties shall have joint and several liability
hereunder. Instead, except as otherwise expressly provided in this Agreement,
each of the TCR Parties 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; provided, however,
that (i) after the Closing, all representations, warranties, covenants and
agreements hereunder of all Contributors whose Partnership Interests have been
acquired by the Transferee shall be deemed to be representations, warranties,
covenants and agreements of the Contributing Partners who prior to the Closing
owned such Partnership Interests, subject to the provisions of Article 18 and
(ii) to the extent that Transferee Indemnified Parties are entitled to
indemnification pursuant to Article 18 hereof and such indemnification claims
are satisfied by exercising the right of offset pursuant to Section 18.5, the
liability of the TCR Parties with respect thereto shall be joint and several to
the extent of the entire Retained Amount available for offset at the time, and
no TCR Party shall have or assert as a defense or counterclaim against the
Transferee that the covenants, agreements, representations or warranties from
which the right to indemnification arose were not made by or do not relate to
such TCR Party or the Property or Partnership Interest owned or transferred by
it.
Section 2.6 Access to Books and Records. The Transferee agrees that each
Contributor shall have access after the Closing to its respective Books and
Records relating to periods prior to the Closing for inspection or duplication
at the offices of the Transferee at reasonable times and upon reasonable
notice.
Section 2.7 Excluded Assets. In addition to such other property, rights
and interests of the TCR Parties that are excluded from the conveyances
contemplated by this Agreement through separate, specific reference elsewhere
in this Agreement, all of the TCR Parties' rights, title and interests in and
to the items described on Schedule 2.7, including, without limitation, all cash
on hand and in accounts of the TCR Parties (other than any funds then in the
possession of any trustee under the terms of any bond indenture with respect to
any of the Assumed Loans and
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the escrow, reserve, collateral or similar funds listed on Schedule 2.2(c)),
are expressly retained by the TCR Parties and excluded from any Property
conveyances or assignments otherwise contemplated by this Agreement. Except as
otherwise expressly provided for in this Agreement, no property, assets or
rights owned by, or interests in, any of the TCR-affiliated entities listed on
Schedule 2.7 are included in the conveyances contemplated by this Agreement.
Section 2.8 No Contributing Partner Liability. Except as otherwise
expressly provided in this Agreement, 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, except as otherwise
expressly provided in this Agreement, and limited exclusively to the terms of
this Agreement and Addendum A or Addendum B, as applicable.
ARTICLE 3. VALUE AND PAYMENT TERMS.
Section 3.1 Issuance of Equity Securities.
(a) At Closing, the Transferee shall issue and deliver to the persons set
forth on Schedule 3.1(a)(i), as the designated representatives of the TCR
Parties (the "TCR REPRESENTATIVES"), that number of Shares or Units, as set
forth on Schedule 3.1(a)(ii), determined by dividing (i) the difference between
(x) the Net Value and (y) the Retained Amount by (ii) the Share Price. The TCR
Representatives shall give the Transferee notice at least ten (10) Business
Days before the Closing Date of the name, address and other reasonable
information required by the Company or the Operating Partnership of or relating
to the Distributees to which the Equity Securities are to be issued at the
Closing.
(b) During the period commencing on the Closing Date and ending one (1)
year after the Closing Date, without the prior written consent of the Company,
no person to whom the Equity Securities issued pursuant to this Agreement are
to be issued or distributed, either directly or indirectly through one or more
intermediaries, shall, directly or indirectly, offer, sell, contract to sell,
pledge, seek the redemption of or otherwise transfer or dispose of all or any
interest in such Equity Securities; provided, however, that none of (i) the
distribution of Equity Securities from a Distributee that is an entity to its
constituent shareholders, partners or members, (ii) the delivery of the Equity
Securities received by a TCR Party as nominee for a Partner of a Contributor or
(iii) the pledge of Equity Securities to a financial institution by the
entities set forth on Schedule 3.1(b), shall violate this Section 3.1(b).
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Section 3.2 Assumption of Indebtedness
(a) At Closing, subject to the receipt of any required consents thereto
from the applicable creditors, lenders or, with respect to tax exempt
indebtedness, governmental authorities or similar agencies and bond trustees,
the Transferee acknowledges and agrees that all Indebtedness and obligations of
the Contributors listed on Schedule 3.2 (the "ASSUMED LOANS") shall remain in
effect with respect to, and therefore be effectively assumed as of the Closing
Date by, the Operating Partnership and or its affiliates; provided that, except
as set forth on Schedule 3.2, the Transferee shall not be required to accept
any changes to the terms of the Assumed Loans (including, with respect to any
bonds, the low to moderate income tenant requirements of the related Real
Estate Properties, but excluding any extension not exceeding two years to the
qualified project period) which would cause or result in (i) any increase in
ongoing financial obligations of the Contributor or (ii) any additional
restrictions on the use or operation of the applicable Real Estate Properties
on or after the Closing Date; it being understood that the Transferee shall not
unreasonably withhold its consent with respect to any changes to the Assumed
Loans which would not cause or result in any such increase or restrictions.
Subject to the receipt of any required consents thereto from the applicable
creditors, lenders or, with respect to tax exempt indebtedness, governmental
authorities or similar agencies and bond trustees, the Transferee (i) agrees
that it will pay and perform, and cause each entity which owns a related Real
Estate Property to pay and perform, any and all obligations with respect to
such Assumed Loans as they become due in accordance with the Assumed Loan
Documents and (ii) hereby agrees to enter into one or more agreements with
Connecticut General Life Insurance Company and Metropolitan Life Insurance
Company (individually or together, the "GUARANTORS"), each in form and
substance satisfactory to the Transferee and the Guarantors, under which the
Company will agree to reimburse each Guarantor in the amount of any payments
made by such Guarantors after the Closing Date under or pursuant to guaranty
agreements which secure payment of tax exempt bonds which finance certain Real
Estate Properties (individually or collectively, the "GUARANTY AGREEMENTS");
provided, however, that such reimbursement obligation agreements with respect
to each of the Guarantors and Guaranty Agreements shall terminate on the date
as of which all obligations under each such Guaranty Agreement terminate and as
of which all obligations under the reimbursement obligation agreements shall
have been satisfied. In addition, the Transferee shall (x) indemnify the TCR
Parties from any liability or obligation under the documents evidencing the
Assumed Loans, including without limitation, environmental liabilities, for
events occurring after the Closing Date and (y) on or before the Closing Date
(A) cause Credit Suisse First Boston or another bank, the credit rating of
which satisfies the requirements under the financing documents, to deliver to
the bond trustee letters of credit in such amounts and on such terms and
conditions as are reasonably required for such letters of credit to constitute
substitute credit enhancements for the tax exempt indebtedness that constitutes
Assumed Loans and (B) otherwise use all commercially reasonable efforts to
satisfy the requirements of the applicable creditors, lenders, trustees and
governmental authorities or agencies and bond trustees whose consent or
approval is required in connection with the matters described in this Section
3.2(a) in relation to their acceptance of such letters of credit pursuant to
the alternate security provisions of such Assumed Loans (subject to the last
two clauses of the first sentence of this Section 3.2(a)). Furthermore, the
TCR Parties agree to use all commercially reasonable efforts to cause the
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Guarantors to assign or release all of the Guarantors' interests under any
mortgages, security agreements or instruments in connection with the Assumed
Loans as directed in writing by the Transferee.
(b) Each Contributing Partner with respect to the applicable Contributor
shall (i) use all commercially reasonable efforts to secure all required
consents to the transactions contemplated by Section 3.2(a) above from the
applicable creditors, lenders, Guarantors or, with respect to tax exempt
indebtedness, governmental authorities or similar agencies and bond trustees,
and (ii) keep the Transferee informed of the progress of discussions with such
creditors, lenders, Guarantors, authorities, agencies and bond trustees. The
costs associated with the tax exempt indebtedness shall be paid in accordance
with Schedule 3.2(b). The Transferee shall pay all the costs of title and real
estate surveys, if required, or any fees and expenses incurred in connection
with the Transferee causing delivery of replacement credit enhancement,
refunding any bonds or interest rate buy-down after the Closing, which shall be
paid by the Transferee. The Transferee shall guaranty the payment of fees and
expenses of the Florida Housing Finance Corporation and the trustees. The
Transferee shall cooperate with the Contributors in obtaining any required
consents to the transactions contemplated by Section 3.2(a) above; provided,
however, that the Transferee shall not be required to agree to or accept any
changes to the terms of the Assumed Loans (excluding any extension not
exceeding two years to the qualified project period) which would cause or
result in (i) any increase in ongoing financial obligations of the Contributor
or (ii) any additional restrictions on the use or operation of the applicable
Real Estate Properties on or after the Closing Date; it being understood that
the Transferee shall not unreasonably withhold its consent with respect to any
changes to the Assumed Loans which would not cause or result in any such
increase or restrictions.
(c) If a creditor, lender, Guarantor or governmental authority or agency
or bond trustee (i) does not take action required to permit transfer of the
Contributors' interests, assumption of the Assumed Loans, release of the
Guaranty Agreements on terms acceptable to the Guarantors, assignment or
release of all of the Guarantors' interests under any mortgages, security
agreements or instruments in connection with the Assumed Loans as contemplated
by Section 3.2(a) above, or substitution of credit enhancements as contemplated
by Section 3.2(a) above (for any reason other than due to a failure of the
Transferee to cooperate with the Contributor on a basis consistent with that
required pursuant to Section 3.2(b)), or (ii) requires changes to the terms of
the Assumed Loans (excluding any extension not exceeding two years to the
qualified project period) which would cause or result in (i) any increase in
ongoing financial obligations of the Contributor or (ii) any additional
restrictions on the use or operation of the applicable Real Estate Properties
on or after the Closing Date (subject to the last clause of Section 3.2(b)),
then the Transferee shall have the option (which it may exercise or not
exercise in its sole discretion) of: (x) terminating this Agreement as to the
Real Estate Property to which such Assumed Loan relates by giving prompt notice
of such termination to the TCR Representatives, whereby such Real Estate
Property shall thereupon become "Unapproved Property"; or (y) causing such
Assumed Loan to be prepaid, or the related tax exempt bonds to be discharged by
defeasance, in full at Closing with cash to be provided by the Transferee,
whereby the Net Value shall be reduced by 100% of the principal amount of the
Assumed Loan so prepaid or discharged, plus all accrued and unpaid
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interest as of the Closing Date and all prepayment premium or penalties due in
connection with the Operating Partnership's prepayment of such Assumed Loan or
defeasance of the related bonds (without duplication with Section 1.87(b)(i)
hereof).
Section 3.3 Assumption of Assigned Property. At Closing, the Operating
Partnership shall assume the rights and obligations of the applicable
Contributors and Assignors under the Leases, the Service Contracts, the Office
Leases, the Property Acquisition Contracts, the Trademarks, the Management
Contracts and the Construction Contracts.
Section 3.4 Assignment and Assumption of Construction-Related Warranties
and Guaranties. At Closing, the Operating Partnership shall (i) receive an
assignment of all rights and benefits under all warranties and guarantees
related to the construction of any of the Real Estate Properties and (ii)
assume the specific warranties and guarantees listed on Schedule 3.4 and
release the TCR Parties from any obligations they may have thereunder.
Section 3.5 Completion Costs.
(a) The TCR Representatives and the Transferee shall use all commercially
reasonable efforts to mutually agree on the Completion Costs (the "ESTIMATED
COMPLETION COSTS") anticipated to finalize construction of each of the Real
Properties listed on Schedule 3.5(a) (collectively, the "DEVELOPMENT
PROPERTIES"). In connection with the foregoing, the TCR Representatives shall
provide, and each of the Contributors and the Contributing Partners shall
cooperate with the TCR Representatives in the provision of, all reasonable
information requested by the Transferee for the purpose of determining the
Estimated Completion Costs for each Development Property. If the parties are
unable to agree on the Estimated Completion Costs by the twentieth (20th) day
prior to the Closing Date, then either party may request binding arbitration of
the Estimated Completion Costs by the following method: Wilson & Stricklan is
hereby appointed by the parties as a neutral arbitrator (the "COMPLETION COST
ARBITRATOR") of the Estimated Completion Costs; provided that if, for any
reason, Wilson & Stricklan is unable to act as Completion Cost Arbitrator, the
Transferee and the TCR Representatives shall appoint a mutually acceptable
arbitrator to serve in its place. The party electing determination by the
Completion Cost Arbitrator shall give written notice to the Completion Cost
Arbitrator and the other party of such election. Thereafter, (i) the TCR
Representatives shall provide, and each of the Contributors and the
Contributing Partners shall cooperate with the TCR Representatives in the
provision of, all reasonable information requested by the Completion Cost
Arbitrator for the purpose of determining the Estimated Completion Costs for
each Development Property and (ii) each party may submit to the Completion Cost
Arbitrator its proposed Estimated Completion Costs, together with any materials
it wishes to submit in support of its position. The Completion Cost Arbitrator
shall, within ten (10) days of such election, then make its own determination
of the Estimated Completion Costs, which determination shall be conclusive and
binding on all parties to this Agreement. At such time either the parties
agree on the Estimated Completion Costs or the Completion Cost Arbitrator
determines the Estimated Completion Costs, Schedule 3.5(a) shall be completed
by incorporating such Estimated Completion Costs therein.
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(b) At Closing, an amount equal to the Estimated Completion Costs shall be
deducted from the Cash Consideration to be delivered at the Closing.
(c) The Transferee shall assume and agree to pay any actual costs to
complete the Development Properties in excess of the Estimated Completion
Costs.
(d) The applicable Contributor and the Transferee shall enter into a
master lease of the rental units of each Development Property on the terms set
forth in Exhibit VI;
Section 3.6 Cash Consideration.
(a) "CASH CONSIDERATION" shall be an amount which is not more than
$150,000,000.
(b) At the Closing, the Transferee shall pay the TCR Representatives, for
the accounts of the TCR Parties, an amount of cash equal to (i) the Cash
Consideration, minus (ii) the following items: (A) the Estimated Completion
Costs pursuant to Section 3.5(b); (B) all amounts required to pay in full at
the Closing all principal of, accrued and unpaid interest on, and premiums,
penalties and other amounts due with respect to, all indebtedness of the
Contributors other than the Assumed Loans, including, without limitation, the
indebtedness set forth on Schedule 3.6(b)(ii)(B); (C) the adjustments required
by Section 3.8(a) hereof, if any; and (D) the net amount of adjustments
calculated pursuant to Article 10 (if such net amount is due the Transferee),
plus (iii) (x) the net amount of adjustments calculated pursuant to Article 10
(if such net amount is due the TCR Parties) and (y) $100,000 with respect to
costs and expenses of the TCR Parties related to the relocation of the office
currently located in Boca Raton, Florida into the Required Office Space
incurred as of the Closing Date. The TCR Representatives shall give the
Transferee written notice of the amount of the Cash Consideration to be
delivered to the TCR Representatives at Closing at least ten (10) Business Days
before the Closing Date.
Section 3.7 Withdrawn Properties. A "WITHDRAWN PROPERTY" shall be any
Unapproved Property, Damaged Property or Condemned Property as to which this
Agreement has been terminated pursuant to Section 2.2, Section 3.2(c), Section
13.2 or Article 14, respectively, or any Real Estate Property that has tax
exempt bond financing associated therewith and that if transferred to the
Operating Partnership pursuant this Agreement, either by direct conveyance or
by the transfer of the Partnership Interests in the Contributor that owns that
Real Estate Property, would cause the interest payable on such tax exempt bond
financing to cease to be tax exempt. In the event any Real Estate Property
becomes a Withdrawn Property, Schedule 3.2 shall be revised to delete the loan
associated with such Withdrawn Property for the definition of Assumed Loans and
the TCR Representatives and the Transferee shall each use all commercially
reasonable efforts to mutually agree upon the assigned value for that Real
Property (the "ASSIGNED VALUE"), taking into account the relation of the
Withdrawn Property to the value of the entire portfolio of Real Properties
being acquired; provided, however, that the parties agree that in the case of
any Real Estate Property that has tax exempt bond financing associated
therewith, there shall be added to the fair value otherwise assigned to such
property on account of its objective characteristics as
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a real estate asset an additional amount of value on account of the cash flow
benefits implicit in the tax exempt bond financing associated therewith equal
to twenty percent (20%) of the principal amount of such tax exempt bond
financing. If the parties are unable to agree on the Assigned Value by the
tenth (10th) Business Day prior to the Closing Date, then either party may
request binding arbitration of the Assigned Value by the following method:
Arthur Andersen LLP ("ANDERSEN") is hereby appointed by the parties as the
neutral arbitrator (the "ARBITRATOR") of the Assigned Value; provided that if,
for any reason Andersen is unable to act as Arbitrator, Andersen 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 and
the transactions contemplated by this Agreement, and hold such hearings, as it
deems appropriate. Except as set forth in the following sentence, in the event
that prior to the Closing, the number of Withdrawn Properties is greater than
such number or combination of Real Estate Properties comprising in the
aggregate over 650 apartment units, this Agreement may be terminated in its
entirety at the election of the Transferee by written notice given to the TCR
Representatives. Notwithstanding anything herein to the contrary, in the event
that any of the Real Estate Properties listed in Schedule 3.7(a) becomes a
Withdrawn Property, then each of the other Real Estate Properties listed in
such Schedule 3.7(a) shall also become a Withdrawn Property and, in such event,
the provisions of the preceding sentence shall not be applicable.
Notwithstanding anything herein to the contrary, in the event that any of the
Real Estate Properties listed in Schedule 3.7(b) becomes a Withdrawn Property,
then each of the other Real Estate Properties listed in such Schedule 3.7(b)
shall also become a Withdrawn Property.
Section 3.8 Management Contracts and Brokerage Business.
(a) Schedule 2.4(c) sets forth the amount of currently projected
annualized gross management fees with respect to each Management Contract (the
"CURRENT ANNUALIZED GROSS FEES") . At the Closing, the parties will calculate
from such schedule the aggregate amount of Current Annualized Gross Fees
attributable to all Management Contracts (i) which are fully assignable to the
Transferee (including receipt of any consents to assignment required under the
contract from the owner of the relevant property under management on or prior
to the Closing Date), (ii) which have not been terminated and (iii) with
respect to which the owner of the relevant property under management has not on
or prior to the Closing Date given notice of its intent to terminate the
contract (the "BASE MANAGEMENT FEES"). If the Base Management Fees are less
than $2,700,000, then the Cash Consideration shall be decreased by an amount
equal to 175% of the shortfall.
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(b) Twelve (12) months following the Closing Date, the Transferee shall
determine the aggregate amount of then projected annualized gross management
fees (the "FIRST ANNIVERSARY ANNUALIZED GROSS MANAGEMENT FEES") with respect to
(i) all Management Contracts that were in effect on the Closing Date which have
not been terminated and with respect to which the owner of the relevant
property under management has not on or prior to such date given notice of its
intent to terminate the contract and (ii) new property management contracts
secured after the Closing Date through the efforts of the third party property
management organization acquired by Transferee hereunder from the TCR Parties
(as opposed to the Transferee's currently operating third party management
organization) so long as the Transferee approved the terms of such new
contracts (which approval shall not be unreasonably withheld), provided that
with respect to both clause (i) and clause (ii) of this Section 3.8(b) the
relevant property under management is not then under contract to be sold,
unless the Transferee has been expressly notified that it will be retained as
the property manager after the sale (the "ADJUSTED MANAGEMENT FEES"). If the
Adjusted Management Fees are less than the lesser of (x) the Base Management
Fees or (y) $2,700,000, then the Retained Amount otherwise distributable to the
TCR Parties pursuant to Section 3.9 hereof shall be reduced by an amount equal
to 175% of the shortfall.
(c) Twelve (12) months following the Closing Date, the Transferee shall
determine (i) the actual amount of gross revenues recognized since the Closing
Date on account of the brokerage business acquired by the Transferee from the
TCR Parties hereunder (the "BROKERAGE REVENUES") and (ii) the amount, if any,
by which the actual amount of gross management fees actually received on
account of the third party management business acquired by the Transferee
hereunder from the TCR Parties exceeds the lesser of (x) the Base Management
Fees or (y) $2,700,000 (the "EXCESS MANAGEMENT REVENUES"). If the sum of the
Brokerage Revenues and the Excess Management Revenues is less than $1,500,000,
then the Retained Amount otherwise distributable to the TCR Parties pursuant to
Section 3.9 hereof shall be reduced by an amount equal to 175% of the
shortfall.
Section 3.9 Retained Amount. At the Closing, the Transferee shall retain
an amount in Units equal to $12,500,000 for payment to the TCR Parties on
January 1, 2000 (the "RETAINED AMOUNT") subject to decrease, if any, as
provided in Section 3.8 hereof or Article 18 hereof, determined by dividing the
applicable dollar amount by the average of the closing prices of the Shares on
the New York Stock Exchange during the period of fifteen (15) consecutive
trading days concluding with the last trading day that is three (3) days before
the date of issuance.
ARTICLE 4. TITLE; MATTERS TO WHICH THIS CONTRIBUTION IS SUBJECT
Section 4.1 Permitted Encumbrances. The Real Property to be contributed
to the Operating Partnership by direct conveyance from the Contributors (or by
indirect conveyance in the case of the transfer of Partnership Interests by
any Contributing Partners pursuant to Section 2.2 hereof) shall be subject only
to the following encumbrances (collectively, the "PERMITTED ENCUMBRANCES"):
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(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, as tenants only;
(c) any and all restrictions, covenants, agreements, easements, matters
and things which are, in each case, of record as set forth in the preliminary
title reports listed on Schedule 4.1(c) affecting title to the Real Property
(except for loans that are not Assumed Loans), and such easements, covenants
and restrictions granted, created or entered into after the Effective Date in
accordance with Section 4.2 below;
(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"), of all applicable Governmental Authorities;
(e) the state of facts shown on the surveys described on Schedule 4.1(e)
for each individual Real Property comprising the 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 and the Construction Contracts;
(g) any installment of assessments affecting the Real Property or any
portion thereof due and payable after the Closing Date;
(h) any utility company 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 the Title Company shall be willing, without special
premium, 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 Contributor will voluntarily grant, create or
enter into, or consent to the creation or imposition of, any encumbrance,
covenant, easement, restriction, PUD ordinance, lot split, zoning change or
land use change on, or with respect to, any Real Property without the prior
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written consent of the Operating Partnership, which consent will not be
unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing,
any Contributor may enter into agreements or grant easements, licenses and
dedications for usual and customary utilities (including telephone and cable
television service through shared tenant service or other arrangements), water,
parking, sewer, ingress and egress granted in the ordinary course of business
without the Operating Partnership's consent; provided that such easements,
licenses, or dedications do not materially adversely impact the applicable Real
Estate Property; and provided further, that the Contributor shall give the
Operating Partnership not less than ten (10) days prior written notice of any
such easement, license or dedication, which shall thereupon become a Permitted
Encumbrance.
Section 4.3 Title Insurance. Concurrent with the execution of this
Agreement, Transferee has obtained a commitment for title insurance for each
Real Property, by which the title company (the "TITLE COMPANY") has agreed to
insure the Operating Partnership's title at Closing subject only to the
Permitted Encumbrances and such matters as may appear of record between the
date of the commitment and the Closing Date. In the event that a title
exception other than the Permitted Encumbrances appears of record prior to
Closing, the Operating Partnership shall nevertheless take title to the Real
Property subject to the exception; provided that:
(a) if the exception is a matter that can be cured by the payment of
money, such as a construction lien, judgment lien, mortgage, or the like, the
exception shall be removed at Closing by the TCR Parties' payment of the
indebtedness or obligation served by the lien or by bonding against such lien
to the satisfaction of the Title Company; or
(b) if the exception is non-monetary and materially and adversely impacts
the value of the Real Property, the parties shall negotiate an appropriate
reduction in Net Value for such matter, and if they are unable to determine the
amount of such reduction prior to Closing, the amount of the reduction claimed
by the Transferee shall be held in escrow pending determination of the proper
reduction. If the parties are unable to agree on the amount of the reduction
post-Closing, the amount of the reduction shall be submitted to binding
arbitration by an experienced real estate appraiser jointly selected by the
parties.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS.
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 Contributor hereby
severally warrants and represents with respect to itself the following:
(a) Organization, Good Standing and Corporate/Partnership Power. The
Contributor is a corporation, a general or limited partnership or a limited
liability company, 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
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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 Contributor, has all requisite,
corporate or 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
Contributor hereunder, will be the legal, valid and binding obligation of the
Contributor, enforceable against the Contributor 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 Contributor, as applicable, of its duties and
obligations 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 Contributor 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 Contributor 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 Contributor, 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 Contributor.
(c) Rent Roll. The Contributor 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 Closing that is current as of January 31,
1998. To the Contributor's knowledge, the information set forth in the Rent
Roll is true and correct as of January 31, 1998 in all material respects. To
the Contributor's knowledge, the Rent Roll reflects all of the leases,
tenancies or occupancies materially affecting the Real Property as of such
date. True and complete copies of the Leases have been made available to the
Transferee.
(d) Work on Real Property. To the Contributor's knowledge, no work has
been performed on the Real Property that it owns immediately prior to the
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
Contributor'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 Contributor's knowledge, there
are no service contracts, equipment leases, union contracts, employment
agreements, management agreements or other agreements materially affecting its
Real Estate Property or the operation
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thereof other than the Service Contracts. To the Contributor's knowledge, all
of the Service Contracts of which it is a party or that affect in any way its
Real Estate Property are in full force and effect without any material default
or claim of material default by any party thereto. To the Contributor's
knowledge, all sums presently due and payable by it under such Service
Contracts have been fully paid.
(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 Contributor's
knowledge, threatened, at law or in equity, against or related to the
Contributor or to all or any part of its Real Estate Property, the
environmental condition thereof, or the operation thereof before or by any
applicable Governmental Authority. The provisions of this Section 5.1(f) shall
survive for the Survival Period.
(g) No Actions Relating to Real Property. Except as set forth on Schedule
5.1(g), the Contributor 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 or land use 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 Contributor 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 Contributor have knowledge that any
such Governmental Authority contemplates the issuance thereof. To the
Contributor'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 Contributor or its Real Property that,
individually or in the aggregate, would have a Material Adverse Effect on the
Contributor. The provisions of this Section 5.1(h) shall survive for the
Survival Period.
(i) Solvency. The Contributor has been and will be solvent at all times
prior to and immediately following the transactions provided for in this
Agreement. There does not exist in effect with respect to the Contributor (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 Contributor, (iv) any appointment of a receiver to take possession of
all, or substantially all, of the assets of the Contributor, (v) any attachment
or other judicial seizure of all, or substantially all, of the assets of the
Contributor, (vi) any admission in writing of the inability of the Contributor
to pay its debts as they come due or (vii) any offer of settlement, extension
or composition to the creditors generally.
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(j) Title to Personal Property. Except as set forth on Schedule 5.1(j),
the Contributor's Personal Property will on the Closing Date be owned by the
Contributor free and clear of any conditional bill 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 Contributor has not received written
notice of any outstanding requirements or recommendations by (i) any insurance
company currently insuring its Real Estate 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 Real Estate Property, which in any case
require or recommend any repairs or work to be done on its Real Estate Property
of a material nature. There has been no damage to any portion of the
Contributor's Real Estate Property caused by fire or casualty that has not been
fully repaired or restored.
(l) Property Financials; Absence of Undisclosed Liabilities.
(i) The operating statements of the Contributor representing the results
of operations of the Contributor (excluding only those operations and assets
not contemplated to be contributed to the Operating Partnership pursuant to
this Agreement) including the results of operations of the Real Estate Property
owned by the Contributor which have been provided to the Transferee (the
"PROPERTY FINANCIALS"), fairly present the operating results of the Contributor
and its Real Estate Property, in each case in accordance with accounting
practices applied on a basis consistent with the historical operating
statements of the Contributor (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.
(ii) On the Closing Date, the Contributor will have no Liability of any
type, including, without limitation, any Liability to the person or entity from
whom or which the Contributor acquired any of its Real Estate Property, except
(v) Permitted Encumbrances, (w) prepaid rents, (x) refundable security deposits
and (y) Assumed Loans.
The provisions of this Section 5.1(l) shall survive for the Survival
Period.
(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 Contributor (the "ASSUMED LOAN
DOCUMENTS") are in full force and effect, and the Contributor 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. The Contributor and each of its predecessors have paid on a
timely basis all material Taxes for which the Company or the Operating
Partnership could be held liable or in respect of which a claim may be made
against the Contributor's Real Estate Property and have timely filed (after
giving effect to any filing extension properly granted by a Governmental
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Authority having authority to do so) all material returns and reports required
to be filed with respect to the ownership and operation of its Real Property
and for which the Operating Partnership could be held liable or a claim made
against such Real Property. As of the date they were prepared, the returns and
reports were accurate and complete in all material respects. Except as set
forth on Schedule 5.1(n), there are no audits or other proceedings by any
Governmental Authority pending or, to the Contributor's knowledge, threatened
with respect to Taxes resulting from the ownership and operation of its Real
Estate Property for which the Operating 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
provisions of this Section 5.1(n) shall survive for the Survival Period.
(o) Restrictions on Sale; Legend. The Contributor 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 Contributor'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
Contributor 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 Contributor 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 Contributor 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 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 Closing.
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(p) Accredited Investor; Investment Intent. The Contributor and each of
its Distributees is an "accredited investor" as defined in Regulation D
promulgated under the Securities Act. Any Equity Securities acquired by the
Contributor or its Distributees will be so acquired for the Contributor's and
its 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 Contributor'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 provisions of this Section 5.1(p) shall survive the Closing.
(q) Employees. The Contributor does not have any employees.
(r) Tax Exempt Bonds.
(i) No modifications of any documents in connection with tax exempt bonds
or other tax exempt indebtedness relating to any Property have been made during
the six (6) month period ending on the Effective Date, except as set forth in
Schedule 5.1(r)(i).
(ii) The Contributor has received no notice of a failure to comply, and to
the knowledge of the Contributor has complied, with all requirements contained
in any bond financing document, the failure to comply with which may adversely
affect the exclusion from gross income of interest on any tax-exempt bonds
which finance any of the Real Estate Properties or cause a default or basis for
a default under any of such bond financing documents.
(iii) Not later than the Closing Date, the Contributor will (A) upon the
Transferee's request, provide the Transferee with any information in its
possession that may demonstrate that not less than 90% of all proceeds,
together with investment income thereon (minus proceeds used to pay "neutral
costs"), of each issue of tax-exempt bonds ("BONDS") which financed Real Estate
Properties was expended to pay the cost of land or property constituting
"residential rental property for family units," within the meaning of Section
103(b)(4)(A) of the Internal Revenue Code of 1954, as amended, and the
regulations thereunder (the "1954 CODE"), and (B) provide access to all tenant
records with respect to all of the Real Estate Properties financed with Bonds,
including but not limited to any records, any income certifications, any income
verifications and any periodic compliance reports which demonstrate that such
Real Estate Properties were operated in compliance in all material respects
with the requirements of the 1954 Code from the first date on which 10% of the
units in each of such Real Estate Properties were occupied initially.
(iv) The TCR Parties agree that, in connection with any refunding of Bonds
by the Transferee after the Closing Date, the TCR Parties will represent and
warrant to Bond Counsel that not less than 90% of all proceeds (minus proceeds
used to pay "neutral costs") of each issue of Bonds which financed Real Estate
Properties, together with investment income
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thereon, was expended to pay the cost of land or property constituting
"residential rental property for family units," within the meaning of Section
103(b)(4)(A) of the 1954 Code.
The provisions of this Section 5.1(r) shall survive for the Survival Period.
(s) Environmental Matters. To the Contributor's knowledge, the
Contributor has made available to the Transferee true and complete copies of
all environmental reports prepared for, or in the possession or control of, the
Contributor. Except as set forth therein, to the Contributor's knowledge, the
Real Property does not contain any hazardous materials in violation of
applicable law. The provisions of this Section 5.1(s) shall survive for the
Survival Period.
(t) Absence of Certain Changes or Events. Except as set forth on Schedule
5.1(t), since September 30, 1997, the Contributor has conducted its business
only in the ordinary course of such business (taking into account prior
practices). The provisions of this Section 5.1(t) shall survive for the
Survival Period.
(u) Capital Structure. As of the Effective Date, the capital structure of
the Contributor is as set forth on Schedule 5.1(u) hereto. All of the equity
interests of the Contributor have been duly and validly issued. Except as set
forth on Schedule 5.1(u), there are no equity interests of the Contributor
issuable upon conversion or exchange of any security of the Contributor.
Except as set forth on Schedule 5.1(u), no holder of any equity interest of the
Contributor is entitled to any preemptive or similar right (i) to subscribe for
any equity interests of the Contributor or (ii) with respect to any of the
transactions contemplated hereby. The provisions of this Section 5.1(u) shall
survive for the Survival Period.
(v) Covenants. The Contributor has complied in all material respects with
the covenants contained in Section 8.1 as of the Closing Date. The provisions
of this Section 5.1(v) shall survive for the Survival Period.
Section 5.2 Definition of Knowledge. As used in this Agreement, the terms
to the "Contributor's knowledge" or "knowledge of the Contributor" shall mean
only the current actual knowledge of the persons listed on Schedule 5.2(a)
after consultation with the district manager with oversight responsibilities
for the Real Estate Property that is the subject of the representation being
made concerning the subject matter of the representation being made; provided
that, with respect to Sections 5.1(f), 5.1(h) and 5.1(n), the terms to the
"Contributor's knowledge" or "knowledge of the Contributor" shall also include
the current actual knowledge of the persons listed on Schedule 5.2(b). 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 does not include constructive, imputed or implied knowledge of
any partner or agent of any Contributor other than such designees. Anything
herein to the contrary notwithstanding, none of the persons listed on Schedule
5.2(a) or Schedule 5.2(b) shall have any personal liability or obligation
whatsoever with respect to any of the matters set forth in this
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Agreement or any of the representations made by the Contributor 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 Contributors 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 real estate investment trust duly organized, validly existing and
in good standing under the laws of the State of Maryland, 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
Trustees of the Company has approved this Agreement and the transactions
contemplated hereby.
(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 Delaware, 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
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(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 8.8, 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.
(e) OP Agreement. The Operating Partnership has furnished to the TCR
Representatives a true and complete copy of OP Agreement, as amended to the
Effective Date. The OP Agreement is in full force and effect and has not been
further amended. Other than with respect to amendments related to the issuance
by the Operating Partnership of equity interests which do not require the
consent of the limited partners, 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 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
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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, the Company's Proxy Statement for
its 1997 annual meeting of shareholders as filed with the SEC pursuant to the
Exchange Act and the Company's Prospectus Supplement dated November 24, 1997 as
filed with the SEC pursuant to Rule 424(b) under the Securities Act
(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 such statements have been modified by subsequently 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,
1996.
(h) Financial Statements. The consolidated financial statements included
in the SEC Documents have been prepared in accordance with generally accepted
accounting procedures ("GAAP") 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 covered by insurance, 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.
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(j) Subsidiaries. Except as set forth on Schedule 6.1(j), the Transferee
has no Subsidiaries nor any interest or investment in any partnership, trust or
other entity or organization. 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.
(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
Liabilities which could reasonably be expected to have a Material Adverse
Effect on the Transferee 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) Liabilities incurred in the ordinary course of
business since the date of such balance sheet.
(m) Capital Structure.
(i) As of March 10, 1998: (A) the authorized capital stock of the Company
consisted of 100,000,000 Shares, 10,000,000 preferred shares of beneficial
interest, par value $.01 per share, and 51,000,000 excess shares of beneficial
interest, par value $.01 per share; (B) the issued and outstanding shares of
capital stock of the Company consisted of 22,061,896 Shares and 4,600,000
shares of 8.30% Series A Cumulative Redeemable Preferred Shares; 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 March 10, 1998, there were (A) 22,061,896 Units outstanding and
held, directly or indirectly, by the Company and (B) 4,052, 578 Units
outstanding and held by persons other than the Company or its subsidiaries.
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(iii) Except for the Units, shares reserved for issuance under any stock
option or dividend reinvestment plan and the conversion or exchange rights that
attach to warrants and convertible securities that are listed on Schedule
6.1(m)(iii), there are no common shares of beneficial interest 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.
(i) Each of the Company and each of its Subsidiaries has (A) filed all
Tax returns and reports required to be filed by it (after giving effect to any
filing extension properly granted by a Governmental Authority having authority
to do so) and all such returns and reports are accurate and complete in all
material respects; and (B) paid (or the Company has paid on its behalf) all
Taxes shown on such returns and reports as required to be paid by it, and the
most recent financial statements contained in the SEC Documents reflect an
adequate reserve for all material Taxes payable by the Company (and by those
Subsidiaries whose financial statements are contained therein) for all taxable
periods and portions thereof through the date of such financial statements.
Since December 31, 1996, the Company has incurred no liability for Taxes under
Sections 857(b), 860(c) or 4981 of the Code and neither the Company nor any of
its Subsidiaries has incurred any material liability for Taxes other than in
the ordinary course of business. To the Company's knowledge, no event has
occurred, and no condition or circumstance exists, that presents a material
risk that any Tax described in the preceding sentence will be imposed upon the
Company. Except as set forth on Schedule 6.1(n)(i), to the Company's knowledge
no deficiency for any Taxes has been proposed, asserted or assessed against the
Company or any of its Subsidiaries, and no requests for waivers of the time to
assess any such Taxes are pending.
(ii) The Company (A) for all taxable years commencing with 1994 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 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
during and since 1993 and continues to be treated for federal income tax
purposes as a partnership and not as a corporation or as an association taxable
as a corporation. Except for any subsidiaries of the Company to be formed
prior to the Closing Date to facilitate the assignment of certain of the
Assigned Property as contemplated by this Agreement, 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. Neither the Company
nor any of its Subsidiaries holds any asset (x) the disposition of which would
be subject to rules similar
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to Section 1374 of the Code as a result of an election under IRS Notice 88-19
or (y) that is subject to a consent filed pursuant to Section 341(f) of the
Code and the regulations thereunder.
(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, the Registration Rights 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.
(i) 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)(i) and except for violations or defaults that would not,
individually or in the aggregate, result in a Material Adverse Effect on the
Company.
(ii) Except as any of the following are expressly identified in the SEC
Documents, Schedule 6.1(r)(ii) sets forth (x) a list of all loan or credit
agreements, notes, bonds, mortgages, indentures and other agreements and
instruments pursuant to which any Indebtedness of the Transferee or any
Subsidiary in an aggregate principal amount in excess of $10,000,000 per item
is outstanding or may be incurred and (y) the respective principal amount
outstanding thereunder on December 31, 1997.
(s) Treatment as a Partnership. The Operating Partnership is a
partnership for federal and state and local income tax purposes.
(t) Transactions with Affiliates. Set forth in Schedule 6.1(t) is a list
of all arrangements, agreements and contracts entered into by the Transferee or
any Subsidiary with any
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person who is an officer, director or affiliate of the Transferee or any
Subsidiary or any entity of which any of the foregoing is an affiliate that (i)
would be required to be disclosed in the Company's filings with the SEC made
pursuant to the Exchange Act since December 31, 1996 and (ii) that are not
disclosed in the SEC Documents. Such documents, copies of all of which have
previously been made available to the TCR Representatives, are listed on
Schedule 6.1(t).
(u) Form S-3. The Company meets all requirements and conditions of the
SEC for eligibility of its Shares as applicable on Form S-3.
(v) Covenants. The Transferee has complied in all material respects with
the covenants contained in Section 8.2 as of the Closing Date. The provisions
of this Section 6.1(v) shall survive for the Survival Period.
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. REPRESENTATIONS AND WARRANTIES OF THE ASSIGNORS.
Section 7.1 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 Assignor hereby severally
warrants and represents with respect to itself and its Assigned Property the
following:
(a) Organization, Good Standing and Corporate/Partnership Power. The
Assignor is a corporation, a general or limited partnership or a limited
liability company, 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 such Assignor, has all requisite, corporate
or 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.
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(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
Assignor hereunder, will be the legal, valid and binding obligation of the
Assignor, enforceable against the Assignor 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 Assignor, as applicable, of its duties and obligations 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
Assignor 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 Assignor 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 Assignor, or (ii)
require any consent, approval or authorization of, or declaration, filing or
registration with, any domestic governmental or regulatory authority or any
other person or entity except as set forth under the Assignor's name on
Schedule 7.1(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 Assignor.
(c) Title to Office Personal Property and Construction and Development
Property. All of the Assignor's Office Personal Property and Construction and
Development Property, if any, is owned by the Assignor free and clear of any
conditional bill of sale, chattel mortgage, security agreement or financing
statement or other security interest of any kind.
(d) Validity of Office Leases. All Office Leases of which the Assignor is
a party are in full force and effect without, to the Assignor's knowledge, any
material default or claim of material default by any party thereto.
(e) Validity of Contracts to be Assigned. All of the Property Acquisition
Contracts, the Management Contracts and the Construction Contracts of which the
Assignor is a party are in full force and effect without, to the Assignor's
knowledge, any material default or claim of material default by any party
thereto, excluding those Management Contracts that have been terminated in the
ordinary course of business.
(f) Title to Contract Entity Interests. The Assignor owns beneficially
and of record, free and clear of any voting agreement, option, charge, security
interest, mortgage, deed of trust, encumbrance, rights of assignment or
purchase rights (collectively "ENCUMBRANCES"), and has full power and authority
to convey free and clear of any Encumbrance, its Contract Entity Interests, if
any, and, upon consummation of the transactions contemplated hereby, the
Transferee (or its designee), assuming it acquires such Contract Entity
Interests for value, in good faith and without notice of any adverse claim,
will acquire all rights of the Assignor in its Contract Entity Interests free
of any Encumbrance. The Assignor's Contract Entity Interests have been validly
issued, and there are no agreements, instruments or understandings with respect
thereto except as set forth in Schedule 7.1(f) hereto. The Assignor does not
have any equity interest, either direct
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or indirect, in the Contract Entities except for the Contract Entity Interests.
The provisions of this Section 7.1(f) shall survive for the Survival Period.
(g) No Other Agreements to Sell. The Assignor has not made any agreement
with, nor, while this Agreement is in full force and effect, will enter into
any agreement with, and does not have any obligation (absolute or contingent)
to, any other person or firm to sell, transfer or in any way encumber any of
its Contract Entity Interests or to not sell its Contract Entity Interests, or
to enter into any agreement with respect to a sale, transfer or encumbrance of,
or put or call right with respect to, its Contract Entity Interests. The
provisions of this Section 7.1(g) shall survive for the Survival Period.
(h) Capital Structure. If the Assigned Property includes the Assignor's
Contract Entity Interests in a Contract Entity, then the capital structure of
such Contract Entity as of the Closing Date shall be set forth on Schedule
7.1(h) and all of such Contract Entity Interests in such Contract Entity shall
have been duly and validly issued. Except as set forth on such schedule, there
shall not be any equity interests of such Contract Entity issuable upon
conversion or exchange of any security of such Contract Entity. Except as set
forth on such schedule, no holder of any equity interest of such Contract
Entity is entitled to any preemptive or similar right (i) to subscribe for any
equity interests of such Contract Entity or (ii) with respect to any of the
transactions contemplated hereby. The provisions of this Section 7.1(h) shall
survive for the Survival Period.
(i) Restrictions on Sale; Legend. The Assignor 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 Distributees and without
prejudice to the Assignor'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 Assignor 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 Assignor 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 Assignor 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
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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 EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE
STATE SECURITIES OR "BLUE SKY" LAWS."
The provisions of this Section 7.1(i) shall survive the Closing.
(j) Accredited Investor; Investment Intent. The Assignor and each of its
Distributees is an "accredited investor" as defined in Regulation D promulgated
under the Securities Act. Any Equity Securities acquired by the Assignor or
its Distributees will be so acquired for the Assignor's and its 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 Assignor'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 provisions of this
Section 7.1(j) shall survive the Closing.
(k) Covenants. The Assignor has complied in all material respects with
the covenants contained in Section 8.1 as of the Closing Date. The provisions
of this Section 7.1(k) shall survive for the Survival Period.
ARTICLE 8. COVENANTS.
Section 8.1 Conduct of the Business of the Contributors and the Assignors.
The Contributors, the Contributing Partners and the Assignors severally, and
not jointly, covenant and agree that between the Effective Date and the 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 Contributor will, or the Contributing Partners of each
Contributor will cause it to, operate and maintain its Real Estate Property in
the ordinary course of business and use all commercially reasonable efforts to
preserve for the Operating Partnership the relationships of such Contributor's
Tenants, suppliers, managers, employees and others having on-going
relationships with the Real Estate Property. The Contributor and the
Contributing Partners of such Contributor will not defer taking any actions or
spending any of its funds (including, without limitation, the expenditures of
funds consistent with past practice for capital
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improvements on those projects commenced prior to the Effective Date), or
otherwise manage the Property differently, due to the transactions contemplated
by this Agreement.
(b) No Contributor, nor any Contributing Partner of the Contributor, will
renew, extend or modify any of its Service Contracts except in the ordinary
course of its business and unless any such Service Contract so renewed,
extended or modified grants to the Contributor and its successors and assigns a
right to terminate on thirty (30) days' notice with no material cost to
exercise such right.
(c) Each Assignor shall comply with all material terms, covenants and
conditions of its respective Management Contracts, Construction Contracts and
Property Acquisition Contracts. The termination of any Management Contract in
the ordinary course of business shall not be a violation of this covenant under
any circumstance, but shall have the effect on Net Value described in Section
3.8.
(d) No Contributor, nor any Contributing Partners of the Contributor,
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 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.
(e) Each Contributor and each Contributing Partner of the Contributor
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 Contributor's ownership of its Real Property.
(f) Each Contributor and each Assignor, as applicable, 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 and under the Office Leases, the leases
on personal property and the Service Contracts. Each Contributor will pay all
other accounts payable, including trade debt, when due in accordance with its
past business practices.
(g) Except for the Permitted Encumbrances and as permitted by Section 4.2,
no Contributor shall cause or permit its Real Property, or any interest
therein, to be alienated, mortgaged, licensed, encumbered or otherwise be
transferred.
(h) Each Contributor 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.
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(i) Each Contributor shall promptly give the Transferee written notice of,
and promptly deliver to the Transferee, a true and complete copy of any written
notice such Contributor may receive, on or before the Closing Date, from any
Governmental Authority concerning a violation of any applicable Legal
Requirements pertaining to its Real Estate Property or of any written notice of
default from the holder of any Assumed Loan.
(j) Each Contributor that is the owner of a Development Property shall (i)
diligently prosecute through the Closing Date all work in progress in
connection with construction of such Development Property in a good and
workmanlike manner substantially in accordance with the plans and
specifications utilized to construct such Development Property, a complete set
of which is set forth on Schedule 8.1(j)(i), and in accordance with all
applicable laws as currently enforced by applicable government officials and
(ii) warrant for a period of one year after the Closing Date that all work
performed by such Contributor in connection with construction of the Properties
listed on Schedule 8.1(j)(ii) is free from any and all defects in material and
workmanship. Such Contributor shall permit a construction representative from
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.
(k) 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), none of the
TCR-affiliated entities shall increase the 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.
(l) With respect to any raw land or existing operating property that is
the subject of any Property Acquisition Contract, neither the Assignor nor any
other of the TCR Parties or any TCR-affiliated entity shall make any individual
expenditure or commitment for an individual expenditure to non-affiliated third
parties in excess of $10,000 or make aggregate expenditures or commitments for
aggregate expenditures to non-affiliated third parties in a total amount in
excess of $25,000 without the prior written consent of the Company.
(m) All sums that become due and payable pursuant to the Service Contracts
between the Effective Date and the Closing Date shall be fully paid by the
Contributor within customary time periods.
(n) None of the TCR Parties shall agree to any modification to the terms
of any tax exempt bond or other tax exempt indebtedness relating to any Real
Estate Property without the prior consent of the Transferee.
(o) From and after the Effective Date, no TCR Party shall enter
discussions with, negotiate or contract with any other party for the sale of
any of the Real Estate Properties or any equity interests in any Contributor.
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(p) Between the Effective Date and the Closing Date, the applicable
Contributor shall use all commercially reasonable efforts to obtain the consent
of the lenders holding the Assumed Loans, the consent or approval, if required,
of any governmental authorities or similar agencies with respect to tax exempt
indebtedness included in the Assumed Loans and the consent of the owners of the
properties subject to the Management Contracts to the transactions contemplated
hereby.
Section 8.2 Conduct of the Business of the Transferee. The Company and the
Operating Partnership covenant and agree that between the Effective Date and the
Closing Date, unless the TCR Representatives have consented in writing to any
other act or omission (such consent not to be unreasonably withheld, conditioned
or delayed) and except as described in Schedule 8.2, the Company and the
Operating Partnership shall perform or observe the following:
(a) There shall be no Change in Control of the Company or the Operating
Partnership.
(b) The Company shall continue to qualify as a REIT for federal income tax
purposes and the Operating Partnership shall continue to qualify as a
partnership for federal income tax purposes.
(c) Between the Effective Date and the Closing Date, the Company shall not
issue Shares for cash at a net price to the Company of less than $23.50 per
Share.
(d) Between the Effective Date and the Closing Date, in any one
transaction or series of related transactions (as such phrase is used for
purposes of Form 8-K under the Exchange Act) the Company shall not issue Equity
Securities for property (other than cash) at a price below $27.625 per Equity
Security without the prior consent of the TCR Representatives (which consent
shall not be unreasonably withheld) if the total value of such transaction or
transactions exceeds $50,000,000.
Section 8.3 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 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 11 not being satisfied.
Section 8.4 Good Faith Cooperation. Subject to the terms and conditions
herein provided, the parties to this Agreement shall (a) use all 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
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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 8.8 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 reasonably
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 8.5 Public Announcements. The initial press release relating to
this Agreement shall be a joint press release, approved by all the parties
hereto for release on the Effective Date, 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
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 8.6 Government Filings. The Company shall use its commercially
reasonable efforts to make, prior to the Closing Date, all necessary filings
with all Governmental Authorities to carry out the transactions contemplated by
this Agreement and will pay all filing fees and the Company's own expenses
incident thereto; provided, however, that this Section 8.6 is not intended to
and shall not be construed in such a manner as to modify the provisions of
Section 9.4 with respect to recordation and transfer charges and other
transaction expenses described therein.
Section 8.7 Listing of Shares. Within thirty (30) 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 best efforts to obtain, prior to
the 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 8.7 shall survive the Closing.
Section 8.8 Registration of Shares. Within six (6) months following the
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 (i) the offer and sale by the Holders (as defined in the
Registration
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Rights Agreement) of the total number of Shares that the Holders would own if
they were to convert all Units owned by them into Shares and (ii) the offer and
sale by the Holders of all Shares received hereunder. The Company shall use
its commercially reasonable efforts to cause such registration statement to be
declared effective by the SEC as soon as practicable and to keep such
registration statement effective thereafter to the extent specified in the
Registration Rights Agreement. The Company, the Operating Partnership and the
Holders shall enter into a registration rights agreement which shall provide,
among other things, for a lock-up restricting any dispositions (to the extent
contemplated by the Registration Rights Agreement) of the Equity Securities
issued to the Holders at the Closing for a period of one (1) year from the date
of issuance (the "REGISTRATION RIGHTS AGREEMENT"), substantially in the form of
Exhibit III, on or prior to the Closing Date.
Section 8.9 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 Parties 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 V (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 Contributor, a Contributing Partner or any
other entity owning, directly or indirectly, any interest in a Contributor or
Contributing Partner. In the event any Distributee does not execute and
deliver a Distributee Agreement or is not an "accredited investor," such
Distributee will not be eligible to receive Shares or Units. The provisions of
this Section 8.9 shall survive the Closing.
Section 8.10 Time of Closing. Each of the parties hereto shall use its
reasonable commercial efforts and act in good faith to take all actions
necessary to consummate the transactions contemplated hereby on or prior to the
Closing Date.
Section 8.11 Pledge of Equity Securities. The Transferee shall cooperate
with any Contributor or Distributee to whom Equity Securities are issued
pursuant to this Agreement in connection with the pledge of such Equity
Securities to a financial institution, subject to Section 3.1(b) hereof and the
lock-up provided by the Registration Rights Agreement. 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 Equity
Securities 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 Contributors 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 8.11, which shall survive as to each Distributee as long as such
Distributee holds Equity Securities.
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Section 8.12 No Solicitation. Except (i) in connection with the
reorganization of the ownership structure of the partnership interests of a
Contributor among its current Partners and/or any TCR-affiliated entities to
facilitate the transactions contemplated by this Agreement or (ii) for
transactions in accordance with the buy/sell provisions of the Joint Venture
Agreements, none of the TCR Parties shall, nor shall they permit any active
current partner or affiliate of TCR or any TCR-affiliated entity (the
"RESTRICTED PARTIES") to, directly or indirectly, enter into, solicit, initiate
or continue any discussions or negotiations with, or encourage or respond to
any inquiries 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 the Transferee and its respective officers,
directors and representatives, concerning any sale of all or a portion of the
TCR Parties' assets, 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 8.13 Prohibited Activities. During the three-year period
following the Closing, none of the TCR Parties shall, nor shall they permit any
Restricted Party to, directly or indirectly, engage in any negotiations with
any party concerning the management of any property covered by a Management
Contract or accept any offer to manage or enter into any agreement or
arrangement to manage any property covered by a Management Contract; provided,
however, that the foregoing shall not apply with respect to any property
covered by a Management Contract that has been terminated in accordance with
its terms so long as a non-Restricted Party shall have managed such property
for a minimum period of six (6) months following such termination.
Section 8.14 Confidentiality. The TCR Parties shall ensure that all
confidential information which each such party or any of its respective
representatives may now possess or may hereafter create or obtain relating to
the properties and assets conveyed to the Transferee pursuant to the terms
hereof, the transactions contemplated hereby or the financial condition,
results of operations, business, properties, assets, liabilities or future
prospects of the Contributors, the Assignors or the Transferee, any of their
respective affiliates or subsidiaries or any of their respective tenants,
customers or suppliers, shall not be published, disclosed or made accessible by
any of them without the prior written consent of the Company; provided,
however, that the restrictions of this sentence shall not apply: (i) to the
extent the disclosure may otherwise be required by applicable law, court
process or by obligations pursuant to any listing agreement with any national
securities exchange or (ii) to the extent such information shall have otherwise
become publicly available.
ARTICLE 9. CLOSING.
Section 9.1 The Closing. The consummation of the transactions
contemplated hereunder (the "CLOSING") shall take place at the offices of Broad
and Cassel, 7777 Glades Road, Boca Raton, Florida, on April 2, 1998, or on such
later date as the parties may otherwise agree or that
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may be provided for herein (the "CLOSING DATE") or at such other place as the
parties hereto shall mutually agree; provided, however, that each of the TCR
Representatives and the Transferee shall have the option (which each may
exercise only once) to extend the Closing Date for a period not to exceed
thirty (30) days.
Section 9.2 Deliveries at the Closing by the TCR Parties. At the Closing,
each of the TCR Parties, as applicable, will deliver or cause to be delivered
to the Operating Partnership the following and, where appropriate, duly
executed on behalf of all necessary parties thereto other than the Company and
the Operating Partnership:
(a) With respect to all Property conveyed to the Operating Partnership by
the Contributor as contemplated in Section 2.1 and Section 2.4(b) hereof, (i)
a special warranty deed (collectively, the "DEEDS") in a form reasonably
satisfactory to the Company, in proper form for recording so as to convey to
the Operating Partnership good and marketable title to its Real Property, free
and clear of all liens and encumbrances, except the Permitted Encumbrances;
(ii) a bill of sale (collectively, the "BILLS OF SALE") in a form reasonably
satisfactory to the Company conveying to the Operating Partnership all of the
TCR Parties' right, title and interest in and to the Personal Property, the
Office Personal Property, the Security Deposits, the Permits and Licenses, the
Telephone Numbers, and the Books and Records; and (iii) an assignment and
assumption agreement (collectively, the "CONTRACT ASSIGNMENT AND 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, the Trademarks, the Office Leases, the Property Acquisition
Contracts (or if applicable the Contract Entity Interests in the Contract
Entities), the Management Contracts and the Construction Contracts, and whereby
the Operating Partnership or its designee, will assume and agree to perform all
of the TCR Parties' 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 Contributing Partners as contemplated in Section 2.2 hereof,
Assignments of Partnership Interest in a form reasonably satisfactory to the
Company.
(c) All original Leases and all other documents pertaining thereto or
copies of same if the Contributor, using its best efforts, is unable to deliver
originals.
(d) All other original documents or instruments referred to herein,
including, without limitation, the Service Contracts, the Office Leases, the
Licenses and Permits, the Property Acquisition Contracts, the Management
Contracts, the Construction Contracts, and the Books and Records, or copies of
same if the Contributor, using its best efforts, is unable to deliver
originals; and keys to the Improvements and the management offices leased
pursuant to the Office Leases.
(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
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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.
(g) Affidavits and other instruments, including but not limited to all
organizational documents of the Contributors and their general partners, the
Contributing Partners and the Assignors, as applicable, including partnership
agreements, operating agreements, bylaws, articles of incorporation and
certificates of good standing and/or existence reasonably requested by the
Transferee evidencing the power and authority of such entities to enter into
and perform this Agreement and any documents to be delivered hereunder and, if
requested by the Transferee, a certified copy of all appropriate corporate
resolutions or membership or partnership actions.
(h) A list of all Security Deposits, prepaid rents, key deposits, and
other such deposits delivered by Tenants under the Leases.
(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 Closing Date, or if
there have been any changes, a description thereof.
(j) A Rent Roll for each Real Property, current as of a date not more than
ten (10) days prior to the Closing Date, certified by a duly authorized
representative of the appropriate Contributor 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 Contributor 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 Contributor or
Contributing Partner and in a form reasonably satisfactory to the Company, to
the extent required by law in connection with the
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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 Contributor's and the Contributing
Partners' obligations thereunder (collectively, the "LOAN ASSUMPTION
DOCUMENTS").
(p) The documents and instruments reasonably requested by, and in a form
satisfactory to, the TCR Representatives to evidence Transferee's assumption of
the rights and obligations set forth in Section 3.3 (collectively, the
"ASSIGNED PROPERTY ASSUMPTION DOCUMENTS").
(q) The documents and instruments reasonably requested by, and in a form
satisfactory to, the Transferee to evidence the assignment and assumption of
the warranties and guarantees set forth in Section 3.4 and the release of the
Contributors' and the Contributing Partners' obligations as described therein
(collectively, the "WARRANTY ASSUMPTION DOCUMENTS").
(r) The Distributee Agreements.
(s) An opinion of counsel to TCR reasonably satisfactory to the
Transferee, in a form to be mutually agreed upon by the Transferee and the TCR
Representatives and, if requested by the Transferee with respect to any
TCR-Affiliated Contributing Partner that is a corporation, partnership, limited
liability company, trust or other entity, an opinion from counsel in form and
content reasonably acceptable to the Transferee substantially to the effect
that:
(i) such TCR-Affiliated Contributing Partner is a limited
partnership, limited liability company, corporation or trust
validly existing and in good standing under the laws of the state
of its organization and, to the knowledge of such counsel, had and
has all applicable corporate, membership or partnership power and
authority to enter into, deliver and perform this Agreement or any
agreement or instrument contemplated hereby;
(ii) the execution, delivery and performance of this Agreement
or any agreement or instrument contemplated hereby, and the
consummation of the transactions contemplated hereby and thereby,
do not and will not constitute a breach or a violation of such
TCR-Affiliated Contributing Partner's partnership agreement,
operating agreement, declaration of trust, charter or bylaws, as
applicable; and
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(iii) all applicable partnership, membership, corporate or
other action necessary for such TCR-Affiliated Contributing Partner
to execute and deliver this Agreement or any agreement or
instrument contemplated hereby has been taken and that the same
have been validly executed and delivered and are the valid, binding
and enforceable obligations of such TCR-Affiliated Contributing
Partner.
(t) Evidence of all third party and Partner consents required under
agreements to which any Contributor or Contributing Partner is a party to the
transactions contemplated hereby, including without limitation any required
consent of the lenders holding the Assumed Loans and any required consent or
approval of any governmental authorities or similar agencies with respect to
tax exempt indebtedness included in the Assumed Loans, to the transactions
contemplated hereby.
(u) An estoppel letter from the trustees with respect to the Assumed Loans
setting forth the unpaid principal amounts thereof.
(v) Evidence of payoff of all indebtedness of the Contributors other than
the Assumed Loans, including, without limitation, the indebtedness set forth on
Schedule 3.6(b)(ii)(B).
(w) Consents to assignment of the Management Contracts (with an
acknowledgment that the property owner has no intent to terminate the agreement
presently or upon the Closing), the Office Leases and the Property Acquisition
Contracts.
(x) The Registration Rights Agreement.
(y) Limited partner signature pages to the OP Agreement from all TCR
Parties receiving Units pursuant to the terms of this Agreement.
(z) With respect to each JV Real Estate Property which is no longer a Real
Estate Property pursuant to Section 2.1 hereof, assignments of property
management agreements pursuant to Section 2.3 hereof, if all required consents
of JV Partners thereto have been obtained.
(aa) Such other documents as may be reasonably required or appropriate to
effectuate the consummation of the transactions contemplated by this Agreement,
in forms reasonably satisfactory to the Company.
Section 9.3 Deliveries at the Closing by the Transferee. At the 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 Contributors or the
Contributing Partners.
(a) The Cash Consideration, as adjusted pursuant to Section 3.6(b).
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(b) Evidence of issuance of Units to be issued at the Closing, including,
but not limited to, a certificate dated as of the Closing Date signed by the
general partner of the Operating Partnership admitting all TCR Parties
receiving such Units as limited partners to the Operating Partnership.
(c) The certificates representing Shares to be issued at the Closing
properly issued to the appropriate party.
(d) The Contract Assignment and Assumption Agreements.
(e) The Loan Assumption Documents.
(f) The Warranty Assumption Documents.
(g) 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 Closing Date, or if there have been
any changes, a description thereof.
(h) 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.
(i) 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.
(j) The OP Agreement, as amended, as amended, modified or restated as
necessary to contain such terms and conditions as are satisfactory to the TCR
Representatives, including, without limitation, those terms set forth on
Exhibit IV.
(k) The Registration Rights Agreement.
(l) 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.
(m) With respect to each JV Real Estate Property which is no longer a
Real Estate Property pursuant to Section 2.1 hereof, assumptions of property
management agreements pursuant to Section 2.3 hereof if all required consents
of JV Partners thereto have been obtained.
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(n) The Employment Agreements.
(o) Such other documents as may be reasonably required or appropriate to
effectuate the consummation of the transactions contemplated by this Agreement,
in forms reasonably satisfactory to the TCR Representatives.
Section 9.4 Fees and Expenses. The TCR Parties shall pay all customary
recordation and transfer charges payable with respect to Real Estate Properties
(including any applicable deed stamp taxes) and all assumption and related
fees, prepayment penalties and out-of-pocket costs in accordance with Section
3.2. The Transferee shall pay all title insurance premiums, title examination
fees and survey costs with respect to a Real Property and any fees and expenses
incurred in connection with the replacement by the Transferee of any credit
enhancements, re-underwriting any bonds or interest rate buy-down after the
Closing with respect to any of the Assumed Loans. 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 9.4 shall survive the
Closing.
Section 9.5 No Warranties.
(a) THE COMPANY AND THE OPERATING PARTNERSHIP ACKNOWLEDGE AND AGREE THAT,
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, 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, EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT, ALL MATERIALS RELATING TO THE PROPERTY WHICH HAVE BEEN
PROVIDED BY THE CONTRIBUTORS HAVE BEEN PROVIDED WITHOUT ANY WARRANTY OR
REPRESENTATION, EXPRESSED OR IMPLIED, AS TO THEIR CONTENT, SUITABILITY FOR ANY
PURPOSE, ACCURACY, TRUTHFULNESS OR COMPLETENESS AND, EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT, 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
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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.
(b) THE COMPANY AND THE OPERATING PARTNERSHIP HEREBY ACKNOWLEDGE AND AGREE
THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, 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 REAL ESTATE PROPERTY, IF ANY; (II) THE EXISTENCE, QUALITY,
NATURE, ADEQUACY, PHYSICAL CONDITION, OR LOCATION OF ANY UTILITIES SERVING THE
REAL ESTATE PROPERTY; (III) THE DEVELOPMENT POTENTIAL OF THE REAL ESTATE
PROPERTY, ITS HABITABILITY, MERCHANTABILITY OR FITNESS, SUITABILITY OR ADEQUACY
FOR ANY PARTICULAR PURPOSE; (IV) THE ZONING OR OTHER LEGAL STATUS OF THE REAL
ESTATE PROPERTY OR THE POTENTIAL USE OF THE PROPERTY; (V) THE REAL ESTATE
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 REAL ESTATE 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 REAL ESTATE PROPERTY OF ANY
HAZARDOUS MATERIALS; OR (VIII) THE CONDITION OF TITLE TO THE REAL ESTATE
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.
(c) The Company and the Operating Partnership acknowledge that, to the
extent they have deemed necessary or appropriate, they have conducted
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 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, other than by reason of the TCR Parties' default hereunder, the
Transferee will (i) indemnify, defend and hold harmless the TCR Parties from
and against all claims, damages, losses, costs, liabilities and expenses
(including
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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 10. ADJUSTMENTS.
Section 10.1 Adjustments at the Closing Date. The following items shall
be prorated (without regard to whether any applicable Real Estate Property is
conveyed in fee or by transfer of Partnership Interests) as of midnight on the
date preceding the Closing Date based on the actual number of days in the
month, and shall be made in cash at Closing, with the TCR Parties 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 Contributor at 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 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
Closing Date shall be remitted to the TCR Parties. After the Closing, the TCR
Parties shall be entitled to initiate and prosecute proceedings to collect
their respective rents delinquent as of the Closing Date, but such right shall
not include the right to evict or dispossess any Tenant.
(b) At the Closing, the TCR Parties shall pay to the Operating Partnership
an amount equal to all Security Deposits and any prepaid rents relating to the
Real Property.
(c) Utility charges payable by the Contributors, including, without
limitation, electricity, water and sewer bills. If there are meters on the
Real Property, the Contributors will cause readings of all said meters to be
performed not more than ten (10) Business Days prior to the Closing Date.
(d) Amounts payable under the Service Contracts and the Office Leases.
(e) Real estate taxes and assessments due or payable for the calendar
year. The proration of real estate taxes shall be upon the basis of the tax
rate for the preceding year applied to the latest assessed valuation. If
subsequent to the 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, a new
computation shall be made, and the TCR Parties agree to pay the Operating
Partnership any increase shown by such recomputation and vice versa.
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(f) The first quarterly dividend on Shares to be issued at the Closing and
first quarterly distribution on Units to be issued at the Closing to which
holders of such Shares or Units are entitled shall be pro rated based on the
number of days from the Closing Date to the record date for the period to which
such dividend or distribution relates to the total number of days between such
record date and the immediately preceding record date. An amount equal to the
portion of such dividend on such Shares to which such holders are not entitled
pursuant to this Section 10.1(f) shall be treated as a debit to the TCR Parties
for the purposes of adjustments made pursuant to this Article 10.
(g) Management fees and other amounts payable by owners of properties
which are the subject of Management Contracts shall be pro rated based upon
records of prepaid and accrued fees by contract to be prepared by the Assignor.
Section 10.2 Adjustment for Assessments. If on the Closing Date any Real
Property or part thereof shall be or shall have been affected by an assessment
or assessments which are or may become payable in installments, all the unpaid
installments of any such assessment which is set forth on Schedule 10.2 shall
be paid and discharged by the TCR Parties on the Closing Date and all other
such adjustments, including, without limitation, property owner association
dues which are payable by the Operating Partnership after the Closing Date,
shall be pro rated in the manner set forth in Section 10.1 above.
Section 10.3 Reimbursement of Deposits and Out-of-Pocket Expenses. At the
Closing (but subject to all applicable constraints with respect to tax exempt
debt and non-recourse indebtedness), (a) all receivables of the TCR Parties set
forth on Schedule 10.3(a) shall be treated as a credit to the TCR Parties for
the purposes of adjustments made pursuant to this Article 10 (subject to
proration in accordance with Section 10.1) and (b) the Operating Partnership
shall refund and replace all letters of credit, bond deposits, sinking funds,
escrows, similar funds and other amounts relating to the Real Properties, as
set forth on Schedule 10.3(b). All of the foregoing payments shall be made in
cash at Closing and none of the foregoing shall have any effect on the
calculation of Net Value under Section 3.1.
Section 10.4 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 (without
regard to whether any applicable Real Estate Property is conveyed in fee or by
transfer of Partnership Interests).
Section 10.5 Errors in Calculations. Any errors in calculations or
adjustments shall be corrected or adjusted within ninety (90) days after the
Closing.
Section 10.6 Survival. The provisions of this Article 10 shall survive
the Closing Date for one hundred twenty (120) days. The provisions of this
Article 10 with respect to readjustment of real estate taxes shall survive the
Closing Date for ninety (90) days after the issuance of the applicable tax
bill.
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ARTICLE 11. CONDITIONS PRECEDENT TO CLOSING.
Section 11.1 Conditions to Obligations of the TCR Parties. The
obligations of each of the Contributors to convey its Property, each of the
Contributing Partners to convey its Partnership Interests and each of the
Assignors to assign its Assigned Property and to perform the other covenants
and obligations to be performed by the Contributors, the Contributing Partners
and the Assignors 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):
(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 right of termination by the Contributors 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 Contributors 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 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 be a partnership for federal and all
state and local income tax purposes.
(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) At the time of Closing, Chris Wheeler shall have been nominated to
fill a vacancy on the Board of Trustees of the Company created by either (i)
the resignation of a Trustee or (ii) an increase in the number of Board seats.
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(h) The Company shall have entered into an employment agreement
substantially in form of Exhibit VII hereto with each of the persons listed on
Schedule 11.1(h) (collectively, the "EMPLOYMENT AGREEMENTS").
(i) The Transferee shall cause Credit Suisse First Boston or another bank,
the credit rating of which satisfies the requirements under the financing
documents, to deliver to the bond trustee letters of credit in such amounts and
on such terms and conditions as are reasonably required for such letters of
credit to constitute substitute credit enhancements for the tax exempt
indebtedness that constitutes Assumed Loans in accordance with Section 3.2(a).
Section 11.2 Conditions to Obligations of the Company and the Operating
Partnership.
(a) 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 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):
(i) The representations and warranties made by the Contributors, the
Contributing Partners and the Assignors 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 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.
(ii) The Contributors, the Contributing Partners and the Assignors shall
have performed all covenants and obligations undertaken by the Contributors,
Contributing Partners and the Assignors herein in all material respects and
complied with all conditions required by this Agreement to be performed or
complied with by them on or before the Closing Date.
(iii) The Contributors, the Contributing Partners and the Assignors shall
have executed and delivered to the Company and the Operating Partnership all of
the items and documents provided herein for said delivery.
(iv) The Company shall (x) have entered into the Employment Agreements.
(v) All consents (other than JV Consents) required under agreements to
which any Contributor or Contributing Partner is a party to the transactions
contemplated hereby shall have been obtained and not been revoked.
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(vi) The master lease with respect to each Development Property pursuant
to Section 3.5 shall have been executed and delivered by the applicable
Contributor or Contributors and the Transferee.
(vii) There shall not have been any changes, circumstances or events with
respect to the Contributors or the Real Estate Properties that in the aggregate
have resulted in a Material Adverse Effect on the businesses and assets of the
Contributors taken as a whole or on the transactions contemplated hereby.
ARTICLE 12. 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, finders' 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 12 shall survive the Closing or
other termination of this Agreement.
ARTICLE 13. CASUALTY LOSS.
Section 13.1 Maintenance of Insurance Policies. The Contributors 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 13.2 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
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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 Affected 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 3.7,
and this Agreement shall continue in full force and effect as to all other
Property.
Section 13.3 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 13, then the appropriate Contributor 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
Contributor. The appropriate Contributor 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 13.4 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
appropriate Contributor hereunder.
ARTICLE 14. 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 Contributor 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 Contributor hereunder. Should the Transferee so
terminate this Agreement as to Condemned Property in accordance with this
Article 14, such Condemned Property shall be treated as a Withdrawn Property
under Section 3.7 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 14, or in the
event of a taking which is not a Material Taking, the appropriate Contributor
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
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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 compliance with applicable zoning laws, or (c) results in a taking of
any portion of any buildings constituting the Improvements.
ARTICLE 15. TERMINATION.
Section 15.1 Termination by the TCR Parties. In the event that the
Closing does not occur on or prior to the Closing Date (as the same may be
extended pursuant to Section 9.1) for any reason other than a breach by any TCR
Party of any agreement, covenant or commitment herein, a failure by the TCR
Parties to satisfy any of the conditions set forth in Section 11.2 hereof or
failure of any condition to the Transferee's obligations hereunder, subject to
this Section 15.1, the TCR Representatives may terminate this Agreement by
written notice to the Transferee. In such event, in addition to and cumulative
of the TCR Parties' right to terminate this Agreement, as their sole and
exclusive remedy, the TCR Parties may recover from the Transferee the aggregate
sum of Five Million and 00/100 Dollars ($5,000,000.00) as liquidated damages
and not as a penalty. The TCR Parties and the Transferee have agreed that such
amount is a reasonable estimate of the damages that the TCR Parties would be
likely to sustain in the event of the Transferee's default, as the actual
amount of such damages would be difficult or impracticable to determine.
Section 15.2 Termination by the Transferee. This Agreement may be
terminated and the transaction contemplated hereby may be abandoned by the
Transferee if (a) the Closing does not occur on or prior to the Closing Date
(as the same may be extended pursuant to Section 9.1) for any reason other than
a breach by the Transferee of any agreement, covenant or commitment herein or a
failure by the Transferee to satisfy any of the conditions set forth in Section
11.1, (b) any of the conditions under Section 11.2 is not satisfied or (c) the
Transferee elects to terminate this Agreement pursuant to Section 3.7 hereof on
account of Withdrawn Properties (each, a "TCR DEFAULT"). In such event, (i)
the Transferee may terminate this Agreement and recover from the TCR Parties
the aggregate sum of Five Hundred Thousand and 00/100 Dollars ($500,000.00) as
liquidated damages and not as a penalty, or (ii) the Transferee may, if the TCR
Default is a willful or intentional failure or refusal by a TCR Party to
perform any covenant or agreement hereunder, seek specific performance, such
election to be made within thirty (30) business days after any such default by
the TCR Parties; provided, however, that the liquidated damages provision of
the foregoing clause (i) shall not apply with respect to a termination pursuant
to Section 3.7 on account of Withdrawn Properties that consist solely of (A)
Damaged Properties, (B) Condemned Properties, (C) Real Estate Properties that
became Unapproved Properties pursuant to Section 2.2(b)(ii) because of a
Third-Party Contributing Partner's failure to comply with Section 2.2(a)(ii) or
the terms of the agreements between the TCR-Affiliated Contributing Partners
and the Third-
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Party Contributing Partners and (D) Real Estate Properties that became
Unapproved Properties pursuant to Section 3.2(c). Furthermore, should the TCR
Default constitute a willful or intentional failure or refusal by the TCR
Parties to perform any covenant or agreement undertaken by them under this
Agreement, the TCR Parties shall be precluded for a period of twelve (12)
months following the Closing Date from transferring directly or indirectly all
or substantially all of the Real Estate Property to any person or entering into
any written agreement providing for such transfer, other than transfers among
parties affiliated with TCR Parties consistent with past practices.
Section 15.3 Minimum Share Price. In the event that the average of the
closing prices of the Shares on the New York Stock Exchange during the period
of fifteen (15) consecutive trading days concluding with the last trading day
that is two (2) trading days prior to the Closing Date is less than $23.50,
either the TCR Representatives or the Transferee may terminate this Agreement
by written notice to the other party. In the event of such a termination,
neither the TCR Parties nor the Transferee may enforce their rights under, nor
are such parties obligated under, Section 15.1 or Section 15.2, as applicable.
Section 15.4 Effect of Termination. In the event of termination of this
Agreement as provided in this Article 15, 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 9.4, Articles 12 and this Article
15.
ARTICLE 16. TAX MATTERS.
Section 16.1 Payment of Taxes by the Contributors. Each Contributor will
pay or provide for payment of all Taxes due and payable on or after the Closing
and will file 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 of its Property for all taxable periods (or portions thereof) ending
on or prior to the Closing for which the Company or the Operating Partnership
could be held liable on a claim made against the Company or the Operating
Partnership; provided, however, that real estate and personal property taxes
for 1998 shall be prorated at the Closing in accordance with the terms and
provisions of this Agreement and the TCR Parties shall have no liability
therefor after the Closing or have any obligation to file any returns or
reports relating thereto. No later than six (6) months after the Closing, the
Contributors 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 Contributors
for the taxable period ending upon the Closing (collectively, the "INCOME TAX
RETURNS"). Under no circumstances shall any Contributor (or its successors and
assigns) amend any Income Tax Return of such Contributor for any taxable period
during which any TCR Party owned an interest in any such Contributor
("CONTRIBUTOR 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 Closing, (i) the then current taxable year of each Contributor (other
than any such Contributor which shall convey its Real Estate Property to the
Transferee in accordance with Section 2.2(a)) for federal and state income tax
purposes shall conclude, (ii) each such Contributor shall terminate for federal
and state income tax purposes effective upon the Closing and (iii) there shall
be a closing of the books of each such Contributor and the profits, losses,
credits and other partnership items of each Contributor shall be allocated
among the constituent partners of each such Contributor for the taxable period
ending upon the Closing. The Transferee agrees that it shall cooperate and
shall cause each Contributor (other than any such Contributor
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which shall convey its Real Estate Property to the Transferee in accordance
with Section 2.2(a)) 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 the Transferee. In
the event that any Governmental Authority shall initiate an audit or
investigation (collectively, an "AUDIT") of any Contributor or any Income Tax
Return of any such Contributor which pertains to any Contributor Tax Period,
the Transferee shall immediately notify the TCR Representatives of such Audit.
The Transferee shall provide the Contributors and their agents with the
opportunity to participate in the resolution of any such Audit and the
Contributors 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 Contributor (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 Contributor and attributable to any Contributor Tax Period
or any constituent partner of any such Contributor, 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.
Section 16.2 Payment of 1997 Taxes. The Operating Partnership is hereby
authorized by each of the Contributors with respect to its respective Property,
in the Operating Partnership's sole discretion, to file any applicable
proceeding for the 1997 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 Contributor(s) or the
Operating Partnership shall be entitled to share in the refund shall be divided
between the appropriate Contributor(s) and the Operating Partnership in
accordance with the apportionment of Taxes pursuant to the provisions hereof.
No Contributor shall be liable for any such expenses that exceed its
apportionment of Taxes.
Section 16.3 Allocation Method. The Company and its affiliates 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 Property for federal
income tax purposes with respect to (i) the contribution of the Property, and
(ii) any revaluation of the Property 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 Closing Date.
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ARTICLE 17. EMPLOYEE MATTERS.
As soon as reasonably practicable and in any event not later than twenty
(20) days prior to the Closing Date, the Transferee shall identify on Schedule
17(a) those employees it desires to hire after the Closing Date (the "REHIRED
EMPLOYEES") and 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 Closing, each of
the TCR Parties shall terminate the employment of each employee, if any,
designated by the Transferee as Rehired Employees pursuant to this Article 17
and shall cooperate with and use its best efforts to assist Transferee in its
efforts to secure satisfactory employment arrangements with those Rehired
Employees. The Transferee shall not assume any of the TCR Parties' or their
affiliates' employee benefit plans or any obligation or liability thereunder.
Service by the Rehired Employees with the TCR Parties shall be treated as
service with the Transferee for vacation and employee benefit plan purposes.
The TCR Parties shall be liable for all severance, if any, and all accrued
vacation of the Rehired Employees as of the Closing Date, and the Transferee
shall have no reimbursement or other liability to the TCR Parties or the
Rehired Employees on account thereof. 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. For a
period of two years following the Closing, none of the TCR Parties shall, nor
shall they permit any Restricted Party to, 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(b) as of the Effective Date or any other
Rehired Employee hired by the TCR Parties after the Effective Date who
exercises a similar level of responsibility relating to the construction,
development, marketing, management or administration of residential properties
in the South Florida Market immediately prior to the Closing and whose name is
added to Schedule 17(b) by the Transferee no less than five (5) Business Days
prior to the Closing. For a period of one year following the Closing, none of
the TCR Parties shall, nor shall they permit any Restricted Party to, directly
or indirectly, hire or offer employment to any other employee of the Transferee
in the South Florida Market (the "OTHER EMPLOYEES") except for incidental
contacts of Other Employees not made as part of a plan or attempt to hire three
or more Other Employees, or any successor or affiliate of the Transferee,
unless in either case the Transferee first terminates the employment of such
employee or gives its written consent to such employment or offer of
employment.
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ARTICLE 18. INDEMNIFICATION.
Section 18.1 By the TCR Parties.
(a) Subject to Section 18.6 hereof, the Contributing Partners and the
Assignors shall jointly and severally indemnify, save and hold harmless the
Company, the Operating Partnership and their respective directors, officers,
employees, agents, attorneys, representatives and affiliates (each of which is
a "TRANSFEREE INDEMNIFIED PARTY"), from and against any and all costs, losses
(including, without limitation, diminution in 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: (i) the inaccuracy of any representation made by any TCR
Party set forth in Sections 5.1(f), 5.1(h), 5.1(l), 5.1(n), 5.1(o), 5.1(p),
5.1(r), 5.1(s), 5.1(t), 5.1(u), 5.1(v), 7.1(f), 7.1(g), 7.1(h), 7.1(i), 7.1(j)
or 7.1(k) of this Agreement, Article 17 of this Agreement, Addendum A or any
other provision of this Agreement that survives the Closing or in any
Distributee Agreement; (ii) the failure of any TCR Party to comply with any
covenant or agreement set forth in this Agreement; and (iii) net adjustments
made pursuant to Article 10 hereof that result in a debit to the TCR Parties to
the extent that the amount thereof could not or was not determined pursuant to
such Article 10 prior to or as of the end of the periods described in Section
10.6, as applicable. This indemnification shall (x) be limited as to amount as
provided in Section 18.6 hereof and (y) survive for the Survival Period.
(b) The Contributing Partners and the Assignors shall jointly and
severally indemnify, save and hold harmless the Transferee Indemnified Parties
from and against any and all Damages incurred in connection with, arising out
of, resulting from or incident to: (i) 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;
(ii) any document filed or to be filed by or on behalf of any Contributor,
Contributing Partner or any direct or indirect shareholder, partner, member or
affiliate of a Contributor or Contributing Partner (the "COVERED CONTRIBUTOR
PARTY") with any Governmental Authority or any other document prepared or
distributed by or on behalf of any Covered Contributor Party in connection with
the transactions contemplated hereby, including any document distributed in
connection with the solicitation of consents to the consummation by the
Contributor 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 Contributor 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; (iii) obligations or liabilities of any
TCR Party to any former partner, member, employee, consultant or agent on
account of such person's present or former interest in or right to participate
in the revenues or profits of any Contributor or Assignor, whether resulting
from the purchase, redemption or acquisition of equity interests in a TCR Party
or the termination of employment or other relationship with a TCR Party or
otherwise; or (iv) the inaccuracy of any representation
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made by, or the failure to comply with any agreement of any TCR Party set forth
in Sections 3(a), 3(b), 3(c), 3(d), 3(h)(ii), 3(aa) and 3(bb) of Addendum A or
Sections 3(a), 3(b), 3(c) and 3(d) of Addendum B. This indemnification shall
be unlimited as to amount and shall survive for a period of five (5) years
after the Closing. At any time after the first anniversary of the Closing, the
Contributing Partners and the Assignors may substitute one or more
TCR-affiliated entities (a "SUBSTITUTE INDEMNITOR") to assume their obligations
under this Section 18.2(b), provided that the Transferee, in the exercise of
its good faith business judgment, is satisfied that the Substitute Indemnitor
has and can reasonably be expected to continue to have sufficient financial
resources to satisfy possible liabilities arising hereunder. Such assignment
shall be effective upon the execution and delivery by the Substitute Indemnitor
of a binding agreement to assume such liabilities and upon the consent of the
Transferee in writing to any such substitution (which consent may not be
unreasonably withheld).
(c) Notwithstanding anything herein to the contrary, any Damages pursuant
to this Section 18.1 arising out of an inaccuracy of the representation and
warranty made by the TCR Parties shall first be satisfied if applicable by
recourse to any applicable title insurance before the Transferee shall be
entitled to recovery from the TCR Parties.
Section 18.2 By the Transferee. Subject to Section 18.6 hereof, the
Transferee shall indemnify and save and hold harmless each of the Contributors,
the Contributing Partners and their respective directors, officers, employees,
agents, attorneys, representatives and affiliates from and against any and all
Damages incurred in connection with, arising out of, resulting from or incident
to: (i) the inaccuracy of any representation made by, or the failure to comply
with any covenant or agreement of, the Transferee in Sections 6.1, 8.7 or 8.8
of this Agreement or in any other provision of this Agreement that survives the
Closing; or (ii) net adjustments made pursuant to Article 10 hereof that result
in a credit to the TCR Parties to the extent that the amount thereof could not
or was not determined pursuant to such Article 10 prior to or as of the end of
the periods described on Section 10.6, as applicable. This indemnification
shall survive for the Survival Period.
Section 18.3 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 18.4 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, condition or event which may give rise to Damages for which
indemnification may be sought under this Article 18. Such Claim Notice shall
specify the nature and amount of the Claim
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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 or indemnity hereunder, written notice thereof shall be given to
the indemnifying party as promptly as practicable (and in any event with 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 and it is not reasonably
foreseeable that the limitations set forth in this Article 18 as to the amount
or scope of indemnification will result in the indemnified party being exposed
to the risk of any significant unindemnified liability arising from the matters
covered by such lawsuit or action, then the indemnifying party shall be
entitled, if its 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 indemnifying 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 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 18 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.
Section 18.5 Right of Offset. Notwithstanding any other provision of this
Agreement to the contrary, the Transferee Indemnified Parties shall have the
right to offset the amount of any Damages with respect to which the Transferee
Indemnified Parties shall be entitled to indemnification hereunder against the
Retained Amount. The Transferee Indemnified Parties shall have no right to
offset against any portion of the Retained Amount that is no longer retained by
the Transferee and has been distributed to the person or entity entitled to
receive them pursuant to Section 3.9 hereof. Notwithstanding the provisions of
Section 3.9 hereof or any other provisions of this Agreement to the contrary,
if one or more Claim Notice(s) shall have been filed
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by or on behalf of a Transferee Indemnified Party and the Claim or Claims
described in the Claim Notices have not been resolved, neither the Company nor
the Operating Partnership shall be obligated, until all such Claims have been
resolved, to distribute any portion of the Retained Amount to the extent that
following such distribution the remaining portion of the Retained Amount would
be less than the amount of the outstanding Claims.
Section 18.6 Limitation on Obligations. The Transferees' sole recourse
for Damages for which the TCR Parties shall be liable under Section 18.1(a)
hereof shall be the rights of offset set forth in Section 18.5 hereof. The TCR
Parties shall not be liable for Damages, in the aggregate, under Section
18.1(a) hereof in excess of the amount available for offset as of any date.
The liability of the Transferee for indemnification pursuant to Section 18.2
hereof as of any date shall be limited to an amount equal to the remaining
Retained Amount available for offset as of such date pursuant to Section 18.5
hereof in the event of indemnification claims against the TCR Parties.
ARTICLE 19. 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:
Gables Residential Trust
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attention:Marcus E. Bromley
Phone: (770) 436-4600
Fax: (770) 438-5559
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attention:Ettore A. Santucci, P.C.
Phone: (617) 570-1000
Fax: (617) 523-1231
and
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William J. Deas, P.A.
2215 River Boulevard
Jacksonville, Florida 32204
Phone: (904) 387-9292
Fax: (904) 389-3035
If to the TCR Parties:
Trammell Crow Residential Company
717 North Harwood, Suite 1200
Dallas, Texas 75201
Attention:Randy Pace
Phone: (214) 922-8433
Fax: (214) 922-8466
and
Trammell Crow Residential Services
6400 Congress Avenue
Suite 1000
Boca Raton, Florida 33487
Attention:Chris Wheeler
Phone: (561) 997-9700
Fax: (561) 997-8649
with a copy to:
Liddell, Sapp, Zively, Hill & Laboon, L.L.P.
2001 Ross Avenue
Suite 3000
Dallas, TX 75201
Attention:R. Brent Clifton, Esq.
Phone: (214) 849-5555
Fax: (214) 849-5599
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 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., New York City 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.
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ARTICLE 20. MISCELLANEOUS.
Section 20.1 Limited Survival of Representations and Warranties. Unless
otherwise expressly provided herein, no representation or warranty in this
Agreement or in any instrument delivered pursuant to this Agreement (other than
the special warranty of title in the Deeds) shall survive the Closing.
Section 20.2 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
8.11, 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 20.3 Amendment. This Agreement cannot be amended, waived or
terminated orally, but only by an agreement in writing signed by each party
hereto.
Section 20.4 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.
Section 20.5 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 20.6 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 20.7 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 20.8 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 20.9 Counterparts. This Agreement may be executed by the parties
hereto in counterparts, all of which together shall constitute a single
Agreement.
Section 20.10 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
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annexed hereto unless the context clearly dictates otherwise. All of the
Schedules and Exhibits annexed hereto are, by this reference, incorporated
herein.
Section 20.11 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, 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
REPRESENTATIVES," who for purposes of this Agreement, until further notice to
the TCR Representatives, shall be the persons listed on Schedule 20.11.
Section 20.12 Attorneys' Fees. In the event of any litigation, bankruptcy
proceeding 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, bankruptcy
proceeding or alternative dispute resolution shall be responsible for payment
of all expenses and reasonable attorneys' fees incurred by the prevailing party
both at the trial level and on appeal. The provisions of this Section 20.12
shall survive the Closing.
Section 20.13 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 20.14 Schedules. Each representation and warranty made herein by
(a) the Contributors, (b) the Company and the Operating Partnership and (c) the
Assignors 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 20.15 Radon. 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.
At Closing, the TCR Representatives shall comply with Schedule 20.15.
Section 20.16 Waiver of Jury Trial. The parties hereto hereby knowingly,
voluntarily and intentionally waive any right they may have to a trial by jury
with respect to any litigation based
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hereon, or arising out of, under, or in connection with this Agreement, or any
document contemplated to be executed in conjunction herewith, or actions of the
parties.
Section 20.17 Forum. The parties hereto hereby knowingly, voluntarily and
intentionally waive any right they may have to file or pursue litigation to
enforce or construe this Agreement or any document to be executed in
conjunction herewith, or any course of conduct, course of dealing, statements
(whether verbal or written), or actions of the parties in any forum, save and
except for the Florida Circuit Court, 15th Circuit, in and for Palm Beach
County, Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Effective Date.
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GABLES RESIDENTIAL TRUST,
a Maryland real estate investment trust
/s/ Marcus E. Bromley
------------------------------------
By: Marcus E. Bromley
Its: Chief Executive Officer
GABLES REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Gables GP, Inc.,
a Texas corporation
Its: General Partner
/s/ Marcus E. Bromley
------------------------------
By: Marcus E. Bromley
Its: President
[TCR PARTIES]
