SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): APRIL 29, 1999
VININGS INVESTMENT PROPERTIES TRUST
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(Exact name of Registrant as specified in charter)
MASSACHUSETTS 0-13693
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(State or other jurisdiction (Commission file number)
of incorporation)
13-6850434
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(IRS employer
identification no.)
3111 PACES MILL ROAD, ATLANTA, GEORGIA 30339
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(Address of principal executive offices) (Zip Code)
(770) 984-9500
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Purchase of Thirteen Properties
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On May 1, 1999, Vinings Investment Properties Trust, through its
subsidiaries, (together "Vinings") completed the acquisition of thirteen
multifamily communities (collectively, the "Portfolio Properties") from
seventeen limited partnerships and limited liability companies (each, a
"Seller"). Five of the Portfolio Properties were purchased through a joint
venture in which Vinings has a 20% interest. The remaining Portfolio Properties
were purchased through subsidiaries of Vinings' Operating Partnership (as herein
defined). The identity of the Seller of each Portfolio Property is set forth
below:
PROPERTY SELLER
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Bradford Place Apartments Crystal Ridge Apartments, L.P.
Bradford Place II Apartments Bradford Place Apartments II, L.P.
Cambridge Apartments Cambridge Apartments Partnership
Cottonwood Apartments Cottonwood Apartments, LLC
Delta Bluff Apartments Delta Bluff Apartments, LLC
Foxgate Apartments Foxgate Apartments and Racquet Club, LLC
Hampton House Apartments Hampton House Apartments, LLC
Heritage Place Apartments Heritage Place Apartments, LLC
The Landings Apartments The Landings Apartments, L.L.C.
Northwood Place Apartments Northwood Place Apartments Partnership
River Pointe Apartments River Pointe Apartments, LLC
Riverchase Apartments Riverchase Apartments, L.P.
Riverchase II Apartments Riverchase Apartments II, L.P.
Riverchase III Apartments Riverchase Apartments III, L.P.
Southwind Apartments Southwind Apartments Partnership
Southwind II Apartments Southwind Apartments II, L.P.
Trace Ridge Apartments Trace Ridge Apartments, L.L.C.
Comprising the Portfolio Properties are 2,032 two- and three-story
garden-style apartment homes of approximately 1,000 square feet per unit. The
Portfolio Properties are located in various markets in Mississippi, with a
concentration in the Jackson area. The average age of each of the Portfolio
Properties is just over three years and on May 1, 1999, the average occupancy of
the Portfolio Properties was approximately 94%.
There is no material relationship between the Sellers, Vinings or any
affiliates of Vinings, or any directors or officers, or associates of directors
or officers, of Vinings.
The aggregate purchase price for the Portfolio Properties was
$94,300,000, including the assumption of approximately $80,958,000 of debt on
the Portfolio Properties and cash payments totaling approximately $13,342,000.
In addition, approximately $1,465,600 of tax, insurance and replacement reserve
escrows held by the various mortgagees was purchased. The determination of the
purchase price for each Portfolio Property was based on arms length
negotiations.
The Portfolio Properties were purchased in seventeen individual
partnerships (the "Property Partnerships") in each of which Vinings Holdings,
Inc. ("Holdings"), a wholly-owned subsidiary of Vinings, is the general partner.
Properties Purchased Through Joint Venture
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Five of the Portfolio Properties, totaling 976 units (the "Joint
Venture Properties"), were purchased by nine Property Partnerships in each of
which Holdings owns a .1% general partnership interest and Vinings/CMS Master
Partnership, L.P. (the "Joint Venture") owns a 99.9% limited partnership
interest. Vinings Investment Properties, L.P. (the "Operating Partnership"), a
subsidiary of Vinings, is the general partner and a 19.98% limited partner in
the Joint Venture, for which it paid approximately $1,705,000. The remaining
limited partnership interests in the Joint Venture are held by an unaffiliated
third party. The Joint Venture was formed on March 22, 1999, primarily to
acquire the limited partner interest in limited partnerships that acquire,
operate, manage, hold and sell certain real property, specifically the Joint
Venture Properties. The aggregate purchase price paid by the Property
Partnerships for the Joint Venture Properties was $46,634,603, which includes
the assumption of approximately $39,265,000 of debt and the balance being paid
in cash. A total of approximately $716,400 in escrows held by the mortgagees was
also purchased. In connection with the acquisition, a fee totaling $233,173 was
paid by the Joint Venture to MFI Realty, Inc., an affiliate of the officers, who
are also Trustees, of the Trust.
Properties Purchased through Operating Partnership
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Eight of the Portfolio Properties, totaling 1,056 units (the "Vinings
Properties"), were purchased by eight Property Partnerships in each of which
Holdings owns a .1% general partnership interest and the Operating Partnership
owns a 99.9% limited partnership interest.. The aggregate purchase price for the
Vinings Properties was $47,665,396, which includes the assumption of debt of
approximately $41,693,000 and the balance being paid in cash. A total of
approximately $749,200 in escrows held by the mortgagees was also purchased. In
connection with the acquisition, a fee, the amount of which is yet to be
determined, is also to be paid by the Operating Partnership in either cash,
shares or partnership interests as determined by the Board of Trustees to MFI
Realty, Inc., an affiliate of the officers, who are also Trustees, of the Trust.
ITEM 5. OTHER EVENTS.
Issuance of Series A Preferred Units
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On April 29, 1999, in a private transaction, the Operating Partnership
issued 1,958,823 Series A Preferred Units of the Partnership (the "Preferred
Units"), for an aggregate purchase price of $8,325,000 pursuant to a Securities
Purchase Agreement (the "Purchase Agreement"). The Operating Partnership used
the proceeds of such sale of Preferred Units to pay the cash consideration for
the Operating Partnership's interests in the Joint Venture and in the Property
Partnerships, which acquired the Vinings Properties.
Terms of Series A Preferred Units
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With respect to payments of dividends and distributions, the Preferred
Units rank senior to, or on a parity with, all Partnership Interests (as defined
in the Amended and Restated Agreement of Limited Partnership Agreement of the
Operating Partnership (as from time to time amended or restated, the
"Partnership Agreement")) not expressly made senior to the Preferred Units. The
holders of Preferred Units are entitled to receive cumulative preferential cash
distributions at the per annum rate of $0.4675 per Preferred Unit. Upon the
occurrence of certain triggering events, the holders of Preferred Units are
entitled to receive, in addition to an amount equal to any accumulated and
unpaid distributions on such holder's Preferred Units, a liquidation preference
of $4.46 per Preferred Unit, or, if any such triggering event occurs prior to
April 29, 2000, $4.25 per Preferred Unit.
Under certain circumstances, the holders of Preferred Units may convert
any part or all of such Preferred Units into certain other Partnership Interests
of the Operating Partnership, shares of beneficial interests, no par value, of
Vinings (each a "Common Share"), or shares of preferred interests of Vinings
(each a "Preferred Share"). In lieu of effecting certain conversions of
Preferred Units into Common Shares, the Operating Partnership, in its sole
discretion, may satisfy its conversion obligations through certain cash
payments, as further set forth in the Partnership Agreement.
Generally, the holders of Preferred Units do not have the right to vote
on any matter on which any general or limited partner of the Operating
Partnership may vote. The holders of Preferred Units do, however, have the right
to vote as a separate class of Partnership Interests on certain transactions
including, without limitation, certain authorizations and issuances of preferred
units of Partnership Interests designated as ranking senior to the Preferred
Units, certain amendments to the Partnership Agreement, and certain sales or
other dispositions of assets of the Operating Partnership, certain mergers or
consolidations of the Operating Partnership, and transactions which result in
the liquidation of the Partnership.
Additionally, the holders of Preferred Units have certain demand and
piggyback registration rights with respect to Common Shares issued to such
holders upon redemption or in exchange for its or their Preferred Units or
Preferred Shares.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements:
Pursuant to Subsection a(4) of Item 7, the information
required by this section will be filed no later than July 19, 1999.
(b) Pro Forma Financial Information:
Pursuant to Subsection a(4) of Item 7, the information
required by this section will be filed no later than July 19, 1999.
<PAGE>
(c) Exhibits:
Exhibit 4.1 Sixth Amendment, dated as of April 29, 1999, to the
Amended and Restated Agreement of Limited Partnership
of Vinings Investment Properties, L.P.
Exhibit 10.1 Securities Purchase Agreement, dated as of April 29,
1999, Relating to Series A Convertible Preferred
Partnership Units of Vinings Investment Properties,
L.P., by and among Vinings Investment Properties Trust,
Vinings Investment Properties, L.P. and the Purchasers
named therein.
Exhibit 10.2 Form of Registration Rights and Lock Up Agreement,
dated as of April 29, 1999.
<PAGE>
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: May 7, 1999
VININGS INVESTMENT PROPERTIES TRUST
By: /s/ Stephanie A. Reed
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Stephanie A. Reed, Vice President
VININGS INVESTMENT PROPERTIES, L.P.
SIXTH AMENDMENT TO THE
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP RELATING TO
SERIES A CONVERTIBLE PREFERRED UNITS
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This Amendment to the Amended and Restated Agreement of
Limited Partnership of VININGS INVESTMENT PROPERTIES, L.P., a Delaware limited
partnership (the "Partnership"), dated April 29, 1999 (this "Amendment") amends
the Amended and Restated Agreement of Limited Partnership of the Partnership,
dated June 30, 1997, as amended (the "Partnership Agreement"), by and among
Vinings Investment Properties Trust (the "General Partner") and each of the
limited partners executing a signature page hereto (the "Contributors").
Capitalized terms used herein and not defined in Section 10 have the meanings
ascribed thereto in the Partnership Agreement. Section references are (unless
otherwise specified) references to sections in this Amendment.
WHEREAS, pursuant to Section 4.2A of the Partnership
Agreement, the General Partner desires to cause the Partnership to issue
additional Units of a new class and series, with the designations, preferences
and relative, participating, optional or other special rights, powers and duties
set forth herein;
WHEREAS, pursuant to Section 14.1B of the Partnership
Agreement, the General Partner, without the consent of the Limited Partners, may
amend the Partnership Agreement by executing a written instrument setting forth
the terms of such amendment; and
WHEREAS, the General Partner desires by this Amendment to so
amend the Partnership Agreement as of the date first set forth above to provide
for the designation and issuance of such new class and series of Units.
NOW, THEREFORE, the Partnership Agreement is hereby amended by
establishing and fixing the rights, limitations and preferences of a new class
and series of Units as follows:
SECTION 1. DESIGNATION AND NUMBER. Pursuant to Section 4.2A of
the Partnership Agreement, a series of Units of Partnership Interests in the
Partnership designated as the "Series A Convertible Preferred Units" (the
"Series A Preferred Units") is hereby established. The number of Series A
Preferred Units constituting such series shall be as set forth on Exhibit A
hereto.
SECTION 2. RANKING. As to the payment of dividends and
distributions, including upon a Triggering Event, the Series A Preferred Units
shall rank as set forth in this Section 2. The Series A Preferred Units shall
rank senior to (i) all Partnership Interests that are not designated as
preferred units of Partnership Interest and (ii) all Partnership Interests that
are designated preferred units of Partnership Interest ranking junior to the
Series A Preferred Units (collectively "Junior Units"). The Series A Preferred
Units shall rank junior to all preferred units of Partnership Interest
designated as ranking senior to the Series A Preferred Units (collectively,
"Senior Units"). The Series A Preferred Units shall rank on a parity with all
preferred units of Partnership Interest other than Junior Units and Senior Units
(collectively, "Parity Units"). Notwithstanding the foregoing, the Partnership
shall not authorize or create, or increase the authorized or issued amount of
any class or series of Senior Units or reclassify any Partnership Interests into
any Senior Units, or create, authorize or issue any obligations or security
convertible into or evidencing the right to purchase any Senior Units, except as
provided in Section 9(a).
SECTION 3. DIVIDENDS AND DISTRIBUTIONS AND ALLOCATIONS. (a)
Payment of Dividends. The holders of Series A Preferred Units shall be entitled
to receive cumulative preferential cash dividends at the rate per annum of
$0.4675 per Series A Preferred Unit. Such dividends shall be cumulative, shall
accrue from the original date of issuance and shall be payable (i) in semiannual
installments in arrears, on the fifteenth day (or, if not a Business Day, the
next succeeding Business Day) of February and August of each year commencing on
August 15, 1999 and, in the event of a conversion or exchange of Series A
Preferred Units, on the conversion or exchange date, as the case may be (each a
"Dividend Payment Date"). The amount of the dividend payable for any period
shall be computed on the basis of a 360-day year of twelve 30-day months and for
any period shorter than a full semiannual period for which dividends are
computed, the amount of the dividend payable shall be computed on the basis of
the actual number of days elapsed in such a 30-day month. If any date on which
dividends are to be paid on the Series A Preferred Units is not a Business Day,
then payment of such dividend shall be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. Dividends on
the Series A Preferred Units shall be made to the holders of record of the
Series A Preferred Units on the relevant record dates to be fixed by the
Partnership acting through the General Partner, which record dates shall be the
same day as the record date for any dividend payable on Junior Units, with
respect to the same period, or, if no such dividend is payable in respect of the
Junior Units, the 1st day of the calendar month in which the applicable dividend
falls or on such earlier date designated on at least ten (10) days' notice by
the Board of Trustees of the General Partner as the record date for such
dividend that is not more than thirty (30) nor less than ten (10) days prior to
such Dividend Payment Date (the "Record Date").
(b) DIVIDENDS CUMULATIVE. Dividends on the Series A Preferred Units
shall accrue whether or not the terms and provisions of any agreement of the
Partnership, including any agreement relating to its indebtedness at any time
prohibit the current payment of dividends, whether or not the Partnership has
Available Cash Flow, whether or not there are funds legally available for the
payment of such dividends and whether or not such dividends are authorized.
Accrued but unpaid dividends on the Series A Preferred Units shall accumulate as
of the Dividend Payment Date on which they first become payable. If cash
dividends on the Series A Preferred Units are in arrears and unpaid for a period
of sixty (60) days or more, then an additional amount of dividends shall accrue
on such amount in arrears at a rate equal to fifteen percent (15.00%) per annum
(the " Default Rate") from the applicable Dividend Payment Date until paid. Any
dividend payment made on the Series A Preferred Units shall first be credited
against any accrued but unpaid dividends with respect to such Series A Preferred
Units and then to any current dividends required to be paid.
(c) PRIORITY AS TO DISTRIBUTIONS. (i) So long as any Series A Preferred
Units are outstanding, no distribution of cash or other property shall be
authorized, declared, paid or set apart for payment on or with respect to any
class or series of Junior Units, nor shall any cash or other property be set
aside for or applied to the purchase, redemption or other acquisition for
consideration of any Series A Preferred Units, Partnership Interests other than
Senior Units, unless, in each case, all distributions accumulated on all Series
A Preferred Units and Parity Units have been paid in full. In determining
whether to make any distributions pursuant to this Section 3(c), the Board of
Trustees of the General Partner shall conservatively forecast future cash flow
requirements as to the ability of the Partnership to meet its future obligations
and liabilities including, without limitation, its ability to satisfy its
obligations to the holders of the Series A Preferred Units. The foregoing
sentence shall not prohibit (a) distributions payable solely in Junior Units,
(b) the conversion of Junior Units into Partnership Interests ranking junior to
the Series A Preferred Units, or (c) the redemption of Partnership Interests
corresponding to any Series A Preferred Share, Parity Share or Junior Share to
be purchased by the General Partner pursuant to Article IX of the Declaration of
Trust to preserve the General Partner's status as a real estate investment
trust, provided that such redemption shall be upon the same terms as the
corresponding purchase pursuant to Article IX of the Declaration of Trust.
(ii) So long as distributions have not been paid in full (or a
sum sufficient for such full payment is not irrevocably deposited in trust for
payment) upon the Series A Preferred Units and all Parity Units, all
distributions authorized and declared on the Series A Preferred Units and all
Parity Units shall be authorized and declared so that the amount of
distributions authorized and declared per Series A Preferred Unit and per Parity
Unit shall in all cases bear to each other the same ratio that accrued
distributions per Series A Preferred Unit and per Parity Unit bear to each
other.
(d) PROHIBITION ON DISTRIBUTION. No distributions on Series A Preferred
Units shall be authorized by the General Partner or paid or set apart for
payment by the Partnership at any such time as the terms and provisions of any
agreement of the Partnership or the General Partner, including any agreement
relating to their indebtedness, prohibits such authorization, payment or setting
apart for payment or provides that such authorization, payment or setting apart
for payment would constitute a breach thereof or a default thereunder, or to the
extent that such authorization or payment shall be restricted or prohibited by
law. No such agreement prohibiting such payments prior to default exists as of
the date hereof and except as provided in Section 9(a), no agreement prohibiting
such payments shall be entered into, provided, however, that the Partnership
and/or the General Partner have and in the future may enter into agreements that
require the Partnership or the General Partner to maintain cash reserves.
(e) NO FURTHER RIGHTS. Holders of Series A Preferred Units shall not be
entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.
(f) ALLOCATIONS. Section 6.1A and 6.1B of the Partnership Agreement is
hereby amended in its entirety as follows:
A. NET INCOME. Net Income shall be allocated:
(i) first, to the General Partner to the extent of Net
Losses previously allocated to the General Partner
pursuant to Section 6.1B(iii) below for all prior
taxable years exceed Net Income previously allocated
to the General Partner pursuant to this Section
6.1A(i) for all prior taxable years,
(ii) second, to the Partners holding Series A Preferred
Units in the same ratio and to the extent that Net
Losses previously allocated to such holders pursuant
to Section 6.1B(ii) below for all prior taxable years
exceed Net Income previously allocated to such
Partners pursuant to this Section 6.1A(ii) for all
prior taxable years,
(iii) third, to Partners holding Junior Units in the same
ratio and to the extent that Net Losses previously
allocated to such holders pursuant to Section 6.1B(i)
below for all prior taxable years exceed Net Income
previously allocated to such holders pursuant to this
Section 6.1A(iii) for all prior taxable years,
(iv) fourth, with respect to Partners holding Junior
Units, pro rata in proportion to each Partner's
respective share of such Junior Units as of the last
day of the period for which such allocation is being
made.
B. NET LOSSES. After giving effect to the special allocations
set forth in Section 1 of EXHIBIT C attached hereto,
Net Losses shall be allocated:
(i) first, to the Partners holding Junior Units, pro rata
in proportion to each Partner's respective share of
such Junior Units as of the last day of the period
for which such allocation is being made until the
portion of the Adjusted Capital Account (ignoring for
this purpose any amounts a Partner is obligated to
contribute to the capital of the Partnership or is
deemed obligated to contribute pursuant to
Regulations Section 1.704-1(b)(2)(ii)(c)(2)) of each
Partner attributable to such Junior Units is reduced
to zero,
(ii) second, to the Partners holding Series A Preferred
Units, until the portion of the Adjusted Capital
Account (modified in the same manner as in the
parenthetical in the immediately preceding clause
(i)) of each such Partner attributable to such Series
A Preferred Units is reduced to zero, and
(iii) third, to the General Partner.
C. (i) Notwithstanding anything to the contrary above,
at such time as a distribution is made to the
Partners who are holders of the Series A Preferred
Units pursuant to Section 3(a) above, there shall be
a special allocation of Net Income (or items of gross
income if there is insufficient net income) to each
such Partner in an amount equal to the amount of the
distribution to such Partner pursuant to Section 3(a)
above.
(ii) In the event of a Triggering Event, there shall
be a special allocation of Net Income (or items of
gross income if there is insufficient Net Income)
to each Partner who holds Series A Preferred
Unit(s) in an amount such that the portion of the
Adjusted Capital Account balance of such Partner
attributable to each such Series A Preferred Unit is
equal to the Liquidation Preference with respect
to such Series A Preferred Unit(s). This Section
shall not apply if a Partner who holds Series A
Preferred Units exercises its right to convert
such Series A Preferred Units into Common Shares
of the General Partner or Junior Units as
described in Section 6 hereof. However, this
Section 3(C)(ii) shall apply if the Company or
any other transferee of Series A Preferred Units
subsequently has such Series A Preferred Units
redeemed or liquidated by the Partnership.
SECTION 4. LIQUIDATION PROCEEDS. (a) Upon the occurrence of
(i) a voluntary sale, lease or transfer (for cash, shares, securities or other
consideration) of all or substantially all the assets of the General Partner,
the Partnership or all of the Property Partnerships to any Person, (ii) the
consolidation or merger of the Partnership, the General Partner or all of the
Property Partnerships (but only if such entity is not the surviving entity and
the holders of such entity's equity securities before such event hold less than
fifty percent (50%) of the survivor's equity securities after such event) with
or into any Person, or (iii) a dissolution or winding up, voluntary or
involuntary of the General Partner, the Partnership or all of the Property
Partnerships (each, a "Triggering Event"), the holders of Series A Preferred
Units shall be entitled to receive out of the assets of the Partnership legally
available for distribution or the proceeds thereof, after payment or provision
for debts and other liabilities of the Partnership, but before any payment or
distributions of the assets shall be made to holders of Junior Units, an amount
equal to the sum of (i) a liquidation preference in an amount equal to $4.46 per
Series A Preferred Unit, or if a Triggering Event occurs prior to the first
anniversary of the date of issuance of the Series A Preferred Units, $4.25 per
Series A Preferred Unit, and (ii) an amount equal to any accumulated and unpaid
distributions thereon, whether or not declared, to the date of payment
(together, the "Liquidation Preference"). In the event of any conflict between
the provisions of this Section 4 and Article V of the Partnership Agreement, the
provisions of this Section 4 shall control.
(b) NOTICE. Written notice of any Triggering Event, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by (i) fax and (ii) by first
class mail, postage pre-paid, not less than thirty (30) and not more than sixty
(60) days prior to the payment date stated therein, to each record holder of the
Series A Preferred Units at the respective addresses of such holders as the same
shall appear on the transfer records of the Partnership.
(c) NO FURTHER RIGHTS. After payment of the full amount of the
Liquidation Preference to which they are entitled, the holders of Series A
Preferred Units shall have no right or claim to any of the remaining assets of
the Partnership (it being understood that such holder may have additional rights
or claims to the remaining assets of the Partnership as a result of its
ownership of Partnership Interests of other classes or series or its status as
General Partner).
SECTION 5. OPTIONAL REDEMPTION. (a) Right of Optional
Redemption. The Series A Preferred Units may not be redeemed prior to the third
anniversary of the issuance date; provided, however, that the Partnership may,
in its sole discretion, redeem any Series A Preferred Units prior to such third
anniversary to the extent that the proceeds used for such redemption are
obtained from the sale or refinancing of a property. On or after the third
anniversary of the issuance date, the Partnership shall have the right to redeem
the Series A Preferred Units, in whole but not in part, at any time or from time
to time, and prior to such third anniversary to the extent of available proceeds
from property sales or refinancings unless the Board of Trustees of the General
Partner has determined that such proceeds are to be used in an exchange pursuant
to Section 1031 of the Internal Revenue Code the Partnership shall redeem the
Series A Preferred Units pro rata, except to the extent that any holder of such
Series A Preferred Units has elected not to have his, her or its pro rata share
of Series A Preferred Units redeemed, in each case upon not less than thirty
(30) nor more than sixty (60) days' written notice, at a redemption price (the
"Redemption Price"), payable in cash equal to the Liquidation Preference that
the holder would be entitled to receive on the date fixed for redemption.
(b) PROCEDURES FOR REDEMPTION. (i) Notice of redemption (a "Redemption
Notice") will be (a) faxed, and (b) mailed by the Partnership, by certified
mail, postage prepaid, not less than thirty (30) nor more than sixty (60) days
prior to the redemption date, addressed to the respective holders of record of
the Series A Preferred Units at their respective addresses as they appear on the
records of the Partnership. No failure to give or defect in such Redemption
Notice shall affect the validity of the proceedings for the redemption of any
Series A Preferred Units except as to the holder to whom such Redemption Notice
was defective or not given. In addition to any information required by law, each
such Redemption Notice shall state: (v) the redemption date, (w) the Redemption
Price, (x) the place or places where such Series A Preferred Units are to be
surrendered for payment of the Redemption Price, (y) that distributions on the
Series A Preferred Units to be redeemed shall cease to accumulate on such
redemption date and (z) that payment of the Redemption Price will be made upon
presentation and surrender of such Series A Preferred Units.
(ii) If the Partnership gives a Redemption Notice in respect
of Series A Preferred Units (which Redemption Notice will be irrevocable) then,
by 12:00 noon, New York City time, on the redemption date, the Partnership will
deposit irrevocably in trust for the benefit of the Series A Preferred Units
being redeemed funds sufficient to pay the applicable Redemption Price and will
give irrevocable instructions and authority to pay such Redemption Price to the
holders of the Series A Preferred Units upon surrender of the Series A Preferred
Units by such holders at the place designated in the notice of redemption. On
and after the date of redemption, distributions will cease to accumulate on the
Series A Preferred Units or portions thereof called for redemption, unless the
Partnership defaults in the payment thereof. If any date fixed for redemption of
Series A Preferred Units is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for redemption. If
payment of the Redemption Price is improperly withheld or refused and not paid
by the Partnership, distributions on such Series A Preferred Units will continue
to accumulate from the original redemption date to the date of payment, in which
case the actual payment date will be considered the date fixed for redemption
for purposes of calculating the applicable Redemption Price.
SECTION 6. CONVERSION. (a) Each Series A Preferred Unit, may, at the
option of the holder thereof, be converted, in whole or in part, into either one
share of beneficial interest of the General Partner, no par value (each, a
"Common Share"), or one Junior Unit of the Partnership (having the same economic
rights as the Junior Units outstanding on the date of this Amendment), at any
time on or after the first anniversary of the date of issue, whether or not the
Partnership has given Redemption Notice under Section 5, on the terms and
conditions set forth in this Section 6. Notwithstanding the foregoing, if a
holder elects to convert its Series A Preferred Units into Common Shares, the
Company may, in its sole and absolute discretion, elect to purchase directly and
acquire such Series A Preferred Units by paying to such holder either the Cash
Amount or the REIT Shares Amount, as elected by the Company (in its sole and
absolute discretion) on the conversion date. Upon such election the Company
shall acquire the Series A Preferred Units tendered for conversion by such
holder which shall automatically be exchanged for an equal number of Junior
Units having the same rights, preferences and privileges as the Common Shares
into which the Series A Preferred Units were converted and shall be treated for
all purposes of the Partnership Agreement as the owner of such Junior Units.
(b) The holder of any Series A Preferred Units may exercise its right
to convert such Series A Preferred Units into either Common Shares or Junior
Units (having the same economic rights as the Junior Units outstanding on the
date of this Amendment) by surrendering for such purpose to the Partnership, at
its principal office or at such other office or agency maintained by the
Partnership for that purpose, a certificate or certificates representing the
Series A Preferred Units to be converted duly endorsed to the Partnership in
blank accompanied by a written notice stating that such holder elects to convert
all or a specified whole number of such Series A Preferred Units in accordance
with the provisions of this Section 6. To the extent that a holder of Series A
Preferred Units elects to convert its Series A Preferred Units for Common Shares
and such conversion, together with all other Series A Preferred Units tendered
by other holders for conversion into Common Shares, would violate the ownership
limitation of the General Partner set forth in Article VI of the Declaration of
Trust, each holder of Series A Preferred Units shall be entitled to convert,
pursuant to the terms of this Section 6, only up to its pro rata share of that
number of Series A Preferred Units which would comply with such ownership
limitation of the General Partner, and any Series A Preferred Units not so
exchanged ("Excess Units") shall be redeemed by the Partnership for cash in an
amount equal to the Liquidation Preference on the date of such redemption. The
General Partner or the Partnership, as the case may be, will pay any and all
documentary, stamp or similar issue or transfer taxes that may be payable in
respect of any issue or delivery of Common Shares or such Junior Units,
respectively, on conversion of Series A Preferred Units pursuant hereto. As
promptly as practicable, and in any event within three Business Days after the
surrender of such certificate or certificates and the receipt of such notice
relating thereto and, if applicable, payment of all transfer taxes, the General
Partner or the Partnership, respectively, shall deliver or cause to be delivered
(i) certificates registered in the name of such holder representing the number
of validly issued, fully paid and nonassessable Common Shares or such Junior
Units to which the holder of shares of Series A Preferred Units so converted
shall be entitled and (ii) if less than the full number of Series A Preferred
Units evidenced by the surrendered certificate or certificates are being
converted, a new certificate or certificates, of like tenor, for the number of
Series A Preferred Units evidenced by such surrendered certificate or
certificates less the number of shares converted. Such conversion shall be
deemed to have been made at the close of business on the date of receipt of such
notice and of such surrender of the certificate or certificates representing the
Series A Preferred Units to be converted so that the rights of the holder
thereof as to the shares being converted shall cease except for the right to
receive Common Shares or such Junior Units, as applicable, and the person
entitled to receive such Common Shares or such Junior Units shall be treated for
all purposes as having become the record holder of such Common Shares or such
Junior Units at such time.
(c) Series A Preferred Units may be converted at any time; provided,
however, that, if a Redemption Notice has been delivered pursuant to Section 5,
Series A Preferred Units may not be converted pursuant to this Section 6 after
the twentieth (20th) day following the receipt of the Redemption Notice by such
holder.
(d) In the event of a conversion of Series A Preferred Units, any
accrued and unpaid distributions, whether or not declared, to the date of
conversion on any Series A Preferred Units tendered for conversion shall, at the
option of the holder, be paid to the holder of such Series A Preferred Units in
cash or in Common Shares, and, if such Series A Preferred Units are tendered for
Common Shares, the number of Common Shares to be issued to such holder shall be
calculated with reference to the fair market value of the Common Shares on the
day prior to the conversion date as determined in good faith by the Board of
Trustees of the General Partner.
<PAGE>
SECTION 7. EXCHANGE FOR PREFERRED SHARES. (a) If the General
Partner receives shareholder approval for the creation of a second class of
beneficial interests in the General Partner and the Board of Trustees of the
General Partner, in its sole discretion designates a series of preferred
beneficial interests that has the same powers, special rights, preferences,
privileges and voting power as the Series A Preferred Units (the "Series A
Preferred Shares"), then upon creation of such class of Series A Preferred
Shares, the General Partner shall give each holder of record of Series A
Preferred Units notice of its election to exchange all or part of the Series A
Preferred Units for Series A Preferred Shares (the "Exchange Notice") by fax,
and registered mail, postage paid, at the address of each holder as it may
appear on the records of the Partnership stating (A) the exchange date, which
shall be no later than sixty (60) days following the receipt of the Exchange
Notice, (B) the place or places where the Series A Preferred Units are to be
exchanged for Series A Preferred Shares, (C) that distributions on the Series A
Preferred Units will cease to accrue on such redemption date; and (D) that
issuance of Series A Preferred Shares will occur upon presentation and surrender
of the Series A Preferred Units. On the exchange date, each Series A Preferred
Unit shall be exchangeable for one Series A Preferred Share, and all powers,
special rights, preferences, privileges and voting power theretofore represented
by such Series A Preferred Unit shall cease except for the right to receive
Series A Preferred Shares, and the person entitled to receive such Series A
Preferred Shares shall be treated for all purposes as having become the record
holder of such Series A Preferred Shares at such time. Notwithstanding the
foregoing, a holder of Series A Preferred Units shall not be required to convert
its Series A Preferred Units to Series A Preferred Shares if such conversion
would adversely affect the rights, obligations, preferences or economic benefits
that such holder would otherwise be entitled to if the Preferred Units were
retained.
(b) In the event an exchange of Series A Preferred Units
pursuant to Section 7 would violate the provisions on ownership limitation of
the General Partner set forth in Article VI of the Declaration of Trust and the
Board of Trustees of the General Partner has not elected, in its sole
discretion, to waive the application of such ownership limitation, each holder
of Series A Preferred Units shall be entitled to exchange, pursuant to the
provisions of Section 7(a), only up to its pro rata share of that number of
Series A Preferred Units which would comply with the provisions of such
ownership limitation of the General Partner. Any Series A Preferred Units not
exchanged because of the ownership limitation shall be exchanged at such later
date as the exchange would not violate the ownership limitation.
(c) PROCEDURE FOR EXCHANGE.
(i) In the event of an exchange of Series A Preferred Units
for Series A Preferred Shares, an amount equal to the accrued and unpaid
distributions, whether or not declared, to the date of exchange on any Series A
Preferred Units tendered for exchange shall (a) accrue on the Series A Preferred
Shares into which such Series A Preferred Units are exchanged, and (b) continue
to accrue on such Series A Preferred Units, which shall remain outstanding
following such exchange, with the General Partner as the holder of such Series A
Preferred Units. Notwithstanding anything to the contrary set forth herein, in
no event shall a holder of a Series A Preferred Unit that was validly exchanged
into a Series A Preferred Share pursuant to this section (other than a Series A
Preferred Unit held by the General Partner), receive a distribution out of
Available Cash of the Partnership, if such holder, after exchange, is entitled
to receive a distribution with respect to the Series A Preferred Share for which
such Series A Preferred Unit was exchanged or redeemed.
(ii) Fractional Series A Preferred Shares are not to be issued
upon exchange but, in lieu thereof, the General Partner will pay a cash
adjustment based upon the fair market value of the Series A Preferred Shares on
the day prior to the exchange date as determined in good faith by the Board of
Trustees of the General Partner.
SECTION 8. COMPLIANCE WITH THE SECURITIES ACT. As a condition to a
conversion or exchange of the Series A Preferred Units, the General Partner may
require the holders of Series A Preferred Units to make such representations as
may be reasonably necessary for the General Partner to establish that the
issuance of Series A Preferred Shares pursuant to the exchange shall not be
required to be registered under the Securities Act of 1933, as amended, or any
state securities laws. Any securities issued upon conversion or exchange shall
be delivered as shares which are duly authorized, validly issued, fully paid and
nonassessable, free of pledge, lien, encumbrance or restriction other than those
provided in the Declaration of Trust, the Bylaws of the General Partner, the
Securities Act of 1933, as amended, and relevant state securities or blue sky
laws or created by the exchanging or converting holder of Series A Preferred
Units. Each Series A Preferred Unit exchanged for Series A Preferred Shares
hereunder shall be transferred to and acquired by the General Partner and shall
not be canceled or redeemed while the securities for which such Series A
Preferred Unit is exchanged remains outstanding.
The certificates representing the securities issued upon
conversion or exchange of the Series A Preferred Units shall contain the
following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (A) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") OR (B) AN EXEMPTION FROM REGISTRATION
UNDER SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS
THEREUNDER IF THE COMPANY HAS BEEN FURNISHED WITH A
SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER OF THE
SECURITIES REPRESENTED HEREBY, OR OTHER EVIDENCE SATISFACTORY
TO THE COMPANY, THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM SUCH
PROVISIONS.
SECTION 9. VOTING RIGHTS. (a) Holders of Series A Preferred
Units shall not be entitled to vote on any matter on which Partners are entitled
to vote, provided that the holders of Series A Preferred Units shall have the
right to vote as a separate class of Partnership Interests on the following,
each of which shall require the consent of holders of record of Series A
Preferred Units representing more than two-thirds of the Series A Preferred
Units outstanding at the time:
(i) to authorize or create, or increase the authorized or
issued amount of, any class or series of Senior Units or reclassify any
Partnership Interests into any Senior Units, or create, authorize or
issue any obligations or security convertible into or evidencing the
right to purchase any Senior Units; or
(ii) to amend, alter or repeal the provisions of the
Partnership Agreement, whether by merger, consolidation or otherwise,
in each case in a transaction or manner that would materially and
adversely affect the powers, special rights, preferences, privileges or
voting power of the Series A Preferred Units; provided, however, that
with respect to the occurrence of a merger, consolidation or a sale or
lease of all of the Partnership's assets as an entirety, so long as (l)
the Partnership is the surviving entity and the Series A Preferred
Units remain outstanding with the terms thereof unchanged, or (2) the
resulting, surviving or transferee entity is a partnership, limited
liability company or other pass-through entity organized under the laws
of any state and substitutes the Series A Preferred Units for other
interests in such entity having substantially the same terms and rights
as the Series A Preferred Units, including with respect to
distributions, voting rights and rights upon liquidation, dissolution
or winding-up, then the occurrence of any such event shall not be
deemed to materially and adversely affect such rights, privileges or
voting powers of the holders of the Series A Preferred Units; and
provided further that any increase in the amount of Partnership
Interests or the creation or issuance of any other class or series of
Partnership Interests or obligation or security convertible into or
evidencing the right to purchase any such Partnership Interests, in
each case ranking junior to the Series A Preferred Units with respect
to payment of distributions or the distribution of assets upon
liquidation, dissolution or winding-up, shall not be deemed to
materially and adversely affect such rights, preferences, privileges or
voting powers of the Series A Preferred Units. In the event of any
conflict between the provisions of Section 14.1 of the Partnership
Agreement and the provisions of this Section 9, the provisions of this
Section 9 shall control.
(b) In addition to the voting rights set forth in Section 9(a), without
the consent of holders of record of Series A Preferred Units representing more
than two-thirds of the Series A Preferred Units outstanding, the Partnership
shall not consummate a Liquidation Transaction; provided, however, that upon the
effectiveness of an amendment to the Partnership Agreement that grants to all
holders of Partnership Interests the right to approve Liquidation Transactions,
the foregoing approval requirement shall terminate and the Partnership shall be
permitted to consummate a Liquidation Transaction if it receives the Consent of
Limited Partners holding at least a majority of the Percentage Interests of the
Limited Partners (including Limited Partnership Interests held by the Company
and Limited Partnership Interests representing the Series A Preferred Units
voting on an as converted basis).
SECTION 10. DEFINITIONS. For purposes of this Amendment
the following terms have the following respective meanings:
"Agreement of Purchase and Sale" shall mean, with respect to any
Portfolio Property, that certain Amended and Restated Agreement of Purchase and
Sale, dated February 15, 1999, as the same may be further amended, restated or
modified from time to time, that relates to the purchase and sale of such
Portfolio Property.
"Amendment" shall have the meaning set forth in the recitals to this
Amendment.
<PAGE>
"Business Day" shall mean each day, other than a Saturday or a Sunday,
which is not a day on which banking institutions in New York, New York are
authorized or required by law, regulation or executive order to close.
"Common Share" shall have the meaning set forth in Section 6(a) of this
Amendment.
"Contributors" shall have the meaning set forth in the recitals to
this Amendment.
"Declaration of Trust" shall mean the Second Amended and Restated
Declaration of Trust of the General Partner, dated February 6, 1985, as amended.
"Default Rate" shall have the meaning set forth in Section 1 of this
Amendment.
"Dividend Payment Date" shall have the meaning set forth in Section 3
of this Amendment.
"Excess Units" shall have the meaning set forth in Section 6(b) of this
Amendment.
"Exchange Notice" shall have the meaning set forth in Section 7 of this
Amendment.
"General Partner" shall have the meaning set forth in Section 3(b) of
this Amendment.
"Heritage Transaction" shall mean the direct or indirect purchase by
the Operating Partnership of any interest in the Portfolio Properties.
"Junior Shares" shall mean all classes of common shares of beneficial
interest in the General Partner and each other class or series of interests of
the General Partner hereinafter created the terms of which do not expressly
provide that it ranks senior to, or on a parity with the Series A Preferred
Shares, if authorized, as to dividends and distributions upon liquidation,
winding up and dissolution of the General Partner.
"Junior Units" shall have the meaning set forth in Section 2 of this
Amendment.
"Liquidation Preference" shall have the meaning set forth in Section
4(a) of this Amendment.
"Liquidation Transaction" shall mean the occurrence of any of the
following:
(i) the sale, transfer or other disposition, in a single
transaction or series of related transactions, of
greater than twenty five percent (25%) of the assets of
the Partnership;
(ii) any merger or consolidation of the Partnership with any
other Person other than any merger in which the
Partnership is the surviving entity and in which (i)
none of the Partnership Interests of the Partnership
outstanding immediately prior to the merger are
converted into, exchanged for or reclassified into cash,
securities or other property (or any combination
thereof) pursuant to the terms of the merger, and (ii)
all of the Partnership Interests of the Partnership
outstanding immediately prior to the merger remain
outstanding following the merger (other than Partnership
Interests of the Partnership voluntarily converted or
exchanged by the holders in accordance with their
terms); or
(iii) any other transaction or series of related transactions
which results in the liquidation of the Partnership.
"Parity Shares" shall mean all classes and series of beneficial
interests of the General Partner the terms of which expressly provide that such
beneficial interests rank on a parity with the Series A Preferred Shares as to
dividends and distributions upon liquidation, winding up and dissolution of the
General Partner.
"Partnership" shall have the meaning set forth in the recitals to of
this Amendment.
"Partnership Agreement" shall have the meaning set forth in Section 1
of this Amendment.
"Portfolio Property" means any one of the properties constituting the
Heritage Transaction as described in Article II of the Agreement of Purchase and
Sale relating thereto, and "Portfolio Properties" shall mean all of the 17
multifamily properties constituting the Heritage Portfolio and described on
Exhibit C to the Securities Purchase Agreement, which are being purchased by the
Property Partnerships, whether directly or indirectly, in the Heritage
Transaction.
"Preferred Units" shall have the meaning set forth in Section 7(a) of
this Amendment.
"Property Partnership" shall have the meaning ascribed to the term
"Purchaser" in Article I of the Agreement of Purchase and Sale for a particular
Portfolio Property, and "Property Partnerships" shall mean collectively each
Property partnership purchasing a Portfolio Property in the Heritage
Transaction.
"Record Date" shall have the meaning set forth in Section 3(a) of this
Amendment.
"Redemption Price" shall have the meaning set forth in Section 5(a) of
this Amendment.
"Securities Purchase Agreement" shall mean that certain Securities
Purchase Agreement, dated as of April 29, 1999, by and among the Partnership,
the General Partner and the purchasers named therein.
"Series A Preferred Shares" shall have the meaning set forth in Section
7(a) of this Amendment.
"Triggering Event" shall have the meaning set forth in Section 4(a) of
this Amendment.
SECTION 11. NO SINKING FUND. No sinking fund shall be
established for the retirement or redemption of Series A Preferred Units.
SECTION 12. EXHIBIT A TO PARTNERSHIP AGREEMENT. In order to
duly reflect the issuance of the Series A Preferred Units provided for herein,
the Partnership Agreement is hereby further amended pursuant to Section 14.1B
thereof by deleting Exhibit A thereto and replacing Exhibit A attached hereto
therefor.
SECTION 13. SPECIAL DISTRIBUTION AND ALLOCATION FOR CERTAIN
PROPERTY. Nothing to the contrary contained in Article V or Article VI of the
Partnership Agreement shall limit any of the rights or obligations set forth in
this Amendment.
[The remainder of this page has been left blank intentionally]
IN WITNESS WHEREOF, this Amendment has been executed as of the
date first above written.
VININGS INVESTMENT PROPERTIES TRUST,
General Partner
By:/s/ Peter D. Anzo
- ---------------------
Name: Peter D. Anzo
Title: President
SECURITIES PURCHASE AGREEMENT
RELATING TO
SERIES A CONVERTIBLE PREFERRED PARTNERSHIP UNITS
of
VININGS INVESTMENT PROPERTIES, L.P.
by and among
VININGS INVESTMENT PROPERTIES TRUST,
VININGS INVESTMENT PROPERTIES, L.P.
and
THE PURCHASERS NAMED HEREIN
Dated as of April 29, 1999
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Section Page
<S> <C>
1. Agreement to Sell and Purchase the Preferred Units.......................................................1
2. Closing of Sale of Preferred Units.......................................................................1
3. Conditions to Closing....................................................................................2
3.1. Conditions Precedent to Obligations of the Purchasers on the Closing Date.......................2
-------------------------------------------------------------------------
(a) Representations and Warranties.............................................................2
------------------------------
(b) Performance................................................................................2
-----------
(c) Proceedings and Documents..................................................................2
-------------------------
(d) Registration Rights Agreement..............................................................2
-----------------------------
(e) Related Matters............................................................................2
---------------
(f) Title and Legal Compliance.................................................................2
--------------------------
(g) Additional Certificates.........................................................................3
3.2. Conditions Precedent to Obligations of the Operating Partnership on the Closing Date............3
(a) Representations and Warranties.............................................................3
(b) Performance................................................................................3
4. Representations, Warranties and Covenants of the REIT and the Operating Partnership......................3
-----------------------------------------------------------------------------------
4.1. Organization and Qualification; Authority.......................................................3
-----------------------------------------
4.2. Corporate and Governmental Authorization; No Contravention......................................4
----------------------------------------------------------
4.3. Validity and Binding Effect.....................................................................5
---------------------------
4.4. Capitalization..................................................................................5
--------------
4.5. Use of Proceeds.................................................................................5
---------------
4.6. Qualification of the REIT.......................................................................5
-------------------------
4.7. Qualification of the Operating Partnership......................................................5
------------------------------------------
4.8. Bankruptcy, etc.................................................................................6
----------------
4.9. Private Offering................................................................................6
----------------
4.10. Purchase of Additional Properties...............................................................6
---------------------------------
4.11. Right of First Refusal..........................................................................7
----------------------
5. Representations, Warranties and Covenants of the Purchasers..............................................7
5.1. Purchase for Investment; Source of Funds........................................................7
5.2. Conversion to Preferred Shares..................................................................8
6. Restrictions on Transfer.................................................................................8
6.1. Restrictive Legends.............................................................................8
6.2. Transfers; Opinions of Counsel..................................................................8
7. Miscellaneous............................................................................................9
-------------
7.1. Survival of Representations and Warranties; Severability........................................9
--------------------------------------------------------
7.2. Amendment and Waiver............................................................................9
--------------------
7.3. Notices, Etc....................................................................................9
------------
7.4. Successors and Assigns.........................................................................10
----------------------
7.5. Descriptive Headings...........................................................................10
--------------------
7.6. Satisfaction Requirement.......................................................................10
------------------------
7.7. GOVERNING LAW..................................................................................10
-------------
7.8. Counterparts...................................................................................10
------------
8. Definitions.............................................................................................10
</TABLE>
EXHIBITS
EXHIBIT A -- Form of Registration Rights Agreement
EXHIBIT B -- Form of Amendment to the Agreement of Limited Partnership
EXHIBIT C -- Description of the Heritage Transaction
SECURITIES PURCHASE AGREEMENT
=============================
SECURITIES PURCHASE AGREEMENT dated as of April 29, 1999 among VININGS
INVESTMENT PROPERTIES TRUST, a Massachusetts business trust (the "REIT"),
VININGS INVESTMENT PROPERTIES, L.P., a Delaware limited partnership (the
"Operating Partnership," and together with the REIT, unless the context
otherwise indicates, the "Companies"), and the purchasers listed on the
signature page hereto (each a "Purchaser," and collectively, the "Purchasers").
Unless otherwise defined, capitalized terms used in this Agreement are defined
in Section 7; references to an "Exhibit" are, unless otherwise specified, to an
Exhibit attached to this Agreement; references to a "Section" are, unless
otherwise specified, to a section of this Agreement.
In consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the Companies and the
Purchasers respectively agrees with each such other party, as follows:
1. AGREEMENT TO SELL AND PURCHASE THE PREFERRED UNITS.
1.1. At the Closing provided for in Section 2, the Operating
Partnership will issue and sell to the Purchasers and, subject to the terms and
conditions of this Agreement, the Purchasers will purchase from the Operating
Partnership, up to an aggregate of Two Million Fifty Thousand (2,050,000) of
Operating Partnership Series A Convertible Preferred Partnership Units (the
"Preferred Units"). Each Purchaser shall purchase the number of Preferred Units
set forth opposite such Purchaser's name on the signature pages hereto.
1.2. The cash purchase price for the Preferred Units is $4.25
per Preferred Unit.
2. CLOSING OF SALE OF PREFERRED UNITS. The purchase and delivery of the
Preferred Units to be purchased by the Purchasers shall take place at the
offices of the Companies, 3111 Paces Mill Road, Suite A-200, Atlanta, Georgia,
at a closing (the "Closing") on April 30, 1999 or at such other place or on such
other date as the Purchasers and the Companies may agree upon (such date on
which the Closing shall have actually occurred, the "Closing Date"). At the
Closing, the Operating Partnership will deliver or cause to be delivered to each
Purchaser the Preferred Units to be purchased by it against payment of the
purchase price therefor. Payment of the purchase price by the Purchasers shall
be by wire transfer to an account designated by the Operating Partnership to the
Purchasers in writing at least one business day prior to the Closing. If at the
Closing (i) the Operating Partnership fails to tender to a Purchaser any of the
Preferred Units to be purchased as provided in this Section 2, or (ii) such
Purchaser fails to tender the cash purchase price for the Preferred Units to the
Operating Partnership, such Purchaser or the Operating Partnership, as the case
may be, shall, at its or their election, be relieved of all further obligations
under this Agreement, without thereby waiving any other rights each may have by
reason of such failure or such non-fulfillment.
3. CONDITIONS TO CLOSING.
3.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASERS ON
THE CLOSING DATE. The Purchasers' obligation to purchase and pay for the
Preferred Units to be sold to it at the Closing is subject to the fulfillment
prior to or at the Closing of the following conditions, any or all of which may
be waived in writing at the option of the Purchasers:
(a) REPRESENTATIONS AND WARRANTIES. The repres-
entations and warranties of the REIT and the Operating
Partnership contained in Section 4 hereof shall be correct in all material
respects at the time of the Closing, after giving effect to the sale of the
Preferred Units, except that any representations and warranties that relate to a
particular date or period shall be true in all material respects as of such date
or period.
<PAGE>
(b) PERFORMANCE. Each of the REIT and the Operating
Partnership shall have performed and complied in
all material respects with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing.
(c) PROCEEDINGS AND DOCUMENTS. All corporate,
partnership and other proceedings contemplated by this Agreement and the other
Transaction Documents shall be satisfactory to the Purchasers and their
counsel, and the Purchasers and their counsel shall have received all such
counterpart originals or certified or other copies of such documents as the
Purchasers or their counsel may reasonably request.
(d) REGISTRATION RIGHTS AGREEMENT. Simultaneously
with or prior to the issuance and sale to the Purchasers of the Preferred
Units to be purchased by the Purchasers at the Closing, the REIT and the
Purchasers shall have entered into the Registration Rights Agreement
substantially in the form of Exhibit A, the Purchasers shall have received a
fully-executed counterpart of the Registration Rights Agreement, such agreement
shall be in full force and effect and no term or condition thereof shall
have been amended, modified or waived.
(e) RELATED MATTERS. As of the Closing, each of (i)
the REIT's Charter Documents and (ii) the Operating Partnership's Partnership
Documents shall not have been modified or amended since the date such documents
were delivered to the Purchasers by the REIT and Operating Partnership,
except for any such amendment to the Operating Partnership's Partnership
Agreement, as is contemplated or necessitated by this transaction, substantially
in the form of Exhibit B.
(f) TITLE AND LEGAL COMPLIANCE. As of the Closing,
(i) the Operating Partnership will be able to acquire good and marketable
title to each Portfolio Property, subject only to Permitted Title
Exceptions, (ii) the title and survey conditions of each Portfolio
Property furnished to the Purchasers shall be satisfactory to the
Purchasers; (iii) the Properties shall be in compliance with all applicable
state and municipal laws, laws or regulations of any Governmental Authority,
including zoning and building codes, laws and regulations, and all applicable
environmental laws and regulations, except for those violations that, when taken
together, could not be reasonably expected to have a Material Adverse Effect.
(g) ADDITIONAL CERTIFICATES. The Purchasers shall
have received a certificate, dated the Closing Date, from each of the Secretary
(or Assistant Secretary) of the REIT and the general partner of the Operating
Partnership, (i) certifying as true, complete and correct their Charter
Documents and Partnership Documents (as appropriate) and resolutions relating
to the transactions contemplated hereby attached thereto, (ii) as to the
absence of proceedings or other action for dissolution, liquidation or
reorganization of any of the REIT, the Operating Partnership or the
Subsidiaries, (iii) as to the incumbency and specimen signatures of officers
who shall have executed instruments, agreements and other documents in
connection with the transactions contemplated hereby, (iv) as to the effect that
certain agreements, instruments and other documents are in the form approved in
the resolutions referred to in clause (i) above, (v) as to certain tax matters
regarding each of the REIT and the Operating Partnership, and (vi) covering such
other matters, and with such other attachments thereto, as counsel to the
Purchasers may reasonably request at least three business days before the
Closing Date, which certificate and attachments thereto shall be satisfactory in
form and substance to the Purchasers.
3.2. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE OPERATING
PARTNERSHIP ON THE CLOSING DATE. The Operating Partnership's obligation to issue
the Preferred Units at the Closing is subject to the fulfillment prior to or at
the Closing of the following conditions, any or all of which may be waived in
writing at the option of the Operating Partnership:
(a) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Purchasers in Section 5 hereof shall be
correct in all material respects at the time of the Closing, after giving
effect to the purchase of the Preferred Units, except that any
representations and warranties that relate to a particular date or period shall
be true in all material respects as of such date or period.
(b) PERFORMANCE. Each Purchaser shall have performed
and complied in all material respects with all agreements and conditions
contained in this Agreement required to be performed or complied with prior to
or at the Closing.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE REIT AND THE
OPERATING PARTNERSHIP. In order to induce the Purchasers to purchase the
Preferred Units, the REIT and the Operating Partnership each hereby jointly and
severally make the representations, warranties and covenants set forth in this
Section 4, with such exceptions as are specifically set forth in a letter
delivered by the Companies to the Purchasers prior to the execution of this
Agreement (the "Disclosure Letter," which Disclosure Letter shall be appended to
and shall be deemed to be part of this Agreement).
4.1. ORGANIZATION AND QUALIFICATION; AUTHORITY.
(a) Each of the REIT and the Subsidiaries is a
corporation duly incorporated or trust, partnership or limited partnership duly
formed and is validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, has full corporate, trust,
or partnership power and authority to own and lease its respective
properties and carry on its respective business as presently
conducted, is duly qualified, registered or licensed as a foreign corporation,
trust, partnership or limited partnership to do business and is in good standing
in each jurisdiction in which the ownership or leasing of its respective
properties or the character of its present operations makes such qualification,
registration or licensing necessary, except where the failure so to qualify or
be in good standing would not have a material adverse effect on the condition
(financial or otherwise), assets, business or results of operations of the REIT
and the Subsidiaries on a consolidated basis (a "Material Adverse Effect"). The
REIT has heretofore made available to the Purchasers' counsel complete and
correct copies of the Declaration of Trust and of the by-laws of the REIT, each
as amended and restated to date and as presently in effect (collectively, the
"Charter Documents").
(b) The Operating Partnership is a limited
partnership duly formed, validly existing and in good standing under the laws
of the State of Delaware, has full partnership power and authority to own and
lease its properties and carry on its business as presently conducted, is duly
qualified, registered or licensed as a foreign limited partnership to do
business and is in good standing in each jurisdiction in which the ownership
or leasing of its properties or the character of its present operations
makes such qualification, registration or licensing necessary, except
where the failure to so qualify or be in good standing would not have a Material
Adverse Effect. The Operating Partnership has heretofore made available to the
Purchasers' counsel complete and correct copies of its Partnership Agreement and
certificate of limited partnership, each as amended and restated to date and as
presently in effect (collectively, the "Partnership Documents").
4.2. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by the REIT, the
Operating Partnership and the Subsidiaries of the Transaction Documents to which
they are a party and all other instruments or agreements to be executed in
connection herewith or therewith and the issuance and sale to (and the purchase
hereunder by) the Purchasers of the Preferred Units pursuant to this Agreement
(a) are within the REIT's, the Operating Partnership's and the Subsidiaries'
respective corporate or partnership powers; (b) have been duly authorized by all
necessary corporate or partnership action on the part of the REIT, the Operating
Partnership and each such Subsidiary; (c) do not contravene or constitute a
default under or violation of (i) any provision of applicable law or regulation
of any Governmental Authority, (ii) the Charter Documents or Partnership
Documents of the REIT, the Operating Partnership or any of the Subsidiaries,
(iii) any material agreement (or require the consent of any Person under any
material agreement that has not been made or obtained) to which the REIT, the
Operating Partnership or any of the Subsidiaries are a party, or (iv) any
judgment, injunction, order, decree or other instrument binding upon the REIT,
the Operating Partnership, any of the Subsidiaries or any of their respective
properties, except where such contravention, default or violation would not have
a Material Adverse Effect; and (d) do not and will not result in the creation or
imposition of any Lien on any asset of the REIT, the Operating Partnership or
any of the Subsidiaries, except where the creation or imposition of such Lien
would not have a Material Adverse Effect. The Preferred Units have been duly and
validly authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued, free and clear of all liens,
encumbrances, equities or claims of any nature whatsoever.
4.3. VALIDITY AND BINDING EFFECT. Each of the Transaction
Documents to which it is a party has been duly executed and delivered by each of
the REIT and the Operating Partnership and is a valid and binding agreement of
the REIT and the Operating Partnership, as applicable, enforceable against the
REIT, the Operating Partnership, as applicable, in accordance with its terms.
4.4. CAPITALIZATION.
(a) As of April 29, 1999, the Operating
Partnership had no Series A Preferred Partnership Units and 1,343,171 common
partnership units of limited and general partnership interest issued and
outstanding.
(b) Except as disclosed in the SEC Filings or the
Partnership Agreement, as of the Closing Date, there are no outstanding
subscriptions, options, warrants, rights, convertible or exchangeable
securities or other agreements or commitments of any character obligating
the REIT or the Operating Partnership to issue any securities. As of the
Closing Date, there are no voting trusts or other agreements or
understandings to which the REIT, the Operating Partnership or the Subsidiaries
are a party with respect to the voting of the Capital Stock or Partnership
Interests of the REIT, the Operating Partnership or the Subsidiaries, as the
case may be. Except as contemplated by the Registration Rights Agreement and the
Existing Rights Agreements, neither the REIT, the Operating Partnership nor any
of the Subsidiaries has entered into any agreement to register their equity or
debt securities under the Securities Act.
4.5. USE OF PROCEEDS. The Operating Partnership agrees to use
the net proceeds of the Preferred Units to consummate the Portfolio Transaction.
4.6. QUALIFICATION OF THE REIT. The REIT is organized and
operates, and currently intends to continue to operate, in a manner so as to
qualify as a "real estate investment trust" under Sections 856 through 860 of
the Code. So long as twenty percent (20%) of the Capital Preferred Units issued
pursuant to this Agreement remain outstanding, and subject to the discretion of
the Board of Trustees contained in the Second Amended and Restated Declaration
of Trust of the REIT, dated February 6, 1995, as amended, the REIT shall
continue to operate in a manner so as to qualify as a "Real Estate Investment
Trust" under Sections 856-860 of the Code.
4.7. QUALIFICATION OF THE OPERATING PARTNERSHIP. The Operating
Partnership is organized as a partnership and is treated for federal income tax
purposes, and intends to continue to be treated as a partnership and not as a
corporation or as an association taxable as a corporation, and so long as twenty
percent (20%) of the Preferred Units issued pursuant to this Agreement remain
outstanding, the Operating Partnership shall continue to be treated as a
partnership for federal income tax purposes. The Operating Partnership intends
for the allocations of profit and loss pursuant to the Partnership Agreement to
have substantial economic effect within the meaning of Section 704(b) of the
Code and the regulations promulgated thereunder.
4.8. BANKRUPTCY, ETC. So long as twenty percent (20%) of the
Preferred Units issued pursuant to this Agreement are outstanding, neither the
Operating Partnership nor the REIT shall: (a) petition or apply for the
appointment of a trustee or other custodian, liquidator or receiver of the
Operating Partnership or the REIT, as the case may be, or any substantial part
of the assets of the Operating Partnership or the REIT; (b) commence any case or
other proceeding relating to the Operating Partnership or the REIT under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, now or hereafter
in effect; (c) take any action to authorize or in furtherance of any of the
foregoing; or (d) if any such petition or application shall be filed or any such
case or other proceeding shall be commenced against the Operating Partnership or
the REIT, as applicable, indicate its approval thereof, consent thereto or
acquiescence therein, without the prior written consent of the Purchasers, which
consent shall not be unreasonably withheld.
4.9. PRIVATE OFFERING. No form of general solicitation or
general advertising, including, but not limited to, advertisements, articles,
notices or other communications, published in any newspaper, magazine or similar
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising,
was used by the REIT, the Operating Partnership or any of the Subsidiaries or
any of the REIT's, Operating Partnership's or such Subsidiary's representatives,
or, to the knowledge of the REIT or the Operating Partnership, any other Person
acting on behalf of the REIT, the Operating Partnership or any of the
Subsidiaries, in connection with the offering of the Preferred Units being
purchased under this Agreement or under any other Transaction Document, if any.
The REIT and the Operating Partnership further represent to the Purchasers that,
subject to the accuracy of the representations of the Purchasers as set forth in
Section 5 hereof, it is not necessary in connection with the offer, sale and
delivery of the Preferred Units in the manner contemplated by this Agreement to
register the offer and sale of the Preferred Units under the Securities Act.
4.10. PURCHASE OF ADDITIONAL PROPERTIES. So long as twenty
percent (20%) of the Preferred Units issued pursuant to this Agreement are
outstanding, neither the Operating Partnership nor any Subsidiary shall purchase
any material real property, other than the Portfolio Properties, without the
prior written consent of such Purchaser, which cannot be unreasonably withheld,
unless the following acquisition guidelines have been met: (a) the property
shall be used or intended to be used by the Operating Partnership for
multifamily residential purposes; (b) any securities issued by the REIT, the
Operating Partnership or any Subsidiary in exchange for such property shall be
issued at fair market value, provided that any price negotiated with the sellers
of such property in an arm's length third party transaction shall be deemed to
be fair market value for such security; and (c) the Trustees shall have
concluded that such property will produce positive net operating income, after
allocating reasonable reserves, upon acquisition by the Operating Partnership.
So long as twenty percent (20%) of the Preferred Units issued pursuant to this
Agreement are outstanding, without the prior written consent of such Purchaser
which shall not be unreasonably withheld, after the Closing Date neither the
REIT nor any Subsidiary of the REIT shall acquire any material real property
other than indirectly through an acquisition or real property by the Operating
Partnership or its Subsidiaries.
<PAGE>
4.11. RIGHT OF FIRST REFUSAL. So long as twenty percent (20%)
of the Preferred Units issued pursuant to this Agreement are outstanding, each
Purchaser (an "Eligible Purchaser") shall have the right of First Refusal set
forth in this Section 4.11 on a pro rata basis in accordance with the number of
Preferred Units or Preferred Shares owned by each such Purchaser. Whenever the
REIT or the Operating Partnership proposes to sell equity securities solely for
cash it shall notify the Eligible Purchaser in writing (a "Sale Notice") of the
rights, preferences, terms, purchase price and number of securities proposed to
be sold at least ten (10) business days prior to the proposed sale. Each
Eligible Person shall have the right to purchase a pro rata portion of such
securities, based on the number of Preferred Units or Preferred Shares owned by
such Eligible Purchaser, on the terms proposed by the Companies by delivering a
written notice of acceptance to the REIT, together with a nonrefundable cash
deposit in the amount of ten percent (10%) of the purchase price of the
securities to be purchased by the Eligible Purchaser, within five (5) days of
the Eligible Purchaser's receipt of Sale Notice. Any securities to be purchased
by Eligible Holders shall be paid for by the Eligible Purchasers and issued by
the Companies on the closing established by the REIT. If any Eligible Purchaser
fails to pay the full purchase price for all securities it has elected to
purchase on the designated closing date, such purchaser shall forfeit its entire
deposit and shall have no further rights under this Section 4.11 with respect to
the currently proposed or any further issuance of equity securities. Any equity
securities that the Eligible Purchasers have not elected to purchase or have
failed to purchase may be offered and sold by the Companies on terms no less
favorable to the Companies than the terms on which such securities were offered
to the Eligible Purchasers. Notwithstanding anything herein to the contrary, no
Eligible Purchaser may exercise its rights under this Section 4.11 if to do so
would violate any law, rule or regulation or would result in the Eligible
Purchaser owning shares in excess of the ownership limits in the REITs Charter
Documents.
5. Representations, Warranties and Covenants of the
Purchasers. In order to induce each of the REIT and the Operating Partnership to
sell the Preferred Units, each Purchaser hereby severally makes the
representations and warranties set forth in this Section 5 with respect to
itself:
5.1. Purchase for Investment; Source of Funds.
(a) Such Purchaser is an "accredited investor"
as defined in Regulation D under the Securities Act and that it is purchasing
the Preferred Units for its own account for independent purposes and not
with a view to the distribution thereof or with any present intention of
distributing or selling any of the Preferred Units. Such Purchaser understands
and agrees that the Preferred Units have not been registered under the
Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from such registration is
available.
(b) Such Purchaser has full power and authority and
has taken all action necessary to authorize it to enter into and perform its
obligations under the Transaction Documents and all other documents or
instruments contemplated hereby. The Transaction Documents are the legal,
valid and binding obligation of such Purchaser, and are enforceable in
accordance with their terms.
5.2. CONVERSION TO PREFERRED SHARES. If at any time the REIT,
in its sole discretion, creates a class or series of Preferred Shares, each
Purchaser shall exchange each Preferred Unit held by such Purchaser for one
Preferred Share, without additional consideration, at the request of the REIT;
provided that such conversion would not adversely affect the rights,
obligations, preferences or economic benefits that the Purchaser would otherwise
be entitled to if the Preferred Units were retained.
6. RESTRICTIONS ON TRANSFER.
6.1. Restrictive Legends. Except as otherwise permitted by
this Section 6, each certificated Preferred Unit issued pursuant to this
Agreement shall be stamped or otherwise imprinted with 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, NOR
PURSUANT TO THE SECURITIES OR "BLUE SKY" LAWS OF ANY STATE.
SUCH SECURITIES MAY NOT BE TRANSFERRED, SOLD, OR OTHERWISE
DISPOSED OF EXCEPT IN ACCORDANCE WITH APPLICABLE "BLUE SKY"
LAWS AND PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER THE SECURITIES
ACT, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT.
Each of the Companies shall maintain a copy of this Agreement and any
amendments thereto on file in their respective principal offices, and will make
such copy available during normal business hours for inspection to any party
thereto or will provide such copy to the Purchasers upon its or their request.
<PAGE>
Whenever the legend requirements imposed by this Section 6.1 shall
terminate, as provided in Section 6.2, the respective holders of Preferred Units
for which such legend requirements have terminated shall be entitled to receive
from each of the Companies, at the Companies' expense, Preferred Units without
such legend.
6.2. TRANSFERS; OPINIONS OF COUNSEL. The Preferred Units may
not be transferred by the Purchasers without the prior written consent of the
Operating partnership, which consent shall not be unreasonably withheld. Each
holder of Preferred Units (a "Restricted Security"), further agrees with respect
to any permitted transfer of such Restricted Security to give to the Operating
Partnership, (a) written notice describing the transferee and the circumstances,
if any, necessary to establish the availability of an exemption from the
registration requirements of the Securities Act or any state law and (b) upon
reasonable request by the Operating Partnership, to such transferring holder, an
opinion from counsel reasonably satisfactory to the Operating Partnership (at
the expense of such holder), in form and substance reasonably satisfactory to
the Operating Partnership, to the effect that the proposed transfer of such
Restricted Security may be effected without registration of such Restricted
Security under the Securities Act or any state law. If for any reason the
Operating Partnership, (after having been furnished with the opinion required to
be furnished pursuant to this Section 6.2) shall fail to notify such holder
within five (5) business days after such holder shall have delivered such notice
and opinion to the Operating Partnership, that, in its or its counsel's opinion,
the transfer may not be legally effective (the "Illegal Transfer Notice"), such
holders shall thereupon be entitled to transfer the Restricted Security to such
permitted transferee as proposed. If the holder of a certificated Restricted
Security delivers to the Operating Partnership an opinion of counsel from
counsel reasonably satisfactory to the Operating Partnership in form and
substance reasonably satisfactory to the Operating Partnership, that subsequent
transfers of such Restricted Security will not require registration under the
Securities Act or any state law, the Operating Partnership, will promptly after
such contemplated transfer deliver new certificates for such Restricted Security
which do not bear the Securities Act legend set forth in Section 6.1 above. The
restrictions imposed by this Section 6 upon the transferability of any
particular Restricted Security shall cease and terminate when such Restricted
Security has been sold pursuant to an effective registration statement under the
Securities Act or transferred pursuant to Rule 144 promulgated under the
Securities Act. The holder of any certificated Restricted Security as to which
such restrictions shall have terminated shall be entitled to receive from the
Operating Partnership, a new security of the same type but not bearing the
restrictive Securities Act legend set forth in Section 6.1 and not containing
any other reference to the restrictions imposed by this Section 6.
Notwithstanding any of the foregoing, no opinion of counsel will be required to
be rendered pursuant to this Section 6.2 with respect to the transfer of any
certificated securities on which the restrictive legend has been removed in
accordance with this Section 6.2. As used in this Section 6.2, the term
"transfer" encompasses any sale, transfer or other disposition of any securities
referred to herein.
7. MISCELLANEOUS.
7.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS;
SEVERABILITY. Except as otherwise set forth in Sections 4.6, 4.7, 4.8, 4.10 and
4.11, the representations and warranties contained in this Agreement and the
Transaction Documents or made in writing by or on behalf of the Companies or the
Purchasers in connection with the transactions contemplated by this Agreement or
the Transaction Documents shall survive the execution and delivery of this
Agreement for a period of one (1) year. Additionally, the provisions of Section
6.2 shall survive the execution and delivery of this Agreement without
limitation as to time. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provisions in any other jurisdiction.
7.2. AMENDMENT AND WAIVER. This Agreement may be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may be given, provided that the same are in writing and signed
by the Purchasers and each of the Companies.
7.3. NOTICES, ETC. Except as otherwise provided in this
Agreement, notices and other communications under this Agreement shall be in
writing and shall be delivered, or mailed by registered or certified mail,
return receipt requested, or by a nationally recognized overnight courier,
postage prepaid, addressed, (a) if to any Purchaser, at the address set forth on
such Purchaser's signature page hereto or such other address as such Purchaser
shall have furnished to the Companies in writing, or (b) if to any other holder
of any Preferred Units, at such address as such other holder shall have
furnished to the Companies in writing, or, until any such other holder so
furnishes to the Companies an address, then to and at the address of the last
holder of such Preferred Units who has furnished an address to the Companies, or
(c) if to the Companies, at the address set forth at the beginning of this
Agreement, to the attention of President, or at such other address, or to the
attention of such other officer, the Companies shall have furnished to the
Purchasers and each such other holder in writing. This Agreement and the other
Transaction Documents and all documents delivered in connection herewith or
therewith embody the entire agreement and understanding between the Purchasers
and the Companies and supersedes all prior agreements and understandings
relating to the subject matter hereof.
7.4. SUCCESSORS AND ASSIGNS. The terms and provisions of this
Agreement and the other Transaction Documents shall inure to the benefit of and
shall be binding only upon the parties to this Agreement. No transfer or
assignment of the rights and privileges herein conferred upon the Purchasers
shall be effective, and such right and privileges shall not extend to or be
vested in, or become a right of, any transferee or assignee, without the prior
written consent of the Companies, which may be withheld in their sole and
absolute discretion.
7.5. DESCRIPTIVE HEADINGS. The headings in this Agreement
are for purposes of reference only and shall not limit or otherwise affect
the meaning hereof.
7.6. SATISFACTION REQUIREMENT. If any agreement, certificate
or other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to a particular party, the determination
of such satisfaction shall be made by such party, as the case may be, in the
sole and exclusive judgment (exercised in good faith) of the Person or Persons
making such determination.
7.7. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAW.
7.8. COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
8. DEFINITIONS. As used herein the following terms have the following
respective meanings:
"1934 Act," means the Securities Exchange Act of 1934, and the
rules and regulations of the Commission promulgated thereunder, as from time to
time amended.
"Affiliate," except as otherwise defined in this Agreement,
means with respect to any Person any other Person directly or indirectly
controlling or controlled by or under common control with such first Person or
any of its Subsidiaries, provided that, for purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by agreement or otherwise.
"Agreement" means this Agreement, as amended, modified or
supplemented from time to time, together with any exhibits, schedules,
appendices or other attachments thereto.
"Agreement of Purchase and Sale" shall mean, with respect to
any Portfolio Property, that certain Amended and Restated Agreement of Purchase
and Sale, dated February 15, 1999, as the same may be further amended, restated
or modified from time to time, that relates to the purchase and sale of such
Portfolio Property.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participation, rights in or other equivalents (however
designated) of such Person's capital stock, and any rights (other than debt
securities convertible into capital stock), warrant or options exchangeable for
or convertible into such capital stock.
"Charter Documents" means certificates or articles of
incorporation, declaration of trust, by-laws or other equivalent organizational
documents, each as amended and restated to date and presently in effect.
"Closing" has the meaning ascribed thereto in Section 2
hereof.
"Closing Date" has the meaning ascribed thereto in Section 2
hereof.
"Commission" means the United States Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
"Companies" has the meaning ascribed thereto in the
introduction hereof.
"Company Counsel" means Goodwin, Procter, Hoar LLP.
<PAGE>
"Company Indemnified Party" has the meaning ascribed thereto
in Section 8.1(b) hereof.
"Declaration of Trust" means the Declaration of Trust of the
REIT, as amended to date and presently in effect.
"Disclosure Letter" has the meaning ascribed thereto in
Section 4 hereof.
"Existing Rights Agreements" means, collectively, each
registration rights agreement and registration rights and lock-up agreement by
and among the REIT and the parties named therein, as filed as exhibits to the
REIT's SEC Filings and listed in the Disclosure Letter.
"General Partner's Certificate" means a certificate executed
on behalf of the Operating Partnership by its general partner.
"Governmental Authority" means any governmental or
quasi-governmental authority including, without limitation, any federal, state,
territorial, county, municipal or other governmental or quasi-governmental
agency, board, branch, bureau, commission, court, department or other
instrumentality or political unit or subdivision, whether domestic or foreign.
"Heritage Transaction" shall mean the direct or indirect
purchase by the Operating Partnership of any interest in the Portfolio
Properties.
"Illegal Transfer Notice" has the meaning ascribed thereto in
Section 6.2 hereof.
"Lien" means any mortgage, lien (statutory or otherwise),
charge, pledge, hypothecation, conditional sales agreement, adverse claim, title
retention agreement or other security interest, encumbrance or other title
defect in or on any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale, trust receipt or
other title retention agreement with respect to any Property or asset of such
Person.
"Losses" has the meaning ascribed thereto in Section 8.1(a)
hereof.
"Material Adverse Effect" has the meaning ascribed thereto in
Section 4.1(a) hereof.
"Officer's Certificate" means a certificate executed on behalf
of the REIT by any authorized officer of the REIT.
"Operating Partnership" has the meaning ascribed thereto in
the introduction hereof.
"Partnership Agreement" shall mean the Amended and Restated
Agreement of Limited Partnership of the Operating Partnership dated June 30,
1997, as amended.
"Partnership Amendment" means the Sixth Amendment to the
Partnership Agreement by and between the Operating Partnership and the
Purchasers.
"Partnership Documents" means partnership, limited
partnership, limited liability company agreements and operating agreements, each
as amended and restated to date and presently in effect, and certificates
required to be filed in such entities' state of organization or formation.
"Partnership Interests" means, with respect to any Person, any
and all shares, units, interests, participation rights in or other equivalents
of such person's interest in the Operating Partnership or any of the Operating
Partnership's or the REIT's subsidiary partnerships, limited partnerships or
limited liability companies, including without limitation, the Series A
Preferred Partnership Units of the Operating Partnership.
"Permitted Title Exceptions" shall mean, with respect to any
Portfolio Property, those "Permitted Title Exceptions" enumerated in Article 6
of the Agreement of Purchase and Sale for such Portfolio Property.
"Person" means any individual, corporation, limited or general
partnership, limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization, or government or any agency or
political subdivision thereof.
"Portfolio Property" means any one of the properties
constituting the Heritage Transaction as described in Article II of the
Agreement of Purchase and Sale relating thereto, and "Portfolio Properties"
shall mean all of the 17 multifamily properties constituting the Heritage
<PAGE>
Transaction and described on Exhibit C hereto which are being purchased by the
Property Partnerships, whether directly or indirectly, in the Heritage
Transaction.
"Preferred Shares" means the preferred shares of beneficial
interest, $.01 par value per share, of the REIT, that have the same economic
rights as the Preferred Units issued pursuant to the terms of this Agreement, to
the extent that an amendment to the Charter Documents permitting the creation of
the Preferred Shares is approved by the shareholders of the REIT.
"Preferred Units" has the meaning ascribed thereto in Section
1 hereof.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Property Partnership" has the meaning ascribed to the term
"Purchaser" in Article I of the Agreement of Purchase and Sale for a particular
Portfolio Property, and "Property Partnerships" shall mean collectively each
Property Partnership purchasing a Portfolio Property in the Heritage
Transaction.
"Purchaser" and "Purchasers" have the meaning ascribed
thereto in the introduction hereof.
"Registration Rights Agreement" means the registration rights
agreement by and between the REIT and the Purchasers, as amended or supplemented
from time to time in accordance with the terms thereof.
"REIT" has the meaning ascribed thereto in the introduction
hereof.
"Restricted Security" has the meaning ascribed thereto in
Section 6.2 hereof.
"Rule 144" means Rule 144 as promulgated by the Commission
under the Securities Act, and any successor rule or regulation thereto.
"Rule 144A" means Rule 144A as promulgated by the Commission
under the Securities Act, and any successor rule or regulation thereto.
"SEC Filings" means official filings of the REIT filed with
the Commission in accordance with the Securities Act and the 1934 Act with
respect to events occurring, or periods ending on or after December 31, 1997.
"Securities Act" means the Securities Act of 1933, and the
rules and regulations of the Commission promulgated thereunder, as from time to
time amended.
"Series A Preferred Partnership Units" means Series A
Preferred Partnership Units of limited partnership interest of the Operating
Partnership to be created by the Partnership Amendment.
"Subsidiaries" means subsidiary corporations, partnerships,
limited partnerships, joint ventures and limited liability companies which are
directly or indirectly at least majority owned by the REIT or the Operating
Partnership, including, unless the context requires otherwise, the Operating
Partnership.
"Transaction Documents" means, collectively, this Agreement,
the Registration Rights Agreement, the Partnership Amendment and any and all
agreements, certificates, instruments and other documents contemplated thereby
or executed and delivered in connection therewith.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
VININGS INVESTMENT PROPERTIES TRUST,
a Massachusetts business trust
By: /s/ Peter D. Anzo
- ----------------------------------
Peter D. Anzo
President and Chief Executive Officer
VININGS INVESTMENT PROPERTIES, L.P.,
a Delaware limited partnership
By: VININGS INVESTMENT PROPERTIES TRUST
By:/s/ Peter D. Anzo
- -----------------------------------
Peter D. Anzo
President and Chief Executive Officer
<PAGE>
Accepted and agreed as of the
date first written above:
KINDER GELT, L.P.
By: ECI Properties, Inc.
General Partner
By:/s/ Henry Hirsch
- ----------------------------- Series A Preferred Partnership
Name: Henry Hirsch Units of Vinings
Title: President Investment Properties, L.P.
Address: Kinder Gelt, L.P.. Number of Units: 588,235
2700 Delk Road, Suite 100
Marietta, Georgia 30067 Cash Purchase Price Per Unit: $4.25
Telephone: (770) 952-1400 Total Purchase Price: $2,500,000
Telecopier: (770) 952-5922
Accepted and agreed as of the
date first written above:
STRICO VININGS, LLC
By: Stricklin & Co.
Manager
By: /s/ Joe K. Stricklin Series A Preferred Partnership
- ---------------------------- Units of Vinings
Name: Joe K. Stricklin Investment Properties, L.P.
Title: Sole General Partner
Address: 6065 Roswell Road Number of Units: 470,588
Atlanta, Georgia 30328
Attn.: Bruce C. Bishop Cash Purchase Price Per Unit: $4.25
Telephone: (404) 303-0500 Total Purchase Price: $2,000,000
Telecopier: (404) 250-9431
Accepted and agreed as of the
date first written above:
WATTS AGENT, L.P.
Series A Preferred Partnership
Units of Vinings
By:/s/Gilbert H. Watts, Jr. Investment Properties, L.P.
--------------------------------
Name: Gilbert H. Watts, Jr.
Title: Managing Partner
Address: Mini Warehouses Number of Units: 470,588
1006 Trammel Street
Dalton, Georgia 30720 Cash Purchase Price: $4.25
Attn.: Gilbert H. Watts, Jr.
Total Purchase Price: $2,000,000
Telephone: (706) 226-3433
Telecopier: (706) 226-4116
Accepted and agreed as of the
date first written above:
LAWRENCE E. COOPER
Signed:/s/Lawrence E. Cooper Series A Preferred Partnership
-------------------- Units of Vinings
Lawence E. Cooper Investment Properties, L.P.
Address: 1150 Lake Hearn Drive, #650 Number of Units: 235,294
Atlanta, GA 30342
Cash Purchase Price Per Unit:$4.25
Telephone: (404) 705-5050
Telecopier: (404) 705-5060 Total Purchase Price: $1,000,000
<PAGE>
Accepted and agreed as of the
date first written above:
CHARLES GOETZ
Signed:/s/ Charles Goetz Series A Preferred Partnership
- -------------------------- Units of Vinings
Charles Goetz InvestmentProperties, L.P.
Address: 567 Grammercy Number of Units: 47,059
Marietta, GA 30068
Cash Purchase Price: $4.25
Telephone: (770) 393-0909 Total Purchase Price: $200,000
Telecopier:
Accepted and agreed as of the
date first written above:
SYLCO, L.P.
By: Lake Hearn Associates,
General Partner
/s/ Lawrence E. Cooper
- ----------------------------------
Name: Lawrence E. Cooper Series A Preferred Partnership
Title: President Units of Vinings
Investment Properties, L.P.
Address: 1150 Lake Hearn Drive, #650 Number of Units: 117,647
Atlanta, GA 30342
Cash Purchase Price Per Unit: $4.25
Telephone: (404) 705-5050
Telecopier: (404) 705-5060 Total Purchase Price: $500,000
Accepted and agreed as of the
date first written above:
ROBERT AND STEPHANIE CANTIZANO, JTWRS
/s/Robert Cantizano and Stephanie Cantizano Series A Preferred Partnership
- ------------------------------------------- Units of Vinings
Name: Robert Cantizano and Investment Properties, L.P.
Stepahanie Cantizano
Number of Units: 17,647
Address: 3809 Wexford Drive Cash Purchase Price: $4.25
Kensington, MD 20895
Total Purchase Price: $75,000.00
Telephone:
Telecopier:
Accepted and agreed as of the
date first written above:
STEPHANIE A. REED
Signed:/s/ Stephanie A. Reed Series A Preferred Partnership
- -------------------------- Units of Vinings
Stepahnie A. Reed InvestmentProperties, L.P.
Address: 88 Parkside Number of Units: 11,764
Marietta, GA 30068
Cash Purchase Price: $4.25
Telephone: Total Purchase Price: $50,000
Telecopier:
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
=========================================
This Registration Rights and Lock-up Agreement (the "Agreement") is
entered into as of April 29, 1999 by and among Vinings Investment Properties
Trust, a Massachusetts business trust (the "Company"), and each of the other
signatories hereto (the "Investors"), which contemporaneously herewith is to
become a partner of Vinings Investment Properties, L.P., a Delaware limited
partnership (the "Partnership"), and their permitted successors and assigns
(together with the Investors, the "Holders").
WHEREAS, each of the Investors is to receive contemporaneously herewith
preferred units of limited partnership interest in the Partnership ("Preferred
Units"), issued without registration under the Securities Act of 1933, as
amended (the "Securities Act"), in consideration for its investment in the
Partnership pursuant to that certain Securities Purchase Agreement, dated as of
April 29, 1999 (collectively, the "Purchase Agreement");
WHEREAS, such Preferred Units may be converted into preferred shares of
beneficial interest in the Company ("Preferred Shares") under certain
circumstances or redeemed for common shares of beneficial interest in the
Company, no par value ( the "Common Shares"), issued without registration under
the Securities Act; and
WHEREAS, it is a condition precedent to the closing of the Purchase
Agreement that the Company provide the Investors with the registration rights
set forth in Section 3 hereof.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
and agreements set forth herein, and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Person" shall mean an individual, partnership, corporation, limited
liability company, trust, or unincorporated organization, or a government or
agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement at the time the Registration Statement was declared effective by the
SEC, as subsequently amended or supplemented by any prospectus supplement
relating to the terms of the offering of any portion of the Registrable Shares
covered by such Registration Statement, and in each case including all material
incorporated by reference therein.
"Registrable Shares" shall mean the Shares, excluding (i) Shares for
which a Registration Statement relating to the sale thereof shall have become
effective under the Securities Act and which have been disposed of under such
Registration Statement, (ii) Shares sold pursuant to Rule 144 under the
Securities Act or (iii) Shares eligible (or which would be eligible in the
absence of the Holder's ownership of Common Shares other than Registrable
Shares) for sale pursuant to Rule 144(k) under the Securities Act.
"Registration Expenses" shall mean any and all expenses incurred by the
Company incident to performance of or compliance with this Agreement, including,
without limitation: (i) all SEC, stock exchange or NASD registration and filing
fees; (ii) all fees and expenses incurred in connection with compliance with
state securities or "blue sky" laws and the rules of the NASD; (iii) all
expenses of any Persons in preparing or assisting in preparing, word processing,
printing and distributing any Registration Statement, any Prospectus,
certificates and other documents relating to the performance of and compliance
with this Agreement; (iv) all fees and expenses incurred in connection with the
listing, if any, of any of the Registrable Shares on any securities exchange or
exchanges pursuant to Section 3(d) hereof; and (v) the fees and disbursements of
counsel for the Company and of the independent public accountants of the
Company, including the expenses of any special audit or "cold comfort" letters
required by or incident to such performance and compliance. Registration
Expenses shall specifically exclude underwriting discounts and commissions
relating to the sale or disposition of Registrable Shares by a selling Holder,
the fees and disbursements of counsel representing a selling Holder, and
transfer taxes, if any, relating to the sale or disposition of Registrable
Shares by a selling Holder, all of which shall be borne by such Holder in all
cases.
"Registration Statement" shall mean any registration statement of the
Company pursuant to the requirements of the Securities Act which covers any of
the Registrable Shares on an appropriate form, and all amendments and
supplements to such registration statement, including post-effective amendments
and supplements, in each case including the Prospectus contained therein, all
exhibits thereto and all materials incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shares" shall mean the Common Shares issued to the Holder(s) upon
redemption or in exchange for its or their Preferred Units or Preferred Shares,
as appropriately adjusted on account of any stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization.
2. LOCK-UP AGREEMENT. Each Holder hereby agrees that for one (1) year
from the date hereof (the "Lock-Up Period"), without the prior written consent
of the Company, it will not offer, sell, contract to sell, hypothecate, pledge,
seek to redeem, grant an option, right or warrant to purchase or otherwise
dispose of, directly or indirectly, any Shares or Preferred Units (the
"Lock-Up").
3. REGISTRATION.
(a) DEMAND REGISTRATION. Subject to the conditions set forth
in this Agreement, at any time after the expiration of the Lock-Up Period, the
Company shall, at the written request of a Holder cause to be filed as soon as
practicable after the date of such request by such Holder a Registration
Statement relating to the sale by the Holder of all or any integral multiple of
100,000 Registrable Shares held by such Holder in accordance with the terms
hereof, and shall use reasonable efforts to cause such Registration Statement to
be declared effective by the SEC as soon as practicable thereafter; provided,
however, that the Company shall not be required to effect more than two demand
registrations pursuant to this Section 3(a). The Company agrees to use
reasonable efforts to keep each Registration Statement continuously effective
until the earlier of (i) twelve (12) months after such Registration Statement
was declared effective by the SEC, or (ii) the date on which all Registrable
Shares registered thereby are sold or otherwise disposed of by the Holders.
Notwithstanding the foregoing provisions of this Section 3(a), during any period
of time which the Company has a Registration Statement in effect under the
provisions of the Securities Act relating to Registrable Shares, the Holders
will not have the right to request the registration of such Registrable Shares
under the provisions of this Section 3(a).
(b) PIGGYBACK REGISTRATION. If at any time while any
Registrable Shares are outstanding and a Registration Statement applicable to a
Holder under Section 3(a) is not effective the Company (in its sole discretion
and without any obligation to do so) proposes to file a registration statement
under the Securities Act in connection with its offering of Common Shares solely
for cash (other than a registration statement (i) on Form S-8 or any successor
form to such Form or in connection with any employee or director welfare,
benefit or compensation plan, (ii) on Form S-4 or any successor form to such
Form or in connection with an exchange offer, (iii) in connection with a rights
offering exclusively to existing holders of Common Shares, (iv) in connection
with an offering solely to employees of the Company or its subsidiaries, or (v)
relating to a transaction pursuant to Rule 145 of the Securities Act), the
Company shall give prompt written notice of such proposed filing to each Holder
who has requested to receive such notices at least fifteen (15) days prior to
the proposed filing date. The notice referred to in the preceding sentence shall
offer each Holder the opportunity to register any amount of Registrable Shares
as such Holder may request (a "Piggyback Registration"). Subject to the
provisions of Section 3 below, the Company shall include in such Piggyback
Registration, in the registration and qualification for sale under the blue sky
or securities laws of the various states and in any underwriting in connection
therewith, all Registrable Shares for which the Company has received written
requests for inclusion therein within fifteen (15) calendar days after the
notice referred to above has been given by the Company to each Holder. Each
Holder of Registrable Shares shall be permitted to withdraw all or part of its
Registrable Shares from a Piggyback Registration at any time prior to the
effective date of such Piggyback Registration. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company and the managing
underwriter advises the Company that the total number of Common Shares requested
to be included in such registration exceeds the number of Common Shares which
can be sold in such offering without adversely affecting the price range or
probability of success of such offering, the Company will include in such
registration in the following priority: (i) first, all Common Shares the Company
proposes to sell, and (ii) second, up to the full number of Registrable Shares
and Common Shares requested to be included in such registration by any Holders
and other holders of registration rights, which in the opinion of such managing
underwriter, can be sold without adversely affecting the price range or
probability of success of such offering (with the Common Shares to be registered
allocated pro rata among the Holders and the other holders of registration
rights on the basis of the total number of Registrable Shares and the other
Common Shares requested to be included in such registration by all such Holders
and other holders of registration rights).
(c) NOTIFICATION AND DISTRIBUTION OF MATERIALS. The Company
shall notify each Holder of the effectiveness of any Registration Statement
applicable to the Shares of such Holder and shall furnish to each such Holder
the number of copies of such Registration Statement and the Prospectus contained
therein as such Holder may reasonably request in order to facilitate its sale of
the Registrable Shares in the manner described in such Registration Statement.
(d) AMENDMENTS AND SUPPLEMENTS; EXCHANGE LISTING APPLICATIONS.
The Company shall prepare and file with the SEC from time to time such
amendments and supplements to any Registration Statement and Prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all the Registrable Shares until the earlier of (i) such
time as all of the Registrable Shares have been disposed of in accordance with
the intended methods of disposition by the Holders as set forth in such
Registration Statement or (ii) the date on which such Registration Statement
ceases to be effective in accordance with the terms of this Section 3. Upon ten
(10) business days' notice, the Company shall file any supplement or
post-effective amendment to such Registration Statement with respect to the plan
of distribution or such Holder's ownership interests in Registrable Shares that
is reasonably necessary to permit the sale of the Holder's Registrable Shares
pursuant to the Registration Statement. The Company shall file any necessary
listing applications or amendments to the existing applications to cause the
Shares registered under the Registration Statement to be then listed or quoted
on the primary exchange or quotation system on which the Common Shares is then
listed or quoted.
(e) NOTICE OF CERTAIN EVENTS.
(i) The Company shall promptly notify each
Holder of, and confirm in writing, the filing of any Registration Statement
or any Prospectus, amendment or supplement related thereto or any
post-effective amendment to any Registration Statement and the effectiveness
of any post-effective amendment.
(ii) At any time when a Prospectus relating to a
Registration Statement is required to be delivered under the Securities Act,
the Company shall immediately notify each Holder of the happening of any
event as a result of which the Prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. In such event, the Company shall
promptly prepare and furnish to each applicable Holder a reasonable number
of copies of a supplement to or an amendment of such Prospectus as may be
necessary so that, as thereafter delivered to the purchasers of
Registrable Shares, such Prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Company will, if
necessary, amend the Registration Statement of which such Prospectus is a part
to reflect such amendment or supplement.
4. STATE SECURITIES LAWS. Subject to the conditions set forth in this
Agreement, the Company shall, in connection with the filing of any Registration
Statement hereunder, file such documents as may be necessary to register or
qualify the Registrable Shares under the securities or "blue sky" laws of such
states as any Holder may reasonably request, and the Company shall use its best
efforts to cause such filings to become effective; provided, however, that the
Company shall not be obligated to qualify as a foreign corporation to do
business under the laws of any such state in which it is not then qualified or
to file any general consent to service of process in any such state. Once
effective, the Company shall use its best efforts to keep such filings effective
until the earlier of (a) such time as all of the Registrable Shares have been
disposed of in accordance with the intended methods of disposition by the Holder
as set forth in the Registration Statement, (b) in the case of a particular
state, a Holder has notified the Company that it no longer requires an effective
filing in such state in accordance with its original request for filing or (c)
the date on which the Registration Statement ceases to be effective in
accordance with Section 3. The Company shall promptly notify each Holder of, and
confirm in writing, the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Shares for sale under
the securities or "blue sky" laws of any jurisdiction or the initiation of any
threat of any proceeding for such purpose.
5. EXPENSES. Except as otherwise provided in this Section 4, the
Company shall bear all Registration Expenses incurred by the Company in
connection with the registration of the Registrable Shares pursuant to this
Agreement. Each Holder shall be responsible for any brokerage or underwriting
commissions and taxes of any kind (including, without limitation, transfer
taxes) with respect to any disposition, sale or transfer of Registrable Shares
sold by it and for any legal, accounting and other expenses incurred by it. In
the event that the Company (in its sole discretion and without any obligation to
do so) amends a Registration Statement in response to a request by a Holder for
such amendment or to reflect a change in the plan of distribution or ownership
interests with respect to a Holder's Registrable Shares, the Holder requesting
such amendment or whose actions require such amendment shall bear all fees,
costs and expenses incurred by the Company or by such Holder in connection
therewith, including fees related to the delisting of Shares from any national
securities exchange or quotation system on which such Shares had been listed for
trading.
6. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify each
Holder and its respective officers, directors, employees, agents,
representatives and affiliates, and each person or entity, if any, that controls
such Holder within the meaning of the Securities Act (each an "Indemnitee")
against any and all losses, claims, damages, actions, liabilities, costs and
expenses (including, without limitation, reasonable fees, expenses and
disbursements of attorneys), joint or several, arising out of or based upon any
untrue or alleged untrue statement of material fact contained in the
Registration Statement or any Prospectus, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, that the Company shall not be liable to such
Indemnitee or any other person to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof), cost or expense arises
out of or is based upon (i) an untrue statement or alleged untrue statement or
omission or alleged omission made in such Registration Statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with information which was
furnished to the Company for use in connection with the Registration Statement
or the Prospectus contained therein by or on behalf of a Holder or any other
Indemnitee or (ii) a Holder's failure to send or give a copy of the most current
Prospectus furnished to the Holders by the Company at or prior to the time such
action is required by the Securities Act to the person claiming an untrue
statement or alleged untrue statement or omission or alleged omission if such
statement or omission was corrected in such Prospectus.
7. COVENANTS OF HOLDER(S). Each Holder hereby agrees (a) to cooperate
with the Company and to furnish to the Company all such information concerning
its plan of distribution and its ownership interests with respect to its
Registrable Shares in connection with the preparation of a Registration
Statement with respect to such Holder's Registrable Shares and any filings with
any state securities commissions as the Company may reasonably request, (b) to
deliver or cause delivery of the Prospectus contained in such Registration
Statement to any purchaser of the shares covered by such Registration Statement
from the Holder and (c) to indemnify the Company, its officers, directors,
employees, agents, representatives and affiliates, and each person, if any, who
controls the Company within the meaning of the Securities Act against any and
all losses, claims, damages, actions, liabilities, costs and expenses arising
out of or based upon (i) any untrue statement or alleged untrue statement of
material fact contained in either such Registration Statement or the Prospectus
contained therein, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, if and to the extent that such statement or omission occurs from
reliance upon and in conformity with information regarding a Holder, its plan of
distribution or its ownership interests, which was furnished to the Company by
or on behalf of a Holder for use therein unless such statement or omission was
corrected in a writing delivered to the Company not less than five (5) business
days prior to the date of the final Prospectus or (ii) the failure by a Holder
to deliver or cause to be delivered the most current Prospectus furnished by the
Company to the Holder to any purchaser of the shares covered by such
Registration Statement from the Holder.
8. SUSPENSION OF REGISTRATION REQUIREMENT.
(a) The Company shall promptly notify each Holder of, and
confirm in writing, the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement with respect to such Holder's
Registrable Shares or the initiation of any proceedings for that purpose. The
Company shall use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such a Registration Statement as soon as
reasonably practicable
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation under this Agreement to cause a Registration
Statement and any filings with any state securities commission to become
effective or to amend or supplement a Registration Statement shall be suspended
in the event and during such period as unforeseen circumstances exist (including
without limitation (i) an underwritten primary offering by the Company if the
Company is advised by the underwriters that the sale of Registrable Shares under
the Registration Statement would impair the pricing or commercial practicality
of the primary offering or (ii) pending negotiations relating to, or
consummation of, a transaction or the occurrence of an event that would require
additional disclosure of material information by the Company in the Registration
Statement or such filing, as to which the Company has a bona fide business
purpose for preserving confidentiality or which renders the Company unable to
comply with SEC requirements) (such unforeseen circumstances being hereinafter
referred to as a "Suspension Event") that would make it impractical or
unadvisable to cause the Registration Statement or such filings to become
effective or to amend or supplement the Registration Statement, but such
suspension shall continue only for so long as such event or its effect is
continuing. The Company shall notify each Holder of the existence and, in the
case of circumstances referred to in clause (i) of this Section 7(b), nature of
any Suspension Event.
(c) Each Holder of Registrable Shares whose Registrable Shares
are covered by a Registration Statement filed pursuant to Section 3 agrees, if
requested by the Company in the case of a Company-initiated nonunderwritten
offering or if requested by the managing underwriter or underwriters in a
Company-initiated underwritten offering, not to effect any public sale or
distribution of any of the securities of the Company, including a sale pursuant
to Rule 144 or Rule 144A under the Securities Act, during the 15-day period
prior to, and during the 60-day period beginning on, the date of commencement of
each Company-initiated offering made pursuant to such Registration Statement, to
the extent timely notified in writing by the Company or the managing
underwriters; provided, however, that such 60-day period shall be extended by
the number of days from and including the date of the giving of any notice
pursuant to Section 3(e)(ii) hereof to and including the date when each Holder
of Registrable Shares covered by such Registration Statement shall have received
the copies of the supplemented or amended Prospectus contemplated by Section
3(e)(ii) hereof.
9. BLACK-OUT PERIOD. Each Holder agrees that, following the
effectiveness of any Registration Statement relating to Registrable Shares of
such Holder, such Holder will not effect any sales of the Registrable Shares
pursuant to the Registration Statement or any filings with any state securities
commissions at any time after such Holder has received notice from the Company
to suspend sales as a result of the occurrence or existence of any Suspension
Event or so that the Company may correct or update the Registration Statement or
such filing. The Holder may recommence effecting sales of the Shares pursuant to
the Registration Statement or such filings following further notice to such
effect from the Company, which notice shall be given by the Company not later
than five (5) business days after the conclusion of any such Suspension Event.
10. ADDITIONAL SHARES. The Company, at its option, may register, under
any Registration Statement and any filings with any state securities commissions
filed pursuant to this Agreement, any number of unissued Common Shares of the
Company or any Common Shares of the Company owned by any other stockholder(s) of
the Company.
11. CONTRIBUTION. If the indemnification provided for in Sections 5 and
6 is unavailable to an indemnified party with respect to any losses, claims,
damages, actions, liabilities, costs or expenses referred to therein or is
insufficient to hold the indemnified party harmless as contemplated therein,
then the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, actions, liabilities, costs or expenses
in such proportion as is appropriate to reflect the relative fault of the
Company, on the one hand, and the Indemnitee, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims, damages,
actions, liabilities, costs or expenses as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the
Indemnitee, on the other hand, shall be determined by reference to, among other
factors, whether the untrue or alleged untrue statement of a material fact or
omission to state a material fact relates to information supplied by the Company
or by the Indemnitee and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, however, that in no event shall the obligation of any indemnifying
party to contribute under this Section 10 exceed the amount that such
indemnifying party would have been obligated to pay by way of indemnification if
the indemnification provided for under Sections 5 or 6 hereof had been available
under the circumstances.
The Company and each of the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 10 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph.
Notwithstanding the provisions of this Section 10, no Holder shall be
required to contribute any amount in excess of the amount by which the gross
proceeds from the sale of Shares exceeds the amount of any damages that the
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any indemnifying party who was not guilty
of such fraudulent misrepresentation.
12. NO OTHER OBLIGATION TO REGISTER. Except as otherwise expressly
provided in this Agreement, the Company shall have no obligation to the Holders
to register the Registrable Shares under the Securities Act.
13. AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified, or supplemented or waived without the prior written consent
of the Company and the Holders of in excess of fifty percent (50%) of the
aggregate of all Registrable Shares.
14. NOTICES. Except as set forth below, all notices and other
communications provided for or permitted hereunder shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by telex or
telecopier, registered or certified mail (return receipt requested), postage
prepaid or courier or overnight delivery service to the respective parties at
the following addresses (or at such other address for any party as shall be
specified by like notice, provided that notices of a change of address shall be
effective only upon receipt thereof), and further provided that in case of
directions to amend the Registration Statement pursuant to Section 3(d) or
Section 6, a Holder must confirm such notice in writing by overnight express
delivery with confirmation of receipt:
If to the Company: Vinings Investment Properties Trust
3111 Paces Mill Road
Suite A-200
Atlanta, GA 30339
Telecopy: (770) 984-0655
Attention: Stephanie A. Reed
with a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109-2881
Telecopy: (617) 523-1231
Attention: David W. Watson, P.C.
If to the Holders: __________________________
==========================
--------------------------
Telecopy: _________________
Attention: _________________
with a copy to: __________________________
==========================
--------------------------
Telecopy: _________________
Attention: _________________
In addition to the manner of notice permitted above, notices given pursuant to
Sections 3, 7 and 8 hereof may be effected telephonically and confirmed in
writing thereafter in the manner described above.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. This Agreement may not be assigned by any Holder and any attempted
assignment hereof by any Holder will be void and of no effect and shall
terminate all obligations of the Company hereunder.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
17. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts applicable to
contracts made and to be performed wholly within said Commonwealth.
18. SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereof shall be enforceable to the fullest extent permitted by law.
19. ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be the complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to such subject matter. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
VININGS INVESTMENT PROPERTIES TRUST
By: /s/ Peter D. Anzo
-----------------------------------
Peter D. Anzo:
President and Chief Executive Officer
[INVESTORS]
By:/s/ Investor
------------------------
Name:
Title:
