SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 30, 1998
GROVE PROPERTY TRUST
(Exact name of registrant as specified in its charter)
Maryland 1-13080 06-1391084
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification Number)
598 Asylum Avenue, Hartford, Connecticut 06105
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (860) 246-1126
N/A
(Former name or former address, if changed since last report)
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2
Item 2. Acquisition or Disposition of Assets
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Pursuant to an Agreement dated as of April 22, 1998, as amended as of
August 31, 1998 (as so amended, the "Conveyance Agreement"), among certain
limited partnerships affiliated with Alexander H. McNeil (the "McNeil
Partnerships") and The Grove Corporation, Grove Property Trust (the "Company")
acquired certain assets on October 30, 1998. The assets which were acquired
through Grove Operating, L.P., a Delaware limited partnership of which the
Company is the sole general partner (the "Operating Partnership") consisted of
17 residential apartment communities containing 1,747 apartments, approximately
$6 million in cash and certain other assets of the McNeil Partnerships.
The Operating Partnership issued an aggregate of approximately
1,000,000 Common Units of the Operating Partnership, including approximately
200,000 of which were issued to a wholly owned subsidiary of the Company, as
part of the purchase price for the assets acquired from the McNeil Partnership.
In accordance with the Conveyance Agreement, the value assigned to each of the
Common Units issued in these transactions was $9.82, the average closing price
of the Company's Common Shares for the 15 trading days preceding the closing.
Additional consideration for the assets acquired from the McNeil Partnerships
was cash in the aggregate amount of approximately $8.8 million and the
assumption of mortgage debt in the aggregate remaining principal amount of
approximately $51 million. Both the amount of cash paid and the number of Common
Units issued is subject to adjustment based on final financial information which
will be prepared for each of the properties as of October 31, 1998.
Concurrently with the acquisition of these properties, the management
agreements relating to these properties and three other properties owned by
partnerships affiliated with Alexander H. McNeil were assigned to the Operating
Partnership. In consideration of the assignment of these management agreements,
the Operating Partnership paid $5.5 million in cash to the management company
that had managed such properties prior to this transaction.
To complete these transactions, the Company also borrowed
approximately $15 million under its revolving credit agreement.
The Conveyance Agreement gives certain McNeil Partnerships which own
subsidized apartment units the right to receive additional consideration in the
future under certain circumstances when and if such apartment units are no
longer subject to various rental restrictions and can be rented out at
prevailing market rents. Since such additional consideration is dependent upon
the result of future operations that are impossible to predict with any
accuracy, it is uncertain whether any of the eligible McNeil Partnerships will
ever qualify for any portion of such additional consideration.
The table below sets forth certain information about each of the
properties acquired.
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Number of
McNeil Partnership Name Apartments Location
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Cedar Glen Associates Limited Partnership 114 Reading, MA
Chestnut Glen Associates Limited Partnership 130 Abington, MA
Conway Court Associates 28 Rosalindale, MA
Glen Grove Associates Limited Partnerships 125 Wellesley, MA
Glen Meadow at Franklin Associates 288 Franklin, MA
Gosnold Grove Associates 33 East Falmouth, MA
Longfellow Glen Associates Limited Partnership 120 Sudbury, MA
Nehoiden Glen Associates Limited Partnership 61 Needham, MA
Noonan Glen Associates Limited Partnership 18 Winchester, MA
Norton Glen Associates Limited Partnership 130 Abington, MA
Old Mill Glen Associates Limited Partnership 50 Maynard, MA
Phillips Park Associates Limited Partnership 49 Wellesley Hills, MA
Summer Hill Glen Associates 120 Maynard, MA
The 929 House Realty Associates 127 Cambridge, MA
Webster Green Associates Limited Partnership 76 Needham, MA
Westwood Glen 156 Westwood, MA
Wilkins Glen Associates 102 Medfield, MA
The Company intends to continue to operate the properties as rental
apartments. Title to each of the properties is held either by a Delaware limited
partnership whose general and limited partners are limited liability companies
wholly owned by the Operating Partnership or by a Delaware limited liability
company wholly owned by the Operating Partnership.
The Company did not obtain independent appraisals of the properties'
values, but instead negotiated such consideration in an arm's length transaction
with Alexander and Virginia McNeil in their capacity as either general partners
of, or principal shareholders or members of entities that serve as general
partner of, each of the McNeil Partnerships.
Item 7. Financial Statements and Exhibits
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(a) Financial statements of the McNeil Partnerships for the periods
specified in regulation S-X will be included in an amendment to this report as
soon as practicable, but not later than 60 days after the date on which this
report is required to be filed.
(b) Pro forma financial statements for the periods specified in
Regulation S-X will be included in an amendment to this report as soon as
practicable, but no later than 60 days after the date on which this report is
required to be filed
(c) Exhibits
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4
Exhibit No. Description
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2.1 Agreement dated as of April 22, 1998 among The Grove
Corporation and the twenty-two limited partnerships identified
on Schedule 1 thereto (incorporated by reference to Exhibit 2.1
to the Company's Current Report on Form 8-K dated October 30,
1998 (Commission File No. 1-13080))
2.2 Amendment dated as of August 31, 1998 to Conveyance Agreement
dated as of April 22, 1998 among The Grove Corporation and the
twenty-one limited partnerships identified on Schedule 1
thereto (incorporated by reference to Exhibit 2.2 to the
Company's Current Report on Form 8-K dated October 30, 1998
(Commission File No. 1-13080))
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5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GROVE PROPERTY TRUST
Date: November 13, 1998 By: /s/ JOSEPH R. LABROSSE
----------------------------------
Joseph R. LaBrosse
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
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2.1 Agreement dated as of April 22, 1998 among The Grove
Corporation and the twenty-two limited partnerships identified
on Schedule 1 thereto (incorporated by reference to Exhibit 2.1
to the Company's Current Report on Form 8-K dated October 30,
1998 (Commission File No. 1-13080))
2.2 Amendment dated as of August 31, 1998 to Conveyance Agreement
dated as of April 22, 1998 among The Grove Corporation and the
twenty-one limited partnerships identified on Schedule 1
thereto (incorporated by reference to Exhibit 2.2 to the
Company's Current Report on Form 8-K dated October 30, 1998
(Commission File No. 1-13080))
AGREEMENT
THIS AGREEMENT (the "Agreement") made as of this 22nd day of April, 1998, by
and among (i) each of the twenty-two (22) limited partnerships identified on
Schedule 1 attached hereto and made a part hereof, each having an office at c/o
Mr. Alexander H. McNeil, 850 Providence Highway, Dedham, Massachusetts 02026
(hereinafter each referred to separately as a "McNeil Partnership" and
collectively referred to as the "McNeil Partnerships") and (ii) The Grove
Corporation ("Grove Corporation"), a Delaware corporation wholly-owned by Grove
Operating L.P., a Delaware limited partnership (hereinafter referred to as the
"Operating Partnership") , each having an office at 598 Asylum Avenue, Hartford,
Connecticut 06105, and (iii) the title company identified on the signature page
of this Agreement (hereinafter called the "Escrow Agent").
WITNESSETH:
WHEREAS, each of the McNeil Partnerships owns the fee simple title to the
apartment complex identified next to its name on Schedule 1, and more
specifically described on Exhibits A-1 to A-22 annexed hereto and made a part
hereof, (hereinafter referred to separately as a "Property" and collectively as
the "Properties"); and
WHEREAS, each of the McNeil Partnerships desires to transfer and convey its
Property to a permitted assignee of Grove Corporation, consisting of either the
Operating Partnership or one or more limited liability companies to be formed
and wholly-owned by the Operating Partnership to take title to a Property as
contemplated in Section 23 hereof (any such limited liability companies so
formed by the Operating Partnership to which any of Grove Corporation's rights
hereunder shall be assigned shall be referred to as a "Grove Company" and
collectively as the "Grove Companies", and the Operating Partnership and Grove
Companies are sometimes collectively referred to as the "Permitted Assignees"),
and Grove Corporation desires that a Permitted Assignee acquire such Property
from a corresponding McNeil Partnership, as a contribution to the Operating
Partnership in exchange for units of limited partnership interest of the
Operating Partnership (hereafter referred to as "OP Units"), cash and other
consideration, in a transaction intended to qualify under section 721(a) of the
Internal Revenue Code of 1986, as amended, all in the manner and upon and
subject to the terms and conditions set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by all the parties, the
parties hereto agree as follows:
1. Agreement to Transfer, Convey and Acquire. Each of the McNeil Partnerships
agrees to transfer and convey to its corresponding Grove Company, and Grove
Corporation agrees to cause each Grove Company to acquire from its corresponding
McNeil Partnership, all in the manner and upon and subject to the terms and
conditions set forth in this Agreement, the Property listed opposite their
respective names on Schedule 1, comprised of:
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(a) that certain piece or parcel of land described on Exhibits A-1 to
A-22, subject only to the Permitted Encumbrances and Liabilities (as defined in
Section 5 hereof), together with the buildings and improvements thereon, with
the name and containing the number of apartment units specified on Schedule 1
next to the respective McNeil Partnership's name (such land, buildings and
improvements are hereinafter collectively referred to as the "Premises");
(b) the easements, rights of-way, privileges and appurtenances, and
rights to the same, belonging to and inuring to the benefit of each of the
respective Premises (the items included in this subsection are sometimes
hereinafter collectively referred to as the "Appurtenant Rights");
(c) all items normally considered fixtures owned by each of the
McNeil Partnerships of every kind, nature and description whatsoever, now or
hereafter located on the respective Premises, or any part thereof, and used or
usable in connection with any present or future occupancy of the respective
Premises, or any part thereof (the items included in this subsection (c) are
sometimes hereinafter collectively referred to as the "Building Equipment");
(d) all articles of personal property, owned by each of the McNeil
Partnerships, now or hereafter located on the respective Premises, or any part
thereof, and used or usable in connection with any present or future occupancy,
operation or maintenance of the respective Premises, or any part thereof (the
items included in this subsection (d) are sometimes hereinafter collectively
referred to as the "Personal Property" and specifically include, without
limitation, any items described on Exhibits B-1 to B-22 attached hereto and made
a part hereof);
(e) all reserves and accounts (the "Regulatory Reserves") maintained
by or on behalf of each of the McNeil Partnerships pursuant to any mortgages
encumbering the Properties or pursuant to the requirement of any law or any
applicable regulatory agreement or other requirement (a "Regulatory Agreement")
of any federal or state agency or authority with jurisdiction over any portion
of the Premises (hereinafter referred to as a "Regulatory Authority"), such as
the United States Department of Housing and Urban Development ("HUD") and the
Massachusetts Housing and Finance Agency ("MHFA"), which has provided mortgage
financing, debt service and/or rent subsidies for the Premises or which has
jurisdiction over any portion of the Premises , including, without limitation,
(i) capital replacement and similar reserves ("Replacement Reserves"), (ii)
operating accounts and expense escrows, including, but not limited to, real
estate tax escrows, insurance premium escrows, utility deposits and the like
that, under applicable Regulatory Agreements and loan agreements, must be
assigned and transferred with the Properties ("Operating Escrows"), (iii)
reserves and escrows set aside to pay principal and interest on the mortgages
encumbering the Properties ("Debt Service Escrows"), (iv) excess rent reserves,
residual receipt reserves and accumulated distribution reserves that are held by
the McNeil Partnerships and may in the future be distributed to its partners
("Excess Rent Reserves"), (v) unadvanced mortgage proceeds reserves ("Unadvanced
Mortgage Proceeds Escrow"), and (vi) the reserves, escrows and accounts
identified in Schedule 5 to this Agreement;
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(f) those certain leasehold interests with respect to fixtures or
articles of personal property which are expressly assumed by Grove Corporation
as contemplated hereunder; and
(g) all right, title and interest of each of the McNeil Partnerships,
if any, in and to the trade name of the respective Premises.
2. Value. The values for each of the Properties shall consist of a fixed,
initial value (the "Initial Value"), a fixed, deferred value (the "Deferred
Value"), and, if the conditions set forth in Subsection (c) below are satisfied,
a contingent value (the "Contingent Value"). The Initial Value of each Property
is set forth on Schedule 2. Schedule 3 allocates the Initial Value by percentage
among classes of apartment types and on a per-apartment-unit basis. The Deferred
Value is $4,500,000, is allocated among the Properties in the manner set forth
on Schedule 3.1 and subject to adjustment as indicated thereon, shall be
evidenced by the Deferred Installment Note in the form attached hereto as
Exhibit P (the "Deferred Installment Note"), which Note shall be issued by a
Grove Company and the Operating Partnership.
(a) Earnest Money Deposits. Simultaneously with Grove Corporation's
execution of this Agreement, Grove Corporation will deposit, as an initial
earnest money deposit (the "Initial Deposit"), in escrow with the Escrow Agent,
the sum of Two Hundred Fifty Thousand Dollars ($250,000.00) in the form of a
certified or bank check or by wire transfer of immediately available funds. Upon
the expiration of the Due Diligence Period (as defined in Section 3 hereof), if
Grove Corporation has not terminated this Agreement pursuant to said Section 3,
Grove Corporation shall deposit an additional Two Hundred Fifty Thousand Dollars
($250,000.00) (the "Additional Deposit") with the Escrow Agent. Until the
Additional Deposit is paid, the Initial Deposit shall be also referred to herein
as the "Deposit." When the Additional Deposit has been paid, the Initial
Deposit, together with the Additional Deposit, shall be together referred to
herein as the "Deposit." The Deposit shall be allocated pro rata among the
McNeil Partnerships identified on Schedule 1 based upon the Initial Value
ascribed to their respective Properties on Schedule 2, as set forth in Schedule
2.1
(b) Initial Value; Initial Issuance of OP Units and Cash. At Closing,
as consideration for the conveyance of the Properties to the Grove Companies,
the Operating Partnership shall issue and deliver to each McNeil Partnership
that number of OP Units determined by dividing the Net Initial Value of its
Property (as hereinafter defined) by the Share Value (as hereinafter defined)
and shall pay the Cash Amount (as hereinafter defined) subject to the
adjustments provided for in Section 12. Within fifteen (15) days prior to the
scheduled Closing Date (as hereinafter defined), the general partner of each
McNeil Partnership shall determine and advise Grove Corporation in writing what
portion, if any, of the net consideration for the conveyance of its Property
shall be paid in cash (the "Cash Amount"), which Cash Amount must be sufficient
to cover all adjustments contemplated herein, and what portion shall be paid in
OP Units, subject to the limitation set forth in Section 36 hereof. The Net
Initial Value of a McNeil Partnership's Property is the Initial Value of such
Property (set forth on Schedule 2), increased in the case of only Rockingham
Glen, Phillips Park Associates Limited Partnership, Webster Green Associates
Limited Partnership, and Abington Glen Associates (collectively, the
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"Market Properties") by the reduction in principal amount that occurs on the
existing first and second mortgages that encumber such Properties between
December 31, 1997 and the Closing Date, and reduced by the Cash Amount. The Cash
Amount, subject to adjustment at Closing pursuant to Section 12, shall be paid
in immediately available funds at Closing. For purposes of this Agreement, the
"Share Value" shall be equal to the average closing price per common share of
Grove Property Trust, a Maryland real estate investment trust, which is the sole
general partner of the Operating Partnership (the "Grove REIT") as reported on
the American Stock Exchange composite tape on the fifteen (15) trading days
immediately preceding the date (the "Issue Date") upon which OP Units are issued
to a McNeil Partnership.
(c) Contingent Value; Issuance of OP Units and Cash.
(1) Each of the McNeil Partnerships identified on Schedule 4
shall be entitled to receive additional consideration for the Property it
conveys to a Grove Company ("Contingent Earnout Rights") in an amount up to its
respective "Maximum Contingent Value," stated on Schedule 4, if, as, when and to
the extent that, any Subsidized Apartment Unit (as hereinafter defined) is
converted to a Market Rate Apartment Unit (as hereinafter defined). The number
of "Subsidized Apartment Units" owned by the McNeil Partnerships are identified
on Schedule 3. A Subsidized Apartment Unit will be deemed converted to a "Market
Rate Apartment Unit" on the earlier to occur of the date (the "Conversion Date")
that such Subsidized Apartment Unit is either (a) actually rented to a tenant at
prevailing market rents, free of all restrictions on rents that can be charged
or the race, character or income of the occupant to whom the apartment can be
rented to (such a tenant is hereinafter referred to as a "Fair Market Value
Tenant"), or (b) the apartment becomes eligible for HUD Section 8 Preservation
Assistance, commonly known as Section 8 enhanced (sticky) vouchers (hereinafter,
the "sticky voucher program") and is occupied by a tenant possessing such a
sticky voucher (such a tenant is hereinafter referred to as a "Sticky Voucher
Tenant"). Commencing six (6) months after the Closing Date and continuing at six
(6) month intervals thereafter until the applicable anniversary of the Closing
Date specified on Schedule 4 for each McNeil Partnership, the Operating
Partnership or applicable Grove Company shall make a one-time distribution (a
"Contingent Value Distribution") to each McNeil Partnership identified on
Schedule 4 in an amount equal to the Contingent Value (as hereinafter defined)
for each Subsidized Apartment Unit previously owned by such McNeil Partnership
and converted to a Market Rate Apartment Unit during the preceding six-month
period. The Contingent Value Distribution shall be equal to the difference (but
not less than zero) on the Conversion Date between the "Adjusted Market Value"
of such Subsidized Apartment Unit and the "Adjusted Initial Value" of such
Subsidized Apartment Unit, as such terms are hereinafter defined. The Contingent
Value Distribution with respect to an apartment occupied by a Sticky Voucher
Tenant shall be subject to the adjustment set forth on Schedule 4.1 to this
Agreement. The "Agreed Market Value" of a Subsidized Apartment Unit shall equal
the product of the applicable Partnership's Original Market Value, set forth on
Schedule 4.3, multiplied by the applicable Percentage of Initial Value Allocated
to each Unit on Schedule 3. The Adjusted Market Value of a Subsidized Apartment
Unit shall be the amount determined by (A) multiplying the Agreed Market Value
of such Subsidized Apartment Unit by nine percent (9%) and dividing the product
thereof by the "Adjusted Capitalization Rate," as
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hereinafter defined, on the Conversion Date, such quotient being hereinafter
referred to as the "Capitalization Rate Adjusted Value," and then (B) increasing
the Capitalization Rate Adjusted Value by the annual increase in the Consumer
Price Index (all items) of the Bureau of Labor Statistics of the U.S. Department
of Labor for the Boston metropolitan area (1967 = 100), from December 31, 1997
through the applicable Conversion Date. The "Adjusted Capitalization Rate" on
the Conversion Date shall equal the sum of (A) the six-month average of ten year
Treasury note annual yields as of the Conversion Date (as reported in the Wall
Street Journal, or by the Treasury Department if the Wall Street Journal no
longer reports such yields) plus (B) 325 basis points, but in no event less than
six percent (6%) nor greater than twelve percent (12%). The Adjusted Initial
Value of each Subsidized Apartment Unit shall equal the "Original Initial Value
of such Subsidized Apartment Unit", as defined below, increased by the annual
increase in the Consumer Price Index (all items) of the Bureau of Labor
Statistics of the U.S. Department of Labor for the Boston metropolitan area
(1967 = 100) from December 31, 1997 through the applicable Conversion Date. The
Original Initial Value of such Subsidized Apartment Unit shall equal the product
of the applicable Partnership's Original Initial Value, set forth on Schedule 2,
multiplied by the applicable Percentage of Initial Value Allocated to Each Unit
on Schedule 3. Unless otherwise agreed, any additional consideration due to a
McNeil Partnership by virtue of the Contingent Earnout Rights described in this
Section shall (A), if the distribution occurs on or prior to the fifth (5th)
anniversary of the Closing Date, be distributed by the Operating Partnership in
the form of OP Units at their Share Value as of the Issue Date (subject to the
limitation of Section 36), and (B), if the distribution occurs after the fifth
(5th) anniversary of the Closing Date, be distributed by the applicable Grove
Company in immediately available funds.
(2) The owner of a Property shall have the right to prepay the
Contingent Earnout Rights contemplated above in connection with any proposed
sale or transfer of a Property. In the event the owner desires to sell or
otherwise transfer a Property, it shall give the applicable McNeil Partnership
written notice of such intention, specifying the proposed purchase price or
value of the Property (the "Sales Notice"), and giving the McNeil Partnership a
thirty (30) day period within which to elect to purchase the Property on the
terms set forth in the Sales Notice. In the event the McNeil Partnership elects
in writing to purchase the Property on the terms set forth in the Sales Notice
within such thirty day period, time being of the essence, the closing of such
sale shall occur within one hundred twenty (120) days following receipt of such
written election, and the Contingent Earnout Rights with respect to such
Property shall be paid as set forth below. In the event the applicable McNeil
Partnership fails to furnish such a written election within such thirty day
period or declines in writing to exercise its rights under this Section, the
owner shall then be free to offer the Property to any third party who is not
affiliated with the Operating Partnership or the Grove REIT, and unless the
actual purchase price or value received with respect to such Property (excluding
any applicable closing adjustments) is less than ninety-five percent (95%) of
the price or value specified in the Sales Notice, the owner shall have no
obligation to reoffer the Property to the applicable McNeil Partnership;
however, in the event the proposed purchase price or value is less than
ninety-five percent (95%) of the price or value specified in the Sales Notice,
the owner must reoffer the Property to the applicable McNeil Partnership,
subject to the procedures set forth above. Upon the sale to either such
applicable McNeil Partnership or a non-affiliated third party, the owner shall
be entitled to prepay the
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Contingent Earnout Rights with respect to such Property, calculated as if the
closing date of such sale or transfer is the applicable Conversion Date, and
substituting the actual purchase price or value per Unit for the Adjusted Market
Value, pursuant to the procedure set forth above in this Section 2. In the event
a Grove Company desires to sell or otherwise transfer a Property after the date
that the applicable McNeil Partnership has dissolved, all references in this
Section 2 (c) (2) to the McNeil Partnership shall instead refer to the former
General Partner of such dissolved McNeil Partnership, or to the managing general
partner thereof in the event that there are more than one such general partner.
(3) In lieu of receiving a Contingent Value Distribution in
accordance with subparagraph (1) above, a McNeil Partnership may elect to
receive at Closing either (A) an additional Cash Amount set forth opposite such
partnership's name on Schedule 4 under the column heading labeled "Cash Out
Amount In Lieu of Contingent Value Distribution", (B) additional OP Units
determined by dividing the amount set forth opposite such partnership's name on
Schedule 4 by the Share Value on the Issue Date (subject to the limitation in
Section 36), or (C) a combination of an additional Cash Amount and additional OP
Units (subject to the limitation in Section 36), such that the sum of the
additional Cash Amount and the value of the additional OP Units equals the
amount set forth opposite such Partnership's name on Schedule 4 (the value of an
OP Unit being deemed to be the Share Value on the Issue Date). A McNeil
Partnership may exercise the option set forth in this Section 2(c)(3) with
respect to either all or just a portion of the Contingent Value Distribution, in
the manner set forth in Schedule 14 to this Agreement, which is incorporated
herein by reference.
(d) The Operating Partnership shall agree that it will permit the
general and limited partners of the McNeil Partnerships (the "Guarantors") to
guarantee on a "bottom dollar basis" (collectively, a "Guarantee") such
indebtedness of the Operating Partnership as they may reasonably request in
order to avoid gain recognition under Section 731(a)(1) of the Internal Revenue
Code by the Guarantors. Any such Guarantee executed by the Guarantors will be in
substantially the form attached hereto as Exhibit O, with no right of
contribution from any other party or entity and shall not be in excess of the
amount of such guarantor's deficit capital account in the McNeil Partnerships on
the Closing Date, less the amount of any non-recourse indebtedness allocated to
such partner pursuant to Section 704 (b) of the Internal Revenue Code and
regulations thereunder promulgated by the Treasury Department. Payments made
under such bottom dollar guarantees shall be made pari passu, with no right of
contribution from any other party or entity, with any existing bottom guarantees
or similar agreements provided to the Operating Partnership prior to the date of
this Agreement. Notwithstanding anything to the contrary in this Agreement, the
Operating Partnership shall not be restricted in its ability to change the
amount or character of its liabilities, but the Operating Partnership shall
allow the Guarantors to enter into such reasonable agreements or arrangements
similar to those set forth herein for the purpose of enabling the Guarantors to
the extent possible to prevent gain recognition under Section 731(a)(1) of the
Internal Revenue Code by the Guarantors.
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3. Grove Corporation's Due Diligence.
(a) For the period (the "Due Diligence Period") expiring at 11:59
p.m. on July 10, 1998, Grove Corporation and its consultants shall have the
right to inspect, examine and investigate the Properties, and all physical,
environmental, financial and legal aspects thereof, and the obligations of Grove
Corporation hereunder shall be conditioned upon Grove Corporation being fully
satisfied, in its sole discretion, as to all such inspections, investigations
and examinations. The McNeil Partnerships shall fully cooperate with Grove
Corporation in its inspections, examinations and investigations including the
disclosure to Grove Corporation of all available information known by the McNeil
Partnerships or in its possession with respect to the Properties. Throughout the
Due Diligence Period, Grove Corporation shall have access to the Properties to
accomplish the foregoing, including, without limitation, the conduct of surface
and subsurface tests and physical and environmental appraisals and studies.
Grove Corporation hereby agrees to restore the Properties to substantially their
condition prior to inspection by repairing any damage caused by their physical
inspection and to indemnify, defend and hold the McNeil Partnerships harmless
from and against any and all claims, liabilities, costs, expenses or damages
arising out of any physical entry onto the Properties or testing by Grove
Corporation or its agents, employees or nominees. Grove Corporation's
indemnification shall survive any termination of this Agreement.
(b) Grove Corporation, in its sole discretion, shall have the
right to terminate this Agreement with respect to any one or more Properties by
written notice to the McNeil Partnerships, received by the McNeil Partnerships
(by facsimile transmission or otherwise) on or before the expiration of the Due
Diligence Period, and thereupon this Agreement shall be void with no recourse to
the parties except as otherwise expressly provided herein, and the Deposit shall
be promptly refunded to Grove Corporation. In the event that Grove Corporation
elects to terminate this Agreement pursuant to this Section 3 (b) with respect
to either (i) any Property owned by more than three of the following six McNeil
Partnerships, consisting of Conway Court Associates, Gosnold Grove Associates,
Broadway Glen Associates, Wilkins Glen Associates, Summer Hill Glen Associates,
and Old Mill Glen Associates Limited Partnership (hereinafter, the "Group A
Properties"), or (ii) more than any six Properties owned by at least six of the
McNeil Partnerships, the McNeil Partnerships shall have the right to terminate
this Agreement in its entirety by written notice to Grove Corporation, received
by Grove Corporation (by facsimile transmission or otherwise) within ten (10)
business days after the McNeil Partnerships' receipt of Grove Corporation's
notice; provided, however, that the McNeil Partnerships shall not have a right
to so terminate this Agreement pursuant to subparagraph (i) of this Section 3
(b) if Grove Corporation elects to terminate this Agreement with respect to more
than three Group A Properties on account of specific engineering, environmental
or title defects pertaining to such Properties, as set forth in a written notice
delivered to the affected McNeil Partnerships and such McNeil Partnerships elect
not to, or fail to, cure such defects to the reasonable satisfaction of Grove
Corporation within sixty (60) days after the McNeil Partnerships' receipt of
such notice. However, in the event Grove Corporation terminates this Agreement
after the Due Diligence Period with respect to any additional Properties
pursuant to the provisions of Sections 9 or 17(a)
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of this Agreement, the McNeil Partnerships shall not have the right to terminate
this Agreement in its entirety, but shall be obligated to proceed to Closing.
(c) In the event this Agreement is terminated for any reason
under any provision of this Agreement, including without limitation Sections
3(b), 9, 13(b), 14 or 17(a) of this Agreement, with respect to more than six of
the Properties or with respect to any of the Properties owned by Abington Glen
Associates, Phillips Park Associates Limited Partnership, Webster Green
Associates Limited Partnership, The 929 House Realty Associates, Glen Meadow at
Franklin Apartments Trust or Westwood Glen (hereinafter, the "Group B
Properties"), Grove Corporation shall have the right to terminate this Agreement
in its entirety by written notice to the McNeil Partnerships. Subject to the
provisions of Section 3 (b) of this Agreement, if Grove Corporation elects to
terminate this Agreement with respect to some, but not all, Properties, this
Agreement shall be void with respect to only those Properties identified by
Grove Corporation with no recourse to the parties, except as otherwise expressly
provided herein, and the Deposit, pro rated to those Properties as to which this
Agreement is terminated, shall be promptly refunded to Grove Corporation, but in
all other respects this Agreement shall remain in full force and effect. If the
McNeil Partnerships elect to terminate this Agreement in its entirety, this
Agreement shall be void with no recourse to the parties, except as otherwise
expressly provided herein, and the entire Deposit shall be promptly refunded to
Grove Corporation.
(d) Prior to the execution of this Agreement, the McNeil
Partnerships have made available to Grove Corporation copies of all files,
documentation, books and records, leases and other material relating to the
Properties, to the extent that the same are in the possession or control of the
McNeil Partnerships and, within ten (10) business days after the execution of
this Agreement, the McNeil Partnerships shall direct the property manager of the
Properties to deliver to Grove Corporation such materials which are in the
property manager's possession.
(e) If this Agreement is not terminated in its entirety in
accordance with Subsection (b) or (c) above, but Grove Corporation fails to
close hereunder for any reason which would be deemed a default of Grove
Corporation under this Agreement, then the McNeil Partnerships shall retain the
Deposit (or the unreturned portion thereof) as liquidated damages in lieu of
damages, specific performance or any other remedy that the McNeil Partnerships
would otherwise have. Notwithstanding the foregoing, in the event there is a
change of management control of Grove REIT during the Due Diligence Period and
Grove Corporation thereafter delivers a termination notice pursuant to Section 3
(b) to the McNeil Partnerships prior to the expiration of the Due Diligence
Period, Grove Corporation shall also be responsible for reimbursing to the
McNeil Partnerships a total of Seventy-Five Thousand Dollars ($75,000) for
out-of-pocket expenses and lost opportunity costs.
(f) If this Agreement is terminated in whole or in part in
accordance with Subsection (b) or (c) above, the Escrow Agent shall return the
Deposit (or the applicable portion thereof) to Grove Corporation.
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4. Closing.
(a) Provided that all of the conditions precedent to Closing set
forth in Section 17 have been satisfied or waived in writing, Closing of the
transactions contemplated by this Agreement shall be held at a mutually
acceptable location on or before the ninetieth (90th) day after the expiration
of the Due Diligence Period, subject to extension as provided in Section 17
hereof and below (the "Closing Date"). Either of the parties shall be entitled
to adjourn the Closing Date for a period not to exceed fourteen (14) days, by
written notice to the other party, in order to take any action of any kind
required in order to permit the Closing contemplated hereunder to occur. Subject
to the foregoing sentence, the extension right under Section 4(b), and the
extension rights under Section 17, time is of the essence as to the Closing
Date. If the Closing Date established pursuant to the preceding sentence is a
Saturday, Sunday or legal holiday, the Closing Date shall be the next business
day thereafter. The place, time and date provided for herein or hereafter, as
may be changed by agreement of the parties, is sometimes referred to as the
"Closing."
(b) The McNeil Partnerships and Grove Corporation acknowledge and
agree that the transactions contemplated hereby will require the McNeil
Partnerships to obtain the Required Consents (as hereinafter defined). In the
event that all Required Consents have not been obtained by the Closing Date,
either the McNeil Partnerships and Grove Corporation shall have the right to
extend the Closing Date for a period of up to sixty (60) days by written notice
to the other party, received by such other party (by facsimile transmission or
otherwise) on or before the Closing Date. In the event that at least 16 of the
McNeil Partnerships (including all of the Group B Properties and subject to the
provisions of Section 3(b) hereof) have obtained the Required Consents by the
scheduled Closing Date and satisfied all of the other conditions precedent for
Closing hereunder, Grove Corporation may elect to close the sale of the
Properties for which such Required Consents have been obtained and other
conditions precedent have been satisfied on the Closing Date, and either of the
parties shall each have the right to adjourn the Closing with respect to the
other Properties for a period or periods which together shall not exceed, in the
aggregate, sixty (60) days. In the event a McNeil Partnership has not satisfied
all conditions precedent to Closing by the end of such sixty day period, either
party may terminate its obligations under this Agreement with respect to such
McNeil Partnership and its Property, by written notice to the other party.
5. No Assumed Liabilities Except Permitted Encumbrances and Liabilities. The
McNeil Partnerships shall transfer marketable fee title to the Properties at
Closing, free and clear of all liens and encumbrances other than the items set
forth below which are sometimes herein referred to as "Permitted Encumbrances
and Liabilities." Grove Corporation will not assume any liabilities of the
McNeil Partnerships or the McNeil Partnerships' businesses, except as expressly
provided in this Agreement. The McNeil Partnerships hereby agree to indemnify,
defend and hold Grove Corporation, the Grove REIT, the Operating Partnership and
Grove Companies, and each of their respective officers, directors, trustees and
employees, harmless from and against any and all claims, liabilities, losses
(including, without limitation, lost profits), costs, expenses (including
attorneys fees) or damages (i) arising out of any liabilities or obligations of
the
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McNeil Partnerships or the McNeil Partnerships' businesses that are not
expressly assumed in this Agreement by Grove Corporation, the Operating
Partnership or Grove Companies, or (ii) which arise out of any of the agreements
or contracts of any of the McNeil Partnerships which are not Assumed Service
Contracts under this Agreement (hereinafter, the "Indemnified Liabilities"),
which agreement to indemnify, defend and hold harmless shall survive any
termination of this Agreement. Notwithstanding any limitation otherwise set
forth in this Agreement, the Operating Partnership or the Grove Companies shall
be entitled to offset the amount of any Indemnified Liabilities described in
clause (ii) of the preceding sentence against any monies or OP Units due under
the Deferred Installment Note or with respect to the Contingent Value
Distribution. In the event that it is ultimately determined in a court or other
legal proceeding that the Operating Partnership or the Grove Companies
wrongfully exercised such offset rights contemplated above, the Operating
Partnership or the Grove Companies, as the case may be, shall be obligated to
reimburse the McNeil Partnerships for all reasonable expenses incurred by virtue
of such wrongful offset, including, without limitation, reasonable attorney's
fees. A condition precedent to the McNeil Partnerships' obligation to close
hereunder shall be the delivery of a mutually acceptable agreement from the
Operating Partnership at Closing, in the form attached hereto as Exhibit J,
expressly assuming or agreeing to indemnify and hold the McNeil Partnerships
harmless from and against the following Permitted Encumbrances and Liabilities
with respect to claims that first accrue after the Closing Date in connection
with the following:
(a) The Mortgages and other encumbrances set forth on Exhibits C-1 to
C-22 attached hereto and made a part hereof;
(b) The leases and tenancies, and all liability to tenants with
respect to security deposits under such leases and tenancies to the extent such
security deposits are transferred to or credited on behalf of Grove Corporation,
set forth on the rent rolls that are attached hereto as Exhibits D-1 to D-22 and
made a part hereof;
(c) The Chapter 121A limited dividend and tax agreements, debt
service subsidy agreements, rent subsidy agreements, affordable housing
agreements and other Regulatory Agreements (excluding any management agreements)
to which the Properties are currently subject;
(d) All of the McNeil Partnerships' liabilities and obligations from
and after the Closing Date under those contracts, operating leases and
agreements listed in Schedule 7 (or in a Closing schedule to be signed by all
parties at the Closing) for the servicing, maintenance and operation of the
Properties (the "Assumed Service Contracts") that the Grove Companies have
elected to continue and assume; and
(e) The Current Liabilities (as hereinafter defined) of the McNeil
Partnerships set forth on Schedule 11 hereto or agreed to by the parties at
Closing, to the extent assumed and agreed to be paid in accordance with Section
12(a) hereof.
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6. Deposit. The Deposit shall be held in escrow by the Escrow Agent pursuant
to the provisions of Section 7 hereof. The Escrow Agent shall invest the Deposit
in either a Federally insured money market account, United States Treasury bills
or such other instruments as Grove Corporation and the McNeil Partnerships may
agree upon. At Closing, the Deposit will be applied to the Cash Amount, if any,
due to the McNeil Partnerships and any balance remaining shall be returned to
Grove Corporation. Any and all interest and dividends earned on the Deposit
shall be paid over to the party entitled to the receipt of the Deposit under the
terms of this Agreement. UPON A DEFAULT BY GROVE CORPORATION AFTER THIS
AGREEMENT HAS BEEN FULLY EXECUTED, EACH OF THE MCNEIL PARTNERSHIPS' SOLE AND
EXCLUSIVE REMEDY SHALL BE TO TERMINATE THIS AGREEMENT AND RETAIN THE ALLOCABLE
PORTION OF THE DEPOSIT (AND ALL INTEREST ACCRUED THEREON) AS LIQUIDATED DAMAGES.
7. Escrow Agent's Powers. The McNeil Partnerships and Grove Corporation
acknowledge and agree that the Escrow Agent shall hold the Deposit pursuant to
the terms and conditions of this Agreement subject to the following:
(a) The Escrow Agent shall act as a depository only and, pending
Closing of the transactions contemplated by this Agreement, the Deposit shall be
invested as provided in Section 6 above and shall be disbursed in accordance
with the terms of this Agreement or as jointly directed in writing by the McNeil
Partnerships and Grove Corporation. In the event that Grove Corporation is, for
any other reason under this Agreement, entitled to a return of all or a portion
of the Deposit, Grove Corporation shall be entitled to all interest which shall
accrue on the amount of the Deposit refunded.
(b) In the event that the McNeil Partnerships or Grove Corporation
shall claim default under the terms of this Agreement, the Escrow Agent will not
be required to deliver the allocable portion of the Deposit to either of the
parties without the written consent of the other or, upon failure thereof, until
the right of either of the parties to receive the allocable portion of the
Deposit shall be fully determined by a court of proper jurisdiction.
(c) In the event of controversy or litigation arising out of this
transaction which (i) results in any expense or attorneys' fees to the Escrow
Agent by virtue of such claim or default, controversy or litigation or (ii)
requires a declaratory judgment by proper court as to the disbursement of said
allocable portion of the Deposit, the Escrow Agent shall be entitled to be
reimbursed by the party that does not prevail in such controversy or litigation,
as determined by a court of competent jurisdiction.
(d) The McNeil Partnerships and Grove Corporation hereby release and
discharge the Escrow Agent from all matters with respect to the subject matter
hereof (except for gross negligence or intentional wrongdoing) and agree to
indemnify and hold the Escrow Agent harmless from and against all costs,
damages, judgments, attorneys' fees, expenses, obligations and liabilities of
any kind or nature which, in good faith, the Escrow Agent may incur or sustain
in connection with this Agreement and, without limiting the generality of the
foregoing, the
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Escrow Agent shall not incur any liability due to a delay in the electronic wire
transfer of funds or with respect to any action taken or omitted in reliance
upon any instrument, including any written notice or instructions provided for
in this Agreement, not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth and accuracy of any
information contained therein, which the Escrow Agent shall in good faith
believe to be genuine, to have been signed or presented by a proper person or
persons and to conform with the provisions of this Agreement.
8. Delivery of Documents.
(a) Deliveries by the McNeil Partnerships. At Closing, each of the
McNeil Partnerships that will convey Property to its corresponding Grove Company
shall deliver to such Grove Company the following documents (the "Documents")
executed by such McNeil Partnership (where applicable):
(1) A quitclaim deed in proper form (the "Deed"), containing
quitclaim covenants of title, sufficient to convey to such Grove Company good
and marketable fee simple title to the McNeil Partnership's Premises, the
Appurtenant Rights and the Building Equipment, free from all encumbrances and
defects other than Permitted Encumbrances and Liabilities;
(2) Checks to the order of the appropriate governmental
authorities in amounts sufficient to pay the real estate transfer or conveyance
taxes payable upon the recording of the Deed, or alternatively, a charge to the
McNeil Partnership in respect of such expenses shall be reflected in the
settlement statement signed at the Closing in favor of Grove Corporation;
(3) Affidavits customarily required by title insurance
companies in the Commonwealth of Massachusetts for the issuing of title
insurance protecting against mechanics liens and parties in possession;
(4) Either waivers of mechanics liens executed by or on behalf
of all persons, firms and corporations who shall have finished materials or
performed work or services on or at the respective Premises during the period
commencing ninety (90) days prior to the Closing, or an indemnification
agreement satisfactory to Grove Corporation's title insurance company
(5) A rent roll for such Premises, in the form of the rent
roll attached hereto as Exhibit D, dated as of the later of (A) the first day of
the calendar month in which Closing occurs, or (B) ten (10) days before the
Closing Date;
(6) A Bill of Sale, substantially in the form attached hereto
as Exhibit E, sufficient to convey to such Grove Company good and marketable
title to the Personal Property, free from all encumbrances and defects other
than Permitted Encumbrances and Liabilities;
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(7) An Assignment of Leases substantially in the form attached
hereto as Exhibit F or in a form approved by the Regulatory Authority, if any,
having jurisdiction over the Property and reasonably acceptable to Grove
Corporation;
(8) Original, ink-signed leases for all tenants of such
Premises who shall have signed such leases, to the extent such McNeil
Partnership has possession of the same or, otherwise, copies thereof;
(9) An assignment of all tenant security deposits and prepaid
rents held by or on behalf of such McNeil Partnership with respect to the
Premises, substantially in the form of Exhibit G hereto;
(10) An assignment of all Regulatory Reserves held by or on
behalf of such McNeil Partnership with respect to the Premises, substantially in
the form of Exhibit N hereto ;
(11) An assignment of Assumed Service Contracts substantially
in the form of Exhibit H together with the ink-signed originals of such Assumed
Service Contracts;
(12) An assignment of all warranties applicable to the
Premises, the Building Equipment and the Personal Property and an assignment of
such warranties, substantially in the form of Exhibit I hereto;
(13) Letters to all tenants of the respective Premises
advising them of the transfer of the Premises, and the new address for paying
rent;
(14) A certification of such McNeil Partnership stating that
all representations and warranties made by such McNeil Partnership in this
Agreement are true and correct in all material respects as of Closing and that
all of the McNeil Partnership's covenants contained in this Agreement have been
complied with in all material respects;
(15) An affidavit that such McNeil Partnership is not a
"foreign person" as defined in Section 1445(b)(2) of the Internal Revenue Code
of 1986, as amended;
(16) An indemnification agreement mutually acceptable to Grove
Corporation and each of the McNeil Partnerships pursuant to which such McNeil
Partnership shall represent and warrant to the Operating Partnership that (A)
all costs and expenses relating to the ownership and operation of the Premises
arising prior to the Closing Date have been paid in full or otherwise provided
for and (B) that all operating leases, service, management and maintenance
contracts that Grove Corporation has not elected to assume have been terminated
on or before the Closing Date, and by which such McNeil Partnership shall agree
to indemnify and hold the Grove REIT, Operating Partnership and the each Grove
Company harmless from the against all loss, costs and expenses arising by reason
of a breach of such representations and warranties.
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(17) Photocopies of such McNeil Partnership's financial
statements for the three fiscal years preceding the Closing Date and surveys and
plans with respect to the Property, if and to the extent that such plans and
surveys are in the possession of such McNeil Partnership;
(18) All keys in the possession of each of the McNeil
Partnerships to all locks at the Premises;
(19) Evidence that all Required Consents (as hereinafter
defined) of such McNeil Partnership's partners have been obtained as required
under the applicable partnership agreement;
(20) Copies of all Required Consents necessary to consummate
the transactions contemplated in this Agreement;
(21) Subscription Agreements and Subscriber Questionnaires
addressed to the Operating Partnership for all partners or partnerships who will
be receiving OP Units in connection with the transactions contemplated herein,
confirming their status as an accredited investor; and
(22) Such other and further documents as may be reasonably
required by the Operating Partnership or Grove Companies to effect the
transactions contemplated by this Agreement.
(b) Deliveries by Grove Corporation, the Operating Partnership and
the Grove Companies. At Closing, Grove Corporation and any Permitted Assignee
shall deliver to the McNeil Partnership that conveys Property pursuant to this
Agreement the following:
(1) Documents from the Operating Partnership evidencing the
admission of the McNeil Partnerships as limited partners of the Operating
Partnership as of the Closing Date, consisting of the Operating Partnership's
acceptance of the Subscription Agreements and an amendment to the Operating
Partnership's Partnership Agreement, which acceptance and amendment shall be
delivered to the McNeil Partnerships at Closing. The McNeil Partnerships
acknowledge that the OP Units are not certificated;
(2) Agreements by the Operating Partnership and such Grove
Company to assume and indemnify the corresponding McNeil Partnership against
liability for Permitted Encumbrances and Liabilities, including, but not limited
to, the Mortgages, substantially in the form of Exhibit J;
(3) The Cash Amount;
(4) A certificate executed by duly authorized representative
of the Grove REIT stating that the representations and warranties made in this
Agreement with respect to the
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Grove REIT are true and correct as of the Closing Date and an undertaking by the
Grove REIT to perform the agreements and covenants set forth in Sections 29 and
32 hereof.
(5) A certificate executed by duly authorized representative
of the Operating Partnership stating that the representations and warranties
made by Grove Corporation are true and correct in all material respects as if
made by the Operating Partnership and Grove Companies as of the Closing Date and
that Grove Corporation and the Permitted Assignees have performed their
respective covenants and other obligations under this Agreement in all material
respects;
(6) Affidavits and other instruments, including but not
limited to all organizational documents of Grove Corporation, the Grove REIT,
the Operating Partnership and the Grove Companies, certificates of
incorporation, organization or formation, certificates of good standing or
existence and officers' incumbency certificates reasonably requested by the
McNeil Partnerships evidencing the power and authority of Grove Corporation, the
Grove REIT, the Operating Partnership and the Grove Companies to enter into
and/or perform this Agreement and/or to deliver the Documents to be delivered
hereunder;
(7) Copies of Internal Revenue Service Form 8832 for each
Grove Company, electing to be disregarded as separate entities for Federal
income tax purposes, and evidence of due mailing of the same by each such Grove
Company;
(8) Such other and further documents as may be reasonably
required by the McNeil Partnerships to effect the transactions contemplated by
this Agreement.
9. Title. Within the period ending at 11:59 p.m. on June 22, 1998, Grove
Corporation, at its sole expense, may obtain a title search and survey of the
Properties. Within the period ending at 11:59 p.m. on July 7, 1998, Grove
Corporation shall notify the affected McNeil Partnership, in writing, of any
title or survey matters as to which Grove Corporation may object, provided that,
with respect to such encumbrances or defects as arise after the date of such
notice, Grove Corporation must notify such McNeil Partnership within five (5)
days after it has actual notice of such encumbrance or defect. The affected
McNeil Partnership shall have a period of fifteen (15) days after receipt of
notice of any such objections in which to notify Grove Corporation that such
McNeil Partnership will attempt to remedy any or all of the matters as to which
Grove Corporation has objected. Unless the affected McNeil Partnership has so
notified Grove Corporation that such McNeil Partnership will attempt to remedy
all such objections, Grove Corporation shall have ten (10) business days after
(i) being notified by the affected McNeil Partnership that it will not remedy
all such objections or (ii) the expiration of such fifteen (15) day period
without receiving any notification from the affected McNeil Partnership of its
intentions to remedy such objections, in which event Grove Corporation may
either: (i) terminate this Agreement in writing with respect to the affected
McNeil Partnership and receive a return of that portion of the Deposit allocated
to the affected McNeil Partnership; or (ii) be deemed to accept title and the
survey subject to the noted objections, other than those which the affected
McNeil Partnership has expressly agreed in writing to remedy, with an
appropriate
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diminution of the Initial Value to reflect such voluntary liens and encumbrances
which are capable of being removed by the payment of cash at Closing out of the
Initial Value. If at Closing the McNeil Partnerships shall be unable to convey
good and marketable title to the Premises free and clear of such encumbrances or
defects after diligent, good faith efforts to do so, which title shall be
insurable as such by a reputable title insurance company and at standard rates,
without exceptions which would adversely affect the use of the Premises as an
apartment complex (other than the Permitted Encumbrances and Liabilities), Grove
Corporation shall have the option either of accepting such title as the McNeil
Partnership can convey with an appropriate diminution of the Initial Value to
reflect such voluntary liens and encumbrances or of terminating this Agreement,
in which event the allocable portion of the Deposit relating to the applicable
McNeil Partnership's Property shall be returned to Grove Corporation.
10. Possession. Each of the McNeil Partnerships shall deliver to its
corresponding Grove Company full possession of its Property at Closing and shall
take all steps requisite to put the such Grove Company in actual possession and
operating control of the Premises, subject only to the rights of tenants in
possession of portions of the Premises pursuant to leases and occupancy
agreements set forth on Exhibit D.
11. Operation of Premises Prior to Closing. From and after the execution of
this Agreement and until Closing, each of the McNeil Partnerships shall take or
refrain from taking the following actions, and shall use good faith reasonable
efforts to cause the existing property managers to take or refrain from taking
the following actions and to manage and operate the Properties in the same
manner as done prior to the execution of this Agreement:
(a) shall operate its Premises in a good and prudent manner and only
in the ordinary course of business, including, without limitation, maintaining
the insurance coverages set forth in Section 16(a)(13) and Schedule 6 hereof ;
(b) shall maintain the Premises, the Building Equipment and the
Personal Property in good repair, reasonable wear and tear excepted;
(c) shall perform all obligations required to be performed by such
McNeil Partnership under all leases affecting the Premises;
(d) shall duly comply with all laws, ordinances and regulations
applicable to the use and operation of the Premises;
(e) shall not amend any lease affecting the Premises, or release or
relieve any tenant of the Premises from any obligation arising under any lease
affecting the Premises, if in either case the rent and/or other charges payable
therefrom would be reduced, or terminate any such lease (except with regard to a
tenant that is in default under its Lease) without obtaining the prior written
consent of Grove Corporation, unless such amendment, modification, release or
other action is required by a Regulatory Authority having jurisdiction over the
Premises;
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(f) shall not enter into new leases for all or any portion of the
Premises without obtaining the prior written consent of Grove Corporation,
except in the ordinary course of such McNeil Partnership's business and, in any
event, in accordance with the following guidelines:
(1) no term shall be more than one (1) year; and
(2) rents shall be not less than the rents in effect at such
Property during the six-month period preceding the date of this Agreement unless
such rent reduction is required by a Regulatory Authority having jurisdiction
over the Premises; and
(g) shall not enter into any additional sticky voucher programs with
any Regulatory Agency or amend existing sticky voucher programs without
obtaining the prior written consent of Grove Corporation, which consent shall
not be unreasonably withheld, conditioned or delayed.
12. Adjustments.
(a) The Initial Value of the Property of each McNeil Partnership
shall be (1) increased by the amount of the Operating Escrows and Debt Service
Escrows that, under applicable Regulatory Agreements and loan agreements, must
be assigned and transferred with such Property, plus the amount of all prepaid
Mortgage Insurance Payments and other prepaid expenses to the extent they
benefit the Properties following the Closing, and (2) decreased by the amount of
all Current Liabilities (as hereinafter defined) incurred by such McNeil
Partnership which are determinable on the Closing Date and identified on a
Closing schedule mutually acceptable to the parties and signed by all applicable
parties to evidence such assumption by the Grove Companies. With respect to any
ordinary operating expense or ordinary capital expenditure contemplated in a
budget reviewed by Grove Corporation prior to the date of this Agreement,
incurred in the ordinary course of operating the applicable apartment complex
prior to the Closing (excluding, without limitation, all litigation claims and
extraordinary expenditures that are not expressly assumed by Grove Corporation),
that is not determinable on the Closing Date but would, in the ordinary course
of such McNeil Partnership's business, be paid out of one of the assigned
Regulatory Reserves other than the reserves for which an adjustment has or will
be made at the Closing (e.g., Operating Escrows and Debt Service Escrows)
(hereinafter, an "Assumed Indeterminable Contingent Liability"), Grove
Corporation agrees that it will pay such operating expense, if presented with a
bill therefor within six months of the Closing, out of the applicable assigned
Regulatory Reserve as soon as Grove Corporation is entitled to make such payment
out of such reserve pursuant to the applicable Regulatory Agreement (this six
month period shall be extended to twelve months only with respect to the amount
of MHFA Incentive Management Fee, which is determined on an annual basis). In
the event such Assumed Indeterminable Contingent Liability has not been
presented to the applicable Grove Company, in a fixed, determinable amount,
within such six (6) month period following the Closing, such Assumed
Indeterminable Contingent Liability shall be the sole responsibility of the
applicable McNeil Partnership, and neither the Operating Partnership nor any
Grove Company shall have any responsibility for its payment, and the applicable
McNeil Partnership hereby agrees to
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indemnify and hold the Operating Partnership and the applicable Grove Company
harmless from any and all liability associated with such Assumed Indeterminable
Contingent Liability. As used herein, the term "Current Liabilities" shall mean
those liabilities which were incurred by the McNeil Partnerships in the ordinary
course of their respective businesses on or before the Closing Date and which
are to be assumed by Grove Corporation or a Permitted Assignee, as evidenced by
such liabilities either being specified on Schedule 11 hereto or expressly
assumed by the applicable Grove Company at the Closing as evidenced by its
initialing of the Closing Schedule contemplated above in this Section 12, other
than liabilities arising with respect to Permitted Encumbrances and Liabilities.
In addition, adjustments shall be made for real property taxes, fuel, water,
electricity, sewer and other utility charges, if any, as of the Closing Date (to
the extent not included in any Operating Escrows or Debt Service Escrows) in
accordance with the prevailing practices of the Massachusetts Bar for real
estate transactions in the respective towns where the Property is located. The
parties shall either provide at Closing for an allocation of laundry income in
respect of the Properties with respect to the period prior to the Closing if
determinable, or agree to another mutually acceptable mechanism for allocating
such income appropriately. No operating expenses not expressly assumed by the
applicable Grove Company shall be the responsibility of either the Operating
Partnership, Grove Corporation or any Grove Companies. All adjustments
contemplated in this Section shall be made by adjustment to the Cash Amount
(subject to the limitations set forth in Section 3).
(b) Rents shall be adjusted in the following manner:
(1) Rents received by a McNeil Partnership as of the Closing
Date for the calendar month in which Closing shall occur shall be adjusted at
the Closing as of the Closing Date; and
(2) Rents receivable with respect to tenants who are in
possession of an apartment unit at the applicable McNeil Partnership's apartment
complex on the date of Closing shall be assigned to Grove Corporation at Closing
and a corresponding adjustment shall be made in such McNeil Partnership's favor,
subject to an allowance for bad debt in the applicable amount specified on
Schedule 12 hereto.
13. Risk of Loss.
(a) Until Closing, the risk of loss by fire or other casualty to the
buildings and improvements on the Premises, and liability for personal injury or
damage to property of others at the Premises, shall be borne by the McNeil
Partnership that owns such Premises.
(b) In the event of damage by fire or other casualty to a Property
prior to Closing, Grove Corporation shall have the option to terminate this
Agreement with respect to such Property, unless such Property is one of the
Group A Properties. If Grove Corporation shall exercise its right to terminate
this Agreement pursuant to this Section 13(b), the affected McNeil Partnership
shall return the portion of the Deposit allocated to the damaged or destroyed
Property to Grove Corporation, and such parties shall be relieved of all further
liabilities and obligations
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hereunder with respect to the affected Property. If Grove Corporation does not
elect to terminate this Agreement with respect to a damaged or destroyed
Property or the damaged or destroyed Property is a Group A Property, this
Agreement shall remain in full force and effect and in such event the parties
shall proceed to Closing with respect to the affected Property, adjusting the
Initial Value of such Property by an amount equal to the cost of restoring the
damage, as estimated by an independent general contractor selected by Grove
Corporation and reasonably acceptable to the affected McNeil Partnership, in
which event the affected McNeil Partnership shall be entitled to retain any
insurance proceeds on account of such casualty. Grove Corporation shall give
written notice to such McNeil Partnership of any election pursuant to this
Section 13(b) within fifteen (15) business days following receipt by Grove
Corporation of written notice of any such casualty.
(c) In the event that Grove Corporation, the Operating Partnership or
a Grove Company shall be subject to a personal injury or property damage claim
at any time relating to an incident occurring at a Property prior to the
Closing, other than an incident arising on account of any act or omission of
Grove Corporation, the Operating Partnership or any of its agents, affiliates
(excluding any party affiliated with any McNeil Partnership for purposes of this
provision) or employees, the affected McNeil Partnership shall defend, indemnify
and hold harmless each of Grove Corporation, the Operating Partnership and Grove
Companies from and against all losses, damages, costs and expenses (including
attorneys' fees) that Grove Corporation, the Operating Partnership or any Grove
Companies may suffer with respect to any such claim or incident. This obligation
to defend, indemnify and hold harmless shall survive the Closing.
14. Condemnation. If, prior to the Closing, all or any part of any Property
(other than a Property constituting a Group A Property) is taken by eminent
domain, Grove Corporation shall have the option either (i) to elect not to
acquire the affected Property, in which case the affected McNeil Partnership
shall return the portion of the Deposit allocated to the condemned Property to
Grove Corporation, and such parties shall be relieved of all further liabilities
and obligations hereunder with respect to the affected Property, or (ii) to
acquire the affected Property subject to such condemnation without adjustment to
the Initial Value of such Property and otherwise in accordance with the terms
and provisions of this Agreement, but Grove Corporation shall upon Closing be
entitled to the proceeds of all awards made or to be made on account of such
taking which would otherwise accrue to the affected McNeil Partnership. In the
event that, prior to the Closing, all or any part of any Group A Property is
taken by eminent domain, and assuming that all other conditions for Closing have
been satisfied, Grove Corporation shall not have the right to terminate this
Agreement with respect to such Property pursuant to this Section 14, but shall
acquire the affected Property subject to such condemnation without adjustment to
the Initial Value of such Property and otherwise in accordance with the terms
and provisions of this Agreement, but Grove Corporation shall upon Closing be
entitled to the proceeds of all awards made or to be made on account of such
taking which would otherwise accrue to the affected McNeil Partnership. Grove
Corporation shall give written notice to such McNeil Partnership of any election
pursuant to this Section within five (5) business days following receipt by
Grove Corporation of any written notice of such taking or proposed taking.
Failure of Grove
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Corporation to make such election within said period shall be deemed an election
to proceed to Closing pursuant to clause (ii) above.
15. Brokers. The McNeil Partnerships, on the one hand, and Grove Corporation
and the Grove Companies, on the other, each represent and agree to and with each
other that each has had no dealings, negotiations or consultations with any
broker in connection with this Agreement or the conveyance of the Premises. The
McNeil Partnerships, on the one hand, and Grove Corporation, on the other, shall
each indemnify and hold the others free and harmless from all losses, damages,
costs and expenses (including attorneys' fees) that any of them may suffer as a
result of any claim or suit brought by any broker or finder who claims that he
participated with any of the McNeil Partnerships or Grove Corporation, the
Operating Partnership or the Grove Companies, as the case may be, in this
transaction.
16. Representations and Warranties.
(a) Each of the McNeil Partnerships severally, not jointly and
severally, represents and warrants to Operating Partnership and to its
corresponding Grove Company as follows:
(1) Each McNeil Partnership has good and marketable title in
fee simple to its Property subject only to Permitted Encumbrances and
Liabilities.
(2) To the best of such McNeil Partnership's knowledge, with
respect to the current use of its Property, the Property presently complies and
will comply at the time of Closing in all material respects with all applicable
restrictive covenants, zoning and subdivision ordinances, building and fire
codes, health and environmental laws and regulations and all other applicable
municipal, state or Federal laws, rules and regulations (collectively, "Laws").
The transactions contemplated herein will create no violations of any Laws
affecting such McNeil Partnership's Property or any part thereof (including,
without limitation, subdivision regulations).
(3) Such McNeil Partnership has performed all obligations
required to be performed by it under all leases and other occupancy agreements
affecting its Property and is the owner of all the leases and other occupancy
agreements listed on the applicable rent roll in Exhibit D hereto, free and
clear of all liens, encumbrances or similar limitations.
(4) The rent roll information set forth on Exhibit D attached
hereto, listing all tenants of such McNeil Partnership's Property and their
respective monthly rent, security deposit, lease term and any existing default,
is substantially complete and correct.
(5) There are no service, management, operating leases,
maintenance or similar contracts or agreements affecting such McNeil
Partnership's Property which will survive the Closing except for those set forth
on Schedule 7.
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(6) Grove Corporation or a Permitted Assignee shall be
entitled to the exclusive property management rights to the Properties following
the Closing.
(7) Except as set forth in Schedule 8, the execution and
delivery of this Agreement and the performance by such McNeil Partnership of all
transactions contemplated by this Agreement to be performed by such McNeil
Partnership (including the execution and delivery of all documents required by
this Agreement to be executed and delivered by such McNeil Partnership) will not
breach any contractual covenants or restrictions between such McNeil Partnership
and any third party or affecting the Property or result in a violation or breach
by McNeil Partnership of any judgment, order, writ, injunction or decree issued
against or imposed upon it, or result in violation of any applicable law, order,
rule or regulation of any government authority.
(8) Such McNeil Partnership has received no notice of any
condemnation or eminent domain proceedings or negotiations for the acquisition
of any portion of its Property in lieu of condemnation and, to the best of such
McNeil Partnership's knowledge, no condemnation or eminent domain proceedings or
negotiations have been commenced or threatened in connection with its Property
or any portion of it.
(9) There are no real estate abatement agreements, exemptions
or programs, payments in lieu of taxes or similar contracts or agreements
affecting such McNeil Partnership's Property which will be affected in any
adverse manner by virtue of the transfer of the Property to the Grove Company to
which it will be conveyed, provided that the Required Consents are obtained.
(10) Such McNeil Partnership has performed all obligations
required to be performed by such McNeil Partnership under all Regulatory
Agreements, if any, affecting its Property, including those with HUD and MHFA,
and such McNeil Partnership is not currently in material default under any of
such Regulatory Agreements.
(11) All Regulatory Reserves associated with such McNeil
Partnership's Property, as well as all other reserves that a McNeil Partnership
is currently required to maintain pursuant to a loan agreement or other
agreement with any of its creditors will be transferred to Operating
Partnership, free and clear of the rights, title or interests of third parties
to any portion of such funds, except for restrictions imposed on the use of such
funds by the owner of the Property by HUD, MHFA or any other Regulatory
Authority or lender pursuant to the terms of the applicable Regulatory
Agreements or loan agreements in effect on the Closing Date.
(12) Except as set forth in Schedule 9, such McNeil
Partnership has received no notice of any litigation or regulatory or
administrative proceedings relating either to its Property or this Agreement
and, to the best of such McNeil Partnership's knowledge, no such proceeding is
pending or threatened.
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(13) The Commercial Property Damage Insurance and Commercial
General Liability Insurance presently carried by such McNeil Partnership for its
Property (and the premium therefor) is in the amounts specified on Schedule 6.
(14) Except as disclosed in the title report for its Property,
all public utilities required for the operation of such McNeil Partnership's
Property (including, without limitation, telephone, electric, gas, public water
and public sanitary sewer) enter the Property through adjoining public streets
and are connected to and servicing the Property.
(15) To the best of such McNeil Partnership's knowledge and
except as set forth in Schedule 10, there has been no storage or use of
hazardous materials on, in or under its Property, other than as may be permitted
by and in compliance with applicable law, nor any discharges or releases of
hazardous materials on, in or under its Property. As used in this Agreement, the
term "hazardous materials" means any hazardous or toxic chemical, agent,
substance, material or waste, including any petroleum based substance, which is
regulated by any local governmental authority, the Commonwealth of
Massachusetts, the United States or any agency thereof, including, but not
limited to substances defined by the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), the Resource Conservation and
Recovery Act or under the Massachusetts General Laws chapter 21E. Such McNeil
Partnership's Property (i) is currently in compliance with (and there is no
condition existing which, with the passage of time, will cause the Property not
to comply with) all applicable health, safety, ecological, environmental inland
wetland, flood control, pollution control and other similar laws, codes,
regulations, standards, and orders applicable to the Property and (ii) is free
from all hazardous materials and all other effluent and debris of any type which
would constitute a health hazard or risk or would otherwise interfere with the
current use of the Property. To the best of the McNeil Partnership's knowledge,
no portion of the Property have ever been used in the past for activities which,
either directly or indirectly, involved the generation, release, storage,
transportation or disposal of any hazardous material. Attached hereto as
Schedule 13 is a list of Properties where the applicable McNeil Partnership is
aware of the existence of an underground storage tank, the parties acknowledging
that the McNeil Partnerships have conducted no independent investigation for any
such underground storage tanks.
(16) All matters known to such McNeil Partnership which might
have a material adverse effect on the ownership, maintenance and operation of
its Property have been disclosed to Grove Corporation.
(17) Such McNeil Partnership's Property legally includes the
number of apartment units specified on Schedule 1 and has the minimum number of
parking spaces required under applicable Laws, as such Laws may have required at
the time of construction of the buildings located upon such Property. Each
Property which is currently subject to any restriction concerning the renting of
units to persons unless they are of or over a specified age are identified as
subject to age restrictions on Schedule 1.
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(18) To the best of such McNeil Partnership's knowledge, there
is no apparent structural defect and all systems of the Property (including
without limitation, septic systems, electrical systems, heating systems, air
conditioning systems and plumbing systems) are in working order and condition.
(19) Attached hereto as Exhibits K-1 to K-22 are copies of
true and correct income statements and certain fixed expense statements for the
Property for calendar years 1996 and 1997, and year-to-date through March 31,
1998 for calendar year 1998.
(20) Accredited Investor; Acquisition for Investment Purposes.
At the Closing, each McNeil Partnership (and each partner, if any, of such
McNeil Partnership receiving OP Units at Closing) will be an "accredited
investor" as defined in Rule 501 of the General Rules and Regulations
promulgated under the Securities Act of 1933, as amended (the "Securities Act").
Each of the McNeil Partnerships is acquiring the Units solely for its own
account for the purpose of investment and not as a nominee or agent for any
other Person and not with a view to, or for offer or sale in connection with,
any distribution of any Units (other than in a transaction which is either
registered under the Securities Act or exempt from such registration, and in
compliance with all applicable Blue Sky or state securities laws or exempt
therefrom). Each McNeil Partnership agrees and acknowledges that it will not,
directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or
otherwise dispose of (hereinafter, "Transfer") any of the OP Units unless such
Transfer complies with the Operating Partnership Agreement and is either (i)
pursuant to an effective registration statement under the Securities Act and
qualification or other compliance under applicable Blue Sky or state securities
laws, or (ii) exempt from registration under the Securities Act and
qualification or other compliance under applicable Blue Sky or state securities
laws. Notwithstanding anything to the contrary in this Agreement, the
representations and agreements set forth in this subparagraph (20) and in the
Subscription Agreement shall survive the Closing contemplated herein, without
any limitation on their survival.
(b) Grove Corporation represents and warrants to each McNeil
Partnership as follows:
(1) On the Closing Date, Grove REIT will be a real estate
investment trust duly organized, validly existing and in good standing under the
laws of the State of Maryland authorized to transact business under the laws of
any state in which the character of the properties owned or leased by it herein
or in which the transaction of its business makes such qualification necessary
except where the failure to be so qualified could reasonably be expected to have
no material adverse effect on its financial condition or business, and will have
all requisite corporate power and authority to execute and deliver this
Agreement and all other documents and instruments to be executed and delivered
by it hereunder and to perform its obligations hereunder and thereunder in
accordance with the terms and conditions hereof and thereof.
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(2) On the Closing Date, the Operating Partnership will be a
limited partnership duly formed and validly existing under the laws of the State
of Delaware, will be duly authorized to transact business under the laws of any
state in which the character of the properties owned or lease by it herein or in
which the transaction of its business makes such qualification necessary, except
where the failure to be so qualified could reasonably be expected to have no
material adverse effect on its financial condition or business, and will have
all requisite partnership power and authority under its Partnership Agreement to
execute and deliver this Agreement and all other documents and instruments to be
executed and delivered by it hereunder and to perform its obligations hereunder
and thereunder in accordance with the terms and conditions hereof and thereof.
Attached hereto as Exhibit M is a copy of the Partnership Agreement of the
Operating Partnership, as amended to date. A further condition precedent to the
McNeil Partnership's obligations to close hereunder shall be the lack of any
material adverse amendments to the Operating Partnership's Partnership Agreement
between the date hereof and the Closing (excluding for the foregoing purposes
any amendment admitting additional partners).
(3) On the Closing Date, each Grove Company will be a limited
liability company duly formed and validly existing under the laws of the State
of Delaware, will be wholly-owned by the Operating Partnership, and will be duly
authorized to transact business under the laws of any state in which the
character of the properties owned or leased by it herein or in which the
transaction of its business makes such qualification necessary, except where the
failure to be so qualified could reasonably be expected to have no material
adverse effect on its financial condition or business, and will have all
requisite limited liability company power and authority to perform its
obligations hereunder following the assignment of the Operating Partnership's
rights to it in accordance with the terms and conditions hereof.
(4) Each Grove Company will, on or before the Closing Date,
have elected to be disregarded as a separate entity for Federal income tax
purposes and will, by the Closing Date deliver to the McNeil Partnership at
Closing evidence of the mailing of such election.
(5) Assuming the due and valid authorization, execution and
delivery of this Agreement by the McNeil Partnerships, this Agreement and the
other agreements and documents to be executed and delivered by each of Grove
Corporation, the Operating Partnership and the Grove Companies hereunder, when
executed and delivered, will be the legal, valid and binding obligation of each
of them, enforceable against each of them in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium or similar laws
relating to creditors' rights and general principles of equity. The performance
by each of Grove Corporation, the Operating Partnership and the Grove Companies
of any of their respective duties and obligations under this Agreement and the
documents and instruments to be executed and delivered by each of them hereunder
will not (i) conflict with, or result in a breach of, or default under, any
provision of any of the organizational documents of any of Grove Corporation,
the Operating Partnership or the Grove Companies or any agreement, instruments
or Laws to which any of them is a party or by which any of them is or may be
bound, or (ii) require any consent, approval or authorization of, or
declaration, filing or registration with,
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any governmental authority, other than an amendment of the Declaration of Trust
of the Grove REIT to increase the number of authorized shares of common shares.
(6) At the Closing, the OP Units to be issued to the McNeil
Partnerships will be duly issued by the Operating Partnership, free and clear of
any mortgage, pledge, lien, encumbrance, security interest, claim or rights of
interest of any third party of any nature whatsoever. The common shares which
may be issued by Grove REIT upon redemption of the OP Units, will be duly
authorized and, when and if issued, will be fully paid and non-assessable, free
and clear of any mortgage, pledge, lien, encumbrance, security interest, claim
or rights of interest of any third party of any nature whatsoever, and will be
listed for trading on the American Stock Exchange, New York Stock Exchange,
NASDAQ National Market or other national securities exchange.
(7) The financial statements of Grove REIT, copies of which
are attached hereto as Exhibit L-1 through L-2, as at and for the years ended
December 31, 1997 and 1996, have been prepared in accordance with generally
accepted accounting principles on a consistent basis from year to year and
fairly present the financial condition of Grove REIT as of such periods and the
results of operations for the respective periods indicated. There have been no
material adverse changes to the financial condition of Grove REIT or the
Operating Partnership since December 31, 1997. Except as set forth in such
financial statements, Grove REIT does not have any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) required by
generally accepted accounting principles to be set forth on a balance sheet of
Grove REIT or in the notes thereto and which, individually or in the aggregate,
would reasonably be expected to have a material adverse effect on the business,
property or assets, operations or condition (financial or otherwise) of Grove
REIT. The certificate to be delivered by the Grove REIT at the Closing
confirming the foregoing representation shall have appended to it the most
current financial statements, as well as any additional quarterly financial
statements, filed with the Securities and Exchange Commission with respect to
the period after December 31, 1997.
(8) The Operating Partnership has been formed to acquire,
finance, own, operate, manage and rent multifamily residential properties and
retail properties in the manner that will be described in the Offering
Memorandum, including all exhibits thereto, to be prepared by the Operating
Partnership and which will be distributed to the McNeil Partnerships that
qualify as accredited investors following the expiration of the Due Diligence
Period (the "Offering Memorandum"). The Memorandum will conform in all material
respects to the applicable requirements of Regulation D of the Securities and
Exchange Commission (the "SEC") for a Rule 506 offering to accredited investors.
The Memorandum will not contain, and the Memorandum and any other information to
be furnished or made available by the Operating Partnership to the McNeil
Partnerships or to any of its general or limited partners will not contain, an
untrue statement of a material fact, and the Memorandum and such other
information will not omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The OP Units, when issued, will conform to
the description thereof in the Memorandum.
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(9) There is no pending or, to Grove Corporation's knowledge,
threatened litigation, administrative proceeding or investigation against Grove
REIT or the Operating Partnership that if adversely determined could reasonably
be expected to have a material adverse effect either on Grove REIT or on the
Operating Partnership or its ability to perform its obligations under this
Agreement in a timely manner. The certificates to be delivered by the Grove REIT
and Operating Partnership at the Closing confirming the foregoing representation
shall update this representation in the event any litigation arises or is
threatened after the date of this Agreement.
(10) Neither Grove Corporation, the Operating Partnership, the
Grove REIT nor any Grove Company makes any representation or warranty with
respect to, and shall not be liable to or responsible for, the tax consequences
incurred by the McNeil Partnerships or any of their partners with respect to the
transactions contemplated under this Agreement
17. Conditions to Closing.
(a) Grove Corporation's and the Grove Companies' obligation to close
hereunder are conditioned upon the following:
(1) That each of the McNeil Partnerships have obtained, to the
extent required in the McNeil Partnerships' respective partnership agreements
and/or under applicable law, the requisite consent or approval of the requisite
percentage of McNeil Partnerships' general and limited partners to the
transactions contemplated in this Agreement;
(2) That the McNeil Partnerships have obtained all consents
and approvals to the transfers of the Properties, subject to the Mortgages, from
the holders of such Mortgages, (provided that Grove Corporation shall
expeditiously take all actions necessary to obtain such Required Consents), as
well as all consents and approvals required to keep in full force and effect all
real estate abatement agreements, exemptions or programs, payments in lieu of
taxes or similar contracts or agreements to which the Properties are currently
entitled to the benefits of;
(3) That the McNeil Partnerships have obtained all necessary
approvals and consents to all of the transactions contemplated herein,
including, without limitation, approvals from HUD and MHFA and such other
approvals, permits and consents as are necessary in order to permit the
corresponding Grove Company to acquire and the Operating Partnership to manage
and operate the Properties (the consents and approvals required by this
Subsection (a) (1), (2) and (3) are hereinafter referred to as "Required
Consents"). The parties agree to expeditiously take all actions necessary to
obtain such Required Consents;
(4) That all of the items and documents required to be
delivered by the McNeil Partnerships at Closing have been delivered.
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(5) That all representations and warranties of the McNeil
Partnerships set forth in Section 16(a) hereof are true and correct in all
materials respects as of the Closing Date;
(6) That the rent roll that is provided by each of the McNeil
Partnerships under Section 8(a)(5) hereof disclosing a total gross rental amount
from the Premises that is not less than ninety-five percent (95%) of the total
gross rental amount that is shown on the Rent Roll that is attached hereto as
Exhibit D; and
(7) That Grove Corporation and its counsel have been provided
with evidence, satisfactory to Grove Corporation in its sole and absolute
discretion, confirming that the Operating Partnership will be entitled to the
exclusive property management of the Premises following the Closing.
In the event any of the foregoing conditions precedent is not satisfied or
waived by Grove Corporation in writing prior to the scheduled Closing Date,
Grove Corporation shall at its option be entitled, by written notice to the
McNeil Partnerships, to either (i) elect to terminate this Agreement by virtue
of the failure to satisfy one or more of such conditions precedent, in which
event Escrow Agent shall return the Deposit to Grove Corporation, this Agreement
shall terminate, and Grove Corporation and McNeil Partnerships shall have no
further liabilities or obligations to each other, except under any provisions of
this Agreement that expressly survives the termination thereof, or (ii) to
extend the date of Closing for up to an additional period ending twelve months
from the date of this Agreement (April 22, 1999). In addition, provided that The
Grove Corporation is then in material compliance with all of its obligations
under this Agreement and is diligently and in good faith undertaking, and
continues diligently during such extension to undertake, all reasonable efforts
to assist in causing any non-satisfied conditions precedent within Grove
Corporation's control to be satisfied, the McNeil Partnerships shall permit an
additional six month extension (but in no event ending later than October 22,
1999). During the foregoing extensions, Closing will occur within fifteen days
after notification by either party to the other, accompanied by satisfactory
evidence, that all of the foregoing conditions precedent have either been
satisfied or waived by Grove Corporation in writing.
(b) The McNeil Partnerships' obligation to close hereunder is
conditioned upon the following:
(1) The representations and warranties made by Grove
Corporation shall be true and correct in all material respects with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date.
(2) Grove Corporation shall have assigned all of its interest
in this Agreement to the Operating Partnership in accordance with the provisions
of Section 23 hereof;
(3) The Operating Partnership, the Grove REIT and the Grove
Companies have executed and delivered to the McNeil Partnerships all of the
items and documents provided herein for said delivery, including, without
limitation, the certificates from the Operating Partnership and the Grove REIT
contemplated in Section 8(b), and the assumption by the Operating Partnership of
Grove Corporation's obligations hereunder, as contemplated in Section 23 hereof.
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(4) All of the Required Consents shall have been obtained.
(5) Grove Corporation and any Permitted Assignees shall have
performed all covenants and obligations undertaken by them herein in all
material respects and materially complied with all conditions required by this
Agreement to be performed or complied with by them on or before the Closing
Date.
(6) Trading of the common shares of Grove REIT is not subject
to suspension, and has not been suspended as of the Closing Date, under the
rules of the American Stock Exchange.
18. Default by a McNeil Partnership.
(a) A McNeil Partnership shall be in default under this Agreement in
the following events:
(1) If the McNeil Partnership shall fail to perform and comply
with the agreements and conditions which are required to be performed or
complied with by such McNeil Partnership pursuant to this Agreement, which
failure is neither waived by Grove Corporation nor cured by the McNeil
Partnership within ten (10) days following receipt, by the McNeil Partnership,
of notice of such failure; or
(2) If such McNeil Partnership's warranties and
representations contained in Section 16(a) above shall not be true in all
material respects on the Closing.
(b) If a McNeil Partnership shall be in default under this Agreement,
the Escrow Agent shall return the portion of the Deposit allocated to the
defaulting McNeil Partnership to Grove Corporation, and, in addition, Grove
Corporation shall be entitled to terminate this Agreement by written notice to
the McNeil Partnerships and/or pursue any other remedy available to Grove
Corporation in law or equity.
19. Default by Grove Corporation.
(a) Grove Corporation shall be in default under this Agreement in the
event that it shall fail to perform and comply with the agreements and
conditions which are required to be performed or complied with by it or any
Permitted Assignee pursuant to this Agreement, which failure is neither waived
by the McNeil Partnership nor cured by Grove Corporation within ten (10) days
following receipt, by Grove Corporation, of notice of such failure.
(b) If Grove Corporation or a Permitted Assignee shall be in default
under this Agreement, an affected McNeil Partnership shall be entitled to retain
the allocable portion of the Deposit as liquidated damages, and all other rights
and liabilities of the parties hereto by reason
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of this Agreement shall be deemed at an end; provided, however, that if Grove
Corporation or a Permitted Assignee shall be in default with respect to any of
the Group A Properties, the McNeil Partnerships shall have the right by written
notice to Grove Corporation to terminate this Agreement in its entirety and to
retain the entire Deposit. The parties agree that the retention of sums paid
hereunder shall be considered as full liquidated damages by reason of the
uncertainty and impossibility of ascertaining actual damage suffered by a McNeil
Partnership. All parties agree that the aforesaid amount constitutes a
reasonable forecast of damages which would be sustained by a McNeil Partnership
in the event of Grove Corporation's or a Permitted Assignee's breach.
20. Prior Agreements. This Agreement constitutes the entire agreement by and
between the parties hereto affecting the Properties and supersedes any and all
previous agreements, written or oral, between the parties and affecting the
Premises. This Agreement may not be modified except by an instrument in writing
signed by the parties hereto.
21. Survival of All Representations and Warranties. Except as expressly
otherwise provided herein, all representations, warranties, covenants and
agreements of the McNeil Partnerships and Grove Corporation (and any Permitted
Assignee's assumption or confirmation thereof) contained herein or delivered at
the Closing shall survive the Closing for a period of one (1) year from the
Closing Date, except that (A) any representation or warranty made by a McNeil
Partnership concerning the physical condition of its Property or its operating
systems shall survive the Closing for a period of six (6) months, and (B) all
indemnification obligations of the parties hereunder shall survive the Closing
with no limitation period. No representation, warranty, covenant or agreement
shall be merged in the Deeds to be given by the McNeil Partnerships, even though
not inserted or otherwise included in such Deeds.
22. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
23. Successors and Assigns. The rights and obligations contained herein
shall be binding upon and inure to the benefit of the McNeil Partnerships, Grove
Corporation and their respective successors and assigns. Grove Corporation has
advised the McNeil Partnerships that, prior to the Closing, and as a condition
precedent to the McNeil Partnerships' obligations under this Agreement, Grove
Corporation shall assign its entire right, title and interest in, to and under
this Agreement to the Operating Partnership. Simultaneously with, but
conditional upon the consummation of such assignment, the Operating Partnership
shall assume all of Grove Corporation's obligations and responsibilities under
this Agreement (including, without limitation, any and all liability for the
representations, warranties, covenants and agreements of Grove Corporation under
this Agreement subject to the limitations set forth in this Agreement). The
Grove Corporation shall not constitute nor be deemed the agent of the Operating
Partnership for any purpose under this Agreement. In addition, the Operating
Partnership shall have the further right to assign its entire right, title and
interest in, to and under this Agreement with respect to any specific Property
to up to 22 limited liability companies wholly owned by the Operating
Partnership, which limited liability companies shall assume the Operating
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Partnership's obligations with respect to a specific Property hereunder. Such
assignment shall not relieve the Operating Partnership from any of its
obligations under or pursuant to this Agreement, including without limitation,
the obligation to issue its OP Units in consideration of the conveyance of the
Properties as contemplated hereunder. Except for the foregoing assignments,
Grove Corporation shall not assign this Agreement without the McNeil
Partnerships' written consent.
24. Waiver of Conditions. Notwithstanding any provision of this Agreement,
either party may at its option waive in writing any provision that is a
condition to its performance hereunder and close the transaction.
25. Notices. Any notice, report, request or demand required, permitted, or
desired to be given under this Agreement shall be in writing and shall be deemed
to have been properly served, for all purposes only if sent by registered or
certified mail, or nationally recognized overnight courier, return receipt
requested, or by facsimile (with confirmation report and a copy of such notice
also sent by certified mail) to the respective party at the addresses set forth
below, and shall be deemed to have been given or served only on the date
received or rejected:
If to Grove Corporation, the Operating 598 Asylum Avenue
Partnership or the Grove Companies: Hartford, CT 06105
Attn: Mr. Damon Navarro
Facsimile No: 860-527-0401
Copy to: Cummings & Lockwood
Four Stamford Plaza
Stamford, CT 06904-0120
Attn: Michael J. Hinton, Esq.
Facsimile No: 203-351-4499
If to the McNeil Partnerships: c/o Mr. Alexander H. McNeil
850 Providence Highway
Dedham, MA 02026
Facsimile No: 781-326-3891
Copy to: Robins, Kaplan, Miller & Ciresi L.L.P.
Suite 2200
222 Berkeley Street
Boston, MA 02116-3751
Attn: Mark S. LaConte, Esq.
Facsimile No: (617) 267-8288
26. Tax Protest. If, as of the Closing Date, there shall be any tax
certiorari proceedings or tax protest proceedings pending with respect to any
portion or all of any of the Properties, all benefits obtained thereby
including, without limitation, any tax refunds, after deducting the cost
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of such proceedings, including attorneys' fees, shall, subject to the terms of
any applicable Regulatory Agreement: (i) if attributable to any tax year ended
prior to the Closing Date, be paid to the affected McNeil Partnership; (ii) if
attributable to any tax year commencing after the Closing Date, be retained by
Grove Corporation; and (iii) if attributable to the tax year in which the
Closing Date occurs, be apportioned between the affected McNeil Partnership and
Grove Corporation as of the Closing Date. This provision shall survive the
Closing.
27. Confidentiality/Exclusivity. The terms and provisions of this Agreement
shall remain confidential and shall not be disclosed, by either Grove
Corporation or the McNeil Partnerships, to any third party other than: (i) the
partners of the McNeil Partnerships; (ii) the current property managers of the
Properties and any other third parties who provide services to the Properties;
(iii) as may be required by law or regulation or to comply with the filing
requirements of any applicable legislation or rule; (iv) any counsel, consultant
or agent assisting the McNeil Partnerships with the conveyance of the Properties
and any counsel, consultant or agent assisting Grove Corporation with the
acquisition of the Properties; or (v) a Regulatory Authority. If Grove
Corporation does not proceed with the acquisition of the Properties, Grove
Corporation shall return to the McNeil Partnerships all materials and
information furnished to it by the McNeil Partnerships or the McNeil
Partnerships' agents in connection with its review of the Properties. The McNeil
Partnerships shall, and shall direct its agents, not to solicit, offer, or
accept an offer for the conveyance of the Properties from any other parties
until the termination of this Agreement.
28. Restrictions on Resale of Properties. Neither the Operating Partnership
nor any Grove Company may reconvey any of the Properties acquired pursuant to
this Agreement for a period of two (2) years following the Closing Date without
the consent of Alexander H. McNeil or, if he is not living, Virginia McNeil,
which may be withheld in his or her sole and absolute discretion. Commencing on
the second anniversary of the Closing Date, and continuing until the seventh
(7th) anniversary of the Closing Date, the Operating Partnership shall not be
permitted, without the consent of Alexander H. McNeil or, if he is not living,
Virginia McNeil, which may be withheld in his or her sole and absolute
discretion, to convey any of the Properties except in a like-kind exchange of
properties qualifying under Section 1031 of the Internal Revenue Code. The
restrictions set forth in this Section shall cease and no longer be valid upon
the death of both Alexander and Virginia McNeil.
29. Representation on Board. Grove Corporation agrees to cause the Grove
REIT to take all actions necessary and feasible (A) to cause one of the McNeils'
designees to be elected to the Board of Trustees and to the Advisory Board of
Grove REIT for an initial term of three (3) years, and (B) thereafter, to use
good faith efforts, except where the Grove REIT objects for cause, to renominate
such designee or other designee of the McNeils for one additional three year
term.
31. Excess Rents Reserves and Unadvanced Mortgage Proceeds Escrow. Included
on Schedule 5 to this Agreement are the amounts of all funded Excess Rents
Reserves and the Unadvanced Mortgage Proceeds Escrow that have been established
by each McNeil Partnership pursuant to the terms of their respective Regulatory
Agreements, all of which reserves shall be
-31-
<PAGE>
transferred to the appropriate Grove Company at Closing. When, as and if a Grove
Company is able to distribute any funds out of such Excess Rents Reserves or
Unadvanced Mortgage Proceeds Escrow without restriction from time to time, such
Grove Company shall distribute fifty percent (50%) of the amount deposited in
such applicable Excess Rents Reserves or Unadvanced Mortgage Proceeds Escrow to
the McNeil Partnership, its successors and assigns, in the manner directed by
the general partners of such McNeil Partnership, but in no event shall such
amount exceed fifty percent (50%) of the funds deposited in such Excess Rents
Reserves or Unadvanced Mortgage Proceeds Escrow as of the Closing Date.
32. Registration and Listing of Grove REIT Shares. Grove Corporation agrees
to cause the Grove REIT to file, at its sole expense, with the SEC as soon as
practicable following one year from the Closing Date, a shelf registration
statement and related prospectus that comply in all material respects with
applicable SEC rules providing for registration under the Securities Act of 1933
of the offer and sale of the maximum number of common shares which might be
issued upon redemption of the OP Units owned by the McNeil Partnerships. Grove
REIT shall use its reasonable good faith efforts to cause such registration
statements to be declared effective by the SEC as soon as practicable and to
keep such registration effective thereafter. Grove Corporation shall use its
best efforts, to maintain the listing of its common shares for trading on the
American Stock Exchange, New York Stock Exchange, NASDAQ National Market or
other national securities exchange. These covenants shall survive Closing.
33. Attorneys' Fees. If an action is brought to enforce or interpret the
provisions and conditions of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and costs.
34. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which, together, shall
constitute one and the same instrument.
35. Authority of Signatories. The individuals executing this Agreement on
behalf of McNeil Partnerships and Grove Corporation warrant and represent to the
other party hereto that such individual is duly authorized and has the right to
enter into this Agreement on behalf of such entities (subject to the approval by
McNeil Partnerships' limited partners where required by McNeil Partnerships'
applicable partnership agreements), and that this Agreement shall be binding on
the entity for which such individual is signing. The individuals and entities
executing this Agreement on behalf of the McNeil Partnerships agree to vote
their respective general partnership interests, as well as all of the limited
partnership interests each owns or controls in such partnerships, in favor of
the transactions contemplated under this Agreement, as well as to recommend
approval of such transactions to the other limited partners of such
partnerships.
36. Accreditation of OP Unit Recipients. Notwithstanding anything to the
contrary in this Agreement, neither Grove Corporation, the Grove REIT nor any
Permitted Assignee shall have any obligation to distribute, or permit the
redistribution of, OP Units to any person or entity who (i) does not qualify as
an accredited investor (as that term is defined in Regulation D of the
-32-
<PAGE>
Securities Act of 1933, as amended) and (ii) has not executed and delivered a
Subscription Agreement and Subscription Questionnaire in the form attached to
this Agreement as Exhibit Q, which demonstrates to Grove Corporation's
reasonable good faith judgment that such person so qualifies. Each of the McNeil
Partnerships covenant and agree that they will not distribute or otherwise
transfer, directly or indirectly, any of the OP Units received in connection
with the transactions contemplated under this Agreement unless such distribution
or other transfer complies with the requirements of such Subscription Agreement
and Subscription Questionnaire.
37. Press Releases and Solicitations. The parties agree to provide each
other with copies of any proposed press releases relating to the transactions
contemplated in this Agreement, as well as copies of any proposed correspondence
intended to be delivered to the limited partners of the McNeil Partnerships
soliciting any necessary consents to the transactions contemplated in this
Agreement. The parties agree to coordinate efforts with respect to all press
releases, but nothing in this paragraph shall be deemed to prohibit Grove
Corporation or any affiliated entities from issuing any press releases or making
any filings that they or their respective counsel believe are either necessary
or appropriate under applicable Securities and Exchange Commission or American
Stock Exchange rules and regulations.
38. Resolution of Pending Litigation. Grove Corporation's and the Grove
Companies' obligation to close hereunder are further conditioned, with respect
to the Properties owned by Rockingham Glen and Fabens Building Associates, upon
the settlement or other disposition acceptable to Grove Corporation in its sole
and absolute discretion, prior to the Closing, of the litigation involving such
McNeil Partnerships referenced on Schedule 9 to this Agreement.
IN WITNESS WHEREOF, each of the McNeil Partnerships and Grove Corporation
have hereunto set their hands and seals as of the day and year first above
written.
Signed, Sealed, and Delivered in the Presence of:
THE GROVE CORPORATION
/s/ Michele Hull
- -----------------------------
/s/ Munawar Cheema By: /s/ Damon Navarro
- ----------------------------- --------------------------------
Its: President, Duly Authorized
-33-
<PAGE>
MCNEIL PARTNERSHIPS:
/s/ Mark S. LaConte GLEN MEADOW AT FRANKLIN
- --------------------------- APARTMENTS TRUST
/s/ Christopher P. Sullivan By: /s/ Alexander H. McNeil
- --------------------------- ----------------------------
[Name]: Alexander H. McNeil
Title: General Partner
/s/ Mark S. LaConte WESTWOOD GLEN
- ---------------------------
/s/ Christopher P. Sullivan By: /s/ Alexander H. McNeil
- --------------------------- ----------------------------
[Name]: Alexander H. McNeil
Title: General Partner
/s/ Mark S. LaConte ROCKINGHAM GLEN
- ---------------------------
/s/ Christopher P. Sullivan By: /s/ Alexander H. McNeil
- --------------------------- ----------------------------
[Name]: Alexander H. McNeil
Title: General Partner
/s/ Mark S. LaConte WILKINS GLEN ASSOCIATES
- ---------------------------
/s/ Christopher P. Sullivan By: /s/ Alexander H. McNeil
- --------------------------- ----------------------------
[Name]: Alexander H. McNeil
Title: General Partner
/s/ Mark S. LaConte SUMMER HILL GLEN ASSOCIATES
- ---------------------------
/s/ Christopher P. Sullivan By: /s/ Alexander H. McNeil
- --------------------------- ----------------------------
[Name]: Alexander H. McNeil
Title: General Partner
-34-
<PAGE>
/s/ Mark S. LaConte NEHOIDEN GLEN ASSOCIATES
- ---------------------------
By: McNeil [Affiliates] LLC,
General Partner
/s/ Christopher P. Sullivan
- --------------------------- By: McNeil Affiliates, Inc.,
Manager
By: /s/ Alexander H. McNeil
-----------------------------
[Name]: Alexander H. McNeil
Title: President
/s/ Mark S. LaConte GOSNOLD GROVE ASSOCIATES
- ---------------------------
By: Sturdy Oaks Construction
Company, Inc.,
/s/ Christopher P. Sullivan General Partner
- ---------------------------
By: /s/ Alexander H. McNeil
-----------------------------
[Name]: Alexander H. McNeil
Title: President
/s/ Mark S. LaConte GLEN GROVE ASSOCIATES
- ---------------------------
By: McNeil [Affiliates] LLC,
General Partner
/s/ Christopher P. Sullivan
- --------------------------- By: McNeil Affiliates, Inc.,
Manager
By: /s/ Alexander H. McNeil
-----------------------------
[Name]: Alexander H. McNeil
Title: President
/s/ Mark S. LaConte CONWAY COURT ASSOCIATES
- ---------------------------
/s/ Christopher P. Sullivan By: /s/ Alexander H. McNeil
- --------------------------- -----------------------------
[Name]: Alexander H. McNeil
Title: General Partner
/s/ Mark S. LaConte NORTON GLEN ASSOCIATES
- ---------------------------
By: McNeil [Affiliates] LLC,
General Partner
/s/ Christopher P. Sullivan
- --------------------------- By: McNeil Affiliates, Inc.,
Manager
By: /s/ Alexander H. McNeil
-----------------------------
[Name]: Alexander H. McNeil
Title: President
/s/ Mark S. LaConte CEDAR GLEN ASSOCIATES
- ---------------------------
By: McNeil [Affiliates] LLC,
General Partner
/s/ Christopher P. Sullivan
- --------------------------- By: McNeil Affiliates, Inc.,
Manager
By: /s/ Alexander H. McNeil
-----------------------------
[Name]: Alexander H. McNeil
Title: President
-35-
<PAGE>
/s/ Mark S. LaConte HIGHLAND GLEN ASSOCIATES
- ---------------------------
By: McNeil [Affiliates] LLC,
General Partner
/s/ Christopher P. Sullivan
- --------------------------- By: McNeil Affiliates, Inc.,
Manager
By: /s/ Alexander H. McNeil
-----------------------------
[Name]: Alexander H. McNeil
Title: President
/s/ Mark S. LaConte FABENS BUILDING ASSOCIATES
- ---------------------------
/s/ Christopher P. Sullivan By: /s/ Alexander H. McNeil
- --------------------------- ----------------------------
[Name]: Alexander H. McNeil
Title: General Partner
/s/ Mark S. LaConte CHESTNUT GLEN ASSOCIATES
- ---------------------------
By: McNeil [Affiliates] LLC,
General Partner
/s/ Christopher P. Sullivan
- --------------------------- By: McNeil Affiliates, Inc.,
Manager
By: /s/ Alexander H. McNeil
----------------------------
[Name]: Alexander H. McNeil
Title: President
/s/ Mark S. LaConte NOONAN GLEN ASSOCIATES
- ---------------------------
By: McNeil [Affiliates] LLC,
General Partner
/s/ Christopher P. Sullivan
- --------------------------- By: McNeil Affiliates, Inc.,
Manager
By: /s/ Alexander H. McNeil
----------------------------
[Name]: Alexander H. McNeil
Title: President
/s/ Mark S. LaConte OLD MILL GLEN ASSOCIATES LIMITED
- --------------------------- PARTNERSHIP
By: McNeil [Affiliates] LLC,
General Partner
/s/ Christopher P. Sullivan
- --------------------------- By: McNeil Affiliates, Inc.,
Manager
By: /s/ Alexander H. McNeil
-----------------------------
[Name]: Alexander H. McNeil
Title: President
/s/ Mark S. LaConte LONGFELLOW GLEN ASSOCIATES
- --------------------------- LIMITED PARTNERSHIP
/s/ Christopher P. Sullivan By: McNeil [Affiliates] LLC,
- --------------------------- General Partner
By: McNeil Affiliates, Inc.,
Manager
By: /s/ Alexander H. McNeil
----------------------------
[Name]: Alexander H. McNeil
Title: President
-36-
<PAGE>
/s/ Mark S. LaConte WEBSTER GREEN ASSOCIATES LIMITED
- --------------------------- PARTNERSHIP
By: Conway Corporation, General
Partner
/s/ Christopher P. Sullivan
- --------------------------- By: /s/ Alexander H. McNeil
----------------------------
[Name]: Alexander H. McNeil
Title: President
/s/ Mark S. LaConte THE 929 HOUSE REALTY ASSOCIATES
- ---------------------------
By: Conway Corporation, General
Partner
/s/ Christopher P. Sullivan
- --------------------------- By: /s/ Alexander H. McNeil
----------------------------
[Name]: Alexander H. McNeil
Title: President
/s/ Mark S. LaConte PHILLIPS PARK ASSOCIATES LIMITED
- --------------------------- PARTNERSHIP
By: Conway Corporation, General
Partner
/s/ Christopher P. Sullivan
- --------------------------- By: /s/ Alexander H. McNeil
----------------------------
[Name]: Alexander H. McNeil
Title: President
/s/ Mark S. LaConte BROADWAY GLEN ASSOCIATES
- ---------------------------
/s/ Christopher P. Sullivan By: /s/ Alexander H. McNeil
- --------------------------- ----------------------------
[Name]: Alexander H. McNeil
Title: General Partner
/s/ Mark S. LaConte ABINGTON GLEN ASSOCIATES
- ---------------------------
/s/ Christopher P. Sullivan By: /s/ Alexander H. McNeil
- --------------------------- ----------------------------
[Name]: Alexander H. McNeil
Title: General Partner
-37-
<PAGE>
/s/ Henrietta M. Gerard LAWYERS TITLE INSURANCE COMPANY*
- ---------------------------
/s/ Amy E. Dwyer By: /s/ John P. Ford
- --------------------------- ----------------------------
[Name]: John P. Ford
Title: VP Agency Manager
Cromwell, CT
* FOR PURPOSES ONLY AS ACTING AS ESCROW AGENT PURSUANT TO PARAGRAPH 6 AND 7 OF
THIS AGREEMENT. ALSO SUBJECT TO TERMS OF SUPPLEMENTAL ESCROW AGREEMENT ATTACHED
AS EXHIBIT R.
-38-
AMENDMENT TO CONVEYANCE AGREEMENT
THIS AMENDMENT TO CONVEYANCE AGREEMENT ("Amendment") is made as of August
31, 1998, by and among: (i) each of the twenty-one (21) limited partnerships
identified on Schedule 1 attached hereto and made a part hereof, each having an
office at c/o Mr. Alexander H. McNeil, 850 Providence Highway, Dedham,
Massachusetts 02026 (hereinafter each referred to separately as a "McNeil
Partnership" and collectively referred to as the "McNeil Partnerships") and (ii)
The Grove Corporation ("Grove Corporation"), a Delaware corporation wholly-owned
by Grove Operating L.P., a Delaware limited partnership (hereinafter referred to
as the "Operating Partnership") , each having an office at 598 Asylum Avenue,
Hartford, Connecticut 06105.
WITNESSETH:
WHEREAS, the parties hereto entered into that certain Agreement, dated as of
April 22, 1998, involving the acquisition by Grove Corporation of certain
properties (the "Properties") owned by the McNeil Partnerships, which Agreement
has previously been amended by several letter agreements (such amended Agreement
is hereinafter referred to as the "Conveyance Agreement"); and
WHEREAS, the parties, concurrent with the execution and delivery of this
Amendment, are entering into an Agreement, dated as of August 31, 1998 (the
"Settlement Agreement"), with McNeil Management, Inc. and its shareholders
("Hall Kuehn") whereby Hall Kuehn has agreed to assign all of its right, title
and beneficial interest in and to certain management agreements involving the
Properties to Grove Corporation; and
WHEREAS, it appears likely that the litigation currently involving Fabens
Building Associates (the "Fabens Litigation") will not be settled or otherwise
disposed of on terms acceptable to Grove Corporation prior to the Closing; and
WHEREAS, the parties desire to make certain clarifications to Schedule 4.1
of the Conveyance Agreement with respect to Contingent Value Distribution; and
WHEREAS, the parties have agreed that certain economic interests of the
general partners of certain of the McNeil Partnerships will be acquired directly
from such general partners, rather than indirectly through the McNeil
Partnerships, as contemplated in the initial Conveyance Agreement; and
WHEREAS, the parties desire to amend the provisions of the Conveyance
Agreement in order to reflect their mutual understandings and agreements
concerning the Settlement Agreement, the Fabens Litigation, the direct
acquisition of certain of the general partners' interests and certain
clarifications to Schedule 4.1 of the Conveyance Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by all of the parties,
the parties hereto agree as follows:
<PAGE>
1. DEFERRED VALUE; DEFERRED INSTALLMENT NOTE. Any and all references in the
Conveyance Agreement to "Deferred Value" and the "Deferred Installment Note" are
hereby deleted, same being null, void and of no further force or effect. Grove
Corporation shall have no obligation to pay the Deferred Value or provide the
Deferred Installment Note.
2. SCHEDULE 2. Schedule 2 to the Conveyance Agreement is hereby deleted in
its entirety and replaced with the revised Schedule 2 attached hereto and made a
part hereof.
3. SCHEDULE 3.1. Schedule 3.1 to the Conveyance Agreement is hereby deleted
in its entirety.
4. SCHEDULE 4.1. Schedule 4.1 to the Conveyance Agreement is hereby deleted
in its entirety and replaced with the revised Schedule 4.1 attached hereto and
made a part hereof.
5. SCHEDULE 4.3. Schedule 4.3 to the Conveyance Agreement is hereby deleted
in its entirety and replaced with the revised Schedule 4.3 attached hereto and
made a part hereof.
6. EXHIBIT P. Exhibit P to the Conveyance Agreement is hereby deleted in its
entirety.
7. FABENS LITIGATION. The parties agree and acknowledge that the Fabens
Litigation does not appear likely to settle or otherwise be disposed of on terms
acceptable to Grove Corporation, and accordingly, pursuant to the provisions of
Section 38 of the Conveyance Agreement, the obligations of the parties under the
Conveyance Agreement with respect to Fabens Building Associates and the Property
owned by such McNeil Partnership, are hereby terminated.
8. SECURITY DEPOSITS. The portion of the Deposit allocated to the Properties
owned by Fabens Building Associates and Broadway Glen Associates shall be
reallocated among the remaining 20 Properties that remain subject to the terms
of the Conveyance Agreement. Schedule 2.1 to the Conveyance Agreement is hereby
deleted in its entirety and replaced with the revised Schedule 2.1 attached
hereto and made a part hereof.
9. CAPITALIZED TERMS. Any capitalized terms used but not defined in this
Amendment shall have the meanings ascribed to them in the Conveyance Agreement.
<PAGE>
10. RATIFICATION. Except as set forth above, the Conveyance Agreement, as
modified by this Amendment, shall remain in full force and effect.
IN WITNESS WHEREOF, each of the McNeil Partnerships and Grove Corporation
have hereunto set their hands and seals as of the day and year first above
written.
Signed, Sealed, and Delivered in the Presence of:
THE GROVE CORPORATION
/s/ Joseph R. LaBrosse
- ---------------------------
By: /s/ Damon Navarro
----------------------------------------
Its: President
MCNEIL PARTNERSHIPS:
/s/ Mark S. LaConte
- --------------------------- By: /s/ Alexander H. McNeil
----------------------------------------
Alexander H. McNeil, duly authorized,
on behalf of the 21 limited partnerships
identified on Schedule 1 attached hereto
TITLE COMPANY; as escrow agent only
/s/ Mark S. LaConte
- ---------------------------
By: /s/ Sarah Orlov
-------------------------------------
[Name]: Sarah Orlov
Title: Title Attorney
