SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
February 24, 2000
(Date of Report - date of earliest event reported)
Stonehaven Realty Trust
(Exact name of registrant as specified in charter)
Maryland 0-25074
39-6594066
(State or other jurisdiction of
(Commission File No.) (IRS
Employer
incorporation or organization)
Identification No.)
2550 University Avenue West, Suite 240 N, St. Paul,
Minnesota 55114
(Address of principal executive offices)
(651) 917-5536
(Registrant's telephone number, including area
code)
Wellington Properties Trust
18650 W. Corporate Drive
Brookfield, Wisconsin 53045
(Former Name and Address)
Item 1, items 3 through 6, and Items 8 and 9 are
not applicable and are therefore omitted.
ACQUISITION OR DISPOSITION OF ASSETS
Item 2A.
Effective February 25, 2000, NTLI Acquisition
Corporation, a Delaware corporation ("Subsidiary")
and wholly-owned subsidiary of Stonehaven Realty
Trust (the "Company") acquired by merger Netlink
International, Inc., a privately held Minnesota
corporation which is an Internet consulting and web
development company. Subsidiary, which is the
surviving corporation, was subsequently renamed
Netlink International, Inc. ("Netlink"). The
acquisition was accomplished by exchanging 914,286
of the Company's common shares for all of the
issued and outstanding stock of Netlink valued at
$4.375 per share, or an aggregate of $4.0 million,
and options to purchase up to an additional one (1)
million shares of the Company's common shares at an
exercise price of $5.375 per share exercisable
commencing February 23, 2001, one-third per year
over three years, and an agreement to set aside an
additional pool of 200,000 options for future award
to Netlink employees. The acquisition was effected
as a reorganization under Sections 368(a)(1)(A) and
368(a)(2)(D) of the Internal Revenue Code of 1986,
as amended.
The selling shareholders of Netlink were Odeh
A. Muhawesh, Mary Henschel, Alan Schmidt, Ahmid
Yassine, Patrick Archbold, Ann K. Wessels, Art
Curruth, Patricia Hewitt, Thomas Walker, and Sherry
Ajax, none of whom had any previous relationship
with registrant. The assets involved were those of
a viable, profitable, operating business including
fixed assets, accounts receivable, intellectual
property, contracts and commitments, employees,
customers, distributors and independent sales
representatives. An independent valuation of
Netlink was obtained that placed its value near $10
million. The final exchange rate was negotiated
between the parties.
In connection with the acquisition, Odeh
Muhawesh, Chief Executive Officer of Netlink, will
become President of the Company and will be
nominated to become a member of the Board of
Trustees of the Company at the Company's next
Annual Meeting of Shareholders (and will
automatically become a member of the Board of
Trustees should a vacancy arise in the interim).
Ann K. Wessels was appointed Chief Financial
Officer of the Company.
Item 2B.
On February 29, 2000, the Company through its
Operating Partnership, Wellington Properties
Investments, L.P., a Delaware limited partnership
(the "Operating Partnership") of which the Company
is the sole general partner, acquired three
commercial real estate properties located in
suburban Minneapolis, Minnesota. The three
properties totaling approximately 78,500 square
feet are new construction and 100 percent leased as
of February 29, 2000. The purchase price of
$6,716,060, was funded through the issuance of an
aggregate of 181,629 Units in Operating Partnership
(valued at $4.375 per Unit, or an aggregate value
of $794,627), the assumption of certain third-party
debt totaling $4,449,505, secured by such
properties, and the balance paid in cash.
The properties were purchased from Plymouth
Partners II, LLC of which Steven B. Hoyt is the
Chief Manager and co-owner along with his wife
Michelle L. Hoyt. Mr. Hoyt is also a Trustee of
Stonehaven Realty Trust, the purchaser of the
properties.
Item 7. FINANCIAL STATEMENTS, PRO FORMA
FINANCIAL INFORMATION
AND EXHIBITS.
(a) Financial Statements of Business
Acquired.
(b) Pro Forma Financial Information.
The Company is not filing the required
financial statements and pro forma
financial information at this time. The
Company will file such financial
statements as an amendment to this Form
8-K within 60 days of the date of this
filing, pursuant to Item 7(1)(a)(4)(i)
of Form 8-K.
(c) Exhibits:
Exhibit
Number Description
+*2.2 Agreement and Plan of
Reorganization dated
as of February 25,
2000, by and among
the Company, NTLI
Acquisition
Corporation, a
Delaware corporation,
Netlink
International, Inc.,
a Minnesota
corporation and Odeh
A. Muhawesh, Mary
Henschel, Alan
Schmidt, Ahmad
Yassine, Patrick
Archbold, Ann
Wessels, Art Carruth,
Patricia Hewitt,
Thomas Walker and
Sherry Ajax
2.3 Contribution Agreement
between Wellington
Partners, L.P.,
Wellington Properties
Trust and Plymouth
Partners II, LLC and
other LP Unit
Recipients dated as
of February 29, 2000
**10.1 Agreement of Limited
Partnership of
Wellington Properties
Investments, L.P. and
Wellington Management
Corporation dated as
of August 31, 1998
99.1 Text of Press Release
dated February 24, 2000
99.2 Text of Press Release
dated March 9, 2000
* Confidential treatment requested as to certain
portions of this exhibit.
+ Pursuant to Item 601(b)(2) of Regulation SK,
certain exhibits to this Agreement and Plan of
Reorganization have been omitted. Such exhibits
will be submitted to the Securities and Exchange
Commission upon request.
**Incorporated herein by reference to Exhibit B of
Wellington Properties Trust Schedule 14A filed
November 6, 1998.
- - 2 -
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: March 15, 2000.
STONEHAVEN
REALTY TRUST
By:___________________________________
Its:________________________________
EXHIBIT INDEX
The following exhibits to this report are
incorporated herein
Exhibit
Number Description
+*2.2 Agreement and Plan of Reorganization
dated as of February 25, 2000, by and
among the Company, NTLI Acquisition
Corporation, a Delaware corporation,
Netlink International, Inc., a
Minnesota corporation and Odeh A.
Muhawesh, Mary Henschel, Alan Schmidt,
Ahmad Yassine, Patrick Archbold, Ann
Wessels, Art Carruth, Patricia Hewitt,
Thomas Walker and Sherry Ajax
2.3 Contribution Agreement between
Wellington Partners, L.P., Wellington
Properties Trust and Plymouth Partners
II, LLC and other LP Unit Recipients
dated as of February 29, 2000
**10.1 Agreement of Limited Partnership of
Wellington Properties Investments, L.P.
and Wellington Management Corporation
dated as of August 31, 1998
99.1 Text of Press Release dated February
24, 2000
99.2 Text of Press Release dated March 9,
2000
* Confidential treatment requested as to certain
portions of this exhibit.
+ Pursuant to Item 601(b)(2) of Regulation SK,
certain exhibits to this Agreement and Plan of
Reorganization have been omitted. Such exhibits
will be submitted to the Securities and Exchange
Commission upon request.
**Incorporated herein by reference to Exhibit B of
Wellington Properties Trust Schedule 14A filed
November 6, 1998.
EXHIBIT 2.2
AGREEMENT AND PLAN OF REORGANIZATION*
* Pursuant to Item 601(b)(2) of Regulation SK,
certain exhibits to this Agreement and Plan of
Reorganization have been omitted. Such exhibits
will be submitted to the Securities and Exchange
Commission upon request.
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
STONEHAVEN REALTY TRUST,
NTLI ACQUISITION CORPORATION,
NETLINK INTERNATIONAL, INC.,
AND ODEH A. MUHAWESH, MARY HENSCHEL,
ALAN SCHMIDT, AHMAD YASSINE,
PATRICK ARCHBOLD, ANN WESSELS, ART CARRUTH,
PATRICIA HEWITT, THOMAS WALKER AND SHERRY AJAX
FEBRUARY 25, 2000
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF ORGANIZATION (the
"Agreement") dated as of February 23, 2000, by and
among Stonehaven Realty Trust, a Maryland real
estate trust (hereinafter referred to as
"Stonehaven"), NTLI Acquisition Corporation, a
Delaware corporation (hereinafter referred to as
"Subsidiary"), Netlink International Inc., a
Minnesota corporation (hereinafter referred to as
"Netlink") and Odeh A. Muhawesh, Mary Henschel,
Alan Schmidt, Ahmad Yassine, Patrick Archbold, Ann
Wessels, Art Carruth, Patricia Hewitt, Thomas
Walker and Sherry Ajax (hereinafter sometimes
referred to individually as "Stockholder" and
collectively as "Stockholders").
RECITALS:
A. Stonehaven, Subsidiary and Netlink desire to
cause the merger of Netlink with and into
Subsidiary (the "Merger"), pursuant to the
Plan of Merger set forth in Exhibit A hereto
(the "Plan of Merger") and the transactions
contemplated hereby, in accordance with the
applicable provisions of the statutes of the
States of Delaware and Minnesota which permit
such Merger.
B. For federal income tax purposes, it is
intended that the Merger shall qualify as a
reorganization with the meaning of Section
368(a) of the Internal Revenue Code of 1986,
as amended and interpreted by treasury
regulations (the "Code").
C. Each of the parties to this Agreement desires
to make certain representations, warranties
and agreements in connection with the Merger
and also to prescribe various conditions
thereto.
AGREEMENT
THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as
follows:
SECTION 1. DEFINITIONS
As used in this Agreement and any exhibits hereto,
the following words and phrases shall have the
meanings set forth below:
"Act" shall mean the Securities Act of 1933, as
amended.
"Authorization" and "Authorizations" shall have the
meanings ascribed to them in Section 5.23 below.
"Base Balance Sheet" shall have the meaning
ascribed to it in Section 5.5 below.
"Closing" shall mean the consummation of the
transactions contemplated herein as described in
Section 3.6 below.
"Closing Date" shall be the date of the Closing as
described in Section 3.6 below.
"Closing Date Balance Sheet" shall mean the audited
balance sheet for Netlink as of the close of
business on the Closing Date (determined in
accordance with generally accepted accounting
principles on a pro forma basis as though the
parties had not consummated the Merger contemplated
by this Agreement), subject to adjustments as
provided in Section 4.1(b) below.
"Code" shall mean the Internal Revenue Code of
1986, as amended and interpreted by treasury
regulations.
"Constituent Corporations" shall refer to
Subsidiary and Netlink.
"Conversion Ratio" shall have the meaning ascribed
to it in Section 3.1(b) below.
"DGCL" shall mean the Delaware General Corporation
Laws.
"Effective Time" shall have the meaning ascribed to
it in Section 2.2 below.
"Employee Benefit Plans" shall have the meaning
ascribed to it in Section 5.25(a) below.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"Financial Statements" shall have the meaning
ascribed to it in Section 5.5 below.
"Fixed Assets" shall have the meaning ascribed to
it in Section 5.6(b) below.
"Indemnified Parties" shall have the meanings
ascribed to it in Sections 12.2 and 12.3 below.
"Intellectual Property" shall have the meaning
ascribed to it in Section 5.13(a) below.
"Knowledge" shall mean actual knowledge or
constructive knowledge if a reasonably prudent
person in a like position would have known, or
should have known, the fact.
"MBCA" shall mean the Minnesota Business
Corporation Act.
"Merger" shall mean the merger of Netlink with and
into Subsidiary with Subsidiary being the Surviving
Corporation as described in this Agreement.
"Merger Consideration" shall have the meaning
ascribed to it in Section 3.1(b) below.
"Minimum Stockholder Equity" shall have the meaning
ascribed to it in Section 4.1(b) below.
"Netlink" shall mean Netlink International, Inc., a
Minnesota corporation.
"Netlink Common Stock" shall mean the Common Stock
of Netlink, no par value.
"Person" shall mean an individual, a partnership, a
corporation, an association, a joint stock company,
a trust, a joint venture, an unincorporated
organization or a governmental entity (or any
department, agency or political subdivision
thereof).
"Plan of Merger" shall refer to the Plan of Merger
set forth in Exhibit A to this Agreement.
"Qualified Plan" shall have the meaning ascribed to
it in Section 5.25(b) below.
"SEC" shall mean the Securities and Exchange
Commission.
"Stockholders" shall refer individually and
collectively to Odeh A. Muhawesh, Mary Henschel,
Alan Schmidt, Ahmad Yassine, Patrick Archbold, Ann
Wessels, Art Carruth, Patricia Hewitt, Thomas
Walker and Sherry Ajax.
"Stonehaven" shall mean Stonehaven Realty Trust, a
Maryland real estate trust.
"Stonehaven Common Stock" shall mean the Common
Stock of Stonehaven, par value $.01 per share.
"Subsidiary" shall mean NTLI Acquisition
Corporation, a Delaware corporation.
"Surviving Corporation" shall mean Subsidiary.
"Taxes" shall mean any federal, state, local or
foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs
duties, capital stock, franchise, profits,
withholding, social security (or similar),
unemployment, disability, real property, personal
property, sales, use, transfer, registration,
value-added, alternative or add-on minimum,
estimated or other tax of any kind whatsoever,
including any interest, penalty or addition
thereto, whether disputed or not.
"Tax Return" shall mean any return, declaration,
report, claim for refund or information return or
statement relating to Taxes, including any schedule
or attachment thereto, and including any amendment
thereof.
"Valuation Price" shall have the meaning ascribed
to it in Section 3.2 below.
SECTION 2. THE MERGER
2.1 The Merger. At the Effective Time (as
defined in Section 2.2) and subject to the terms
and conditions of this Agreement and the Plan of
Merger, Netlink shall be merged with and into
Subsidiary, and the separate existence of Netlink
shall thereupon cease, in accordance with the
applicable provisions of the MBCA and DGCL.
(a) Subsidiary will be the Surviving
Corporation in the Merger and
will continue to be governed by
the laws of the State of
Delaware, and the separate
corporate existence of Subsidiary
and all of its rights,
privileges, immunities and
franchises, public or private,
and all its duties and
liabilities as a corporation
organized under the DGCL, will
continue unaffected by the
Merger, except that Subsidiary's
name will be "Netlink
International, Inc."
(b) The Merger will have the effects
specified by the DGCL and the MBCA.
2.2 Effective Time. As soon as practicable
following fulfillment or waiver of the conditions
specified in Sections 9 and 10 hereof, and provided
that this Agreement has not been terminated or
abandoned pursuant to Section 11 hereof, the
Constituent Corporations will cause Articles of
Merger (the "Articles of Merger") together with the
Plan of Merger and such other documents as are
required by the DGCL and the MBCA to be filed with
the offices of the Secretary of State of the State
of Delaware and Minnesota. Subject to and in
accordance with the laws of the States of Delaware
and Minnesota, the Merger will become effective at
the date and time the Articles of Merger are filed
with the office of the Secretary of State of the
State of Delaware, or such later time or date as
may be specified in the Articles of Merger (the
"Effective Time"). Each of the parties will use
its best efforts to cause the Merger to be
consummated as soon as practicable following the
fulfillment or waiver of the conditions specified
in Sections 9 and 10 hereof.
SECTION 3. CONVERSION OF SHARES
3.1 Conversion of Netlink Shares in the
Merger. Pursuant to the Plan of Merger, at the
Effective Time, by virtue of the Merger and without
any action on the part of any holder of any capital
stock of Netlink:
(a) Each share of Netlink Common Stock
owned by the Stockholders shall, be
converted into, and become exchangeable
for, the number of shares of validly
issued, fully paid and nonassessable
Stonehaven Common Stock equal to the
Conversion Ratio.
(b) In this Agreement, the term "Conversion
Ratio" means a fraction, the numerator
of which is equal to $4,000,000 (the
"Preliminary Purchase Price") divided
by the Valuation Price as defined in
Section 3.2 herein, and the denominator
of which is equal to the total number
of shares of Netlink Common Stock
issued and outstanding immediately
prior to the Effective Time. The
Conversion Ratio prior to any
adjustment pursuant to Section 4 is
.54863. The consideration referred to
in this Section 3.1 is sometimes
hereinafter referred to as the "Merger
Consideration."
3.2 Stonehaven's Common Stock Valuation
Price in Merger. The "Valuation Price" of
Stonehaven's Common Stock is $4.375 per share.
3.3 Status of Subsidiary Shares. At the
Effective Time, by virtue of the Merger and without
any action on the part of any holder of any capital
stock of Subsidiary, each issued and outstanding
share of common stock of Subsidiary shall continue
unchanged and remain outstanding as a share of
Common Stock of the Surviving Corporation.
3.4 Exchange of Company Common Stock
Certificates.
(a) At the Closing, each Stockholder shall
deliver the certificates representing
all issued and outstanding shares of
Netlink Common Stock owned by such
Stockholder, duly endorsed in blank, in
exchange for the certificates
representing shares of Stonehaven
Common Stock required to effect the
exchange referred to in Section 3.1
(based upon the Valuation Price
computed pursuant to Section 3.2).
Shares of Stonehaven Common Stock into
which shares of Netlink Common Stock
shall be converted in the Merger shall
be deemed to have been issued at the
Effective Time.
(b) From and after the Effective Time, each
holder of a certificate which
immediately prior to the Effective Time
represented outstanding shares of
Netlink Common Stock, shall be entitled
to receive in exchange therefor, upon
surrender thereof to Stonehaven, a
certificate or certificates
representing the number of shares of
Stonehaven Common Stock as computed by
Sections 3.1 and 3.2 (to be later
adjusted, if necessary, by Section
3.8). From and after the Effective
Time, Stonehaven shall be entitled to
treat the certificates which
immediately prior to the Effective Time
represented shares of Netlink Common
Stock and which have not yet been
surrendered for exchange as evidencing
the ownership of the number of full
shares of Stonehaven Common Stock into
which the shares of Netlink Common
Stock represented by such certificates
shall have been converted pursuant to
Section 3.1, notwithstanding the
failure to surrender such certificates.
However, notwithstanding any other
provision of this Agreement, until
holders or transferees of certificates
which immediately prior to the
Effective Time represented shares of
Netlink Common Stock have surrendered
them for exchange as provided herein,
no dividends shall be paid with respect
to any shares represented by such
certificates. Upon surrender of a
certificate which immediately prior to
the Effective Time represented
outstanding shares of Netlink Common
Stock, there shall be paid to the
holder of such certificate the amount
of any dividends which theretofore
became payable, but which were not paid
by reason of the foregoing, with
respect to the number of whole shares
of Stonehaven Common Stock represented
by the certificate or certificates
issued upon such surrender. If any
certificate for shares of Stonehaven
Common Stock is to be issued in a name
other than that in which the
certificate, which immediately prior to
the Effective Time represented shares
of Netlink Common Stock, surrendered in
exchange therefor is registered, it
shall be a condition of such exchange
that the person requesting such
exchange shall pay any transfer or
other taxes required by reason of the
issuance of certificates for such
shares of Stonehaven Common Stock in a
name other than that of the registered
holder of any such certificate
surrendered.
(c) Notwithstanding any other provision of
this Agreement or the Merger Agreement,
and in order to avoid the issuance of
any certificates for fractional shares
of Stonehaven Common Stock, Stonehaven
shall issue a full share of its Common
Stock in lieu of any such fractional
share.
3.5 Closing of Transfer Books. From and
after the Effective Time, the stock transfer books
of Netlink shall be closed and no transfer of
shares of Netlink Common Stock shall thereafter be
made. If, after the Effective Time, Netlink Common
Stock certificates are presented to Stonehaven,
they shall be cancelled and exchanged for the
Merger Consideration in accordance with the
procedures set forth in this Section 3.
3.6 Closing. The closing (the "Closing")
of the transactions contemplated by this Agreement
shall take place at the offices of Messerli &
Kramer P.A. at 10:00 a.m., local time, on
Wednesday, February 23, 2000, or at such other time
and place and on such other date as Stonehaven and
Netlink shall agree (the "Closing Date").
3.7 Intentionally deleted.
3.8 Deliveries at Closing. The parties
shall deliver the following instruments, documents
and property at Closing:
(a) By Stonehaven and the Subsidiary.
Stonehaven shall deliver the following
instruments, documents and property to
the Stockholders at the Closing:
(i) the Merger Consideration;
(ii) an opinion of Messerli & Kramer
P.A., counsel to Stonehaven and
the Subsidiary, substantially in
the form of Exhibit 3.8(a)(ii)
hereto;
(iii) an executed copy of the Plan of
Merger;
(iv) resolutions of the Board of
Trustees of Stonehaven and the
Board of Directors and Sole
Shareholder of Subsidiary
authorizing the Merger and the
transactions contemplated hereby;
and
(v) Employment Agreements by and
between Stonehaven and each of
Odeh A. Muhawesh, Mary Henschel
and Ann Wessels executed by
Stonehaven.
(b) By Netlink and the Stockholders.
Netlink and the Stockholders shall
deliver the following instruments,
documents and property to Stonehaven
and the Subsidiary at the Closing:
(i) stock certificates representing
all outstanding shares of Netlink
Common Stock in accordance with
this Section 3, together with all
necessary stock powers endorsed
in blank;
(ii) an opinion of Rider, Bennett,
Egan & Arundel LLP counsel to
Netlink and the Stockholders,
substantially in the form of
Exhibit 3.8(b)(ii) hereto;
(iii) Employment Agreements by and
between Stonehaven and each of
Odeh A. Muhawesh, Mary Henschel
and Ann Wessels executed by such
Stockholders;
(iv) all consents, approvals,
documents and certificates
contemplated by this Agreement or
reasonably requested by
Stonehaven or its counsel and
copies of all contracts,
commitments, leases and other
documents required to be
identified on the Schedules
hereto;
(v) the original stock record and
minute books of Netlink;
(vi) the resignations, dated as of the
Closing Date, of all of the
officers and directors of
Netlink;
(vii) resolutions of the Board of
Directors and the Stockholders of
Netlink authorizing the Merger
and the transactions contemplated
hereby; and
(viii) an executed copy of the Plan of
Merger.
(c) Additional Matters. Each party agrees
to execute and deliver such additional
instruments, documents and property,
and to take such additional action, as
may reasonably be requested by another
party hereto, or his, her or its
counsel, in order to effectuate the
transaction contemplated by this
Agreement.
SECTION 4. ADJUSTMENT TO THE MERGER CONSIDERATION
4.1 Merger Consideration Adjustment.
(a) Preparation of Closing Date Balance
Sheet. Within ninety (90) days after
the Closing Date, Stonehaven will
prepare at its expense and deliver to
the Stockholders the Closing Date
Balance Sheet for Netlink. The
Closing Date Balance Sheet shall be
adjusted to take into account or
reflect the following additional
matters:
(i) The restatement of Netlink's
obligation to Odeh A. Muhawesh
which, as of the Closing Date is
$750,000 ("Stockholder's Note");
and
(ii) The value, if any, of
MyFreeDesk.com, Inc. common stock
owned by Netlink as set forth in
Section 5.4 hereof.
(b) Adjustments. The Closing Date Balance
Sheet, as adjusted in subsection (a)
hereof, shall be compared to the Base
Balance Sheet (with similar adjustments
as provided in subsection (a) hereof).
In the event that the stockholder's
equity as of the Closing Date as
reflected on the Closing Date Balance
Sheet (as adjusted) is at least 90% of
the stockholder's equity as reflected
on the Base Balance Sheet (as adjusted)
(the "Minimum Stockholder Equity"), no
reduction in the Merger Consideration
shall be made. If the stockholder's
equity as of the Closing Date as
reflected on the Closing Date Balance
Sheet (as adjusted) is less than the
Minimum Stockholder Equity, the Merger
Consideration shall be reduced by the
amount such stockholder's equity as of
the Closing Date is less then the
Minimum Stockholder Equity.
The Stockholders shall have 30
days after receipt of the Closing Date
Balance Sheet to give Stonehaven
written notice that the Stockholders
intend to dispute the auditor's
determination of Netlink's Closing Date
stockholders' equity. Within 30 days
after receipt of the Stockholders'
written notice, Stonehaven shall
attempt to settle the dispute with the
Stockholders. If the Stockholders and
Stonehaven do not reach settlement of
Stonehaven's claim within such 30 days,
the dispute may at any time thereafter
be submitted by the Stockholders or
Netlink to arbitration in Minneapolis,
Minnesota, before a single arbitrator
selected by the American Arbitration
Association in accordance with the
rules and procedures of the American
Arbitration Association then in effect.
Any such arbitrator must be a
certified public accountant practicing
with a "Big 5" accounting firm other
than PricewaterhouseCoopers LLP. The
Stockholders and Stonehaven agree that
the arbitrator's award shall be final
and binding upon them with respect to
the dispute and may be entered in any
court having jurisdiction thereof. All
costs of the arbitration (including the
reasonable legal expenses of all
parties thereto) shall be borne by the
Stockholders and/or Stonehaven in the
amounts determined by the arbitrator,
who shall base such determination upon
the relative merits of the respective
positions of the Stockholders and
Stonehaven in the dispute.
Any reductions in the Merger
Consideration as determined above shall
be effected by the Stockholders
delivering to Stonehaven within ten
(10) business days after written
demand, shares of Stonehaven Common
Stock for cancellation. In determining
the number of shares of Stonehaven
Common Stock to be canceled under this
subsection (b), such shares shall be
valued at the Valuation Price per share
on the Closing Date of the Merger
determined pursuant to Section 3.2.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF
NETLINK AND THE STOCKHOLDERS
As a material inducement to Stonehaven to
enter into this Agreement and to consummate the
transactions contemplated hereby, Netlink and the
Stockholders, jointly and severally, hereby make to
Stonehaven each of the representations and
warranties set forth in this Section 5.
5.1 Organization and Qualification. Netlink
is a corporation duly organized, validly existing
and in good standing under the laws of the State of
Minnesota and has full power and authority to own
or lease its properties and to conduct its business
in the manner and in the places where such
properties are owned or leased or as such business
is currently conducted. The copies of Netlink's
Articles of Incorporation, as amended to date
(hereinafter referred to as its "Articles"),
certified by the Secretary of State of the State of
Minnesota, and of Netlink's Bylaws, as amended to
date (hereinafter referred to as its "Bylaws"),
certified by Netlink's Secretary, both as attached
under Exhibit 5.1(a) hereto, are complete and
correct and no amendments thereto have been filed
or are pending. Netlink is and has been at all
times in compliance with its Articles and Bylaws.
Netlink is duly qualified or licensed to conduct
business as a foreign corporation in and is in good
standing in each jurisdiction in which the nature
of the business conducted by Netlink or the
character and nature of the property or assets
owned or leased by Netlink makes such qualification
necessary, all of which jurisdictions are listed on
the Schedule of Foreign Qualifications attached
hereto as Exhibit 5.1(b).
5.2 Authority. Netlink has full right,
power and authority to enter into this Agreement
and each agreement, document and instrument to be
executed and delivered by Netlink pursuant to this
Agreement and to carry out the transactions
contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and each
such other agreement, document and instrument by
Netlink have been duly and validly authorized and
approved by all necessary action on the part of
Netlink and no other action on the part of Netlink
or the Stockholders is required in connection
therewith. This Agreement and each agreement,
document and instrument to be executed and
delivered by Netlink pursuant to this Agreement
constitutes, or when executed and delivered will
constitute, the legal, valid and binding obligation
of Netlink, each enforceable in accordance with
their respective terms. The execution, delivery and
performance by Netlink of this Agreement and each
such agreement, document and instrument:
(a) does not and will not violate any
foreign, federal, state, local or
other laws, regulations or
ordinances applicable to Netlink;
(b) does not or will not violate any
term or provision of the Articles
or Bylaws of Netlink; and
(c) does not and will not result in a
breach of, constitute or result
in a default under, accelerate
any obligation under or give rise
to a right of termination of, any
indenture or loan or credit
agreement or any other agreement,
contract, instrument, mortgage,
lien, lease, permit,
authorization, order, writ,
judgment, injunction, decree,
determination or arbitration
award to which Netlink is a party
or by which the property of
Netlink is bound or affected, or
result in the creation or
imposition of any mortgage,
pledge, lien, security interest
or other charge or encumbrance on
any of Netlink's assets.
No consent or waiver by, approval of, or
designation, declaration or filing with, any Person
is required in connection with the execution,
delivery and performance by Netlink and the
Stockholders of this Agreement and each agreement,
document and instrument to be executed and
delivered by Netlink or the Stockholders pursuant
to this Agreement.
5.3 Capitalization. Netlink's authorized
capital stock consists solely of shares of Netlink
Common Stock, of which 1,666,500 shares are issued
and outstanding and of which 333,500 shares are
authorized but unissued. All shares of Netlink
Common Stock are owned of record and beneficially
by the Stockholders in the amounts set forth in
Exhibit 5.3 hereto. There are no outstanding
dividends, whether current or accumulated, due or
payable on any of the capital stock of Netlink.
None of the Netlink Common Stock has been issued or
transferred in violation of any federal or state
law, including without limitation the Act. The
Netlink Common Stock is, and when delivered to
Stonehaven or its designee pursuant to this
Agreement will be, (i) duly authorized, validly
issued and outstanding, (ii) fully paid, non-
assessable and free of preemptive rights and (iii)
free and clear of any and all pledges, claims,
restrictions, charges, liens, security interests,
encumbrances or other interests of third parties of
any nature whatsoever. There are no outstanding
options, warrants, rights, commitments or
agreements of any kind for the issuance or sale of,
or outstanding securities convertible into, any
additional shares of capital stock of any class of
Netlink, and there are no voting trusts, voting
agreements, proxies or other agreements,
instruments or undertakings with respect to the
voting of any Netlink Common Stock to which Netlink
or the Stockholders are a party except a certain
Shareholder and Voting Control Agreement dated
January 1, 2000, which will be terminated prior to
the Closing Date.
5.4 Subsidiaries. Netlink has no
subsidiaries, has not had any subsidiaries during
the preceding five years and does not own any
securities issued by any business organization or
governmental authority except for United States
government securities, bank certificates of deposit
or other cash equivalents. Netlink does not own or
have any direct or indirect interest in or control
over any corporation, partnership, joint venture or
other entity of any kind. Notwithstanding the
foregoing, on or prior to the Closing Date, Odeh A.
Muhawesh shall cause to be transferred to Netlink
shares representing approximately 5% of the
outstanding stock of MyFreeDesk.com, Inc. No
payment shall be required for the transfer, nor
shall any liability for payment be reflected on the
Closing Date Balance Sheet.
5.5 Financial Statements. For each of the
past five fiscal years, Netlink's fiscal year end
has been December 31. Exhibit 5.5 contains the
unaudited balance sheets of Netlink as of December
31, 1997, 1998 and 1999, and the related unaudited
statements of income, changes in stockholder's
equity and cash flows of Netlink for the fiscal
years then ended (all such financial statements
being referred to collectively herein as the
"Financial Statements"). The unaudited balance
sheet of Netlink as of December 31, 1999, as
adjusted in the manner set forth in Section 4.1(a),
is referred to herein as the "Base Balance Sheet"
and is also attached as Exhibit 5.5. All of the
Financial Statements (including the notes thereto)
have been prepared in accordance with generally
accepted accounting principles applied consistently
during the periods covered thereby, are complete
and correct, present fairly the financial condition
of Netlink at the dates of said statements and the
results of its operations for the periods covered
thereby and are consistent with the books and
records of Netlink.
5.6 Title to Properties; Liens; Condition
of Properties.
(a) Netlink does not own any real property.
The Schedule of Leases (Exhibit 5.6(a))
contains a copy of and an accurate and
complete list of all of Netlink's
leasehold interests in real and
personal property including a brief
description of each leasehold interest
(including the duration and financial
terms thereof) and, if applicable, all
liens, mortgages or other encumbrances
upon each leasehold interest. All
leases to which Netlink is a party are
currently in full force and effect and
each party thereto has performed all of
its obligations under each of such
leases and is not in default
thereunder, and Netlink is not aware of
any event or condition which could
result in a default under any such
lease after notice or lapse of time or
both, nor has Netlink received notice
of any alleged default under any such
lease. The consummation of the
transactions contemplated by this
Agreement will not result in any
modification, termination, breach or
default or require any consent under
any such lease.
(b) Netlink does not own any machinery,
equipment, furniture, fixtures or
improvements (collectively, the "Fixed
Assets") with an original cost per unit
in excess of $500 or with a fair market
value in excess of $5,000, except as
set forth on the Schedule of Fixed
Assets (Exhibit 5.6(b)) attached
hereto. Netlink has good and
marketable title to all of its personal
property and none of the personal
property or assets of Netlink is
subject to any mortgage, pledge, lien,
conditional sales agreement, security
interest, encumbrance or other charge
except as specifically reflected in the
Base Balance Sheet.
(c) All machinery and equipment owned or
leased by Netlink is in reasonably good
repair and in working order.
5.7 Taxes.
(a) Returns and Payments. Netlink has filed
all Tax Returns that it was required to
file. All such Tax Returns were correct
and complete in all respects. All Taxes
owed by Netlink (whether or not shown
on any Tax Return) have been paid or
provided for in Netlink's Financial
Statements. Netlink currently is not
the beneficiary of any extension of
time within which to file any Tax
Return. No claim has ever been made by
an authority in a jurisdiction where
Netlink does not file Tax Returns that
it is or may be subject to taxation by
that jurisdiction. There are no actual,
pending or threatened liens,
encumbrances or charges against any of
the assets of Netlink arising in
connection with any failure (or alleged
failure) to pay any Tax.
(b) Withholding Taxes. Netlink has withheld
and paid all Taxes required to have
been withheld and paid in connection
with amounts paid or owing to any
employee, independent contractor,
creditor, shareholder or other third
party.
(c) Tax Liabilities. None of Netlink, the
Stockholders or any of Netlink's
officers, directors or employees
responsible for Tax matters has
knowledge of any facts that would lead
them to expect any authority to assess
any additional Taxes for any period for
which Tax Returns have been filed.
There is no dispute or claim concerning
any Tax liability of Netlink either
claimed or raised by any authority in
writing or as to which any of Netlink,
the Stockholders or any of Netlink's,
officers, directors or employees
responsible for Tax matters has
knowledge based upon personal contact
with any agent of such authority. The
Schedule of Tax Matters (Exhibit 5.7(c)
hereto) includes all Tax Returns filed
for taxable periods ended on or after,
and all examination reports, closing
agreements and statements of
deficiencies assessed against or agreed
to by Netlink since December 31, 1994,
indicates those Tax Returns that have
been audited and indicates those Tax
Returns that currently are the subject
of audit. Netlink has disclosed on its
federal income Tax Returns all
positions taken therein that could give
rise to a substantial understatement of
federal income Tax within the meaning
of Code Section 6662.
(d) Statute of Limitations. Netlink has not
waived any statute of limitations in
respect of Taxes or agreed to any
extension of time with respect to a Tax
assessment or deficiency.
(e) Affiliated Group. Netlink has not been
a member of an affiliated group filing
a consolidated federal income Tax
Return or has any liability for the
Taxes of any other person or entity
under Treasury Regulations Section
1.1502-6 (or similar provision of
state, local, or foreign law), as a
transferee or successor, by contract or
otherwise. Netlink is not a party to
any Tax allocation or sharing
agreement.
(f) Tax Attributes. Netlink is an S
Corporation within the meaning of Code
Section 1361(a).
5.8 Absence of Undisclosed Liabilities. As
of the date of the Base Balance Sheet and the date
hereof, Netlink had and has no indebtedness,
liabilities or obligations of any nature or kind,
whether accrued, absolute, contingent or otherwise
asserted or unasserted, known or unknown and
whether due or to become due (including, without
limitation, potential liabilities relating to
products or services provided by Netlink or the
conduct of Netlink's business prior to the date of
the Base Balance Sheet regardless of whether claims
in respect thereof had been asserted as of such
date), except liabilities which are reflected on
the Base Balance Sheet.
5.9 Accounts Receivable. A complete and
accurate listing of all accounts receivable of
Netlink as of December 31, 1999 accurately
reflecting the aging thereof is attached hereto as
the Schedule of Accounts Receivable (Exhibit 5.9).
Netlink has no accounts receivable or loans
receivable from any person, firm or corporation
which is affiliated with it or from any of its
directors, officers, employees or the Stockholders,
and all accounts and loans receivable from any such
person, firm or corporation shall be paid in cash
prior to the Closing Date.
5.10 Unbilled Time; Work In Process. The
value of all unbilled time or work-in-process
stated in the Base Balance Sheet reflect Netlink's
normal valuation policies and billing practices and
was determined in accordance with generally
accepted accounting principles, practices and
methods consistently applied.
5.11 Absence of Certain Changes. Except as
provided in Exhibit 5.11 and since the date of the
Base Balance Sheet, there has not been:
(a) any operation of Netlink out of the
ordinary course of business or any
change in the financial condition,
properties, assets, liabilities,
business, prospects or operations of
Netlink which change, by itself or in
conjunction with all other such
changes, has been or is likely to be
materially adverse with respect to
Netlink;
(b) any material purchase, sale, license or
other disposition, or any agreement or
other arrangement for the purchase,
sale, license or other disposition, of
any part of Netlink's properties or
assets (including any patents,
trademarks and copyrights) other than
purchases for and sales from inventory
in the ordinary course of business;
(c) any damage, destruction or loss,
whether or not covered by insurance,
adversely affecting Netlink's
properties, assets or business in
excess of $5,000 per single occurrence;
(d) any change with respect to the
Netlink's officers, management or
supervisory personnel other than
changes in supervisory personnel
occurring in the ordinary course of
business;
(e) any payment or discharge of a lien or
liability of Netlink which has been
paid or incurred other than in the
ordinary course of business;
(f) any obligation or liability incurred by
Netlink to any bank, to any officer,
director, employee or stockholder of
Netlink, or, other than in the ordinary
course of business, to any other
individual; or any loans or advances
made by Netlink to any officer,
director, employee or stockholder of
Netlink, except for normal compensation
and expense allowances payable to such
persons;
(g) any capital expenditure by Netlink in
excess of $10,000 for any one item;
(h) any contracts entered into by Netlink
which obligate Netlink for more than
$10,000 with respect to any one
contract or more than $25,000 with
respect to the aggregate of all such
contracts;
(i) any change in the accounting methods or
practices followed by Netlink or any
change in depreciation or amortization
policies or rates theretofore adopted;
(j) any increase in work in process levels
in excess of historical levels for
comparable periods;
(k) any acceleration, termination,
modification or cancellation of any
agreement, contract, lease or license
(or series of related agreements,
contracts, leases or licenses)
involving more than $10,000 to which
Netlink is a party or by which it is
bound;
(l) any issuance of any evidence of
indebtedness or creation, incurring,
assumption or guaranteeing of any
indebtedness for borrowed money or
capital lease obligations involving in
excess of $10,000 singly or $25,000 in
the aggregate;
(m) any delay or postponement of payment of
any accounts payable or other
liabilities outside the ordinary course
of business;
(n) any declaration, setting aside or
payment of any dividend or distribution
with respect to its capital stock, or
redemption, purchase or other
acquisition of its capital stock;
(o) any change in the employment terms or
employment-related benefits for any
independent sales representative or
employee outside the ordinary course of
business; or
(p) any agreement or understanding, whether
in writing or otherwise, for Netlink to
take any of the actions specified in
paragraphs (a) through (o) above.
5.12 Banking Relations. All of the
arrangements which Netlink has with any banking
institutions are described in the Schedule of
Arrangements with Banking Institutions (Exhibit
5.12) attached hereto, indicating with respect to
each of such arrangements the type of arrangement
maintained and the person or persons authorized to
act on behalf of the Netlink in respect thereof.
5.13 Intellectual Property.
(a) All domestic and foreign patents,
patent applications, copyrighted works,
copyright applications and
registrations, trade names, trademarks
and service marks, registered
trademarks and trademark applications,
registered service marks and service
mark applications which are used by,
owned by or licensed to Netlink
(collectively, the "Intellectual
Property") are listed in the Schedule
of Intellectual Property (Exhibit 5.13)
attached hereto, which Schedule
indicates, with respect to each, the
nature of Netlink's interest therein
and the expiration date thereof or the
date on which Netlink's interest
therein terminates. Registered
copyrights, patents, trademarks and
service marks which are owned by or
licensed to Netlink have been duly
registered in, filed in or issued by,
as the case may be, the United States
Patent and Trademark Office, the United
States Register of Copyrights or the
corresponding offices of other
countries identified on said Schedule,
and have been properly maintained and
renewed in accordance with all
applicable provisions of law and
administrative regulations in the
United States and each such country.
(b) The Intellectual Property is the only
intellectual property used in or
otherwise necessary to operate the
business and operations of Netlink as
currently conducted or proposed to be
conducted.
(c) Use of the Intellectual Property and
any other intellectual property used by
Netlink does not require the consent of
any other person and the same are
freely transferable (except as
otherwise provided by law) and are
owned exclusively by Netlink, free and
clear of any attachments, liens,
encumbrances or adverse claims, and
neither its present or contemplated
activities, products or service
infringe, misappropriate, dilute,
impair or constitute unfair competition
with respect to any patent, tradename,
trademark, copyright or other
proprietary rights of others.
(d) No other person has an interest in or
right or license to use, or the right
to license others under, the
Intellectual Property. There are no
claims or demands of any other person
pertaining thereto and no proceedings
have been instituted, or are pending or
threatened, which challenge the rights
of Netlink in respect thereof and
Netlink and the Stockholders do not
know of any facts which could be the
basis of any such claims. There is no
infringement of any of the Intellectual
Property by others nor is any of the
Intellectual Property subject to any
outstanding order, decree, judgment,
stipulation, settlement, lien, charge,
encumbrance or attachment. No claim or
demand has been made and no proceeding
has been filed or is threatened to be
filed charging Netlink with
infringement of any patent, trade name,
trademark, service mark or copyright
and Netlink and the Stockholders do not
know of any facts which could be the
basis of any such claims. There are no
royalties, honoraria, fees or other
payments payable by or on behalf of
Netlink to any person with respect to
any of the Intellectual Property.
5.14 Trade Secrets and Customer Lists.
Netlink owns or has the right to use, free and
clear of any claims or rights of others, all trade
secrets, inventions, developments, customer lists,
manufacturing and secret processes, hardware
designs, programming processes, software and other
information and know-how (if any) required for or
used in the marketing of all services formerly or
presently sold, licensed, under development or
produced by Netlink, including products licensed
from others. There are no payments which are
required to be made by or on behalf of Netlink for
the use of such trade secrets, inventions,
developments, customer lists, copyrighted
materials, manufacturing and secret processes and
know-how. Netlink is not using or in any way making
any unlawful or wrongful use of any confidential
information, copyrighted materials, know-how or
trade secrets of any third party, including,
without limitation, any former employer of any
present or past employee of Netlink or of any of
Netlink's predecessors. None of the Stockholders is
a party to any non-competition or confidentiality
agreement with any party other than Netlink.
5.15 Contracts. Except for contracts,
commitments, plans, agreements and licenses
attached to and described in the Schedule of
Contracts and Commitments (Exhibit 5.15) attached
hereto, Netlink is not a party to or subject to:
(a) any plan or contract providing for
compensation or benefits of any type in
connection with services rendered to
Netlink by its employees or independent
contractors having an aggregate value
with respect to any one individual in
excess of $25,000 (other than those
providing for employment at will), or
involving any interest in the capital
stock of Netlink;
(b) any contract or agreement for the
purchase of any commodity, material or
Fixed Asset, other than purchase orders
entered into in the ordinary course of
business for less than $10,000 each and
which in the aggregate do not exceed
$30,000;
(c) any contract or agreement for the sale
of any product, material, Fixed Assets
or service, other than contracts with
customers entered into in the ordinary
course of business;
(d) any contract or agreement providing for
the purchase of all or substantially
all of its requirements of a particular
product from a supplier, or for
periodic minimum purchases of a
particular product from a supplier;
(e) any contract or agreement which by its
terms does not terminate or is not
terminable without penalty by Netlink
and any successor or assignee of
Netlink on 30 days' notice;
(f) any contract containing covenants
limiting in any material respect
Netlink's freedom to compete in any
line of business or with any Person;
(g) any license agreement (as licensor or
licensee);
(h) any contract or agreement with any
present or former officer, director or
stockholder of Netlink or with any
persons or organizations controlled by
or affiliated with any of them;
(i) any contract, agreement or arrangement
providing for a guarantee or
indemnification by Netlink;
(j) any agreement concerning a partnership
or joint venture; or
(k) any agreement under which the
consequences of a default or
termination could have a material
adverse effect on the business,
financial conditions or prospects of
Netlink.
Copies of all contracts, commitments, plans,
agreements or licenses attached to and described in
the Schedule of Contracts and Commitments are true,
correct and complete, and have been subject to no
amendment, extension or other modification as of
the date hereof. Each contract, commitment, plan
agreement and license described in the Schedule of
Contracts and Commitments or the Schedule of
Customers, Distributors and Independent Sales
Representatives (Exhibit 5.27) is binding and
enforceable in accordance with its terms and is in
full force or effect without any default thereunder
by Netlink or, to the knowledge of Netlink or any
Stockholder, by any other party thereto (a
"default" being defined for purposes hereof as an
actual default or any set of facts which would,
upon receipt of notice or passage of time,
constitute a default). The execution, delivery and
performance of this Agreement, and the agreements,
documents and instruments contemplated hereby, by
Netlink and the Stockholders and the change in
control of Netlink effected hereby does not and
will not affect the validity or enforceability of,
or in any way modify Netlink's rights or
obligations under any contract, lease, commitment,
plan, agreement or license to which Netlink is a
party or under which it is entitled to benefits.
5.16 Litigation. There are no suits,
actions or administrative, arbitration or other
proceedings or governmental investigations pending
or threatened against or relating to Netlink or
Netlink's properties or business. Netlink is not
otherwise engaged as a party in any suit, action or
administrative, arbitration or other proceeding.
Netlink has not entered into or been subject to any
consent decree, compliance order or administrative
order with respect to any property owned, operated,
leased or used by Netlink. Netlink has not received
any request for information, notice, demand letter,
administrative inquiry or formal or informal
complaint or claim with respect to any property
owned, operated, leased or used by Netlink or any
facilities or operations thereon. There are no
existing or, to the knowledge of Netlink or the
Stockholders, threatened warranty or other similar
claims, or any facts upon which a claim of such
nature could be based, against Netlink for services
which are defective or fail to meet any service or
product warranties. Neither Netlink nor any
Stockholder is aware of any facts providing a basis
for any matter addressed in this Section 5.16 or
has any reason to believe that any such matters
will be forthcoming.
5.17 Compliance with Laws. Netlink is not in
material violation of any laws, rules or
regulations which apply to the conduct of its
business or any facilities or property owned,
leased, operated or used by Netlink. There has
never been any citation, fine or penalty imposed,
asserted or threatened against Netlink under any
foreign, federal, state, local or other law or
regulation relating to employment, immigration,
occupational safety, zoning or environmental
matters, and neither Netlink nor the Stockholders
is aware of any circumstances, occurrences or
conditions likely to result in the imposition or
assertion of such a citation, fine or penalty, nor
has Netlink or the Stockholders received any notice
to the effect that Netlink is in violation of any
such laws or regulations.
5.18 Insurance. The physical properties and
assets of Netlink are insured to the extent
disclosed in the Schedule of Insurance (Exhibit
5.18) attached hereto, and all other insurance
policies and arrangements of Netlink are disclosed
in said Schedule, including present product
liability insurance policies and product liability
insurance policies held by Netlink over the past
five years. All such present policies of insurance
are with insurance companies believed by Netlink to
be financially sound and reputable and are in full
force and effect, all premiums with respect thereto
are currently paid and Netlink is in compliance
with the terms thereof. Said insurance policies are
sufficient for compliance by Netlink with all
requirements of law and all agreements and leases
to which Netlink is a party and provide insurance
coverage for the properties, assets, operations and
employees of Netlink generally comparable in type
and amount to that which is customarily carried by
other corporations engaged in similar businesses
and of approximately the same size and similarly
situated as Netlink. The workers' compensation
insurance of Netlink complies with applicable
statutory requirements as to the amount of such
coverage. Neither this Agreement nor the
consummation of the transactions contemplated
hereby will cause any such insurance policy not to
be in full force and effect.
5.19 Service Warranties. Each service
performed by Netlink has been in material
conformity with all applicable contractual
commitments and all express and implied warranties.
Netlink has no material liability (and there is no
basis for any present or future action, suit,
proceeding, hearing, investigation, charge,
complaint, claim or demand which may give rise to
any liability) for reperformance of any service or
other damages in connection therewith, subject only
to the reserve for service warranty claims set
forth in the Base Balance Sheet (if any) as
adjusted for the passage of time through the
Closing Date in accordance with the past custom and
practice of Netlink. No service performed by
Netlink is subject to any guaranty, warranty or
other indemnity.
5.20 Service Liability. Netlink has no
material liability (and there is no basis for any
present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or
demand against it giving rise to any liability)
arising out of any injury to individuals or
property as a result of any service performed by
Netlink.
5.21 Powers of Attorney. Neither Netlink nor
any Stockholder has entered into any outstanding
power of attorney relating to Netlink or its
business or assets.
5.22 Finder's Fee. Neither Netlink nor any
of the Stockholders have incurred or will incur or
become liable for any broker's commission or
finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
5.23 Authorizations. Netlink has obtained
and is in compliance with all federal, foreign,
state, provincial, municipal, local or other
governmental consents, certifications, licenses,
permits, registrations, grants and other
authorizations (collectively the "Authorizations"
and individually an "Authorization") which are
necessary to permit it to conduct its business as
presently conducted, and no proceeding is pending
or threatened in which any Person or governmental
authority is seeking to revoke or deny the renewal
of any Authorization. All Authorizations are listed
in the Schedule of Authorizations (Exhibit 5.23).
Each Authorization is in full force and effect
without any default thereunder by Netlink (a
"default" being defined for purposes hereof as an
actual default or any set of facts which would,
upon receipt of notice or passage of time,
constitute a default), will remain in full force
and effect after giving effect to the transactions
contemplated by this Agreement, and Netlink has not
received notice of any claim or charge that Netlink
has breached any Authorization.
5.24 Transactions with Interested Persons.
Neither the Stockholders nor any officer,
supervisory employee or director of Netlink nor any
of their respective spouses or children, owns,
directly or indirectly, on an individual or joint
basis, any material interest in, or serves as an
officer or director or in another similar capacity
of, any customer, competitor or supplier of
Netlink, or any organization which has a material
contract or arrangement with Netlink.
5.25 Employee Benefit Plans.
(a) All employee benefit plans, as that
term is defined in Section 3(3) of
ERISA, which now are or ever have been
maintained by Netlink (or any
subsidiary of Netlink) or to which
Netlink (or any subsidiary of Netlink)
now has or has ever had an obligation
to contribute (the "Employee Benefit
Plans") are described in the Schedule
of Employee Benefit Plans
(Exhibit 5.25) attached hereto. No
event has occurred nor has there been
any omission which would result in
violation of any laws, rulings or
regulations applicable to any Employee
Benefit Plan. There are no claims
pending or threatened with respect to
any Employee Benefit Plan, other than
claims for benefits by employees,
beneficiaries or dependents arising in
the normal course of the operation of
any such plan.
(b) Each Employee Benefit Plan that is
intended to be qualified under Section
401(a) or 401(k) of the Code is
identified as a "Qualified Plan" on the
Schedule of Employee Benefit Plans and
has in fact been so qualified from the
effective date of its establishment and
continues to be so qualified (unless
such plan has been terminated, in which
case such plan continued to be so
qualified until its date of
termination). No event or omission has
occurred which would cause any such
plan to lose its qualification under
Section 401(a) or 401(k) of the Code,
or which would cause Netlink to incur
liability for any excise tax under the
Code with respect to the maintenance,
operation or any other aspect of any
such Qualified Plan.
(c) Neither Netlink nor any member of any
group of trades or businesses under
common control with Netlink, within the
meaning of Section 4001(b)(1) of ERISA,
(i) has ever had an obligation to
contribute to a multiemployer plan,
within the meaning of Section 3(37) of
ERISA, (ii) has incurred any liability
under Title IV of ERISA, which will not
be paid in full prior to the Closing
Date or (iii) has ever made
contributions to or has had an
obligation to contribute to an
association established under Section
501(c)(9) of the Code. With respect to
each employee benefit plan as that term
is defined in Section 3(3) of ERISA,
maintained by Netlink or any member of
any "controlled group" (as defined in
Section 412(n) of the Code) of which
Netlink is or has been a member (a
"Controlled Group") to which Netlink or
any member of any Controlled Group has
had an obligation to contribute there
are no "accumulated funding
deficiencies" within the meaning of
Section 302 of ERISA or Section 412 of
the Code, or contributions or premiums
required to be made which have not been
either paid or accrued as a liability
by Netlink. All payments and
contributions required to be made under
any and all collective bargaining
agreements, or any other agreements, to
which Netlink or any member of any
Controlled Group is a party or is
otherwise subject, have been made on a
timely basis.
(d) With respect to each "group health
plan" (as defined in Section 607(1) of
ERISA) that has been maintained by
Netlink or any member of any Controlled
Group, all notices required pursuant to
Section 606 of ERISA have been provided
on a timely basis and each such plan
has otherwise complied in all material
respects with the requirements of
Sections 606 through 608 of ERISA.
Except as required by Section 601 of
ERISA, neither Netlink nor any member
of any Controlled Group has made any
commitment or is otherwise obligated to
provide any non-pension benefits to any
employee, former employee or spouse or
dependent of any such employee or
former employee.
(e) With respect to each Employee Benefit
Plan maintained by Netlink (or any
subsidiary of Netlink) within the three
years preceding the Closing, complete
and correct copies of the following
documents (if applicable to such
Employee Benefit Plan) are attached as
part of the Schedule of Employee
Benefit Plans: (i) all documents
embodying or governing such Employee
Benefit Plan, as they may have been
amended to the date hereof; (ii) the
most recent IRS determination letter
with respect to such Employee Benefit
Plan and any applications for
determination subsequently filed with
the IRS; (iii) the three most recently
filed IRS Forms 5500, with all
applicable schedules attached thereto;
(iv) the three most recent actuarial
valuation reports completed with
respect to such Employee Benefit Plan;
(v) the summary plan description for
such Employee Benefit Plan and all
modifications thereto; and (vi) any
insurance policy (including any
fiduciary liability insurance policy)
related to such Employee Benefit Plan.
5.26 Intentionally deleted.
5.27 Customers. Distributors and Independent
Sales Representatives. The Schedule of Customers,
Distributors and Independent Sales Representatives
(Exhibit 5.27) sets forth the names and addresses
of all customers to which, and independent sales
representatives and distributors through which,
Netlink has sold or distributed in excess of
$50,000 of its services during any of the last
three fiscal years of Netlink. Such schedule also
indicates all customers, distributors and
independent sales representatives with which
Netlink has entered into a contract or agreement.
During such period and through the date hereof, no
such customer or distributor has canceled or
otherwise terminated its relationship with Netlink
or decreased materially its usage or purchase of
the services of Netlink. To the knowledge of
Netlink or any of the Stockholders, no such
customer or distributor has any plan or intention
to terminate, cancel or otherwise modify its
relationship with Netlink in a manner which would
be materially adverse to Netlink.
5.28 Labor Relations: Employees. Netlink
employs approximately 28 employees as of the date
hereof and generally enjoys a good employer-
employee relationship. Each employee of Netlink who
is compensated in the aggregate in excess of
$25,000 annually and his or her current rate of
compensation is listed, together with a copy of any
employment agreement, in the Schedule of Employee
Compensation (Exhibit 5.28) attached hereto.
Netlink is not delinquent in payments to any of its
employees for any wages, salaries, commissions,
bonuses or other direct compensation for any
services performed for it to the date hereof or
amounts required to be reimbursed to such
employees. Upon termination of the employment of
any of Netlink's employees, neither Netlink nor
Stonehaven will by reason of anything done prior to
the Closing be liable to any of such employees for
"severance pay" or any other payments. Netlink is
in compliance with all applicable laws and
regulations respecting labor, employment, fair
employment practices, terms and conditions of
employment and wages and hours. There are no
charges of employment discrimination or unfair
labor practices, claims by employees against
Netlink the asserted value of which exceeds $5,000
individually or $15,000 in the aggregate or
strikes, slowdowns, stoppages of work or any other
concerted interference with normal operations
existing, pending or threatened against or
involving Netlink. No question concerning
representation exists respecting the employees of
Netlink. No grievance which might have an adverse
effect on Netlink or the conduct of its business or
any arbitration proceeding arising out of or under
collective bargaining agreements is pending and no
claim therefor has been asserted. No collective
bargaining agreement is in effect or is currently
being or is about to be negotiated by Netlink.
5.29 Other Agreements and Claims. Except as
set forth in the Schedule of Other Agreements
(Exhibit 5.29) attached hereto, there are no
material agreements or arrangements not contained
herein, or disclosed in any Schedule hereto, to
which any Stockholder, or any individual serving as
director or officer of Netlink, is a party relating
to the business of Netlink or to such
Stockholder's, director's or officer's rights and
obligations as a stockholder, partner of a
stockholder, director or officer of Netlink. As of
the Closing Date, each Stockholder represents that
he or she has no known material claims for damages,
reimbursement, entitlement or otherwise against
Netlink.
5.30 Copies of Documents. Netlink has
included in the Schedules and Exhibits attached
hereto true and correct copies of (a) all material
documents referred to in this Section 5 including,
without limitation, those referred to in the
Schedules delivered to Stonehaven pursuant to this
Agreement, and (b) all other corporate books and
records including, without limitation, all stock
record books, all minutes of stockholders' and
directors' meetings and all consents in lieu of
such meetings, which accurately record all action
taken by its stockholders and Board of Directors
and committees thereof from the date of
organization of Netlink through the date hereof.
However, if Netlink has previously provided a copy
of any documents to Stonehaven, Netlink's
obligations hereunder will be satisfied by
describing the document on any Schedule or Exhibit
hereto and indicating its prior delivery to
Stonehaven.
5.31 Disclosure of Material Information and
Potentially Adverse Developments. Netlink and the
Stockholders have reported to Stonehaven any and
all material information of which Netlink or any of
the Stockholders has knowledge as to potentially
adverse factors in the business of Netlink, other
than factors affecting the industry generally.
5.32 Netlink Common Stock. The Stockholders
own of record and beneficially the number of shares
of Netlink Common Stock set forth opposite his or
her name in Exhibit 5.3 hereto, free and clear of
any and all restrictions on transfer (other than
any restrictions under the Act and state securities
laws which do not prohibit the transfer of Netlink
Common Stock to Stonehaven as contemplated herein
and other than the Shareholder and Voting Control
Agreement referred to in Section 5.3 hereof),
pledges, claims, restrictions, charges, liens,
security interests, encumbrances or other interests
of third parties of any nature whatsoever. No
Stockholder is a party to any contract or
commitment that could require such Stockholder to
sell, transfer, or otherwise dispose of any capital
stock of Netlink (other than this Agreement, and
the Shareholder and Voting Control Agreement
referred to in Section 5.3 hereof). No Stockholder
is a party to any voting trust, proxy or other
agreement or understanding with respect to the
voting of any capital stock of Netlink other than
the Shareholder and Voting Control Agreement
referred to in Section 5.3 hereof.
5.33 Authority. The Stockholders have full
right, authority, power and capacity: (i) to enter
into this Agreement and each agreement, document
and instrument to be executed and delivered by or
on behalf of him or her pursuant to this Agreement;
(ii) to carry out the transactions contemplated
hereby and thereby; and (iii) to transfer, sell and
deliver the Netlink Common Stock to Stonehaven (or
its designee) in the Merger pursuant to this
Agreement. This Agreement and each agreement,
document and instrument executed and delivered by
each Stockholder pursuant to this Agreement
constitutes, or when executed and delivered will
constitute, the legal, valid and binding obligation
of the Stockholders, each enforceable in accordance
with their respective terms. The execution,
delivery and performance of this Agreement and each
such agreement, document and instrument by the
Stockholders: (i) does not and will not violate any
foreign, federal, state, local or other laws,
regulations or ordinances applicable to the
Stockholders or require the Stockholders to obtain
any approval, consent or waiver of, or make any
filing with, any Person or authority (governmental
or otherwise) that has not been obtained or made;
and (ii) does not and will not result in a breach
of, constitute a default under, accelerate any
obligation under or give rise to a right of
termination of, any indenture or loan or credit
agreement or any other agreement, contract,
instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction,
decree, determination or arbitration award to which
the Stockholders are a party or by which the
property of the Stockholder is bound or affected,
or result in the creation or imposition of any
mortgage, pledge, lien, security interest or other
charge or encumbrance on any of the property or
assets of Netlink.
5.34 Certain Securities Law Matters;
Investment Representations. Each Stockholder
acknowledges being furnished by Stonehaven with a
copy of Stonehaven's recent filings with the SEC,
including Form SB-21A filed October 25, 1999, Form
10QSB/A filed November 16, 1999, Form 8K filed
January 13, 2000 and Form 8-K/A filed January 14,
2000, and being offered the opportunity to ask
questions of, and receive answers from,
Stonehaven's officers with respect to Stonehaven's
business and financial affairs. Each Stockholder
hereby acknowledges and agrees that the Stonehaven
Common Stock to be acquired pursuant to this
Agreement is being acquired for his or her own
account and not for any other person, or with a
view to distribution or sale thereof, and that such
securities have not been registered under the Act
or applicable state securities or "Blue Sky" laws,
and therefore cannot be resold unless so registered
or exempted therefrom. The Stockholders agree and
understand that certificates representing such
securities will bear the following legend
reflecting the foregoing restrictions on transfer:
"The shares of stock represented by
this certificate have not been
registered under the Securities Act of
1933, as amended (the "Act")
or under any applicable state
securities laws (the "Laws"). The
shares
may not be sold, transferred, assigned,
pledged or otherwise disposed
of at any time unless they are
registered under such Act and Laws
or unless in the opinion of legal
counsel for the Company such
disposition will not result in a
violation of such Act or any such
Laws."
5.35 Further Assurances. The
representations, warranties and statements
contained in this Agreement and in the
certificates, exhibits and schedules delivered by
Netlink to Stonehaven pursuant to this Agreement,
when taken together, do not and shall not contain
any untrue statement of a material fact, and do not
and shall not omit to state a material fact
required to be stated therein or necessary in order
to make such representations, warranties or
statements not misleading in light of the
circumstances in which they were made.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF
STONEHAVEN AND SUBSIDIARY
Stonehaven and Subsidiary, jointly and
severally, hereby make to the Stockholders each of
the representations and warranties set forth in
this Section 6 as follows:
6.1 Organization and Good Standing.
Stonehaven is a real estate investment trust duly
organized, legally existing, and in good standing
under the laws of the State of Maryland with full
corporate power to conduct its business as now
being conducted. Subsidiary is a corporation duly
organized, legally existing and in good standing
under the laws of the State of Delaware with full
corporate power to conduct business as now being
conducted.
6.2 Authority. Stonehaven and Subsidiary
have full right, power and authority to enter into
this Agreement and each agreement, document and
instrument to be executed and delivered by them
pursuant to this Agreement and to carry out the
transactions contemplated hereby and thereby. The
execution, delivery and performance of this
Agreement and each such other agreement, document
and instrument by them has been duly and validly
authorized and approved by all necessary action on
the part of each of them and no other action on the
part of each of them is required in connection
therewith. This Agreement and each agreement,
document and instrument to be executed and
delivered by each of them pursuant to this
Agreement constitutes, or when executed and
delivered will constitute, the legal, valid and
binding obligation of each of them, each
enforceable in accordance with their respective
terms. The execution, delivery and performance by
Stonehaven and Subsidiary of this Agreement and
each such agreement, document and instrument:
(a) does not and will not violate any
foreign, federal, state, local or other
laws, regulations or ordinances
applicable to Stonehaven;
(b) does not or will not violate any term
or provision of the Declaration of
Trust of Stonehaven or the Articles of
Incorporation or Bylaws of Stonehaven
and Subsidiary; or
(c) does not and will not result in a
breach of, constitute or result in a
default under, accelerate any
obligation under or give rise to a
right of termination of, any indenture
or loan or credit agreement or any
other agreement, contract, instrument,
mortgage, lien, lease, permit,
authorization, order, writ, judgment,
injunction, decree, determination or
arbitration award to which Stonehaven
or Subsidiary is a party or by which
the property of Stonehaven or
Subsidiary is bound or affected, or
result in the creation or imposition of
any mortgage, pledge, lien, security
interest or other charge or encumbrance
on any of Stonehaven's or Subsidiary's
assets.
No consent or waiver by, approval of, or
designation, declaration or filing with, any Person
or authority (governmental or otherwise) is
required in connection with the execution, delivery
and performance by Stonehaven or Subsidiary of this
Agreement and each agreement, document and
instrument to be executed and delivered by
Stonehaven pursuant to this Agreement.
6.3. Stonehaven Common Stock. The
Stonehaven Common Stock is, and when delivered to
the Stockholders pursuant to this Agreement will
be, (i) duly authorized, validly issued and
outstanding, (ii) fully paid, non-assessable and
free of preemptive rights, and (iii) free and clear
of any and all pledges, claims, restrictions,
charges, liens, security interests, encumbrances or
other interests of third parties of any nature
whatsoever, except for restrictions imposed by
state or federal securities laws and any other
restriction imposed by this Agreement.
6.4 SEC Reports. Stonehaven has filed all
required forms, reports and documents with the SEC
which, when filed comply as to form in all material
respects with all applicable requirements of the
Act and the Securities Exchange Act of 1934, as
amended, and there has been no material adverse
change in the assets or financial condition of
Stonehaven since the date upon which Stonehaven
made its last filing with the SEC.
6.5 Further Assurances. The
representations, warranties and statements
contained in this Agreement and in the
certificates, exhibits and schedules delivered by
Stonehaven to Netlink and the Stockholders pursuant
to this Agreement, when taken together, do not and
shall not contain any untrue statement of a
material fact, and do not and shall not omit to
state a material fact required to be stated therein
or necessary in order to make such representations,
warranties or statements not misleading in light of
the circumstances in which they were made.
SECTION 7. PRE-CLOSING COVENANTS OF NETLINK AND
THE STOCKHOLDERS
Each of Netlink and the Stockholders,
jointly and severally, hereby make the covenants
and agreements set forth in this Section 7.
7.1 Conduct of Business. Between the date
of this Agreement and the Closing Date, Netlink
will, and the Stockholders will cause Netlink to:
(a) conduct its business only in the
ordinary course and refrain from
changing or introducing any method of
management or operations or entering
into any agreement or commitment except
in the ordinary course of business and
consistent with prior practices;
(b) refrain from making any purchase, sale
or disposition of any asset or property
other than in the ordinary course of
business, from purchasing any capital
assets costing more than $25,000 in the
aggregate and from mortgaging,
pledging, subjecting to a lien or
otherwise encumbering any of its
properties or assets other than in the
ordinary course of business;
(c) refrain from incurring any contingent
liability as a guarantor or otherwise
with respect to the obligations of
others, and from incurring any other
contingent or fixed obligations or
liabilities except those that are in
the ordinary course of business;
(d) refrain from making any change or
incurring any obligation to make a
change in its Articles, Bylaws or
authorized or issued capital stock;
(e) refrain from declaring, setting aside
or paying any dividend, making any
other distribution in respect of its
capital stock or making any direct or
indirect redemption, purchase or other
acquisition of its stock;
(f) refrain from making any change in the
compensation payable or to become
payable to any of its officers,
employees, agents or independent
contractors;
(g) refrain from increasing short or long-
term debt except in the ordinary course
of business, prepaying any loans from
its stockholders, officers or directors
(if any) or making any change in its
borrowing arrangements;
(h) prevent any change with respect to its
management and supervisory personnel
and banking arrangements;
(i) keep intact its business organization,
keep available its present officers and
employees and preserve the goodwill of
all suppliers, customers, distributors,
independent contractors and others
having business relations with it;
(j) have in effect and maintain at all
times all insurance of the kind, in the
amount and with the insurers set forth
in the Schedule of Insurance hereto or
equivalent insurance with any
substitute insurers or insurance
policies approved by Stonehaven in
writing prior to such change of insurer
or issuance of new insurance policy;
(k) furnish Stonehaven with unaudited
monthly balance sheets and statements
of income of Netlink within ten (10)
days after each month end for each
month ending more than ten (10) days
before the Closing; and
(l) permit Stonehaven and its authorized
representatives to have full access to
all of its properties, assets, records,
tax returns, contracts and documents
and furnish to Stonehaven or its
authorized representatives such
financial and other information with
respect to Netlink's business or
properties as Stonehaven may from time
to time reasonably request.
7.2 Authorization from Others. Prior to the
Closing Date, Netlink and each of the Stockholders
will obtain all authorizations, consents and
permits of others required to permit the
consummation by Netlink and each of the
Stockholders of the transactions contemplated by
this Agreement.
7.3 Breach of Representations and
Warranties. Neither Netlink nor any Stockholder
shall take any action which would result in any of
the representations and warranties contained in
Section 5 hereof being untrue in any material
respect. Promptly upon the occurrence of, or
promptly upon Netlink or a Stockholder becoming
aware of the impending or threatened occurrence of,
any event which would cause or constitute a breach
or default, or would have caused or constituted a
breach or default had such event occurred or been
known to Netlink or such Stockholder prior to the
date hereof, of any of the representations and
warranties of Netlink or the Stockholders contained
in or referred to in this Agreement or in any
Schedule or Exhibit referred to in this Agreement,
Netlink or such Stockholder, as the case may be,
shall give detailed written notice thereof to
Stonehaven and shall use its, his or her best
efforts to prevent or promptly remedy the same.
7.4 Consummation of Agreement. Netlink and
the Stockholders, jointly and severally, shall use
their best efforts to perform and fulfil all
conditions and obligations on their parts to be
performed and fulfilled under this Agreement.
Netlink will obtain prior to the Closing all
necessary authorizations or approvals of its
stockholders and Board of Directors, in accordance
with the laws of the state of incorporation of
Netlink.
7.5 Cooperation with Stonehaven. Netlink
and the Stockholders, jointly and severally, shall
cooperate with all reasonable requests of
Stonehaven and Stonehaven's counsel in connection
with the consummation of the transactions
contemplated hereby.
7.6 No Solicitation of Other Offers. Until
the earlier of March 1, 2000 or the date that
Stonehaven notifies Netlink in writing of
Stonehaven's intention to abandon this Agreement,
none of Netlink, the Stockholders, nor any of their
respective officers, directors, agents or
representatives will, directly or indirectly, (i)
solicit, initiate discussions or engage in
negotiations with, any person, other than
Stonehaven, relating to the possible acquisition of
Netlink or any of Netlink's assets or capital
stock, including whether by merger or other
business combination (except in the ordinary course
of business of Netlink); (ii) provide, or cause any
other person to provide, any information to any
person, other than Stonehaven, relating to the
possible acquisition of Netlink or any of Netlink's
assets or capital stock, including whether by
merger or other business combination (except in the
ordinary course of business of Netlink); or (iii)
enter into a transaction with any Person, other
than Stonehaven, concerning the possible
acquisition of Netlink or any of Netlink's assets
or capital stock, including whether by merger or
other business combination (except in the ordinary
course of business of Netlink). None of the
Stockholders will vote their Netlink Common Stock
in favor of any acquisition proposed by a party
other than Stonehaven. The Stockholders will
notify Stonehaven immediately if any Person makes
any proposal, offer, inquiry or contact with
respect to any of the foregoing.
7.7 Confidentiality. Netlink and the
Stockholders, jointly and severally, agree that
(a) Netlink, the Stockholders and their respective
officers, directors, agents and representatives
will hold in strict confidence, and will not use,
any "Confidential Information" obtained in
connection with this transaction or Agreement with
respect to the business of Stonehaven, except for
the purpose of Netlink's internal evaluation of the
transactions contemplated by this Agreement; (b) if
such transactions are not consummated, Netlink will
return to Stonehaven all copies of such
Confidential Information, including but not limited
to worksheets, reports, manuals, lists, memoranda
and other documents prepared by or made available
to Netlink or the Stockholders in connection with
this transaction; and (c) they will treat the
existence of this Agreement and the transactions
contemplated hereby as strictly confidential and
will not disclose them to any Person without the
prior written consent of Stonehaven. "Confidential
Information" includes all business and financial
information of Stonehaven, including financial
statements, tax returns, business and marketing
plans and customer and supplier data, but does not
include publicly available information obtained
from a third party source not under an agreement or
obligation to maintain in the confidentiality of
such information and information independently
developed by a party without the use of otherwise
confidential information.
7.8 Landlord Estoppel Certificates.
Netlink and the Stockholders will use their
reasonable best efforts to obtain from Netlink's
landlords (the "Landlords") estoppel certificates
acceptable in form and substance to Stonehaven
providing that (i) each lease is in full force and
effect and has not been modified, altered or
supplemented in any way; (ii) on the date of such
estoppel certificate, there are no existing
defenses, off-sets or credits which the Landlord
has against Netlink under the lease, and the
Landlord is not aware of any action or inaction
that has occurred or failed to occur that by the
passage of time or upon notice duly given would
constitute a defense to the lease or create a right
of off-set or to a credit, or if such an action or
inaction has occurred, the nature of the action or
inaction; and (iii) stating the amount of rent and
the date through which such rent has been paid.
SECTION 8. PRE-CLOSING COVENANTS OF STONEHAVEN
AND SUBSIDIARY
8.1 Consummation of Agreement. Stonehaven
and Subsidiary shall use their best efforts to
perform and fulfil all conditions and obligations
on their part to be performed and fulfilled under
this Agreement. Stonehaven and Subsidiary will
obtain prior to the Closing all necessary
authorizations or approvals of their Board of
Trustees or Board of Directors and stockholders (in
the case of Subsidiary), in accordance with the
laws of the States of Maryland and Delaware,
respectively.
8.2 Confidentiality. Stonehaven and
Subsidiary agree that, unless and until the Closing
has been consummated, (a) Stonehaven and Subsidiary
and their officers, directors, agents and
representatives will hold in strict confidence, and
will not use, any "Confidential Information"
obtained in connection with this transaction or
Agreement with respect to the business of Netlink,
except for the purpose of their internal evaluation
of this transaction or the consummation of the
transaction contemplated herein and (b) if the
transactions contemplated by this Agreement are not
consummated, Stonehaven and Subsidiary will return
to Netlink all copies of such Confidential
Information, including but not limited to
worksheets, reports, manuals, lists, memoranda and
other documents prepared by or made available to
Stonehaven and Subsidiary in connection with this
transaction. "Confidential Information" includes
all business and financial information of Netlink,
including financial statements, tax returns,
business and marketing plans and customer and
supplier data, but does not include publicly
available information obtained from a third party
source not under an agreement or obligation to
maintain the confidentiality of such information
and information independently developed by a party
without the use of otherwise confidential
information. Nothing in this Agreement shall be
construed to prevent Stonehaven and Subsidiary
from, or in any way subject Stonehaven and
Subsidiary to liability for, making such
disclosures regarding this Agreement or the
negotiation of the transactions contemplated herein
as Stonehaven and Subsidiary shall reasonably
determine are necessary under the federal
securities laws so long as Stonehaven and
Subsidiary shall have sent to Netlink, by
facsimile, written notice of Stonehaven's intention
to make such disclosure.
8.3 Authorization from Others. Prior to the
Closing Date, Stonehaven and Subsidiary will obtain
all authorizations, consents and permits of others,
if any, required to permit the consummation by
Stonehaven and Subsidiary of the transactions
contemplated by this Agreement.
8.4 Breach of Representations and
Warranties. Neither Stonehaven nor Subsidiary shall
take any action which would result in any of the
representations and warranties contained in Section
6 hereof being untrue in any material respect.
Promptly upon the occurrence of, or promptly upon
Stonehaven or Subsidiary becoming aware of the
impending or threatened occurrence of, any event
which would cause or constitute a breach or
default, or would have caused or constituted a
breach or default had such event occurred or been
known to Stonehaven or Subsidiary prior to the date
hereof, of any of the representations and
warranties of Stonehaven or Subsidiary contained in
or referred to in this Agreement or in any Schedule
or Exhibit referred to in this Agreement,
Stonehaven or Subsidiary, as the case may be, shall
give detailed written notice thereof to Netlink and
shall use its best efforts to prevent or promptly
remedy the same.
8.5 Cooperation with Netlink. Stonehaven
shall cooperate with all reasonable requests of
Netlink and Netlink's counsel in connection with
the consummation of the transactions contemplated
hereby.
SECTION 9. CONDITIONS PRECEDENT TO STONEHAVEN'S
AND SUBSIDIARY'S OBLIGATIONS
The obligation of Stonehaven and Subsidiary
to consummate this Agreement and the transactions
contemplated hereby is subject to the fulfilment,
prior to or at the Closing, of the conditions
precedent set forth in this Section 9.
9.1 Instruments of Transfer. The
Stockholders shall have delivered to Stonehaven
stock certificates representing all outstanding
shares of Netlink Common Stock in accordance with
Section 3.
9.2 Intentionally deleted.
9.3 Opinions of Counsel. Stonehaven shall
have received the opinion, dated the Closing Date
and satisfactory in form and substance to it, of
counsel for Netlink and the Stockholders, which
opinion shall be substantially in the form of
Exhibit 9.3 hereto.
9.4 Employment Arrangements. Odeh A.
Muhawesh, Mary Henschel and Ann Wessels shall have
executed and delivered to Stonehaven an Employment
Agreement in substantially the form of Exhibit 9.4
attached hereto. In addition, each of such Netlink
employees, and such other Netlink employees as may
be elected by Stonehaven, shall have agreed to
become employees of Subsidiary on terms acceptable
to Stonehaven.
9.5 Intentionally deleted.
9.6 Trustee Resignations. The trustees of
Netlink's retirement and profit sharing plans shall
have agreed to resign as trustees thereof upon the
request of Stonehaven.
9.7 Resignations of Officers and Directors.
Stonehaven shall have received the resignations,
dated as of the Closing Date, of all of the
officers and directors of Netlink.
9.8 Representations and Warranties. Each of
the representations and warranties of Netlink and
the Stockholders set forth in Section 5 hereof,
respectively, shall be true and correct in all
respects on and as of the Closing Date as though
made on and as of the Closing Date (and all
references to the "date hereof" in Section 5 shall
for purposes of this Section 9.8, be deemed to
refer to the Closing Date). Netlink and the
Stockholders shall have delivered to Stonehaven a
complete and accurate update of the Schedule of
Accounts Receivable through the Closing Date. All
action necessary to authorize the execution,
delivery and performance by Netlink and the
Stockholders of this Agreement and the consummation
of the transactions contemplated hereby shall have
been duly and validly taken by the Board of
Directors of Netlink and the Stockholders.
9.9 Covenants. Each of Netlink and the
Stockholders shall, on or before the Closing Date,
have performed all of its or his or her obligations
hereunder that by the terms hereof are to be
performed on or before the Closing Date.
9.10 No Material Adverse Change. There shall
have been no material adverse change in the
financial condition, properties, assets,
liabilities, prospects, business or operations of
Netlink since the date hereof.
9.11 Absence of Litigation. No order shall
have been entered by any court or administrative
body, and no private or governmental proceeding
shall be pending or threatened which seeks to
restrain, enjoin or otherwise prevent the
consummation of the transactions contemplated
hereby.
9.12 Authorization and Consents. Netlink
shall have made all filings with and notifications
of governmental authorities, regulatory agencies
and other entities required to be made by Netlink
in connection with the execution and delivery of
this Agreement, the performance of the transactions
contemplated hereby and the continued operation of
the business of Netlink subsequent to the Closing,
and Netlink and Stonehaven shall have received all
required authorizations, waivers, consents and
permits, satisfactory to Stonehaven, from all third
parties required in connection with the
consummation of the transactions contemplated by
this Agreement, to avoid a breach, default,
termination, acceleration or modification of any
indenture, loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien,
lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or
arbitration award as a result of the execution or
performance of this Agreement, or otherwise in
connection with the execution and performance of
this Agreement.
9.13 Delivery of Other Documents. Netlink
and the Stockholders shall have delivered to
Stonehaven all consents, approvals, documents and
certificates contemplated by this Agreement or
reasonably requested by Stonehaven or its counsel
and copies of all contracts, commitments, leases
and other documents required to be identified on
the Schedules hereto. Stonehaven shall have
received the original stock record books and the
original minute books of Netlink.
9.14 Intentionally deleted.
9.15 Due Diligence Review. Stonehaven shall
have had full opportunity to make such business,
accounting and legal review of the business,
operations, properties and financial condition of
Netlink as it desires and shall be satisfied with
the results of such review.
SECTION 10. CONDITIONS PRECEDENT TO NETLINK'S AND
STOCKHOLDERS'
OBLIGATIONS
The obligations of Netlink and the
Stockholders to consummate this Agreement and the
transactions contemplated hereby are subject to the
fulfilment, prior to or at the Closing, of the
conditions precedent set forth in this Section 10.
10.1 Representations, Warranties and
Covenants. Each of the representations and
warranties of Stonehaven and Subsidiary in Section
6 hereof shall be true and correct on the Closing
Date as though made on and as of the Closing Date
(and all references to the "date hereof" in Section
6 shall, for purposes of this Section 10.1, be
deemed to refer to the Closing Date). All action
necessary to authorize the execution, delivery and
performance by Stonehaven and Subsidiary of this
Agreement and each agreement, document and
instrument to be executed and delivered pursuant to
this Agreement and the consummation of the
transactions contemplated hereby and thereby shall
have been duly taken by Stonehaven and Subsidiary.
10.2 Covenants. Stonehaven and Subsidiary
shall, on or before the Closing Date, have
performed all of their obligations hereunder which
by the terms hereof are to be performed on or
before the Closing Date.
10.3 Instruments of Transfer. Stonehaven
shall have delivered to the Stockholders stock
certificates representing Stonehaven Common Stock
in accordance with Section 3.
10.4 Opinions of Counsel. The Stockholders
shall have received the opinion, dated the Closing
Date and satisfactory in form and substance to it,
of counsel for Stonehaven, which opinion shall be
substantially in the form of Exhibit 10.4 hereto.
10.5 No Material Adverse Change. There shall
have been no material adverse change in the
financial condition, properties, assets,
liabilities, prospects, business or operations of
Stonehaven since the date hereof.
10.6 Absence of Litigation. No order shall
have been entered by any court or administrative
body, and no private or governmental proceeding
shall be pending or threatened which seeks to
restrain, enjoin or otherwise prevent the
consummation of the transactions contemplated
hereby.
10.7 Authorization and Consents. Stonehaven
shall have made all filings with and notifications
of governmental authorities, regulatory agencies
and other entities required to be made by
Stonehaven in connection with the execution and
delivery of this Agreement, the performance of the
transactions contemplated hereby and the continued
operation of the business of Stonehaven subsequent
to the Closing, and Stonehaven and Netlink shall
have received all required authorizations, waivers,
consents and permits, satisfactory to Netlink, from
all third parties required in connection with the
consummation of the transactions contemplated by
this Agreement, to avoid a breach, default,
termination, acceleration or modification of any
indenture, loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien,
lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or
arbitration award as a result of the execution or
performance of this Agreement, or otherwise in
connection with the execution and performance of
this Agreement.
10.8 Delivery of Other Documents.
Stonehaven shall have delivered to Netlink and the
Stockholders all consents, approvals, documents and
certificates contemplated by this Agreement or
reasonably requested by Netlink, the Stockholders
or their counsel and copies of all consents,
approvals, certificates and other documents
required to be identified on the Schedules hereto.
10.9 Intentionally deleted.
10.10 Due Diligence Review. Netlink and the
Stockholders shall have had full opportunity to
make such business, accounting and legal review of
the business, operations, properties and financial
condition of Stonehaven as it desires and shall be
satisfied with the results of such review.
SECTION 11. TERMINATION OF AGREEMENT
11.1 Termination. At, or at any time prior
to, the Closing, this Agreement may be terminated
(i) by mutual consent of Netlink, the Stockholders
and Stonehaven; (ii) by Stonehaven if any of the
conditions stated in Section 9 have not been
satisfied at or prior to the Closing; or (iii) by
Netlink and the Stockholders if any of the
conditions stated in Section 10 have not been
satisfied at or prior to the Closing.
11.2 Effect of Termination.
(a) All obligations of the parties
hereunder shall cease upon termination
as provided above, except that the
provisions of this Section and of
Sections 7.7, 8.2, 12 and 13.2 shall
survive any termination of this
Agreement, and except that nothing
herein shall relieve any party from any
liability for any knowing breach or
inaccuracy of any representation or
warranty contained herein or any
failure to comply with any covenant or
agreement contained herein.
(b) Despite any other provisions of this
Agreement, if this Agreement is
terminated by any party hereto on the
basis of a material breach of or
inaccuracy in any representation or
warranty made by any other party
hereto, failure of any condition or any
material breach of any covenant made
herein where such breach, failure or
inaccuracy is deliberate or wilful, the
party whose breach, inaccuracy or
failure is the basis of such
termination will be liable to each
other party hereto for all expenses
incurred by such other parties in
connection with negotiating, preparing
and entering into this Agreement and
the other agreements contemplated
hereby and preparing to carry out the
transactions contemplated hereby and by
such other agreements.
11.3 Right to Proceed. Anything in this
Agreement to the contrary notwithstanding, if any
of the conditions specified in Section 9 hereof
have not been satisfied, Stonehaven shall have the
right to proceed with the transactions contemplated
hereby without waiving any of Stonehaven's or
Subsidiary's rights hereunder, and if any of the
conditions specified in Section 10 hereof have not
been satisfied, Netlink and the Stockholders shall
have the right to proceed with the transactions
contemplated hereby without waiving any of their
rights hereunder.
SECTION 12. INDEMNIFICATION
12.1 Materiality; Survival. All
representations, warranties, agreements, covenants
and obligations herein or in any schedule,
certificate or financial statement delivered by any
party incident to the transactions contemplated
hereby are material, shall be deemed to have been
relied upon by the parties and shall survive the
Closing hereof for a period of twelve (12) months
after which no claim for an incorrect
representation or warranty under this Agreement may
be brought, and no litigation with respect thereto
may be commenced, and no party shall have any
liability or obligation with respect thereto,
unless the Indemnified Party (as hereinafter
defined) gives written notice to the indemnifying
parties specifying with particularity the incorrect
representation or warranty claimed on or before the
expiration of such period; provided, however, that
the representations contained in Sections 5.7, 5.25
and 5.34 shall survive until the expiration of the
applicable statute of limitations.
12.2 Indemnification by the Stockholders.
(a) The Stockholders, jointly and
severally, agree to defend, indemnify
and hold Stonehaven and Subsidiary and
their respective subsidiaries and
affiliates and the persons serving as
officers, directors, partners,
employees or agents thereof
(hereinafter collectively referred to
in this Section 12.2 as the
"Indemnified Parties" or individually
as an "Indemnified Party") harmless
from and against any damages,
liabilities, losses, fines, penalties,
study costs and expenses, including,
without limitation, reasonable counsel
fees and expenses as the same are
incurred (together referred to as
"Losses") of any kind or nature
whatsoever which may be sustained or
suffered by any of them arising out of
or based upon or in connection with any
of the following matters:
(i) a breach of any representation,
warranty, agreement, covenant or
obligation made by Netlink or any
of the Stockholders in this
Agreement or in any Exhibit,
Schedule, certificate or
financial statement delivered
hereunder or in connection
herewith (notwithstanding any
investigation by or knowledge of
any of the Indemnified Parties)
or by reason of any claim, action
or proceeding asserted or
instituted growing out of any
matter or thing constituting a
breach of such representations,
warranties or covenants; or
(ii) fraud in connection with the
making by Netlink or any
Stockholder of any
representation, warranty,
covenant or obligation or an
intentional misrepresentation or
breach by Netlink or any
Stockholder of any
representation, warranty,
covenant or obligation.
(b) Stonehaven shall give prompt written
notice to the Stockholders of any
claim, liability or expense to which
the indemnification obligations
hereunder would apply. Such notice
shall state the information then
available regarding the amount of such
claim, liability or expense and shall
specify the provision or provisions of
this Agreement under which the claim,
liability or expense is asserted. The
failure to promptly notify the
Stockholders as provided above shall
not relieve the Stockholders of any
liability hereunder except to the
extent that the rights of the
Stockholders have been materially and
adversely prejudiced as a result of the
failure to give, or the delay in
giving, such notice.
(c) If such indemnification claim,
liability or expense is the subject of
litigation, the Stockholders shall have
the right to participate at their own
expense in the defense of any such
litigation, or if in the opinion of
Stonehaven the financial condition or
business of the Subsidiary would not be
impaired thereby, Stonehaven may
authorize the Stockholders, if they so
desire, to take over the defense of
such litigation so long as such defense
is expeditious and is undertaken by
counsel acceptable to Stonehaven.
(d) Any claims, liabilities or expenses for
indemnification hereunder shall be paid
or otherwise satisfied by the
Stockholders within 10 days after
notice thereof is given by Stonehaven
unless within such 10-day period the
Stockholders indicate in a writing
delivered to Stonehaven that they
dispute the nature or amount of the
claim, liability or expense. In this
latter case and upon the election of
any party hereto after such 10-day
period, the dispute shall be referred
to the American Arbitration Association
to be settled by arbitration in
Minneapolis, Minnesota, in accordance
with the commercial arbitration rules
of such Association. The fees and
expenses of the arbitrator shall be
borne by that person or entity among
the Stockholders and Stonehaven whose
last offer of settlement differed by a
greater amount from the arbitrator's
award than did the last offer of
settlement of the other party;
provided, however, that no offer of
settlement shall be disclosed to the
arbitrator until after the arbitrator
renders an award on the merits. The
determination of the arbitrator as to
the amount, if any, of the
indemnification claim, liability or
expense which is properly allowable
shall be conclusive and binding upon
the parties hereto and payment shall be
made as so determined within five
business days of the date of such
award. The judgment upon the award may
be entered in any court having
jurisdiction thereof. There shall be
added to the amount of any arbitration
award interest at the rate of 10% per
annum, accrued daily, on the amount
required to be paid pursuant to such
award. This interest will be computed
from the date payment would have been
paid if not disputed to the date paid
and the arbitrator shall include
provisions therefor in any award
rendered.
(e) Notwithstanding the foregoing, the
Stockholders shall not have any
liability to the Indemnified Parties
until the aggregate amount of all
indemnifiable damages incurred by the
Indemnified Parties exceeds $40,000 in
aggregate, at which point the
Stockholders shall be jointly and
severally liable to the Indemnified
Parties for all such indemnifiable
damages in excess of such amount.
12.3 Indemnification by Stonehaven and
Subsidiary.
(a) Stonehaven and Subsidiary agree to
defend, indemnify and hold the
Stockholders (hereinafter collectively
referred to in this Section 12.3 as the
"Indemnified Parties" or individually
as an "Indemnified Party") harmless
from and against any damages,
liabilities, losses, fines, penalties,
study costs and expenses, including,
without limitation, reasonable counsel
fees and expenses as the same are
incurred (together referred to as
"Losses") of any kind or nature
whatsoever which may be sustained or
suffered by any of them arising out of
or based upon or in connection with any
of the following matters:
(i) a breach of any representation,
warranty, agreement, covenant or
obligation made by Stonehaven or
Subsidiary in this Agreement or
in any Exhibit, Schedule,
certificate or financial
statement delivered hereunder or
in connection herewith
(notwithstanding any
investigation by or knowledge of
any of the Indemnified Parties)
or by reason of any claim, action
or proceeding asserted or
instituted growing out of any
matter or thing constituting a
breach of such representations,
warranties or covenants; or
(ii) fraud in connection with the
making by Stonehaven or
Subsidiary of any representation,
warranty, covenant or obligation
or an intentional
misrepresentation or breach by
Stonehaven or Subsidiary of any
representation, warranty,
covenant or obligation.
(b) The Stockholders shall give prompt
written notice to Stonehaven and
Subsidiary of any claim, liability or
expense to which the indemnification
obligations hereunder would apply. Such
notice shall state the information then
available regarding the amount of such
claim, liability or expense and shall
specify the provision or provisions of
this Agreement under which the claim,
liability or expense is asserted. The
failure to promptly notify Stonehaven
and Subsidiary as provided above shall
not relieve Stonehaven and Subsidiary
of any liability hereunder except to
the extent that the rights of
Stonehaven and Subsidiary have been
materially and adversely prejudiced as
a result of the failure to give, or the
delay in giving, such notice.
(c) If such indemnification claim,
liability or expense is the subject of
litigation, Stonehaven and Subsidiary
shall have the right to participate at
their own expense in the defense of
any such litigation, or if in the
opinion of the Stockholders, the
financial condition or business of the
Stockholders would not be impaired
thereby, the Stockholders may authorize
Stonehaven and Subsidiary , if they so
desire, to take over the defense of
such litigation so long as such defense
is expeditious and is undertaken by
counsel acceptable to the Stockholders.
(d) Any claims, liabilities or expenses for
indemnification hereunder shall be paid
or otherwise satisfied by Stonehaven
and Subsidiary within 10 days after
notice thereof is given by the
Stockholders unless within such 10-day
period Stonehaven and Subsidiary
indicate in a writing delivered to the
Stockholders that they dispute the
nature or amount of the claim,
liability or expense. In this latter
case and upon the election of any party
hereto after such 10-day period, the
dispute shall be referred to the
American Arbitration Association to be
settled by arbitration in Minneapolis,
Minnesota, in accordance with the
commercial arbitration rules of such
Association. The fees and expenses of
the arbitrator shall be borne by that
person or entity among the Stockholders
and Stonehaven and Subsidiary whose
last offer of settlement differed by a
greater amount from the arbitrator's
award than did the last offer of
settlement of the other party;
provided, however, that no offer of
settlement shall be disclosed to the
arbitrator until after the arbitrator
renders an award on the merits. The
determination of the arbitrator as to
the amount, if any, of the
indemnification claim, liability or
expense which is properly allowable
shall be conclusive and binding upon
the parties hereto and payment shall be
made as so determined within five
business days of the date of such
award. The judgment upon the award may
be entered in any court having
jurisdiction thereof. There shall be
added to the amount of any arbitration
award interest at the rate of 10% per
annum, accrued daily, on the amount
required to be paid pursuant to such
award. This interest will be computed
from the date payment would have been
paid if not disputed to the date paid
and the arbitrator shall include
provisions therefor in any award
rendered.
(e) Notwithstanding the foregoing,
Stonehaven and Subsidiary shall not
have any liability to any of the
Indemnified Parties until the aggregate
amount of all indemnifiable damages
incurred by the Indemnified Parties
exceeds $40,000 in aggregate, at which
point Stonehaven and Subsidiary shall
be liable to the Indemnified Parties
for all such indemnifiable damages in
excess of such amount.
SECTION 13. POST-CLOSING COVENANTS OF
STONEHAVEN, SUBSIDIARY,
NETLINK AND THE STOCKHOLDERS.
Stonehaven, Subsidiary, Netlink and the
Stockholders, as the case may be, make the
following covenants and agreements to be performed
on and after the Closing Date:
13.1 Lock-Up Agreement. In addition to the
restrictions on transfer of the Stonehaven Common
Stock to be acquired pursuant to this Agreement set
forth in Section 5.34, and except as permitted in
the next sentence of this Section 13.1, the
Stockholders agree that the Stockholders will not,
directly or indirectly, issue, offer, sell
(including any short sale), grant any option for
the sale of, acquire any option to dispose of,
assign, transfer, pledge or otherwise encumber or
dispose of, any shares of such Stonehaven Common
Stock or securities convertible into or exercisable
or exchangeable for or evidencing any right to
purchase or subscribe for any shares of such
Stonehaven Common Stock or any beneficial interest
therein held by the Stockholders and received as a
result of the transactions contemplated by this
Agreement without the prior written consent of
Stonehaven. The Stockholders and Stonehaven agree
that 33-1/3% of such Stonehaven Common Stock held
by any Stockholder shall be released from the
foregoing restrictions one (1) year following the
Closing Date; 66-2/3% of the Stonehaven Common
Stock, held by any Stockholder shall be released
from the foregoing restrictions two (2) years
following the Closing Date; and 100% of such
Stonehaven Common Stock held by any Stockholder
shall be released from the foregoing restrictions
three (3) years following the Closing Date;
provided however, that notwithstanding the
foregoing, each Stockholder may (a) transfer shares
of such Stonehaven Common Stock to (i) his or her
spouse, parent, sibling or lineal descendants or
(ii) any trust for the benefit of such persons, if
such transferee agrees in writing to be bound by
the terms of these provisions to the same extent as
the Stockholder; (b) sell or otherwise dispose of
any shares of Stonehaven Common Stock purchased by
a Stockholder in the open market; and (c) sell or
otherwise dispose of any shares of Stonehaven
Common Stock upon the termination of a
Stockholder's employment with Stonehaven or
Subsidiary for any reason other than a voluntary
termination by such Stockholder or a termination
"for cause". As used in the preceding sentence,
the term "for cause" shall mean the termination of
a Stockholder's employment on the basis of, or as a
result of, one or more of the following
circumstances: (i) a violation by a Stockholder of
any applicable material law or regulation
respecting the business of Stonehaven or
Subsidiary; (ii) a Stockholder being found guilty
of, or being publicly associated with, a felony or
an act of dishonesty or an act of wilful or
reckless behaviour in connection with the
performance of his or her duties on behalf of
Stonehaven or Subsidiary, or otherwise; or (iii) a
Stockholder's course of conduct constituting the
wilful or negligent failure of the Stockholder to
perform his duties hereunder and which is, or may
result in a material detriment to Stonehaven or
Subsidiary as reasonably determined by the Board.
Notwithstanding the foregoing, any transfer
of each Stonehaven Common Stock is and remains
subject to the requirements of Section 5.34
requiring registration of each Stonehaven Common
Stock under the Act (and/or applicable state
securities or "Blue Sky" laws), unless an exemption
from registration is available.
Section 13.2 Piggyback Registration.
(a) Subject to the terms of
this Agreement, in the
event Stonehaven decides to
register additional shares
of Stonehaven Common Stock
on a form that would be
suitable for registration,
Stonehaven will: (i)
promptly give each
Stockholder written notice
thereof (which shall
include a list of the
jurisdictions in which
Stonehaven intends to
attempt to qualify such
securities under the
applicable "Blue Sky" or
other state securities
laws); and (ii) include in
such registration, and in
any underwriting involved
therein, all of the shares
of Stonehaven Common Stock
issued to Stockholders
pursuant to this Agreement,
as specified in a written
request delivered to
Stonehaven by any
Stockholder within twenty
(20) days after delivery of
a written notice from
Stonehaven to the
Stockholders.
(b) If the registration of
which Stonehaven gives
notice is for a registered
public offering involving
an underwriting, Stonehaven
shall so advise the
Stockholders as part of the
written notice. In such
event, the right of any
Stockholder to registration
shall be conditioned upon
such underwriting and the
inclusion of any
Stockholder's Stonehaven
Common Stock received
pursuant to this Agreement
in any such underwriting to
the extent provided in this
subsection. All
Stockholders proposing to
distribute their Stonehaven
Common Stock through such
underwriting shall
(together with Stonehaven
and other shareholders
distributing their
securities through such
underwriting) enter into an
underwriting agreement with
the underwriter's
representative for such
offering. The Stockholders
shall have no right to
participate in the
selection of the
underwriters for an
offering pursuant to this
subsection. In addition to
the foregoing, the
underwriter's
representative may require
a limitation of the number
of shares to be
underwritten based upon
market conditions in which
event such shares shall be
excluded from registration
proportionately including
the Stonehaven Common
Shares received by the
Stockholders. Any of the
Stockholders who disapprove
of the terms of any such
underwriting may elect to
withdraw therefrom by
providing no less than
seven (7) days prior
written notice to
Stonehaven and any such
underwriter at least seven
(7) days prior to the
effective date of a
registration statement.
(c) In the case of any
registration effected
pursuant to this Section
13.2, Stonehaven shall bear
all registration and
qualification fees and
expenses (including
underwriters' discounts,
commissions and expenses),
and all legal, accounting
or printing expenses;
provided, however, that
each selling Stockholder
shall bear the fees and
expenses of any separate
counsel he or she may
select.
Section 13.3 Trustee Seat. At the next
annual meeting of the shareholders of Stonehaven,
Stonehaven will cause Odeh A. Muhawesh to be
nominated for a seat on the Board of Trustees of
Stonehaven. Should a vacancy occur on the Board of
Trustees prior to the next annual meeting of the
shareholders of Stonehaven, Odeh A. Muhawesh shall
be appointed to fill such vacancy.
Section 13.4 Note due to Stockholder.
On or before May 31, 2000, Stonehaven will cause
the Subsidiary to reduce the outstanding balance of
the Stockholder's Note referred to in Section
4.1(a)(ii) by $415,000. A copy of the Stockholder's
Note is attached hereto as part of Exhibit 5.29.
In addition to the foregoing, on or before January
2, 2001, Stonehaven will cause the Subsidiary to
pay the remaining balance of the Stockholder's Note
in full. The payment on or before January 2, 2001,
may, at the option of Stonehaven and the
Subsidiary, be paid in cash or cash equivalents or
by delivery of unrestricted Stonehaven Common
Shares having a then current value equal to the
outstanding balance of the Stockholder's Note.
Section 13.5 Reservation of Option
Shares. Stonehaven agrees to reserve under its
1998 Share Option Plan (the "Plan") not less than
200,000 shares of Stonehaven Common Stock for
issuance to key employees of Subsidiary. Options
to acquire such shares shall be granted by the
Compensation Committee of Stonehaven within one
year after the Closing Date upon terms reasonably
established by the Compensation Committee in
accordance with the Plan.
SECTION 14. MISCELLANEOUS
14.1 Fees and Expenses. Except as otherwise
provided herein, each of the parties to this
Agreement will bear its own expenses in connection
with the negotiation and consummation of the
transactions contemplated by this Agreement.
Notwithstanding the foregoing, the Subsidiary shall
assume the legal expenses actually incurred by
Netlink and the Stockholders in an amount not to
exceed $10,000.. All sales and transfer taxes, fees
and duties under applicable law (including all
stock transfer taxes, fees and duties, if any)
incurred in connection with this Agreement or the
transactions contemplated thereby will be borne and
paid by the Stockholders.
14.2 Law Governing. This Agreement shall be
governed by and construed in accordance with the
laws of the State of Minnesota without reference to
the choice of law provisions thereof. The parties
hereby irrevocably and unconditionally consent to
the exclusive jurisdiction of the courts of the
State of Minnesota and of the United States of
America located in the State of Minnesota in
connection with any suit, action or proceeding
relating to this Agreement and the transactions
contemplated hereby (without, however, derogating
from the exclusivity of the arbitration procedures
set forth in subparagraphs 12.2(d) and 12.3(d)
hereof) and agree not to commence any action, suit
or proceeding relating thereto except in such
courts.
14.3 Notices. All notices, requests, demands
and other communications hereunder shall be deemed
to have been duly given if delivered by hand, sent
by certified or registered mail, postage prepaid,
by overnight courier service, or by telex, telecopy
or other written form of electronic confirmation
confirmed in writing:
To: STONEHAVEN REALTY TRUST:
Attn: Duane H. Lund, CEO
11000 Prairie Lakes Drive, Suite 614
Eden Prairie, MN 55344
With a copy to:
William M. Habicht, Esq.
Messerli & Kramer P.A.
1800 Fifth Street Towers
150
South Fifth Street
Minneapolis, MN 55402-4218
To: NTLI ACQUISITION CORPORATION: Attn:
Duane H. Lund, CEO
11000 Prairie
Lakes Drive, Suite 614
Eden Prairie, MN 55344
With a copy to:
William M. Habicht, Esq.
Messerli & Kramer P.A.
1800 Fifth Street Towers
150
South Fifth Street
Minneapolis, MN 55402-4218
To: NETLINK INTERNATIONAL, INC.
Odeh A. Muhawesh, President
2550 University Avenue West
Suite 240 N
St.
Paul, MN 55114
With a copy to:
Gene H. Hennig, Esq.
Rider Bennett Egan & Arundel LLP
333
South Seventh Street
Suite 2000
Minneapolis, MN 55402
To the STOCKHOLDERS: c/o
Odeh A. Muhawesh
2550 University Avenue West
Suite 240 N
St.
Paul, MN 55114
With a copy to:
Gene H. Hennig, Esq.
Rider Bennett Egan & Arundel LLP
333
South Seventh Street
Suite 2000
Minneapolis, MN 55402
or to such other address of which any party may
notify the other parties thereof as provided above.
14.4 Entire Agreement. This Agreement,
including the Schedules and Exhibits referred to
herein, constitutes the entire agreement among the
parties with respect to its subject matter and
supersedes all previous written or oral
negotiations, commitments and writings; no
promises, representations, understandings,
warranties and agreements have been made by any of
the parties hereto except as referred to herein or
in such Schedules and Exhibits or in such other
writings; and all inducements to the making of this
Agreement relied upon by all the parties hereto
have been expressed herein or in said Schedules or
Exhibits or in such other writings.
14.5 Assignability. This Agreement shall be
binding upon, and shall be enforceable by and inure
to the benefit of, the parties named herein and
their respective successors and permitted assigns.
This Agreement may not be assigned by any party
without the prior written consent of all other
parties hereto.
14.6 Waivers; Severability. The failure of
any of the parties to this Agreement to require the
performance of a term or obligation under this
Agreement or the waiver by any of the parties to
this Agreement of any breach hereunder shall not
prevent subsequent enforcement of such term or
obligation or be deemed a waiver of any subsequent
breach hereunder. If any one or more of the
provisions of this Agreement are held to be
invalid, illegal or unenforceable, the validity,
legality or enforceability of the remaining
provisions of this Agreement will not be affected
thereby, and the parties will use all reasonable
efforts to substitute for such invalid, illegal or
unenforceable provisions one or more valid, legal
and enforceable provisions which, insofar as
practicable, implement the purposes and intents
hereof. To the extent permitted by applicable law,
each party waives any provision of law which
renders any provision of this Agreement invalid,
illegal or unenforceable in any respect.
14.7 Specific Performance. Each of the
parties acknowledges and agrees that the other
parties would be damaged irreparably in the event
any of the provisions of this Agreement are not
performed in accordance with their specific terms
or otherwise are breached. Accordingly, each of
the parties agrees that the other parties shall be
entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms
and provisions hereof in any action instituted in
any court of the United States or any state thereof
having jurisdiction over the Parties and the
matters (subject to the provisions set forth in
Section 13.2), in addition to any other remedy to
which they may be entitled, at law or in equity.
14.8 Counterparts. This Agreement may be
executed in any number of counterparts, each of
which shall be deemed an original and all of which
shall constitute one and the same agreement.
14.9 Amendments. This Agreement may not be
amended or modified, nor may compliance with any
condition or covenant set forth herein be waived,
except by a writing duly and validly executed by
each party hereto, or in the case of a waiver, the
party waiving compliance.
IN WITNESS WHEREOF, the undersigned have
affixed their signatures hereto as of the date
first above written.
STONEHAVEN REALTY TRUST NETLINK
INTERNATIONAL INC.
a Maryland real estate investment trust a
Minnesota corporation
By: /s/ Duane H. Lund By: /s/
Odeh A. Muhawesh
Duane H. Lund, Chief Executive Officer
Ode
h A.
Muha
wesh
,
Chie
f
Exec
utiv
e
Officer
NTLI ACQUISITION CORPORATION STOCKHOLDERS:
a Delaware corporation
/s/ Odeh A. Muhawesh
By: /s/ Duane H. Lund Odeh A.
Muhawesh
Duane H. Lund, Chief Executive Officer
/s/
Mary Henschel
Mary Henschel
/s/
Alan Schmidt
Alan
Schmidt
/s/
Ahmah Yassine
Ahmad
Yassine
/s/Patrick Archbold
Patrick
Archbold
/s/
Ann Wessels
Ann
Wessels
/s/
Art Curruth
Art
Carruth
/s/
Patricia Hewitt
Patricia
Hewitt
/s/
Thomas Walker
Thomas
Walker
/s/
Sherry Ajax
Sherry
Ajax
SCHEDULE OF EXHIBITS
Exhibit A Plan of Merger
Exhibit 5.1(a) Articles of Incorporation
and Bylaws of Netlink
Exhibit 5.1(b) Schedule of Foreign
Qualifications
Exhibit 5.3 Schedule of Stockholders
Exhibit 5.5 Financial Statements
Exhibit 5.6(a) Schedule of Leases
Exhibit 5.6(b) Schedule of Fixed Assets
Exhibit 5.7(c) Schedule of Tax Matters
Exhibit 5.9 Schedule of Accounts Receivable
Exhibit 5.11 Changes Since the Date of
the Base Balance Sheet
Exhibit 5.12 Schedule of Arrangements
with Banking Institutions
Exhibit 5.13 Schedule of Intellectual
Property
Exhibit 5.15 Schedule of Contracts and
Commitments
Exhibit 5.18 Schedule of Insurance
Exhibit 5.23 Schedule of Authorizations
Exhibit 5.25 Schedule of Employee
Benefit Plans
Exhibit 5.27 Schedule of Customers,
Distributors and Independent Sales Representatives
Exhibit 5.28 Schedule of Employee
Compensation
Exhibit 5.29 Schedule of Other
Agreements
EXHIBIT A
PLAN OF MERGER
PLAN OF MERGER, dated as of February 23,
2000, by and among STONEHAVEN REALTY TRUST, a
Maryland real estate investment trust
("Stonehaven"), NTLI ACQUISITION CORPORATION, a
Delaware corporation and a wholly-owned subsidiary
of Stonehaven ("Subsidiary"), and NETLINK
INTERNATIONAL INC., a Minnesota corporation
("Netlink") (Subsidiary and Netlink being
hereinafter collectively referred to as the
"Constituent Corporations").
RECITALS
A. Odeh A. Muhawesh, Mary Henschel, Alan
Schmidt, Ahmid Yassine, Patrick Archbold, Ann
Wessels, Art Carruth, Patricia Hewitt, Thomas
Walker and Sherry Ajax (each individually a
"Shareholder" and collectively the "Shareholders")
own all of the issued and outstanding capital stock
of Netlink, which consists of 1,666,500 shares of
common stock, no par value (the "Netlink Common
Stock "). Stonehaven owns all of the issued and
outstanding capital stock of Subsidiary.
B. Prior to the execution of this Plan of
Merger, Stonehaven, Subsidiary, Netlink and the
Shareholders entered into an Agreement and Plan of
Reorganization dated as of February 23, 2000 (the
"Plan of Reorganization") providing for certain
representations, warranties and agreements in
connection with the transaction contemplated.
C. The Board of Trustees of Stonehaven and
the Board of Directors of Subsidiary and Netlink
approved the merger of Netlink into Subsidiary (the
"Merger") upon the terms and subject to the
conditions set forth herein and in the Plan of
Reorganization in accordance with the applicable
provisions of the Minnesota Business Corporation
Act (the "MBCA") and the General Corporation Laws
of Delaware (the "GCLD").
D. For federal and income tax purposes, it
is intended that the Merger shall qualify as a
reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended
(the "Code").
AGREEMENT
Therefore, for good and valuable
consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger.
(a) At the Effective Time (as defined in
Section 1.2 hereof) and subject to the terms and
conditions of this Agreement and the Plan of
Reorganization, Netlink shall be merged with and
into Subsidiary, and the separate existence of
Netlink shall thereupon cease, in accordance with
the applicable provisions of the MBCA and the GCLD.
(b) Subsidiary will be the surviving
corporation in the merger (sometimes referred to
herein as the "Surviving Corporation") and will
continue to be governed by the laws of the State of
Delaware, and the separate corporate existence of
Subsidiary and all of its rights, privileges,
immunities and franchises, public or private, and
all its duties and liabilities as a corporation
organized under the GCLD, will continue unaffected
by the Merger.
(c) The Merger will have the effects
specified by the MBCA and the GCLD.
1.2 Effective Time. The Merger shall be
effective upon the filing of this Plan of Merger
together with the Articles of Merger and such other
documents as are required by the MBCA and the GCLD
to be filed with the Secretary of State of the
State of Minnesota or the Secretary of State of the
State of Delaware. Subject to and in accordance
with the laws of the States of Minnesota and
Delaware, the Merger will become effective at the
date and time the Articles of Merger are filed with
the office of the Secretary of State of the State
of Delaware, or such later time or date as may be
specified in the Articles of Merger (the "Effective
Time").
ARTICLE II
THE SURVIVING CORPORATION
2.1 Articles of Incorporation. The
Articles of Incorporation of Subsidiary as in
effect immediately prior to the Effective Time
shall be the Articles of Incorporation of the
Surviving Corporation after the Effective Time,
except as amended pursuant to Section 2.2 hereof.
2.2 Amendment to Articles of Incorporation.
Article I of the Articles of Incorporation of the
Surviving Corporation is hereby amended to read as
follows:
The name of the corporation
is "Netlink International, Inc."
2.3 By-Laws. The By-Laws of Subsidiary as
in effect immediately prior to the Effective Time
shall be the By-Laws of the Surviving Corporation
after the Effective Time.
2.4 Board of Directors. The directors of
Subsidiary immediately prior to the Effective Time
shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with
the Articles of Incorporation and By-Laws of the
Surviving Corporation.
2.5 Officers. The officers of Subsidiary
immediately prior to the Effective Time shall be
the initial officers of the Surviving Corporation,
in each case until their respective successors are
duly elected or appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
3.1 Conversion of Netlink Shares in the
Merger. As of the Effective Time, by virtue of the
Merger each issued and outstanding share of Netlink
Common Stock shall be converted into the right to
receive .54863 shares of Stonehaven common stock,
$.01 par value (the "Stonehaven Common Stock"),
subject to certain adjustments set forth in the
Plan of Reorganization. Each such share of
Stonehaven Common Stock shall be fully paid and
nonassessable.
3.2 Status of Subsidiary Shares. At the
Effective Time, by virtue of the Merger and without
any action on the part of any holder of any capital
stock of Subsidiary, each issued and outstanding
share of common stock of Subsidiary shall continue
unchanged and remain outstanding as a share of
common stock of the Surviving Corporation.
3.3 Exchange of Certificates. At the
Closing, (as defined in the Plan of
Reorganization), the Shareholders shall deliver the
certificates representing all issued and
outstanding shares of Netlink Common Stock properly
endorsed in blank in exchange for the certificates
representing shares of Stonehaven Common Stock into
which such Shareholder's Netlink Common Stock has
been converted pursuant to Section 3.1 hereof.
3.4 Rights of Holders of Netlink Common
Stock. From and after the Effective Time, each
holder of a certificate which immediately prior to
the Effective Time represented outstanding shares
of Netlink Common Stock, shall be entitled to
receive in exchange therefor, upon surrender
thereof to Stonehaven, a certificate or
certificates representing the number of shares of
Stonehaven Common Stock (subject to certain later
adjustments set forth in the Plan of
Reorganization). From and after the Effective
Time, Stonehaven shall be entitled to treat the
certificates which immediately prior to the
Effective Time represented shares of Netlink Common
Stock and which have not yet been surrendered for
exchange as evidencing the ownership of the number
of full shares of Stonehaven Common Stock into
which the shares of Netlink Common Stock
represented by such certificates shall have been
converted pursuant to Section 3.1 hereof,
notwithstanding the failure to surrender such
certificates. However, notwithstanding any other
provision of this Agreement or the Plan of
Reorganization, until holders or transferees of
certificates which immediately prior to the
Effective Time represented shares of Netlink Common
Stock have surrendered them for exchange as
provided herein, no dividends shall be paid with
respect to any shares represented by such
certificates. Upon surrender of a certificate
which immediately prior to the Effective Time
represented outstanding shares of Netlink Common
Stock, there shall be paid to the holder of such
certificate the amount of any dividends which
theretofore became payable, but which were not paid
by reason of the foregoing, with respect to the
number of whole shares of Stonehaven Common Stock
represented by the certificate or certificates
issued upon such surrender. If any certificate for
shares of Stonehaven Common Stock is to be issued
in a name other than that in which the certificate,
which immediately prior to the Effective Time
represented shares of Netlink Common Stock,
surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the
person requesting such exchange pay any transfer or
other taxes required by reason of the issuance of
certificates for such shares of Stonehaven Common
Stock in a name other than that of the registered
holder of any such certificate surrendered.
3.5 No Fractional Shares. Notwithstanding
any other provision of this Agreement or the Plan
of Reorganization, and in order to avoid the
issuance of any certificates for fractional shares
of Stonehaven Common Stock, Stonehaven shall issue
a full share of its Common Stock in lieu of any
such fractional share.
ARTICLE IV
MISCELLANEOUS
4.1 Termination. This Agreement shall
terminate in the event of and upon termination of
the Plan of Reorganization.
4.2 Amendment. This Agreement may be
amended by the parties hereto, at any time before
or after approval hereof by the Shareholders, but,
after any such approval, no amendment shall be made
which (a) changes the ratio at which Netlink Common
Stock is to be converted into Stonehaven Common
Stock pursuant to Section 3.1, subject to the
adjustments set forth in the Plan of
Reorganization, (b) in any way materially adversely
affects the rights of holders of Netlink Common
Stock or (c) changes any of the principal terms of
this Agreement, in each case, without the further
approval of such Shareholders. This Agreement may
not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
4.3 Waiver. At any time prior to the
Effective Time, the parties hereto may (a) extend
the time for the performance of any of the
obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or
in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or
conditions contained herein. Any agreement on the
part of a party hereto to any such extension or
waiver shall be valid if set forth in an instrument
in writing signed on behalf of such party.
4.4 Notices. All notices required or
permitted to be given hereunder shall be in writing
and shall be deemed given when delivered in person
or sent by confirmed facsimile, or when received if
given by Federal Express or other nationally
recognized overnight courier service, or five (5)
business days after being deposited in the United
States mail, postage prepaid, registered or
certified mail, addressed to the applicable party
as provided in the Plan of Reorganization.
4.5 Entire Agreement. This Agreement and
the Plan of Reorganization constitute the entire
agreement between the parties and shall be binding
upon and inure to the benefit of the parties hereto
and their respective legal representatives,
successors and permitted assigns. The parties and
their respective affiliates make no representations
or warranties to each other, except as contained in
the Plan of Reorganization, and any and all prior
representations and statements made by any party or
its representatives, whether verbally or in
writing, are deemed to have been merged into this
Agreement and the Plan of Reorganization, it being
intended that no such prior representations or
statements shall survive the execution and delivery
of this Agreement and the Plan of Reorganization.
4.6 Non-Waiver. The failure in any one or
more instances of a party to insist upon
performance of any of the terms, covenants or
conditions of this Agreement, to exercise any right
or privilege conferred in this Agreement, or the
waiver by said party of any breach of any of the
terms, covenants or conditions of this Agreement,
shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or
privileges, but the same shall continue and remain
in full force and effect as if no such forbearance
or waiver had occurred. No waiver shall be
effective unless it is in writing and signed by an
authorized representative of the waiving party.
4.7 Counterparts. This Agreement may be
executed in counterparts, each of which shall be
deemed to be an original, and all such counterparts
shall constitute but one instrument.
4.8 Severability. The invalidity of any
provision of this Agreement or portion of a
provision shall not affect the validity of any
other provision of this Agreement or the remaining
portion of the applicable provision.
4.9 Governing Law. This Agreement and the
Plan of Reorganization shall be construed in
accordance with the laws of the State of Minnesota
applicable to contracts made to be performed
entirely therein.
4.10 Binding Effect; Benefit. This
Agreement shall inure to the benefit of and be
binding upon the parties hereto and their
successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to
confer on any person other than the parties hereto
and their respective successors and permitted
assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement,
including, without limitation, third party
beneficiary rights.
4.11 Assignability. This Agreement shall
not be assignable by any party without the prior
written consent of the other parties (which consent
shall not be unreasonably withheld).
4.12 Headings. The headings contained in
this Agreement are for convenience of reference
only and shall not affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed
this Plan of Merger on the date first above
written.
STONEHAVEN REALTY TRUST
By: /s/
Duane H. Lund
Duane H. Lund, Chief Executive Officer
NTLI
ACQUISITION CORPORATION
By: /s/
Duane H. Lund
Duane H. Lund, Chief Executive Officer
NETLINK
INTERNATIONAL, INC.
By: /s/
Odeh A. Muhawesh
Odeh
A. Muhawesh, President
(Certificate should be executed by the surviving
corporation)
CERTIFICATE OF MERGER
OF NETLINK INTERNATIONAL, INC.,
A MINNESOTA CORPORATION
INTO
NTLI ACQUISITION CORPORATION,
A DELAWARE CORPORATION
The undersigned corporation
DOES HEREBY CERTIFY:
FIRST: That the name and state of
incorporation of each of the constituent
corporations of the merger is as follows:
NAME STATE OF
INCORPORATION
Netlink International, Inc.
Minnesota
NTLI Acquisition Corporation
Delaware
SECOND: That a Plan and Agreement of Merger
between the parties to the merger has been
approved, adopted, certified, executed and
acknowledged by each of the constituent
corporations in accordance with the requirements of
Section 252 of the General Corporation Law of
Delaware.
THIRD: That the Certificate of Incorporation
of NTLI Acquisition Corporation, a Delaware
corporation which is surviving the merger, shall be
the Certificate of Incorporation of the surviving
corporation and the name of the surviving
corporation after the merger shall be "Netlink
International, Inc."
FOURTH: That the executed Plan and Agreement
of Merger is on file at an office of the surviving
corporation, the address of which is 11000 Prairie
Lakes Drive, Suite 610, Eden Prairie, MN 55344.
FIFTH: That a copy of the Plan and Agreement
of Merger will be furnished by the surviving
corporation, on request and without cost, to any
stockholder of any constituent corporation.
SIXTH: The authorized capital stock of each
corporation which is a party to the merger is as
follows:
Par value per share or
statement that shares
Corporation Class Number of
Shares are without par value
Netlink International Inc.
(MN) Common 2,000,000
no par value
NTLI Acquisition Corporation
(DE) Voting Common 10,000
$.01
Non-Voting
Common 10,000
$.01
Dated: February 23, 2000.
NTLI
ACQUISITION
CORPORATION,
a Delaware
corporation
By /s/
Duane H. Lund
Duane H.
Lund, Chief Executive Officer
EXHIBIT B
EMPLOYMENT AGREEMENT OF
MUHAWESH
ODEH A. MUHAWESH
EMPLOYMENT AGREEMENT
ODEH A. MUHAWESH
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"),
is made and entered into with effect as of the 23rd
day of February, 2000 (the "Effective Date"), by
and between Stonehaven Realty Trust, a Maryland
real estate investment trust (the "Employer"), and
Odeh A. Muhawesh (the "Executive").
RECITALS
A. The Employer desires to employ the
Executive as the President of the Employer and
Chief Executive Officer of the Employer's
subsidiary corporation, Netlink International, Inc.
("Netlink") for a specified term.
B. The Executive is willing to accept such
employment, upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises
and of the covenants and agreements hereinafter
contained, it is covenanted and agreed by and
between the parties hereto as follows:
AGREEMENTS
1. Position and Duties. The Employer
hereby employs the Executive as the President of
Employer and Chief Executive Officer of Netlink, or
in such other comparable or other capacities as
shall be mutually agreed between the Employer and
the Executive. During the period of the
Executive's employment hereunder, the Executive
shall devote his best efforts and full working
time, energy, skills and attention to the business
and affairs of the Employer. The Executive's
duties and authority shall consist of and include
all duties and authority customarily performed and
held by persons holding equivalent positions with
companies in similar businesses as that of the
Employer and similar in nature and size to the
Employer, as such duties and authority are
reasonably defined, modified and delegated from
time to time by the Board of Trustees (the "Board")
and the Chief Executive Officer of the Employer.
The Executive shall have the powers necessary to
perform the duties assigned to him, and shall be
provided such supporting services, staff,
secretarial and other assistance, office space and
accouterments as shall be reasonably necessary and
appropriate in light of such assigned duties.
Notwithstanding the foregoing, the Executive
shall have the right to continue involvement with
the businesses and investments listed on Exhibit A
attached hereto ("Other Activities"); provided,
that the Executive devotes no more than 50 hours
per month in the aggregate toward the Other
Activities, and provided further, that the specific
businesses for which the Other Activities were
formed or created are not now, nor in the future
will be, competitive with those of the Employer and
its subsidiaries, specifically including Netlink.
2. Compensation. As compensation for the
services to be provided by the Executive hereunder,
the Executive shall receive the following
compensation and other benefits:
(a) Base Salary. The Executive shall
receive a "Base Salary" at the rate of One Hundred
Twenty Thousand Dollars ($120,000) per annum,
payable in periodic installments in accordance with
the regular payroll practices of the Employer.
(b) Performance Bonus. Provided that
company objective and subjective performance
criteria are met, in the opinion of the Board or
its Compensation Committee, the Executive shall
also receive a discretionary annual cash
performance bonus in such amounts as are determined
by the Board or its Compensation Committee.
(c) Benefits. The Executive shall be
entitled to all perquisites, plans and benefits
extended to similarly situated executives by the
Employer. The Employer shall also pay up to $650
per month in lease payments or as an allowance for
an automobile for use by the Executive in
performance of his duties hereunder. Upon
termination of the Executive's employment
hereunder, the Executive shall, if requested by the
Employer, assume any remaining lease obligations
with respect to the automobile and shall hold the
Employer harmless from any obligations associated
therewith. In addition, the Executive shall be
entitled to participate in all plans and benefits
generally, from time to time, accorded to employees
of the Employer ("Benefit Plans"), all as
determined by the Board or its Compensation
Committee from time to time.
(d) Withholding. The Employer shall
be entitled to withhold, from amounts payable to
the Executive hereunder, any federal, state or
local withholding or other taxes or charges which,
from time to time, it is required to withhold. The
Employer shall be entitled to rely upon the advice
and counsel of its independent accountants with
regard to any question concerning the amount or
requirement of any such withholding.
3. Term and Termination.
(a) Term. The term of this Agreement
and the Executive's employment hereunder shall be
extended through March 31, 2002, unless sooner
terminated at any time by either party, with or
without cause, such termination to be effective as
of either (i) ten (10) business days after written
notice to that effect is delivered by the Employer
to the Executive except as and to the extent
otherwise required under subparagraphs (e) and (g)
of this Section 3; or (ii) ten (10) days after
written notice to that effect is delivered to the
Employer by the Executive, whichever is applicable
to the termination in question.
(b) Voluntary Termination by
Executive. In the event that the Executive
voluntarily terminates his employment under this
Agreement, other than pursuant to Section 3(d) of
this Agreement, the Employer shall only be required
to pay the Executive such Base Salary and other
benefits as shall have accrued through the
effective date of the termination, and the Employer
shall not be obligated to pay any performance bonus
for the then-current fiscal year or have any
further obligations whatsoever to the Executive
(other than payment of amounts remaining unpaid
pursuant to declared performance bonuses for prior
fiscal years and reimbursement of approved
expenses).
(c) Premature Termination by
Employer. In the event of termination of the
employment of Executive under this Agreement by the
Employer for any reason other than in accordance
with the provisions of subparagraph (e) ("for
cause"), subparagraph (f) (death), or subparagraph
(g) (disability) of this Section 3, then,
notwithstanding any actual or allegedly available
alternative employment or other mitigation of
damages by (or which may be available to) the
Executive, the Executive shall be entitled to a
"Lump Sum Payment" equal to: (x) the product of his
monthly Base Salary then payable, multiplied by
twenty-four (24); plus (y) the product of one-
twelfth (1/12) of the average of the two (2) most
recent annual performance bonuses that the
Executive received from the Employer, multiplied by
the number of full calendar months the Executive
was employed during the then-current fiscal year of
the Employer. In the event of a termination
governed by this subparagraph (c) of Section 3, the
Employer shall also: (z) continue for the
Executive (provided that such items are not
available to him by virtue of other employment
secured after termination) the then existing
perquisites, plans and benefits being provided by
the Employer, plus all Benefit Plans, as of and
after the date of termination, provided such plans
or benefits permit such continuation, all items in
(z) being collectively referred to as "Post-
Termination Perquisites and Benefits," for twenty-
four (24) months following such termination. The
payments and benefits provided under (x), (y) and
(z) above shall be in addition to such Base Salary
as shall have accrued and remain unpaid as well as
any expense reimbursements or other payments
relating to the period preceding such termination
and remaining due and owing to the Executive, and
shall be in addition to the payment of any
theretofore declared performance bonus compensation
for any prior fiscal year that remains unpaid as of
the date of termination.
(d) Constructive Discharge. If, at
any time during the term of this Agreement, except
in connection with a "for cause" termination
pursuant to subparagraph (e) of this Section 3 or
the Executive's death or disability termination
pursuant to subparagraphs (f) or (g), respectively,
of this Section 3, the Executive is Constructively
Discharged (as hereinafter defined), the Executive
shall have the right, by written notice to the
Employer given within one hundred and twenty (120)
days of such Constructive Discharge, to terminate
his services hereunder, effective as of thirty (30)
days after such notice, and the Executive shall
have no further obligations under this Agreement
except as specified in Section 5 hereof. The
Executive shall in such event be entitled to a Lump
Sum Payment, as well as all of the Post-Termination
Perquisites and Benefits, as if such termination of
his employment had been effectuated pursuant to
subparagraph (c) of this Section 3 and subject to
all of the conditions set forth in subparagraph (c)
of this Section 3.
For purposes of this Agreement,
the Executive shall be deemed to have been
"Constructively Discharged" upon the occurrence of
any one of the following events:
(i) The Executive is
removed from the positions with the Employer set
forth in Section 1 hereof, other than as a result
of the Executive's appointment to a position of
comparable or superior authority and
responsibility, or other than for cause, and
provided further, that the Employer shall be
permitted to broaden and expand the Executive's
responsibilities, whether in the same or different
position without such change constituting a
"Constructive Discharge" hereunder;
(ii) The Executive shall
fail to be vested by the Employer with the power,
authority and support services customarily
attendant to said offices other than for cause;
(iii) The Employer shall
formally notify the Executive in writing, that the
employment of the Executive will be terminated
(other than for cause) or materially modified
(other than for cause) in the future, or that the
Executive will be Constructively Discharged in the
future;
(iv) The Employer changes
the primary employment location of the Executive to
a place that is more than one hundred (100) miles
from St. Paul, Minnesota as of the Effective Date
of this Agreement; or
(v) The Employer commits
a material breach of its obligations under this
Agreement, which it fails to cure or commence to
cure within thirty (30) days after receipt of
written notice thereof from the Executive (or if
cure is not possible within such thirty (30) days,
then the Employer must have failed to either
commence to cure within thirty (30) days of have
failed to complete to cure within sixty (60) days).
(e) Termination for Cause. The
employment of the Executive under this Agreement
may be terminated by the Employer on a "for cause"
basis, as hereinafter defined. If the Executive's
employment is terminated by the Employer "for
cause" under this subparagraph (e), the Employer
shall only be obligated to pay the Executive such
Base Salary as shall have accrued through the
effective date of the termination, and the Employer
shall not be required to pay the Executive any
performance bonus for the current fiscal year, or
have any further obligations whatsoever to the
Executive (other than payment of amounts remaining
unpaid pursuant to declared performance bonuses for
prior fiscal years and reimbursement for previously
approved expenses). Termination "for cause" shall
mean the termination of Executive's employment on
the basis of, or as a result of, one or more of the
following circumstances: (i) a violation by the
Executive of any applicable material law or
regulation respecting the business of the Employer;
(ii) the Executive being found guilty of, or being
publicly associated with, a felony or an act of
dishonesty or an act of willful or reckless
behavior in connection with the performance of his
duties as an officer of the Employer, or otherwise;
or (iii) the Executive's course of conduct
constituting the willful or negligent failure of
the Executive to perform his duties hereunder and
which is, or may result in a material detriment to
the Company as reasonably determined by the Board.
The Executive shall be entitled to thirty (30)
days' prior written notice (the "Termination
Notice") of the Employer's intention to terminate
his employment for cause. Such Termination Notice
shall specify the grounds for such termination,
afford the Executive a reasonable opportunity to
cure any conduct or act (if curable) alleged as
grounds for such termination; and afford the
Executive a reasonable opportunity to present to
the Board his position regarding any dispute
relating to the existence of such cause.
Notwithstanding the foregoing procedure, the
Employer (through the Board) shall have the
unilateral right to make the final substantive
determination as to whether the Executive has
properly remedied or otherwise addressed those
matters described in the Termination Notice as
grounds for termination of the Executive's
employment. In the event the Employer determines
(as of the expiration of the above-contemplated 30-
day period) that the Executive has not
appropriately remedied or otherwise addressed those
matters, the Executive's term of employment shall
in all events automatically terminate as of the
thirtieth (30th) day after the Employer delivers the
Termination Notice, without any responsibility or
obligation of the Employer to provide the Executive
with any further notice or explanation of the
grounds for his termination.
(f) Payments Upon Death. This
Agreement shall terminate upon the death of the
Executive. Upon the Executive's death and
termination of this Agreement, the Employer shall
only be obligated to pay: (i) such Base Salary as
shall have accrued through the date of death; plus
(ii) one-twelfth (1/12) of the average of the two
(2) most recent annual performance bonuses that the
Executive received from the Employer, multiplied by
the number of full calendar months the Executive
was employed during the then-current fiscal year of
the Employer, and the Employer shall not have any
further obligations to the Executive (other than
payment of amounts remaining unpaid pursuant to
declared performance bonuses for prior fiscal years
and reimbursement of approved expenses). The
amount the Employer shall be obligated to pay upon
the Executive's death shall be made to such
beneficiary, designee or fiduciary as Executive may
have designated in writing or, failing such
designation, to the executor or administrator of
his estate, in full settlement and satisfaction of
all claims and demands on behalf of the Executive.
Such payments shall be in addition to any other
death benefits of the Employer made available for
the benefit of the Executive, and in full
settlement and satisfaction of all payments
provided for in this Agreement.
(g) Disability Determination. The
Employer may deliver a Termination Notice and
terminate the Executive's employment if the
Executive is determined to be "disabled," which
term shall mean the Executive's inability, as a
result of physical or mental incapacity,
substantially to perform his duties hereunder for a
period of either six (6) consecutive months, or one
hundred and twenty (120) business days within a
consecutive twelve (12) month period. In the event
of a dispute regarding the Executive's
"disability," such dispute shall be resolved
through arbitration as provided in subparagraph (d)
of Section 9 hereof, except that the arbitrator
appointed by the American Arbitration Association
shall be a duly licensed medical doctor. The
Executive shall be entitled to the compensation and
benefits provided under this Agreement during any
period of incapacitation occurring during the term
of this Agreement prior to the establishment of
Executive's "disability" and subsequent termination
of his employment. Upon the Executive's
termination of employment under this Section 3(g),
the Employer shall only be obligated to pay the
Executive: (i) such Base Salary as shall have
accrued through the effective date of termination;
plus (ii) one-twelfth (1/12) of the average of the
two (2) most recent annual performance bonuses that
the Executive received from the Employer,
multiplied by the number of full calendar months
the Executive was employed during the then-current
fiscal year of the Employer, and the Employer shall
not have any further obligations to the Executive
(other than payment of amounts remaining unpaid
pursuant to declared performance bonuses for prior
fiscal years and reimbursement of approved
expenses).
(h) Termination Upon Change in
Control.
(i) In the event of a Change in
Control (as defined below)
of the Employer and the
termination of the
Executive's employment by
Executive or by the
Employer under either of
subparagraphs (1) or (2)
below in connection
therewith ("Change in
Control Termination"), the
Executive shall be entitled
to the Lump Sum Payment and
Post-Termination
Perquisites and Benefits
determined under
subparagraph (c) of this
Section 3. The following
shall constitute Change in
Control Termination under
this subparagraph (h):
(1) The Executive
terminates his
employment under this
Agreement pursuant to
a written notice to
that effect delivered
to the Board within
sixty (60) days after
the occurrence of an
event constituting a
Change in Control.
(2) Executive's
employment is
terminated (other
than for cause or
death or disability),
but including
Constructive
Discharge, by the
Employer or its
successor, either
within one (1) year
prior to or following
an event constituting
a Change in Control.
(ii) For purposes of this
subparagraph (h), the term
"Change in Control" shall
mean the approval by the
shareholders of the
Employer of: (1) a merger
or consolidation of the
Employer, if the
shareholders of the
Employer immediately before
such merger or
consolidation do not, as a
result of such merger or
consolidation, own,
directly or indirectly,
more than fifty percent
(50%) of the combined
voting power of the then
outstanding voting
securities of the entity
resulting from such merger
or consolidation in
substantially the same
proportion as was
represented by their
ownership of the combined
voting power of the voting
securities of the Employer
outstanding immediately
before such merger or
consolidation; (2) a
complete or substantial
liquidation or dissolution,
or an agreement for the
sale or other disposition,
of all or substantially all
of the assets of the
Employer; or (3) a complete
or substantial liquidation
or dissolution or an
agreement for the sale or
other disposition of its
ownership interest in
Netlink International, Inc.
Notwithstanding the
foregoing, a Change in
Control shall not be deemed
to occur solely because
forty percent (40%) or more
of the combined voting
power of the then-
outstanding securities is
acquired by: (1) a trustee
or other fiduciary holding
securities under one or
more employee benefit plans
maintained for employees of
the entity; or (2) any
corporation or other entity
which, immediately prior to
such acquisition, is
substantially owned,
directly or indirectly, by
the stockholders of the
Employer in the same
proportion as their
ownership of stock in the
Employer immediately prior
to such acquisition.
(iii) If it is determined, in the
opinion of the Employer's
independent accountants, in
consultation with the
Employer's independent
counsel, that any amount
payable to the Executive by
the Employer under this
Agreement, or any other
plan or agreement under
which the Executive
participates or is a party,
would constitute an "Excess
Parachute Payment" within
the meaning of Section 280G
of the Internal Revenue
Code of 1986, as amended
(the "Code") and be subject
to the excise tax imposed
by Section 4999 of the Code
(the "Excise Tax"), the
Employer shall pay to the
Executive a "grossing-up"
amount equal to the amount
of such Excise Tax and all
federal and state income or
other taxes with respect to
the payment of the amount
of such Excise Tax,
including all such taxes
with respect to any such
grossing-up amount. If, at
a later date, the Internal
Revenue Service assesses a
deficiency against the
Executive for the Excise
Tax which is greater than
that which was determined
at the time such amounts
were paid, the Employer
shall pay to the Executive
the amount of such
unreimbursed Excise Tax
plus any interest,
penalties and professional
fees or expenses, incurred
by the Executive as a
result of such assessment,
including all such taxes
with respect to any such
additional amount. The
highest marginal tax rate
applicable to individuals
at the time of payment of
such amounts will be used
for purposes of determining
the federal and state
income and other taxes with
respect thereto. The
Employer shall withhold
from any amounts paid under
this Agreement the amount
of any Excise Tax or other
federal, state or local
taxes then required to be
withheld. Computations of
the amount of any grossing-
up supplemental
compensation paid under
this subparagraph (h) shall
be made by the Employer's
independent accountants, in
consultation with the
Employer's independent
legal counsel. The
Employer shall pay all
accountant and legal
counsel fees and expenses.
4. Confidentiality and Loyalty. The
Executive acknowledges that prior to his entry into
this Agreement he has produced, received and had
access to, and may hereafter during the course of
his employment continue to produce, receive and
otherwise have access to various materials,
records, data, trade secrets and information not
generally available to the public (collectively,
"Confidential Information") regarding the Employer
and its subsidiaries and affiliates. Accordingly,
during and subsequent to any termination of this
Agreement, on any basis, the Executive shall hold
in confidence and shall not, directly or
indirectly, disclose, use, copy or make lists of
any such Confidential Information, except to the
extent that (a) such information is or thereafter
becomes lawfully available from public sources; or
(b) such disclosure is authorized in writing by the
Employer; or (c) such disclosure is required by law
or by any competent administrative agency or
judicial authority; or (d) such disclosure is
otherwise reasonably necessary or appropriate in
connection with the performance by the Executive of
his duties hereunder. All records, files,
documents, computer diskettes, computer programs
and other computer-generated material, as well as
all other materials or copies thereof relating to
the Employer's business, which the Executive shall
prepare or use, shall be and remain the sole
property of the Employer, shall not be removed from
the Employer's premises without its written
consent, and shall be promptly returned to the
Employer upon termination of the Executive's
employment hereunder. The Executive agrees to
abide by the Employer's general policies, as in
effect from time to time, respecting
confidentiality and the avoidance of interests
conflicting or appearing to be in conflict with
those of the Employer.
5. Non-Competition Covenant.
(a) Restrictive Covenant. The
Employer and the Executive have jointly reviewed
the tenant and customer lists, property submittals,
logs, broker lists, and operations of the Employer,
and have agreed that, in consideration of this
Agreement, and the payment of the amounts described
in Sections 2 and 3 hereof, the Executive hereby
agrees that, except with the express prior written
consent of the Employer, during the term of
Executive's employment with the Employer hereunder
(the "Restrictive Period"), he will not, directly
or indirectly, compete with the business of the
Employer, including, but not by way of limitation,
by directly or indirectly violating any duty the
Executive owes the Employer under applicable state
law, owning, managing, operating, controlling,
financing, or by directly or indirectly serving as
an employee, officer or director of or consultant
to, or by soliciting or inducing, or attempting to
solicit or induce, any employee or agent of
Employer to terminate employment with Employer and
become employed by any person, firm, partnership,
corporation, trust or other entity which owns or
operates a business similar to that of the Employer
and its subsidiaries (the "Restrictive Covenant").
For purposes of this subparagraph (a), a business
shall be considered "similar" to that of the
Employer if it is engaged in the ownership,
acquisition, development, ownership, operation,
management or leasing of multi-unit residential,
commercial or industrial property (i) in any
geographic market or territory in which the
Employer owns properties, either as of the date
hereof or as of the date of termination of the
Executive's employment; or (ii) in any "Target
Market" publicly identified by the Employer; or
(iii) in any market in which an acquisition is
pending at the time of the termination of the
Executive's employment. In addition to the
foregoing, for purposes of this subparagraph (a), a
business shall be considered "similar" to that of
Employer if it is engaged in e-commerce and
specifically "e-mall" or "e-real estate" concepts;
Internet access; computer network design, operation
and consulting; and/or any other product or service
offered by the Employer or Netlink. If the
Executive violates the Restrictive Covenant and the
Employer brings legal action or seeks injunctive or
other relief, the Employer shall not, as a result
of the time involved in obtaining such relief, be
deprived of the benefit of the full period of the
Restrictive Covenant. Accordingly, the Restrictive
Covenant shall be deemed to have the duration
specified in this paragraph (a), computed from the
date the relief is granted, but reduced by the time
between the period when the Restrictive Period
began to run and the date of the first violation of
the Restrictive Covenant by the Executive. In the
event that a successor of the Employer assumes and
agrees to perform this Agreement or otherwise
acquires the Employer, this Restrictive Covenant
shall continue to apply only to the primary service
area of the Employer as it existed immediately
before such assumption or acquisition. This
Restrictive Covenant shall further not prohibit the
Executive from owning, directly or indirectly,
capital stock or similar securities which are
listed on a securities exchange or quoted on the
National Association of Securities Dealers
Automated Quotation System which do not represent
more than five percent (5%) of the outstanding
capital stock of any corporation.
Notwithstanding the foregoing, the
Executive's affiliation with the Other Activities
shall not be deemed to violate the Restrictive
Covenant, provided that the products and services
offered by the Other Activities do not compete with
those products and services offered by the Employer
and its subsidiaries, including, specifically,
Netlink.
(b) Remedies for Breach of
Restrictive Covenant. The Executive acknowledges
that the restrictions contained in Sections 4 and 5
of this Agreement are reasonable and necessary for
the protection of the legitimate proprietary
business interests of the Employer; that any
violation of these restrictions would cause
substantial injury to the Employer and such
interests; that the Employer would not have entered
into this Agreement with the Executive without
receiving the additional consideration offered by
the Executive in binding himself to these
restrictions; and that such restrictions were a
material inducement to the Employer to enter into
this Agreement. In the event of any violation or
threatened violation of these restrictions, the
Employer shall be relieved of any further
obligations under this Agreement, shall be entitled
to any rights, remedies or damages available at
law, in equity or otherwise under this Agreement,
and shall be entitled to preliminary and temporary
injunctive relief granted by a court of competent
jurisdiction to prevent or restrain any such
violation by the Executive and any and all persons
directly or indirectly acting for or with him, as
the case may be, while awaiting the decision of the
arbitrator selected in accordance with paragraph
(d) of Section 9 of this Agreement, which decision,
if rendered adverse to the Executive, may include
permanent injunctive relief to be granted by the
court.
6. Intercorporate Transfers. If the
Executive shall be transferred by the Employer to
an affiliate of the Employer, such transfer shall
not be deemed a Constructive Discharge or otherwise
be deemed to terminate or modify this Agreement,
and the employing corporation to which the
Executive shall have been transferred shall, for
all purposes of this Agreement, be construed as
standing in the same place and stead as the
Employer as of the date of such transfer. For
purposes hereof, an affiliate of the Employer shall
mean any corporation or other entity directly or
indirectly controlling, controlled by, or under
common control with the Employer. For all relevant
purposes hereof, the tenure of the Executive shall
be deemed to include the aggregate term of his
employment by both the Employer and its affiliate.
7. Interest in Assets and Payments.
Neither the Executive nor his estate shall acquire
any rights in any funds or other assets of the
Employer, otherwise than by and through the actual
payment of amounts payable hereunder; nor shall the
Executive or his estate have any power to transfer,
assign, anticipate, pledge, hypothecate or
otherwise encumber any of said payments; nor shall
any of such payments be subject to seizure for the
payment of any debt, judgment, alimony, separate
maintenance or be transferable by operation of law
in the event or as a result of any bankruptcy,
insolvency or to any other legal proceeding
otherwise relating to the Executive.
8. Indemnification.
(a) The Employer shall provide the
Executive (including his heirs, personal
representatives, executors and administrators),
during the term of this Agreement and thereafter,
throughout all applicable limitations periods, with
coverage under the Employer's then-current
directors' and officers' liability insurance
policy, at the Employer's expense. In addition to
the insurance coverage provided for in paragraph
(a) of this Section 8, the Employer shall defend,
hold harmless and indemnify the Executive (and his
heirs, executors and administrators) to the fullest
extent permitted under applicable law, and subject
to the requirements, limitations and specifications
set forth in the Bylaws and other organizational
documents of the Employer, against all expenses and
liabilities reasonably incurred by him in
connection with or arising out of any action, suit
or proceeding in which he may be involved by reason
of his having been an officer of the Employer
(whether or not he continues to be an officer at
the time of incurring such expenses or
liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court
costs and attorneys' fees and the cost of
reasonable settlements.
(b) In the event the Executive
becomes a party, or is threatened to be made a
party, to any action, suit or proceeding for which
the Employer has agreed to provide insurance
coverage or indemnification under this Section 8,
the Employer shall, to the full extent permitted
under applicable law, advance all expenses
(including the reasonable attorneys' fees of the
attorneys selected by Employer and approved by
Executive for the representation of the Executive),
judgments, fines and amounts paid in settlement
(collectively "Expenses") incurred by the Executive
in connection with the investigation, defense,
settlement, or appeal of any threatened, pending or
completed action, suit or proceeding, subject to
receipt by the Employer of a written undertaking
from the Executive covenanting: (i) to reimburse
the Employer for all Expenses actually paid by the
Employer to or on behalf of the Executive in the
event it shall be ultimately determined by a court
of competent jurisdiction that the Executive is not
entitled to indemnification by the Employer for
such Expenses; and (ii) to assign the Employer all
rights the Executive has to insurance proceeds,
under any policy of directors' and officers'
liability insurance or otherwise, to the extent of
the amount of Expenses actually paid by the
Employer to or on behalf of the Executive.
9. General Provisions.
(a) Successors; Assignment. This
Agreement shall be binding upon and inure to the
benefit of the Executive, the Employer, the
Executive's personal representatives and the
Employer's successors and assigns. Any successor
or assignee of the Employer shall be deemed the
successor to all or substantially all of the
business and/or assets of the Employer, whether
directly or indirectly, by purchase, merger,
consolidation, acquisition of stock, or otherwise,
by an agreement in form and substance satisfactory
to the Executive expressly to assume and agree to
perform this Agreement in the same manner and to
the same extent as the Employer would be required
to perform if no such succession had taken place.
The Executive may neither assign his duties or
obligations this Agreement, nor sell, assign,
pledge, encumber, transfer or hypothecate his
entitlement hereunder, and the Employer shall have
no obligation to recognize any such purported
alienation, or pay any funds to any party claiming
the benefit thereof.
(b) Entire Agreement; Modifications.
This Agreement constitutes the entire agreement
between the parties respecting the subject matter
hereof, and supersedes all prior negotiations,
undertakings, agreements and arrangements with
respect thereto, whether written or oral. Except
as otherwise explicitly provided herein, this
Agreement may not be amended or modified except by
written agreement signed by the Executive and the
Employer.
(c) Enforcement and Governing Law.
The provisions of this Agreement shall be regarded
as divisible and separate; if any of said
provisions should be declared invalid or
unenforceable by a court of competent jurisdiction,
the validity and enforceability of the remaining
provisions shall not be affected thereby. This
Agreement shall be construed and the legal
relations of the parties hereto shall be determined
in accordance with the laws of the State of
Minnesota as it constitutes the situs of the
Employer and the employment hereunder, without
references to the law regarding conflicts of law.
(d) Arbitration. Except as otherwise
provided in paragraph (b) of Section 5, any dispute
or controversy arising under or in connection with
this Agreement or the Executive's employment by the
Employer shall be settled exclusively by
arbitration, conducted by a single arbitrator
sitting in Minneapolis, Minnesota, in accordance
with the rules of the American Arbitration
Association (the "AAA") then in effect. The
arbitrator shall be selected by the parties from a
list of eleven (11) arbitrators provided by the AAA
provided that no arbitrator shall be related to or
affiliated with either of the parties. Not later
than ten (10) days after the list of proposed
arbitrators is received by the parties, the
parties, or their respective representatives, shall
meet at a mutually convenient location in
Minneapolis, Minnesota, or telephonically. At that
meeting, the party who sought arbitration shall
eliminate one (1) proposed arbitrator and then the
other party shall eliminate one (1) proposed
arbitrator. The parties shall continue to
alternatively eliminate names from the list of
proposed arbitrators in this manner until each
party has eliminated five (5) proposed arbitrators.
The remaining arbitrator shall arbitrate the
dispute. Each party shall submit, in writing, the
specific requested action or decision it wishes to
take, or make, with respect to the matter in
dispute ("Proposed Solution"), and the arbitrator
shall be obligated to choose one (1) party's
specific Proposed Solution, without being permitted
to effectuate any compromise or "new" position;
provided, however, that the arbitrator is
authorized to award amounts not in dispute during
the pendency of any dispute or controversy arising
under or in connection with this Agreement. The
party whose Proposed Solution is not selected shall
bear the costs of all counsel, experts or other
representatives that are retained by both parties,
together with all costs of the arbitration
proceeding, including, without limitation, the
fees, costs and expenses imposed or incurred by the
arbitrator. Judgment may be entered on the
arbitrator's award in any court having
jurisdiction; including, if applicable, entry of a
permanent injunction under paragraph (b) of Section
5.
(e) Press Releases and Public
Disclosure. Any press release or other public
communication by either the Executive or the
Employer with any other person concerning the
terms, conditions or circumstances of Executive's
employment, or the termination of such employment,
shall be subject to prior written approval of both
the Executive and the Employer, subject to the
proviso that the Employer shall be entitled to make
requisite and appropriate public disclosure of the
terms of this Agreement and any termination hereof,
without the Executive's consent or approval, as may
be required under applicable statutes, and the
rules and regulations of the Securities and
Exchange Commission and NASDAQ. The Employer shall
be entitled to rely on the advice and counsel of
its professional advisors in determining whether
any such disclosure is required.
(f) Waiver. No waiver by either
party, at any time, of any breach by the other
party of, or compliance with, any condition or
provision of this Agreement to be performed by the
other party, shall be deemed a waiver of any
similar or dissimilar provisions or conditions at
the same time or any prior or subsequent time.
(g) Notices. Notices given pursuant
to this Agreement shall be in writing, and shall be
deemed given when received if personally delivered,
or on the first (1st) business day after deposit
with a commercial overnight delivery service.
Notices to the Employer shall be addressed and
delivered to the principal headquarters office of
the Employer, Attention: Chairman. Notices to the
Executive shall be sent to the address set forth
below the Executive's signature on this Agreement,
or to such other address as Executive may hereafter
designate in a written notice given to the Employer
and its counsel.
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first above written.
STONEHAVEN REALTY TRUST
EXECUTIVE:
By: /s/Duane H. Lund
/s/Odeh A. Muhawesh
Duane H. Lund
Odeh A. Muhawesh
Chief Executive Officer
Address of Executive:
2250 University Avenue West
Suite 240N
St.
Paul, MN 55114
EXHIBIT A
Schedule of Other Activities
Those companies that should be excluded from this
merger transaction are:
1. Internet Pizza
2. Service Bidding, Inc.
3. RSSI, Inc.
4. 3 B Soft/Explain
5. MyFree Desk Inc.
6. Konbon
EXHIBIT 2.3
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT
Between
WELLINGTON PROPERTIES TRUST
WELLINGTON PROPERTIES INVESTMENTS, L.P.
PLYMOUTH PARTNERS II, LLC,
AND THE OTHER LP UNIT RECIPIENTS REFLECTED ON THE
SIGNATURE PAGE HERETO
Dated as of February 29, 2000
IN MAKING AN INVESTMENT DECISION INVESTORS
MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER
AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THE SECURITIES REFERENCED
HEREIN HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES
HAVE NOT CONFIRMED THE ACCURACY OR ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY
NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED
TO BEAR THE FINANCIAL RISK OF THIS INVESTMENT FOR
AN INDEFINITE PERIOD OF TIME.
TABLE OF CONTENTS
Page
1. CONTRIBUTION. 1
1.1. LLC INTERESTS 1
1.2. PROPERTIES 1
2. CONTRIBUTION CONSIDERATION; LP UNITS; TAX
MATTERS. 1
2.1. CONTRIBUTION CONSIDERATION 2
2.2. LP UNITS. 2
2.3. CERTAIN INFORMATIONAL MATERIALS 3
2.4. TRANSFER REQUIREMENTS 4
3. INSPECTION. 4
3.1. CONTRIBUTOR'S DELIVERY OF
SPECIFIED DOCUMENTS 4
3.2. DUE DILIGENCE 4
3.3. TENANT ESTOPPELS 5
3.4. SERVICE CONTRACTS 6
3.5. TRANSITION INFORMATION 6
4. TITLE AND SURVEY REVIEW. 6
4.1. DELIVERY OF TITLE COMMITMENT AND
SURVEY 6
4.2. TITLE REVIEW AND CURE 7
4.3. DELIVERY OF TITLE POLICY AT
CLOSING 7
4.4. TITLE AND SURVEY COSTS 8
5. CONTRIBUTOR CALl OPTION. 8
5.1. CALL OPTION 8
6. CLOSING. 8
6.1. CLOSING 8
6.2. TERMINATION 9
7. CONTRIBUTORS' REPRESENTATIONS AND
WARRANTIES 9
7.1. DESCRIPTIVE INFORMATION 9
7.2. TITLE 9
7.3. CONTRIBUTOR'S DELIVERIES 9
7.4. NO VIOLATIONS 9
7.5. DEFAULTS 10
7.6. AUTHORITY 10
7.7. QUALIFICATION 10
7.8. SUCCESSOR LIABILITY 10
7.9. CONTRACTS 10
7.10. PHYSICAL CONDITION 11
7.11. IMPROVEMENTS 11
7.12. EMPLOYEES 11
7.13. COMPLIANCE WITH LAWS AND CODES 11
7.14. LITIGATION 12
7.15. INSURANCE 12
7.16. FINANCIAL INFORMATION 12
7.17. RE-ZONING 12
7.18. PERSONAL PROPERTY 12
7.19. REAL ESTATE TAXES 12
7.20. UNITED STATES PERSON 13
7.21. EXISTING MORTGAGES 13
7.22. CONDEMNATION 13
7.23. LEASED PERSONAL PROPERTY 13
7.24. INTELLECTUAL PROPERTY 13
7.25. INVESTMENT REPRESENTATION 14
7.26. ASSIGNED INTERESTS 14
7.27. WARRANTIES AS TO LEASES 14
7.28. TAX MATTERS. 15
8. ACQUIROR'S REPRESENTATIONS AND WARRANTIES 16
8.1. X STATUS 16
8.2. ACQUIROR AUTHORITY 16
8.3. QUALIFICATION 16
8.4. INFORMATIONAL MATERIALS 16
8.5. NO MATERIAL ADVERSE CHANGE 16
9. PRE-CLOSING COVENANTS 17
9.1. IMPLEMENTING AGREEMENT 17
9.2. NEW LEASES 17
9.3. NEW CONTRACTS 17
9.4. OPERATION OF PROJECTS 17
9.5. CONSENTS AND APPROVALS 18
9.6. CONTINUATION OF EMPLOYEES 18
9.7. EXCLUSIVITY 18
9.8. MONTHLY UPDATES OF RENT ROLLS AND
OPERATION
STATEMENTS 18
9.9. DAMAGE 18
9.10. CONDEMNATION 19
10. PRORATIONS AND ADJUSTMENTS. 19
10.1. PRORATIONS 19
10.2. WORK CONTRACTS 21
10.3. TENANT DEPOSITS 21
10.4. DEPOSITS 21
10.5. WAGES 22
10.6. LEASING COMMISSIONS 22
10.7. POST-CLOSING ADJUSTMENTS. 22
11. ENVIRONMENTAL WARRANTIES AND AGREEMENTS. 22
11.1. DEFINITIONS 22
11.2. WARRANTIES 24
12. CONDITIONS PRECEDENT TO CLOSING. 25
12.1. ACQUIROR'S CONDITIONS PRECEDENT 25
12.2. CONTRIBUTOR'S CONDITIONS
PRECEDENT 27
12.3. MUTUAL CONDITIONS PRECEDENT 27
13. CLOSING DELIVERIES. 27
13.1. CONTRIBUTOR'S 27
13.2. ACQUIROR'S 29
14. BROKERAGE 30
15. LP UNIT RECIPIENTS 31
15.1. LP UNIT SCHEDULE 31
15.2. LP UNIT RECIPIENTS 31
16. DEFAULT. 31
16.1. REMEDIES. 31
16.2. NO MERGER; SURVIVAL 32
16.3. LITIGATION EXPENSES 32
17. INDEMNIFICATION. 32
17.1. BY CONTRIBUTORS AND LP UNIT
RECIPIENTS 33
17.2. BY ACQUIROR AND OPERATING
PARTNERSHIP 33
17.3. REMEDIES UPON FRAUD 33
17.4. INDEMNIFICATION OF THIRDPARTY
CLAIMS 33
17.5. PAYMENT 34
17.6. JURISDICTION 35
17.7. NO WAIVER 35
18. NOTICES 35
19. MISCELLANEOUS. 35
19.1. SUCCESSORS AND ASSIGNS 35
19.2. BENEFIT 36
19.3. FURTHER ASSURANCES 36
19.4. ENTIRE AGREEMENT 36
19.5. TIME OF THE ESSENCE 36
19.6. CONDITIONS PRECEDENT 36
19.7. CONSTRUCTION 36
19.8. GOVERNING LAW 37
19.9. PARTIAL INVALIDITY 37
19.10. WAIVER OF CONDITIONS PRECEDENT 37
19.11. CERTAIN SECURITIES MATTERS 37
19.12. COUNTERPARTS 37
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this
"AGREEMENT") is effective as of the 29th day of
February, 2000 (the "EFFECTIVE DATE"), by and among
Steven B. Hoyt ("CONTRIBUTOR"), Plymouth Partners
II, LLC, a limited liability company, Wellington
Properties Investments, L.P., a Delaware limited
partnership (the "OPERATING PARTNERSHIP"),
Stonehaven Realty Trust, a Maryland real estate
investment trust ("ACQUIROR") and the parties
identified on the signature page hereto as "LP UNIT
RECIPIENTS."
1. CONTRIBUTION.
1.1 LLC INTERESTS. Contributor agrees to
contribute and assign to the Operating Partnership,
and Acquiror agrees to cause the Operating
Partnership to accept and assume from Contributor,
on the terms and conditions set forth herein, all
of Contributor's interest in and to the Property
Owners (the "ASSIGNED INTEREST").
1.2 PROPERTIES. Each of the Property
Owners owns certain improved real properties, which
properties include those certain buildings (the
"BUILDINGS"), each containing that number of net
rentable square feet, as specified on Exhibit A
attached hereto. The Buildings are leased to
Tenants (as defined below). Each of the Buildings
is commonly known by the respective street address
in the cities, counties and states described on
Exhibit A attached hereto. For purposes of this
Agreement the term, "PROJECTS," shall be deemed to
mean, collectively: (i) all of the parcels of land
(collectively, the "LAND") owned by the Property
Owners, together with all rights, easements and
interests appurtenant thereto, including, but not
limited to, any streets or other public ways
adjacent to said Land and any water or mineral
rights owned by, or leased to, the owner of such
land; (ii) all improvements located on the Land,
including, but not limited to, the Buildings, and
all other structures, systems, and utilities
associated with, and utilized, by the owner
thereof, in the ownership and operation of the
Buildings (all such improvements being collectively
referred to herein as the "IMPROVEMENTS"); (iii)
all personal property owned by each Property Owner
(collectively, the "PERSONAL PROPERTY"), including,
without limitation, all fixtures and other built-
in improvements and equipment necessary to operate
the Projects; (iv) all building materials,
supplies, hardware, carpeting and other inventory
owned by each Property Owner and maintained in
connection with each such owner's ownership and
operation of the Land and/or Improvements and not
owned by Tenants; (v) all trademarks, tradenames,
development rights and entitlements and other
intangible property used or useful in connection
with the foregoing (collectively, the "INTANGIBLE
PERSONAL PROPERTY"); and (vi) the respective
interest of each Property Owner in all leases and
other agreements to occupy, or concerning the
occupancy of, all or any portion of either or both
of the Land and the Improvements (collectively, the
"LEASES").
2. CONTRIBUTION CONSIDERATION;
LP UNITS; TAX MATTERS.
2.1 CONTRIBUTION CONSIDERATION. Acquiror
shall cause the Operating Partnership to pay to
Contributor, as consideration for Contributor's
assignment of all of the Assigned Interest (the
"CONTRIBUTION CONSIDERATION"), consideration
consisting of that number of LP Units (as defined
below) having an aggregate value, calculated as
provided in Section below, equal to: (A) $901,060;
minus (B) any applicable prorations described in
Section ("PRORATIONS") and credited, as of the
Closing Date (as defined below), to or on behalf of
Acquiror; plus (C) any applicable Prorations
credited, as of the Closing Date, to Contributor;
minus (D) any other adjustments described in this
Agreement ("ADJUSTMENTS") occurring on or prior to
the Closing Date in favor of Acquiror; and plus (E)
any Adjustments occurring on or prior to the
Closing Date in favor of the Contributor (in each
case, as reflected on the Closing Statement on the
Closing Date and subject to adjustment pursuant to
Section . If the above-described calculation of
Contribution Consideration would result in a
fractional number of LP Units to be delivered to
Contributor, Acquiror shall round that fraction up
or down, as the case may be, to the nearest whole
number of LP Units. Provided that all applicable
conditions precedent to Acquiror's obligations to
close as set forth in this Agreement (collectively,
"ACQUIRER'S CONDITIONS PRECEDENT") have been
satisfied and fulfilled, or waived in writing by
Acquiror, the Contribution Consideration shall be
paid to Contributor at the Closing pursuant to
Section below. At Closing, Contributor shall
distribute the Contribution Consideration to its
respective LP Unit Recipients, in the respective
percentages set forth on the LP Unit Schedule (as
defined below).
2.2 LP UNITS.
(a) The Contribution Consideration shall be
paid by Acquiror's delivery of partnership units
(the "LP UNITS") in Operating Partnership, which
partnership units shall have the terms set forth on
Exhibit B. The LP Units will be redeemable for
preferred shares of beneficial interest of the
Acquiror ("SHARES") in accordance with the
provisions of the Redemption Agreement
substantially in the form attached hereto as
Exhibit C. Contributor acknowledges that the LP
Units will not be certificated and that, therefore,
the issuance of the LP Units shall be evidenced by
the execution and delivery of an amendment (the
"AMENDMENT") to the Partnership Agreement (as
defined below), which amendment shall be executed
and delivered by Acquiror and Contributor at the
Closing.
(b) For purposes of determining the number
of LP Units to be delivered in satisfaction of
payment of the Contribution Consideration, the
Contribution Consideration shall be divided by a
unit price equal to $4.35 per LP Unit ("UNIT
PRICE").
(c) Contributor shall deliver to Acquiror,
and shall cause its direct and indirect partners,
shareholders and members, as the case may be
("INTEREST HOLDERS"), to deliver to Acquiror, or to
any other party designated by Acquiror, a completed
questionnaire and representation letter providing,
among other things, information concerning
Contributor's, each Interest Holder's, and each LP
Unit Recipient's status as an accredited investor
("ACCREDITED INVESTOR"), as such term is defined in
Regulation D promulgated under the Securities Act
of 1933 (as amended, the "SECURITIES ACT"), as
amended, and shall provide or cause to be provided
to Acquiror, or to any other party designated by
Acquiror, such other information and documentation
as may reasonably be requested by Acquiror in
furtherance of the issuance of the LP Units as
contemplated hereby. Notwithstanding anything
contained in this Agreement to the contrary, in the
event that, in the reasonable opinion of Acquiror,
based on advice of its securities counsel, (x) any
such person or entity providing Investor Materials
(as hereinafter defined) is not considered an
Accredited Investor, (y) the proposed issuance of
LP Units hereunder might not qualify for the
exemption from the registration requirements of
Section 5 of the Securities Act, or (z) the
proposed issuance of LP Units hereunder would
violate any applicable federal or state securities
laws, rules or regulations, or agreements to which
the Operating Partnership or Acquiror is or becomes
privy, or any tax-related or other legal rules,
agreements or constraints applicable to the
Operating Partnership or Acquiror shall so advise
Contributor, in writing (the "REGULATORY VIOLATION
NOTICE"). In the event a Regulatory Violation
Notice is delivered, this Agreement shall
terminate, and no party shall have any further
liability hereunder except (i) as otherwise
expressly set forth in this Agreement and (ii) to
the extent a breach of this Agreement gives rise
to, or becomes the basis for, the Regulatory
Violation Notice.
(d) Contributor and each LP Unit Recipient
hereby covenants and agrees that it shall deliver
and shall cause each of its Interest Holders to
deliver to Acquiror, or to any other party
designated by Acquiror, any documentation that may
be required under the Partnership Agreement or any
charter document of Acquiror, and such other
information and documentation as may reasonably be
requested by Acquiror, at such time as any LP Units
are redeemed for Shares ("CONVERSION SHARES"). The
provisions of this Section shall survive the
Closing indefinitely and shall not merge into any
of the conveyancing documents delivered at the
Closing.
(e) The parties acknowledge that
Contributor intends to treat the assignment of
the Assigned Interest in exchange for LP Units as a
tax-free partnership contribution pursuant to
Section 721 of the Internal Revenue Code of 1986,
as amended (the "CODE"). Acquiror shall cooperate,
and shall cause the Operating Partnership to
cooperate, in all reasonable respects with
Contributor to effectuate such Exchange. The
provisions of this Section shall survive Closing
indefinitely and shall not merge into any
conveyancing documents delivered at the Closing.
2.3 CERTAIN INFORMATIONAL MATERIALS. For
purposes hereof, the term "PARTNERSHIP AGREEMENT"
shall mean the Operating Partnership's Limited
Partnership Agreement dated as of August 31, 1998,
as amended from time to time. Contributor and the
LP Unit Recipients hereby acknowledge and agree
that the ownership of LP Units by them and their
rights and obligations as limited partners of the
Operating Partnership (including, without
limitation, its right to transfer, encumber, pledge
and exchange LP Units) shall be subject to all of
the express limitations, terms, provisions and
restrictions set forth in this Agreement and in the
Partnership Agreement. In that regard, Contributor
and each LP Unit Recipient hereby covenants and
agrees that, at the Closing, it shall execute any
and all documentation reasonably required by
Acquiror and the Operating Partnership to formally
memorialize the foregoing (collectively, the
"PARTNERSHIP AGREEMENT ADOPTION MATERIALS").
Contributor and each LP Unit Recipient acknowledges
that each has received and reviewed, at the
Effective Date and prior to the Closing Date, the
following: (i) Acquirer's Annual Report on Form 10-
KSB for the year ended December 31, 1998 (the "10-
K"); (ii) Acquiror's Notice of Annual Meeting of
Shareholders and Proxy Statement in connection with
Acquiror's 1999 Annual Meeting of Shareholders;
(iii) documents filed with the United States
Securities and Exchange Commission ("SEC")
subsequent to the 10-K; and (iv) the Partnership
Agreement. Contributor and each LP Unit Recipient
acknowledges that, prior to the Closing Date, it:
(x) has had an opportunity to conduct a due
diligence review of the affairs of Acquiror and
Operating Partnership; and (y) has been afforded
the opportunity to ask questions of, and receive
additional information from, Acquiror and Operating
Partnership regarding Acquiror and Operating
Partnership.
2.4 TRANSFER REQUIREMENTS. Contributor and
each LP Unit Recipient may only sell, transfer,
assign, pledge or encumber, or otherwise convey any
or all of the LP Units and, if applicable, any
Conversion Shares, in strict compliance with this
Agreement, the Partnership Agreement, the charter
documents of Acquiror, the registration and other
provisions of the Securities Act (and the rules
promulgated thereunder), any state securities laws,
the rules of the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") and
the Registration Rights Agreement (as defined in
the Partnership Agreement), in each case as may be
applicable. The provisions of this Section shall
survive the Closing indefinitely and shall not
merge into any of the conveyancing documents
delivered at the Closing.
3. INSPECTION.
3.1 CONTRIBUTOR'S DELIVERY OF SPECIFIED
DOCUMENTS. Within 5 business days after execution
of this Agreement by Contributor, Contributor shall
provide to Acquiror or make available to Acquiror
copies of each and every item set forth on Exhibit
D to this Agreement (the "PROJECTS INFORMATION").
The terms "RENT ROLL," "OPERATION STATEMENTS,"
"COMMISSION SCHEDULE," and "SERVICE CONTRACTS" used
herein are defined in Exhibit D. Upon delivery of,
or making available to Acquiror, the last item of
Projects Information, Contributor shall deliver to
Acquiror a written notice (the "PROJECTS
INFORMATION NOTICE") certifying that this
obligation has been satisfied together with an
itemization of the matters delivered or made
available to Acquiror. If any such item is not in
Contributor's possession or control, Contributor
shall provide to Acquiror a written acknowledgment
to that effect. Contributor shall have the
continuing obligation during the pendency of this
Agreement to provide Acquiror with any document
described above and coming into Contributor's
possession or produced or entered into by
Contributor after the initial delivery of the
Projects Information.
3.2 DUE DILIGENCE. Acquiror shall have
through the 30th day following the Effective Date
(the "DUE DILIGENCE PERIOD") in which to examine,
inspect, and investigate the Projects and, in
Acquiror's sole and absolute judgment and
discretion, to determine whether the Projects are
satisfactory to Acquiror and to obtain appropriate
internal approval to proceed with this transaction.
Acquiror may terminate this Agreement pursuant to
this Paragraph by giving notice of termination to
Contributor on or before the last day of the Due
Diligence Period. Upon such termination, all
further rights and obligations of the parties under
this Agreement shall terminate, except any
obligation which by its terms survives any
termination of this Agreement. This Agreement
shall continue in full force and effect if Acquiror
does not give the notice of termination under this
Agreement. During the pendency of this Agreement,
Acquiror and its agents, employees, and
representatives shall have a continuing right of
reasonable access to the Projects (and any records
relating to the Projects) for the purpose of
examining and making copies of all books and
records and other materials relating to the
Projects in Contributor's or its Projects manager's
possession and for the purpose of conducting
analyses, surveys, architectural, engineering,
geotechnical and environmental inspections and
tests (including intrusive inspection and sampling)
of the Projects, and any other inspections,
studies, or tests reasonably required by Acquiror.
In the course of its investigations, Acquiror may
make inquiries to third parties, including, without
limitation, tenants, lenders, contractors, Projects
managers, parties to Service Contracts and Work
Contracts (as defined below) and municipal local
and other government officials and representatives,
and Contributor consents to such inquiries.
Acquiror shall keep the Projects free and clear of
any liens and will indemnify, defend, and hold
Contributor harmless from all liens or any claims
asserted by third parties against Contributor to
recover for personal injury or Projects damage as a
result of Acquiror's entry onto the Projects. If
any inspection or test disturbs the Projects,
Acquiror will restore the Projects to its condition
before any such inspection or test. Acquiror's
obligations under the preceding two sentences shall
survive Closing or any termination of this
Agreement. During the Due Diligence Period,
Acquiror shall have the right to conduct a "walk-
through" of the Projects upon appropriate notice to
tenants as permitted under the Leases and to
conduct such additional environmental tests,
samples, assessments and audits of the Projects as
Acquiror may deem appropriate in order to perform
pre-Closing due diligence regarding the current
environmental conditions of or affecting the
Projects. If Acquiror determines in its sole
discretion to perform a Phase II environmental
investigation, the Due Diligence Period shall
continue through the 60th day after the Effective
Date and all references thereafter to "Due
Diligence Period" shall mean such 60-day period.
As a condition to Acquiror's obligation to close,
there shall be no material adverse change in any
condition of or affecting the Projects after the
expiration of the Due Diligence Period. Material
adverse change will include, without limitation,
the dumping of refuse or the release, dumping or
discovery of any environmental contamination.
3.3 TENANT ESTOPPELS. Contributor shall
endeavor to secure and shall deliver to Acquiror,
as and when received, but in any event by at least
10 days before the Closing Date, estoppel
certificates dated not more than 15 days prior to
the Closing Date from tenants under all Leases in
the form satisfactory to Acquiror (the "TENANT
ESTOPPELS"). Contributor shall provide Acquiror
with copies of the Tenant Estoppels for Acquiror's
review and comment before delivering the Tenant
Estoppels to tenants and a Rent Roll, current as of
a date no more than 15 days prior to the Closing
Date. Acquiror's obligation to close this
transaction is subject to the condition that (a)
prior to the Closing Date, Acquiror shall have
received from any tenant(s) executing a Lease for
premises containing 5,000 or more square feet of
space, and 80% of the balance of the tenants in
occupancy in the Projects, a current Tenant
Estoppel (dated not earlier than 15 days prior to
the Closing Date) and consistent with the most
recent Rent Roll; (b) as of the Closing Date, the
Leases shall be in full force and effect and no
material default or claim by landlord or tenant
shall exist or have arisen under any Leases; and
(c) as of the Closing Date, no tenant shall have
initiated or had initiated against it any
insolvency, bankruptcy, receivership or other
similar proceeding. If the required Tenant
Estoppels are not delivered to Acquiror, or if any
Tenant Estoppel either does not meet the foregoing
requirements or discloses any facts objectionable
to Acquiror in its reasonable opinion, or if any of
the other conditions set forth in the preceding
paragraph which are to be satisfied as of the
Closing Date are not satisfied as of such date (as
it may be extended hereunder), Acquiror may elect
to either: (i) terminate this Agreement by
delivering written notice to Contributor on or
before the Closing Date; or (ii) waive the
satisfaction of this condition (and failure to
provide such written notice of termination shall be
deemed a waiver) and proceed with the transaction
contemplated hereunder.
3.4 SERVICE CONTRACTS. Not less than 10
days prior to the Closing Date, Acquiror shall
notify Contributor as to which Service Contracts
Acquiror will assume and which Service Contracts
will be terminated by Contributor 30 days after
Closing. Acquiror will assume the obligations
arising from and after the Closing Date under those
Service Contracts that are not in default as of the
Closing Date and which Acquiror has elected to
assume. Contributor shall terminate at Closing,
and Acquiror shall not assume, any property
management agreement affecting the Projects.
3.5 TRANSITION INFORMATION. No later than
5 days prior to the Closing or on such other date
as may be specified in this Paragraph , Contributor
will provide Acquiror with the following
information: (i) a tenant contact list that
includes the legal notification address, telephone
number and emergency contact (including individual
and telephone numbers) for each tenant; (ii) an
aged accounts receivable list for the Projects to
be generated and delivered to Acquiror on the day
preceding the Closing Date; (iii) a list of all
vendors for the Projects, including contacts,
addresses and telephone numbers; (iv) a list of all
utility providers and account numbers for the
Projects; and (v) copies of invoices forwarded to
tenants for the month preceding Closing, and, if
then prepared, for the month of Closing.
4. TITLE AND SURVEY REVIEW.
4.1 DELIVERY OF TITLE COMMITMENT AND
SURVEY. Acquiror shall cause to be prepared and
shall deliver to Contributor and its counsel (a) a
current ALTA-ACSM as-built survey of the Projects
(the "SURVEY") including a certification addressed
to Acquiror in the form satisfactory to Acquiror;
(b) copies of Uniform Commercial Code searches in
the name of Contributor, the Property Owners and
the Projects issued by the Title Company (as
defined below) or a search company acceptable to
Acquiror ("UCC SEARCHES") and (c) a current,
effective commitment for title insurance (the
"TITLE COMMITMENT") issued by a title company
acceptable to Acquiror (the "TITLE COMPANY") in the
amount of the estimated Contribution Consideration
plus the amount of the Assumed Liabilities (the
"COVERAGE AMOUNT") with Acquiror as the proposed
insured, and accompanied by true, complete, and
legible copies of all documents referred to in the
Title Commitment. No later than 20 days prior to
the Closing Date, Acquiror shall cause to be
prepared and will deliver to Contributor and its
counsel, an updated Title Commitment (the "TITLE
DATE DOWN"), bringing title to the Projects
current, and accompanied by copies of any documents
not disclosed in the original Title Commitment.
4.2 TITLE REVIEW AND CURE. During the Due
Diligence Period, Acquiror shall review title to
the Projects as disclosed by the Title Commitment,
the Survey and UCC Searches. Acquiror shall advise
Contributor, the Title Company and the surveyor in
writing of any matters set forth on those documents
to which Acquiror objects. Contributor will
reasonably cooperate with Acquiror in curing
Acquiror's objections, but Contributor shall not be
obligated to cure any such objections except liens
and security interests created by, through or under
Contributor or Property Owners (including, without
limitation, those disclosed by the UCC Searches),
all of which liens and security interests
Contributor shall cause to be released at Closing.
Contributor also agrees to remove or cause to be
removed any exceptions or encumbrances to title
which arise after the Effective Date, other than
those approved by Acquiror prior to their being
placed of record. Prior to the expiration of the
Due Diligence Period, the parties shall memorialize
in writing those objections which Contributor is
obligated to cure as aforesaid, or has elected to
cure at Closing, and cause the Title Company to
issue a revised Title Commitment. The term
"PERMITTED EXCEPTIONS" means all those exceptions
shown on the Title Commitment, the Survey and UCC
Searches as of the expiration of the Due Diligence
Period other than those objections that Contributor
has elected to cure in writing prior to the
expiration of the Due Diligence Period and any
matters placed of record subsequent to the Due
Diligence Period with the prior written consent of
Acquiror. If the Title Date Down, or any subsequent
revision to the Title Commitment, contains
additional or modified conditions to obtaining any
endorsement requested by Acquiror during the Due
Diligence Period or discloses any exceptions or
encumbrances other than Permitted Exceptions, and
if any such matters are objectionable to Acquiror,
Acquiror will provide Contributor with written
notice of its objection to any such new or modified
matters within 10 days after receipt of the Title
Date Down, or any subsequent revision to the Title
Commitment. Acquiror may terminate this Agreement
by delivering written notice to Contributor on or
prior to the Closing Date if any matter to which
Acquiror objects is not removed, modified or
insured over in a manner satisfactory to Acquiror.
Acquiror shall be deemed to have approved any
title exception that Contributor is not obligated
to remove and to which either Acquiror did not
object as provided above, or to which Acquiror did
object, but with respect to which Acquiror did not
terminate this Agreement.
4.3 DELIVERY OF TITLE POLICY AT CLOSING.
As a condition to Acquiror's obligation to close,
the Title Company shall deliver to Acquiror at
Closing an ALTA Owner's Policy (Revised 10-17-70
and 10-17-84) (or other form if required by state
law) of title insurance, with extended coverage
(i.e., with ALTA General Exceptions 1 through 5
deleted, or with corresponding deletions if the
Projects is located in a non-ALTA state), issued by
the Title Company as of the Closing Date, in the
amount of the Coverage Amount, containing
Acquiror's Endorsements, insuring Acquiror as owner
of good, marketable and indefeasible fee simple
title to the Projects, and subject only to the
Permitted Exceptions (the "TITLE POLICY").
"ACQUIROR'S ENDORSEMENTS" shall mean, to the extent
such endorsements are available under the laws of
the state in which the Projects is located: (a)
owner's comprehensive; (b) access; (c) survey
(accuracy of survey); (d) location (survey legal
matches title legal); (e) separate tax lot;
(f) legal lot; (g) zoning 3.1, with parking and
loading docks; and (h) such other endorsements as
Acquiror may require during the Due Diligence
Period based on its review of the Title Commitment
and Survey. Contributor shall execute at Closing
an ALTA Statement (Owner's Affidavit) and any other
documents or agreements required by the Title
Company to issue the Title Policy in accordance
with the provisions of this Agreement.
4.4 TITLE AND SURVEY COSTS. Contributor
shall pay for (i) the cost of the Survey, including
any revisions necessary to make the Survey conform
to the requirements of this Agreement, and (ii) the
base premium for the Title Policy, including any
endorsements required to insure over exceptions
which Contributor is required or has agreed to
remove or insure over as hereinbefore provided),
(iii) the cost of extended coverage and Acquiror's
endorsements and (iv) the cost of the UCC Searches.
5. CONTRIBUTOR CALL OPTION.
5.1 CALL OPTION. On the third anniversary
of the Closing Date (the "OPTION DATE"),
Contributor shall have the one-time right to elect
to purchase the Assigned Interest from Operating
Partnership (the "OPTION") in exchange for (1) the
assumption of the Existing Mortgage Debt (as
defined below), plus the amount of any liabilities
encumbering the Projects in excess of the Existing
Mortgage Debt, (2) surrender of all LP Units issued
to Contributor at Closing and (3) cash in an amount
equal to the costs and expenses of Acquiror
resulting from the exercise of the Option.
Contributor shall be entitled to exercise the
Option only (x) upon delivery to Acquiror of
written notice of its intent to exercise the Option
at least 120 days prior to the Option Date and
(y) if all of the LP Units issued to Contributor at
Closing are outstanding, have not been redeemed and
are owned by Contributor or the LP Unit Recipients.
Acquiror shall have a ten-day period from receipt
of Contributor's notice of its exercise of the
Option to either (a) consent to Contributor's
exercise of the Option or (b) redeem the LP Units
issued to Contributor at Closing for a per unit
redemption price equal to the Unit Price. Upon
acceptance of Contributor's exercise of the Option
by Acquiror, Contributor shall be unconditionally
obligated to consummate the purchase of the
Assigned Interest within 60 days after delivery of
its notice exercising the Option. The documents
evidencing the consummation of the purchase
pursuant to the Option shall include the agreement
of Contributor and LP Unit Recipients to indemnify,
protect, defend and hold Acquiror and Operating
Partnership harmless from and against any and all
claims, damages, losses, suits, proceedings, costs
and expenses (including reasonable attorneys' fees)
arising in connection with the Assigned Interest
and the Projects from and after the closing of the
Option purchase. The provisions of this Section
shall survive the Closing indefinitely and shall
not merge into any of the conveyancing documents
delivered at Closing. Contributor shall not assign
its rights under the Option.
6. CLOSING.
6.1 CLOSING. The transactions contemplated
hereby shall be consummated at a closing (the
"CLOSING") to take place at the offices of
Acquiror. The Closing shall occur on the date (the
"CLOSING DATE"): (i) that is ten days after
conclusion of the Due Diligence Period, or (ii) at
such earlier time and at such other place as the
parties may mutually and reasonably agree upon in
writing, but (iii) no later than February 29, 2000.
The Closing shall be effective as of 12:01 a.m.
eastern standard time on the Closing Date.
6.2 TERMINATION. If the Closing has not
occurred by February 29, 2000, each of Acquiror and
Contributor may terminate this Agreement by written
notice to the other, and no party shall have any
further liability to any other party under this
Agreement, except that all parties hereto shall
remain liable under Section 16 for any breach of
their representations, warranties or covenants
under this Agreement prior to such termination.
7. CONTRIBUTORS' REPRESENTATIONS AND WARRANTIES.
Contributor and each Property Owner represent
and warrant to Acquiror that the following matters
are true as of the Effective Date and shall be true
as of the Closing Date:
7.1 DESCRIPTIVE INFORMATION. The
descriptive information concerning the Projects set
forth in Section and in all exhibits referred to
in Section is complete, accurate, true and correct
in all material respects.
7.2 TITLE. The Property Owners are the
legal fee simple titleholders of the Projects and,
other than with respect to Permitted Exceptions,
have or will have at the Closing good, marketable
and insurable title to the Projects, free and clear
of all mortgages and security interests, leases,
agreements and tenancies (other than the Leases),
licenses, claims, options, options to purchase,
liens, covenants, conditions, restrictions, rights-
of-way, easements, judgments and other matters
affecting title to the Projects.
7.3 CONTRIBUTOR'S DELIVERIES. All items
delivered by Contributor pursuant to this Agreement
are true, accurate, correct and complete in all
material respects, and fairly present the
information set forth in a manner that is not
materially misleading. The copies of all documents
and other agreements delivered or furnished and
made available by Contributor to Acquiror pursuant
to this Agreement include all of and the only
Leases and other written agreements relating to or
affecting the ownership and operation of the
Projects, there being no "side" or other written
agreements in force or effect, to which the
Projects are subject. Contributor and each Property
Owner have made available to Acquiror true and
complete copies of its respective governing
documents, including each amendment thereto.
7.4 NO VIOLATIONS. The execution, delivery
and performance by Contributor and the Property
Owners of this Agreement and the consummation of
the transactions contemplated hereby and thereby,
do not and will not (i) violate any statute, law,
ordinance, rule, regulation or judicial decision of
any Governmental Authority (as defined below)
("LAW") or any writ, order, injunction, plan or
decree of any Governmental Authority ("ORDER");
(ii) violate or conflict with, result in a breach
of, constitute a default (or an event which with
the passage of time or the giving of notice, or
both, would constitute a default) under, or will
result in the termination of, or accelerate the
performance required by, or permit cancellation of,
or result in the creation of any lien upon any
assets under any Service Contract, Work Contract or
other legally binding indenture, mortgage, note,
license, deed of trust, commitment, restriction,
purchase order, or other agreement or instrument to
which Contributor and the Property Owners are a
party or by which Contributor and Property Owners
or any of their respective assets are bound
("CONTRACT") or by which Contributor and the
Property Owners or any of their respective assets
may be affected; (iii) permit the acceleration of
the maturity of any indebtedness of Contributor and
the Property Owners or any indebtedness secured by
assets; or (iv) violate or conflict with any
provision of the governing document of Contributor
and the Property Owners.
7.5 DEFAULTS. The Property Owners have
not: (a) breached any provision of, nor is it in
default under the terms of, any Contract to which
they are a party or under which they have any
rights or by which they are bound or which relates
to their businesses, assets or properties and to
the knowledge of the Property Owners, no other
party to any such Contract has breached such
Contract or is in default thereunder (nor have the
Property Owners waived any such default), and no
event has occurred and no condition or state of
facts exists which with the passage of time or the
giving of notice, or both, would constitute such a
default or breach by the Property Owners or by any
such other party, or give right to an automatic
termination or the right of discretionary
termination thereof; (b) each of the Contributor
and the Property Owners have complied with its
obligations, and has not breached any of its
duties, under the respective Property Owners
documents governing such entity; (c) each of their
assets and properties is in compliance with, and no
violation exists under, any Law or Order applicable
in any way to the Property Owners, any of its
assets or properties; and (d) no notice from any
governmental entity has been received by or on
behalf of the Property Owners claiming any
violation of any Law (including any building,
zoning or other ordinance) or Order, or requiring
any work, construction or expenditure.
7.6 AUTHORITY. Contributor and Property
Owners' execution and delivery of this Agreement
and the consummation of the transaction described
herein will have been duly authorized by all
appropriate actions and proceedings. Contributor
and Property Owners are limited liability companies
duly authorized and validly existing, and in good
standing, under Colorado law, and the person(s)
signing this Agreement on behalf of Contributor and
Property Owners has the power and authority to
enter into and perform this Agreement in accordance
with its terms. No consents of third parties are
required in connection with Contributor and
Property Owners' execution, delivery and
performance of this Agreement. Assuming due
authorization, execution and delivery of this
Agreement by the other parties hereto, this
Agreement constitutes the valid and binding
obligation of Contributor and Property Owners
enforceable in accordance with its terms, except as
such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization
or similar laws or court decisions from time to
time in effect that effect creditors' rights
generally and by legal and equitable limitations on
the availability of specific remedies.
7.7 QUALIFICATION. Property Owners are
qualified to do business in all states in which it
is required to be so qualified in order to own and
manage the Projects.
7.8 SUCCESSOR LIABILITY. The Property
Owners have not succeeded to the liabilities of any
other person by operation of law pursuant to a
purchase of stock, merger, consolidation or similar
transaction.
7.9 CONTRACTS. There are no Contracts of
any kind relating to the management, leasing,
operation, maintenance or repair of any Project,
except as set forth on Exhibit D. The Property
Owners have performed all material obligations to
be performed by them under all, and are not in
default under any, of those Contracts to which
reference is made in the preceding sentence. Except
as set forth in Exhibit D, all of the Contracts
may, by the express terms thereof be terminated
without penalty or other payment by the Property
Owner (or its assignee) upon no more than 30 days'
prior notice.
7.10 PHYSICAL CONDITION. There is no
existing patent or, to the best of its knowledge,
latent structural or other physical defect or
deficiency in the condition of any of the Projects,
or any component or portion thereof, that would or
could impair or impose costs upon the current use,
occupancy or operation of such Project, and that
has not been fully corrected. To the best of its
knowledge, there is no defect or deficiency in the
Improvements, the structural elements thereof, the
mechanical systems (including, without limitation,
all HVAC System, plumbing, electrical, elevator,
security, utility and sprinkler systems) therein,
or the roof of any Building, nor has Contributor or
any Property Owner received written notice from any
Tenant or any other party alleging the existence of
any such defect or deficiency.
7.11 IMPROVEMENTS. The Improvements were
completed and installed in substantial accordance
with all (if any) plans and specifications that
were provided to Acquiror, which were approved by
all Governmental Authorities having jurisdiction
thereover, and do not violate any governmental
laws, ordinances, rules or regulations.
7.12 EMPLOYEES. (i) None of the
Contributor's or Property Owners' employees at the
Projects is employed pursuant to a written
agreement, and all employees may be terminated at
will, (ii) none of such employees at the Projects
is a union employee, (iii) neither Contributor nor
any Property Owner nor any affiliate thereof is a
party to, nor are the Projects subject to, any
collective bargaining or other agreement or
understanding with any labor union, (iv) neither
Contributor nor any Property Owner nor any
affiliate thereof is privy to or involved in any
labor or union controversy or other interaction of
any kind and (v) the Property Owners have and
currently are conducting their business in full
compliance with all laws relating to employment and
employment practices, terms and conditions of
employment, wages and hours and nondiscrimination
in employment, the violation of which would have a
material adverse effect on any Property Owner or
the transactions contemplated by this Agreement.
7.13 COMPLIANCE WITH LAWS AND CODES. To the
best of its knowledge, the Projects, and the use
and operation of any or all of them, are (and the
use and operation of any component, portion or area
of any Project is) in full compliance with all
applicable municipal and other governmental laws,
ordinances, regulations, codes, licenses, permits
and authorizations. Neither Contributor nor the
Property Owners have received written notice from
any Governmental Authority (as defined below)
alleging that there are not presently and validly
in effect all licenses, permits and other
authorizations necessary (including, without
limitation, certificates of occupancy) for the use,
occupancy and operation of the Projects as they are
presently being operated, whether required of the
Property Owner or any Tenant. Without limiting the
foregoing, the Projects fully comply with all
applicable requirements of the Americans With
Disabilities Act of 1990 (42 U.S.C.A. (S)12101 et
seq.). The Projects are zoned by the municipality
in which they are located so as to permit the uses
and structures thereon, in a manner that
accommodates and is fully compatible with the
Building and Improvements as they presently exist.
No Project constitutes a non-conforming use or non-
conforming structure under applicable present
zoning laws. No zoning, subdivision, environmental,
Hazardous Material (as defined below), building
code, health, fire, safety or other law, order or
regulation is, or on the Closing will be, violated
by the continued maintenance, operation or use of
any Improvements or parking areas in the Projects,
and none of Contributor or the Property Owners have
received any written notice of any such violation
from any Governmental Authority having jurisdiction
over the Projects. All driveway entrances and exits
to each Project are permanent, and no special
access or other permits are required to maintain
same. All existing streets and other improvements,
including water lines, sewer lines, sidewalks,
curbing and streets at each Project have been paid
for and either enter such Project through adjoining
public streets; or, if any or all of such items
enter through private lands, do so in accordance
with valid, irrevocable easements running with the
ownership of such Project.
7.14 LITIGATION. There are no pending or to
the best of its knowledge threatened judicial,
municipal or administrative proceedings affecting
any Project or in which a Contributor Property
Owner is a party, including, without limitation,
proceedings for or involving collections,
condemnation, eminent domain, alleged building code
or environmental or zoning violations, or personal
injuries or property damage alleged to have
occurred on any Project or by reason of the
condition, use of, or operations on, such Project.
No attachments, execution proceedings, assignments
for the benefit of creditors, insolvency,
bankruptcy, reorganization or other proceedings are
pending or threatened against the Contributor or
any Property Owners.
7.15 INSURANCE. The Property Owners now have
in force commercially reasonable levels of
property, liability and business interruption
insurance relating to the Projects as specifically
set forth on Schedule . Neither Contributor nor
Property Owners have received any written notice
from any insurance carrier concerning, nor does
Contributor or Property Owners have any knowledge
of, any defects or inadequacies in the Projects
that, if not corrected, would result in termination
of insurance coverage or increase in the normal and
customary cost thereof.
7.16 FINANCIAL INFORMATION. All income,
expense and Operation Statements and all other
books and records delivered to Acquiror by
Contributor (the "RECORDS"), are complete,
accurate, true and correct; and accurately set
forth the results of the operation of the Projects
for the periods covered. There has been no material
adverse change in the financial condition or
operation of the Projects since the period covered
by the Operation Statements.
7.17 RE-ZONING. Neither Contributor nor
Property Owners have any knowledge of any pending
or threatened proceeding for the rezoning of any
Project or any portion thereof, or for the taking
of any other action by governmental authorities
that would have an adverse or material impact on
the value of any Project or use thereof.
7.18 PERSONAL PROPERTY. The Personal
Property is all of the personal property owned by
the Property Owners and used in (or necessary for)
the operation of the Projects and all such Personal
Property is in good and operable condition and
repair, and free of material defects.
7.19 REAL ESTATE TAXES. Contributor has
delivered to Acquiror all (if any) copies of the
most recent real estate "TAX BILL(S)" for (and the
only real estate tax bills applicable to) the
Projects. Neither Contributor nor Property Owners
have knowledge of any proposed increase in the
assessed valuation or rate of taxation of any or
all of the Projects from that reflected in the most
recent Tax Bills. There is not now pending, and
each of Contributor and Property Owners agrees that
it will not, without the prior written consent of
Acquiror, institute, prior to the Closing any
proceeding or application for a reduction in the
real estate tax assessment of any of the Projects
or any other relief for any tax year. There are no
outstanding agreements with attorneys or
consultants with respect to the Tax Bills that will
be binding on Acquiror or the Operating Partnership
or any of the Projects after the Closing. Other
than the amounts disclosed by the Tax Bills, no
other real estate taxes have been, or will be,
assessed against the Projects, or any portion
thereof, in respect of the year 1999 or any prior
year, and no special assessments of any kind
(special, bond or otherwise) are or have been
levied against the Projects, or any portion
thereof, that are outstanding or unpaid. Each
Property Owner has paid all real estate taxes
presently due and owing with respect to the
Projects.
7.20 UNITED STATES PERSON. Contributor is a
"United States Person" within the meaning of
Section 1445(f)(3) of the Code, as amended, and, if
required, shall execute and deliver an "Entity
Transferor" certification at Closing.
7.21 EXISTING MORTGAGES. Schedule sets
forth a true, correct and complete schedule of
those mortgage(s) or trust deed(s) ("EXISTING
MORTGAGES") presently encumbering the Projects or
any portion thereof (the "EXISTING MORTGAGE
SCHEDULE"). Each Property Owner has complied with
the terms of, and all notices or correspondence
received from the holder of, the promissory notes
evidencing the loans (the "EXISTING LOANS") secured
by the Existing Mortgages (the "EXISTING NOTES"),
the Existing Mortgages, and all other documents
securing the Existing Notes (collectively, with the
Existing Mortgages and the Existing Notes, the
"EXISTING LOAN DOCUMENTS"). Each Property Owner has
paid, on a timely basis, all sums due under the
Existing Loan Documents, when and as due. The
Existing Loan Documents are in full force and
effect, and none of Contributor or any Property
Owner has received any written notice alleging that
any Property Owner is in default thereunder.
7.22 CONDEMNATION. No condemnation or other
governmental taking proceedings affecting all or
any part of any or all of the Projects is pending
or, to the knowledge of the Contributor and the
Property Owners, threatened or contemplated.
7.23 LEASED PERSONAL PROPERTY. Schedule
lists all leases pursuant to which Property Owners
hold equipment, vehicles, furniture or any other
item of personal property used in connection with
its respective business, other than leases
terminable without penalty on less than thirty (30)
days notice. All of the personal property leased
by Property Owners under such leases is presently
utilized by Property Owners in the ordinary course
of its business. True and complete copies of all
such leases have been made available to Acquiror.
7.24 INTELLECTUAL PROPERTY. Except for the
name of the Projects, there are no trade names,
trademarks, service marks, copyrights or other
Intangible Personal Property (or any registrations
with any government entity of, or applications for
registration pending with respect to, any of the
foregoing) owned or licensed by Property Owners
that are material to the conduct of the business of
Property Owners.
7.25 INVESTMENT REPRESENTATION. Contributor
represents that its LP Units are being acquired by
it with the present intention of holding such LP
Units for purposes of investment, and not with a
view towards sale or any other distribution.
Contributor recognizes that it may be required to
bear the economic risk of an investment in the LP
Units for an indefinite period of time. Contributor
is an Accredited Investor. Contributor has such
knowledge and experience in financial and business
matters so as to be fully capable of evaluating the
merits and risks of an investment in the LP Units.
Contributor has been furnished with the
informational materials described in Section
(collectively, the "INFORMATIONAL MATERIALS"), and
has read and reviewed the Informational Materials
and understands the contents thereof. Contributor
has been afforded the opportunity to ask questions
of those persons they consider appropriate and to
obtain any additional information they desire in
respect of the LP Units and the business,
operations, conditions (financial and otherwise)
and current prospects of Acquiror and the Operating
Partnership. Contributor has consulted its own
financial, legal and tax advisors with respect to
the economic, legal and tax consequences of
delivery of the LP Units and has not relied on the
Informational Materials, Acquiror, the Operating
Partnership or any of their officers, trustees,
affiliates or professional advisors for such advice
as to such consequences. Contributor is domiciled
in the State of Colorado.
7.26 ASSIGNED INTERESTS. Contributor owns
100% of any ownership or equity interest in the
Property Owners, free and clear of any liens or
encumbrances.
7.27 WARRANTIES AS TO LEASES. With respect
to each of the tenants listed on any Rent Roll
received by Acquiror from Contributor or any
Property Owners, and any other tenants leasing
space in any or all of the Projects as of the
Closing (collectively, the "TENANTS"), Contributor
and Property Owners represent and warrant to
Acquiror that as of the Effective Date and as of
the Closing, the following are true in all material
respects:
(a) Each of the Leases is in full
force and effect. Each Tenant is legally
required to pay all sums and perform all
obligations set forth in the Leases, without
concessions, abatements, offsets or other
bases for relief or adjustment.
(b) All obligations of the lessor
under the Leases that accrue to the Closing
have been performed, including, but not
limited to, all required tenant improvements,
cash or other inducements, rent abatements or
moratoria, installations and construction
(for which payment in full has been made in
all cases), and each Tenant has
unconditionally accepted lessor's performance
of such obligations. The transaction
described herein will not result in a default
or an event that, with the giving of notice
or the passing of time, or both, will result
in a default by the landlord under any Lease.
No Tenant has asserted (in writing) any
offsets, defenses or claims available against
rent payable by it or other performance or
obligations otherwise due from it under any
Lease. The lessor under each Lease has no
obligation to perform any tenant improvement
for any Tenant other than as set forth in the
Leases.
(c) No Tenant is in default under or
is in arrears in the payment of any sums or
in the performance of any obligations
required of it under its Lease. No Tenant has
prepaid any rent or other charges for more
than one month in advance.
(d) None of Contributor or any
Property Owner has any reason to believe that
any Tenant is, or may become, unable or
unwilling to perform any or all of its
obligations under its Lease, whether for
financial or legal reasons or otherwise.
(e) No guarantor(s) of any Lease has
been released or discharged, partially or
fully, voluntarily or involuntarily, or by
operation of law, from any obligation under
or in connection with any Lease or any
transaction related thereto.
(f) There are no brokers'
commissions, finders' fees, or other charges
payable or to become payable to any third
party on behalf of the lessor as a result of
or in connection with any Lease or any
transaction related thereto, including, but
not limited to, any exercised or unexercised
option(s) to expand or renew.
(g) No Tenant or any other party has
asserted (in writing) any claim (other than
for customary refund at the expiration of a
Lease) to all or any part of any security
deposit. Other than as set forth in the Rent
Roll, under no Lease has the lessor applied
any security deposit proceeds for its own
benefit with respect to any current Tenant.
7.28 TAX MATTERS.
(a) Except to the extent reflected in the
Closing Statement, there are no unpaid taxes
arising from the operation of the business of the
Property Owners during any period prior to the
Closing Date for which the Acquiror, Operating
Partnership or the Property Owners will become
liable or which will become a lien against any of
the assets or properties of Acquiror, Operating
Partnership or the Property Owners following the
Closing, including but not limited to payroll,
withholding and social security taxes for any
employee or person deemed to be an employee of such
entity.
(b) The Property Owners are qualified, and
since the date of their formation have been
qualified, to be treated as a partnership for
federal income tax purposes.
(c) The Property Owners have never applied
for any tax ruling or entered into a closing
agreement with any taxing authority. The Property
Owners have not received from the IRS or from the
tax authorities of any state, county, local or
other jurisdiction (i) any notice of underpayment
of taxes or other deficiency which has not been
paid, (ii) any objection to any tax return or
report filed by Property Owners nor (iii) any
notice of audit with respect to any tax, nor are
the Property Owners currently the subject of any
such audit. There are no outstanding agreements or
waivers extending the statutory period of
limitations applicable to any tax return or report
filed by Property Owners.
(d) All of the services provided by the
Property Owners (or any other person acting as
lessor or landlord for any of their assets or
properties) to the tenants of its properties (under
its respective leases are customary in that
geographic area for first class office space and
are primarily for the convenience of the tenant as
described in Section 856(d) of the Code. No
formula for determining percentage rents under any
lease with a tenant of the Property Owners has the
effect of basing such rent on the income (as
opposed to revenues) or profits of any persons.
Any rent payable by tenants of its properties
attributable to personal property does not exceed
15% of the total rent under the relevant lease
attributable to both real and personal property
(determined in accordance with Section 856(d)(1)(C)
of the Code). Schedule lists any service contract
(including those which are terminable without
penalty on thirty (30) days or less notice or
requiring less than $10,000 in aggregate payments
over the remaining term of the contract) for the
provision of services to any Property as to which
the Property Owners receive a mark-up.
8. ACQUIROR'S REPRESENTATIONS
AND WARRANTIES.
Acquiror represents and warrants to
Contributor that the following matters are true as
of the Effective Date and shall be true as of the
Closing.
8.1 TAX STATUS. The Operating Partnership
has been formed to be classified as a partnership
or a publicly traded partnership taxable as a
partnership for federal income tax purposes and not
an association taxable as a corporation or a
publicly traded partnership taxable as a
corporation. Acquiror is a real estate investment
trust under Sections 856 through 860 of the Code
and is in compliance with all of the requirements
therefor under such sections of the Code, and the
transactions contemplated hereby, including the
formation of the Operating Partnership, shall not
affect the status of the Acquiror as a real estate
investment trust under the Code.
8.2 ACQUIROR AUTHORITY. Acquiror's
execution and delivery of this Agreement and the
consummation of the transaction described herein
will have been duly authorized by all appropriate
actions and proceedings. Acquiror is a real estate
investment trust duly authorized and validly
existing, and in good standing, under Maryland law,
and the person(s) signing this Agreement on behalf
of Acquiror has the power and authority to enter
into and perform this Agreement in accordance with
its terms. No consents of third parties are
required in connection with Acquiror's execution,
delivery and performance of this Agreement.
Assuming due authorization, execution and delivery
of this Agreement by the other parties hereto, this
Agreement constitutes the valid and binding
obligation of Acquiror and Operating Partnership
enforceable in accordance with its terms, except as
such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization
or similar laws or court decisions from time to
time in effect that effect creditors' rights
generally and by legal and equitable limitations on
the availability of specific remedies.
8.3 QUALIFICATION. Acquiror is qualified
to do business in all states in which it is
required to be so qualified in order to own and
manage the Projects.
8.4 INFORMATIONAL MATERIALS. The
Informational Materials completely and accurately
describe the business, operations and other
material facts about of Acquiror in all material
respects.
8.5 NO MATERIAL ADVERSE CHANGE. Since
September 30, 1999, no change has occurred that
would have a material adverse effect on the
business, financial condition or results of
operation of Acquiror, taken as a whole.
9. PRE-CLOSING COVENANTS.
Contributor and each Property Owner hereby
covenant as provided in this Article , as
applicable.
9.1 IMPLEMENTING AGREEMENT. Subject to the
terms and conditions hereof, each party hereto
shall use best efforts to take all action required
of it to fulfill its obligations under the terms of
this Agreement, to cause the conditions to Closing
to be satisfied and to facilitate the consummation
of the transactions contemplated hereby.
9.2 NEW LEASES. No Property Owner shall
amend, terminate or grant concessions regarding any
Lease in any economic or other material respect or
executing any new lease, license, or other
agreement affecting the ownership or operation of
all or any portion of the Projects or for personal
property, equipment, or vehicles, without
Acquiror's prior written approval.
9.3 NEW CONTRACTS. No Property Owner shall
enter into any contract with respect to the
ownership and operation of all or any portion of
any or all of the Projects that will survive the
Closing, or that would otherwise affect the use,
operation or enjoyment of any or all of the
Projects, without Acquiror's prior written
approval, except for service contracts entered into
in the ordinary course of business that are
terminable, without penalty, on not more than 30
days' notice, for which no consent shall be
required. Contributor and the Property Owners shall
not acquire or pursue any acquisition of real or
personal property other than the Projects without
Acquiror's prior written consent.
9.4 OPERATION OF PROJECTS. Prior to
Closing, no Property Owner shall (a) operate or
manage the Projects in any manner other than that
which is in effect on the Effective Date in the
ordinary and usual course of business consistent
with past practice; (b) fail to maintain present
services (including, but not limited to, pest
control); (c) fail to maintain the Projects as they
were maintained on the Effective Date; (d) not keep
on hand sufficient materials, supplies, equipment
and other Personal Property for the efficient
operation and management of the Projects in the
same manner as exists on the Effective Date; (e)
sell or list for sale any of the Projects, (f) fail
to use its best efforts to preserve its good will
and advantageous relationships with tenants,
customers, suppliers, independent contractors,
employees and other persons material to the
operation of the Projects, (g) fail to take or
permit any action or omission which would cause any
of its representations or warranties contained
herein to become inaccurate or any of the covenants
made by it to be breached, (h) cause or permit any
default to occur under the Existing Mortgage Debt
or cause or permit any increase in the outstanding
aggregate principal balance thereof from the date
hereof until the Closing, or (i) not perform, prior
to delinquency, all of such Property Owner's
obligations under the Leases, Contracts, licenses,
permits or approvals of Governmental Authorities
and other agreements relating to the Projects or in
any way not in accordance with applicable laws,
ordinances, rules and regulations affecting the
Projects. The Property Owners shall not agree to
any material change orders or additions to tenant
improvements or changes in the scope of work or
specifications with respect to any Contract without
Acquiror's prior written approval. Each Property
Owner shall continue to maintain all insurance
policies referred to in Section in full force and
effect up to and including the Closing Date.
9.5 CONSENTS AND APPROVALS. Each party
shall use its best efforts to obtain all consents,
approvals, certificates and other documents
required in connection with the performance by it
of this Agreement and the consummation of the
transactions contemplated hereby.
9.6 CONTINUATION OF EMPLOYEES. Contributor
and Property Owners agree to use best efforts to
persuade those of their employees designated by
Acquiror in writing to Contributor to accept
employment with Acquiror immediately following the
Closing, and Acquiror agrees to hire such employees
immediately following the Closing provided that any
such employee does not engage in malfeasance prior
to the Closing.
9.7 EXCLUSIVITY. Unless and until this
Agreement is terminated pursuant to its terms, none
of Contributor, any Property Owner or any LP Unit
Recipient shall, directly or indirectly, through
any Affiliate, officer, director, partner, agent or
otherwise, initiate, solicit or knowingly encourage
(including by way of furnishing non-public
information or assistance), or take any other
action to facilitate knowingly, any inquiries or
the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Competing
Transaction (as defined below), or enter into or
maintain or continue discussions or negotiate with
any person in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or
endorse any Competing Transaction, or authorize or
knowingly permit any of the officers, directors,
partners or employees of such party or any of its
affiliates or any investment banker, financial
advisor, attorney, accountant or other
representative retained by such party or any of
such party's affiliates to take any such action,
and Contributor or any Property Owner or affiliate
of such Property Owner shall notify Acquiror orally
(within one business day) and in writing (as
promptly as practicable) of all of the relevant
details relating to all inquiries and proposals
which Contributor or any Property Owner or
affiliate of such Property Owner or any such
officer, director, employee, partner, investment
banker, financial advisor, attorney, accountant or
other representative may receive relating to any of
such matters. A "COMPETING TRANSACTION" means,
whether in a single transaction or a series of
transactions, the sale by any LP Unit Recipient of
any equity interest in Contributor, the sale by
Contributor of any equity interest in a Property
Owner, or the sale or other transfer by any
Property Owner of its assets or business, in whole
or in part, whether through direct sale, merger,
consolidation, asset sale, exchange,
recapitalization, other business combination,
liquidation, or other action out of the ordinary
course of business.
9.8 MONTHLY UPDATES OF RENT ROLLS AND
OPERATION STATEMENTS. Contributor will promptly
provide Acquiror with monthly updates of the Rent
Roll and Operation Statements for the Projects.
9.9 DAMAGE. Contributors and the Property
Owners shall promptly give Acquiror written notice
of any damage to the Projects, describing such
damage whether such damage is covered by insurance
and the estimated cost of repairing such damage.
If such damage would not have a material adverse
effect on the damaged Project, (i) Contributor
shall, to the extent possible, begin repairs prior
to the Closing, (ii) at the Closing the Operating
Partnership shall receive all insurance proceeds
not applied to cure the damage with respect to such
Project prior to the Closing (including rent loss
insurance applicable to any period from and after
the Closing) due to a Property Owner for the
damage, together with an assignment of any
unsettled insurance claim, (iii) any uninsured
damage, coinsurance or deductible and any rent
abatement not covered by rent loss insurance
proceeds delivered to a Property Owner, as
reasonably estimated by Acquiror, shall be credited
to the Operating Partnership at the Closing, and
(iv) the Operating Partnership shall assume the
responsibility for the repair after the Closing.
The Operating Partnership shall be entitled to any
excess of the proceeds of the respective Property
Owner's insurance over and above the actual cost of
repair and restoration. If such damage is likely
to have a material adverse effect on the damaged
Project ("MATERIAL DAMAGE"), Acquiror may elect, by
notice to Contributor given within 20 business days
after Acquiror is notified of such damage (and the
Closing as to such Property shall be extended, if
necessary, to give Acquiror such 20 business day
period to respond to such notice) to (i) proceed in
the same manner as in the case of damage that is
not material, receiving a credit at the Closing
equal to the amount by which the contribution value
of such Project is reduced by such damage, or (ii)
elect to terminate this Agreement by giving notice
to Contributor on or before the Closing Date.
9.10 CONDEMNATION. Contributor will give
Acquiror prompt written notice of the institution
or threat of any exercise of the power of eminent
domain on the Projects. If the proceedings in
eminent domain would have a material adverse effect
on the Projects subject to such proceedings
("MATERIAL EMINENT DOMAIN PROCEEDINGS"), by notice
to Contributor given within 20 business days after
Acquiror receives notice of proceedings in eminent
domain that are contemplated, threatened or
instituted by any government entity having the
power of eminent domain with respect to the
Projects, Acquiror may (i)proceed under this
Agreement or (ii) terminate this Agreement by
giving notice to Contributor on or before the
Closing Date. If Acquiror elects to proceed under
this Agreement, the Property Owners shall assign to
the Operating Partnership at the Closing its entire
right, title and interest in and to any
condemnation award, and the Operating Partnership
shall have the sole right during the pendency of
this Agreement to negotiate and otherwise deal with
the condemning authority in respect of such matter.
If necessary, the Closing shall be extended to
give Acquiror the full 20 business day period to
make such election.
10. PRORATIONS AND ADJUSTMENTS.
10.1 PRORATIONS. Before the Closing, the
Property Owners shall provide such information and
verification reasonably necessary to support the
prorations and adjustments under this Article .
All prorations set forth below in this Section
shall be as of the Closing Date (the "CUTOFF
DATE"), with the Cutoff Date being a day of income
and expense to the Property Owners. All income and
expense with respect to the Projects and all items
customarily prorated in real estate closings shall
be prorated as of the Cutoff Date between Acquiror
and the Property Owners with respect to the
Projects, except as otherwise provided herein.
(a) Acquiror shall receive a credit for any
real estate and tangible personal property taxes
(and any assessments imposed by private covenant),
whether or not then due or payable, imposed in
respect of a Project and applicable for the portion
of the current year or other applicable tax period
which has elapsed by the Cutoff Date (and to the
extent unpaid, for prior years or tax periods). If
the amount of any such taxes have not been
determined as of the Closing, such credit shall be
based on a reasonable estimate of the parties as to
the full assessed value of the Properties and the
assessment ratios and tax rates anticipated to be
in effect for the current year (and if the parties
are not able to agree on such rate, the most recent
ascertainable rate shall be used). The Property
is subject to an Assessment agreement with the Tax
Increment District.
(b) Acquiror shall receive a credit for any
rent and other income under Leases (and any
applicable or local tax on rent) collected by the
Property Owners before the Closing and applicable
to any period of time after the Cutoff Date. The
Contributor shall receive a credit for receivables
from tenants (less any agreed on discount for
uncollectibility) for rent and other income under
Leases (and any applicable or local tax or rent)
applicable to any period of time prior to the
Cutoff Date, except to the extent that the
Contributor and Acquiror agree that such
receivables are unlikely to be collectible
("DOUBTFUL RECEIVABLES"). All collections of
accounts receivable other than Doubtful Receivables
after the Closing shall be retained by Acquiror.
After the Closing, the Operating Partnership shall
apply all rent and income collected by Acquiror
from a tenant, unless the tenant properly
identifies the payment as being for a specific
item, first to such tenant's monthly rental for the
month in which Closing occurred to the extent not
already paid and then to arrearages in the reverse
order in which they were due, remitting to the
Contributor, after deducting collection costs, any
rent properly allocable to receivables constituting
Doubtful Receivables for the period ending on the
Cutoff Date. Acquiror shall bill and attempt to
collect such rent arrearages constituting Doubtful
Receivables in the ordinary course of business, but
shall not be obligated to engage a collection
agency to collect any such rent arrearages except
at the Contributor's expense, or to take legal
action to collect any such rent arrearages. After
the Closing, the Property Owners shall not have the
right to seek collection of any rents or other
income applicable to any period before the Cutoff
Date. Any rent or other income received by any
Property Owner after the Closing which are owed to
Acquiror shall be held in trust and remitted to
Acquiror promptly after receipt, and any rent
collected by Acquiror which is owed to the Property
Owners shall be held in trust and remitted to the
Property Owners promptly after receipt.
(c) Estimated percentage rents accrued from
any tenant under any Lease for any lease year in
which the Closing occurs (with any such percentage
rents to be deemed to have been earned and received
on an equal per diem basis spread throughout such
lease year) shall be prorated between the
Contributor and Acquiror as of the Cutoff Date
(d) The Property Owners, as landlords under
the Leases, are currently collecting from tenants
under the Leases additional rent to cover taxes,
insurance, utilities, maintenance and other
operating costs and expenses (collectively,
"OPERATING EXPENSE PASS-THROUGHS") incurred by them
in connection with the ownership, operation,
maintenance and management of the Properties. If
the Property Owners collected estimated prepayments
of Operating Expense Pass-Throughs in excess of any
tenant's share of such expenses, then if the excess
can be determined by the Closing, Acquiror shall
receive a credit for the excess or, if the excess
cannot be determined at the Closing, Acquiror shall
receive a credit based upon an estimate. Acquiror
shall be responsible for crediting or repaying
those amounts to the appropriate tenants. At the
Closing, Contributor shall pay or provide for all
Operating Expense Pass-Throughs for the period
through the Cutoff Date except to the extent
reflected in the Proration Items.
(e) Contributor shall receive a credit for
regular charges under Service Contracts assumed by
its Acquiror pursuant to this Agreement paid and
applicable to the period after the Cutoff Date and
Acquiror shall receive a credit for such charges
payable and applicable to the period ending on the
Cutoff Date.
(f) Contributor shall cause the meters, if
any, for utilities to be read on the Cutoff Date
and to pay the bills rendered on the basis of such
readings, except for utilities paid directly by
tenants. If any such meter reading for any utility
is not available, then adjustment therefor shall be
made on the basis of the most recently issued bills
therefor which are based on meter readings no
earlier than 30 days before the Cutoff Date.
10.2 WORK CONTRACTS. At the Closing,
Contributor and Acquiror shall prorate the cost of
all work under the contracts for tenant
improvements under the Leases and all contracts for
repairs, restorations, renovations or improvements
being performed on the Projects ("WORK CONTRACTS")
that has been performed through the Cutoff Date.
Acquiror shall receive a credit against the
purchase price for the Property Owners' pro rata
share of the work performed under the Work
Contracts through the Cutoff Date. At the Closing,
Contributor shall provide for Work Contracts under
which all the work described therein has been
substantially completed, lien waivers, payment
affidavits, certificates of completion, and Tenant
Estoppels. For Work Contracts which are not
substantially completed at the Cutoff Date,
Contributor shall provide contractor progress
reports and estoppels and other evidence reasonably
necessary to confirm the Property Owners'
compliance with their obligations pursuant to the
Work Contracts and this Section . Notwithstanding
the foregoing, lien waivers and payment affidavits
will not be required for Work Contracts under which
all the work described therein has been
substantially completed but payment for contractual
retention has not been made pending completion of
punch list items. At the Closing, Contributor and
the Property Owners shall also provide such
indemnity or other assurance to enable the Title
Company to issue the Title Policy without exception
for mechanics' and materialmens' liens related to
work performed by the Property Owners under the
Work Contracts.
10.3 TENANT DEPOSITS. All tenant security
deposits (and interest thereon if required by Law
or contract to be earned thereon) shall remain with
Property Owners at Closing without adjustment to
any party.
10.4 DEPOSITS. All utility deposits and
escrows for taxes and insurance and similar types
of deposits and escrows shall remain with Property
Owners at Closing without adjustment to any party.
10.5 WAGES. Acquiror and the Operating
Partnership shall not be liable for any wages,
fringe benefits, payroll taxes, unemployment
insurance contributions, accrued vacation pay,
accrued pay for unused sick leave, accrued
severance pay and other compensation accruing prior
to the Closing for employees of Contributor or the
Property Owners except to the extent reflected on
the Closing Statement.
10.6 LEASING COMMISSIONS. On or before the
Closing Date, Contributor shall pay in full all
leasing commissions due to leasing or other agents
for the current remaining term of each Lease
(determined without regard to any unexercised
termination or cancellation right but including any
commissions due in respect of renewal options or
terms that have been exercised or are in effect as
of the Closing Date); provided, however, that if
any leasing agent will not accept such payment,
then Acquiror shall receive a credit at Closing in
an amount equal to the then-unpaid leasing
commissions.
10.7 POST-CLOSING ADJUSTMENTS.
(a) Either party shall be entitled to a
post-Closing adjustment for any incorrect Proration
or Adjustment or for any Proration or Adjustment
for which a final reconciliation cannot be
completed at Closing. Any dispute regarding the
determination of the final Closing Statement shall
be resolved by a "Big 5" accounting firm other than
a firm that provides services to Contributor or
Acquiror (which shall be selected by lot or such
other procedure as the parties may agree) whose
decision shall be binding on the parties.
(b) If post-Closing adjustments are made to
the Contribution Consideration pursuant to this
Section , either (i) Contributor shall surrender to
Acquiror for cancellation LP Units equal to the
amount, if any, charged against Contributor in such
post-Closing adjustment (determined based on the
Unit Price); or (ii) Acquiror shall deliver to
Contributor that number of additional LP Units
arrived at by dividing the Unit Price into the
amount, if any, charged against Acquiror in such
post-Closing adjustment.
11. ENVIRONMENTAL WARRANTIES
AND AGREEMENTS.
11.1 DEFINITIONS. Unless the context
otherwise requires:
(a) "ENVIRONMENTAL LAW" or "ENVIRONMENTAL
LAWS" shall mean all applicable past, present or
future federal, state and local statutes,
regulations, directives, ordinances, rules, court
orders, decrees, arbitration awards and the common
law, which pertain to environmental matters,
contamination of any type whatsoever or health and
safety matters, as such have been amended, modified
or supplemented from time to time (including all
present and future amendments thereto and re-
authorizations thereof). Environmental Laws
include, without limitation, those relating to: (a)
the manufacture, processing, use, distribution,
treatment, storage, disposal, generation or
transportation of Hazardous Materials; (b) air,
soil, surface, subsurface, groundwater or noise
pollution; (c) Releases; (d) protection of
wildlife, endangered species, wetlands or natural
resources; (e) Tanks; (f) health and safety of
employees and other persons; and (g) notification
requirements relating to the foregoing. Without
limiting the above, Environmental Law also includes
the following: (i) the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C.
(S)(S) 9601 et seq.), as amended ("CERCLA"); (ii)
the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act (42 U.S.C.
(S)(S) 6901 et seq.), as amended ("RCRA"); (iii)
the Emergency Planning and Community Right to Know
Act of 1986 (42 U.S.C. (S)(S) 11001 et seq.), as
amended; (iv) the Clean Air Act (42 U.S.C. (S)(S)
7401 et seq.), as amended; (v) the Clean Water Act
(33 U.S.C. (S)1251 et seq.), as amended; (vi) the
Toxic Substances Control Act (15 U.S.C. (S) 2601 et
seq.), as amended; (vii) the Hazardous Materials
Transportation Act (49 U.S.C. (S)(S) 1801 et seq.),
as amended; (viii) the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. (S) 136 et
seq.), as amended; (ix) the Federal Safe Drinking
Water Act (42 U.S.C. (S) 300f et seq.), as amended;
(x) the Federal Radon and Indoor Air Quality
Research Act (42 U.S.C. (S) 7401 note, et seq.);
(xi) the Occupational Safety and Health Act (29
U.S.C. (S) 651 et seq.), as amended; (xii) any
state, county, municipal or local statutes, laws or
ordinances similar or analogous to (including
counterparts of) any of the statutes listed above;
and (xiii) any rules, regulations, directives,
orders or the like adopted pursuant to or
implementing any of the above.
(b) "ENVIRONMENTAL PERMIT" or
"ENVIRONMENTAL PERMITS" shall mean licenses,
certificates, permits, directives, requirements,
registrations, government approvals, agreements,
authorizations, and consents which are required
under or are issued pursuant to an Environmental
Law or are otherwise required by Governmental
Authorities.
(c) "GOVERNMENTAL AUTHORITY" or
"GOVERNMENTAL AUTHORITIES" shall mean any agency,
commission, department or body of any municipal,
township, county, local, state or Federal
governmental or quasi-governmental regulatory unit,
entity or authority having jurisdiction or
authority over all or any portion of the Projects
or the management, operation, use or improvement
thereof.
(d) "HAZARDOUS CONDITION" or "HAZARDOUS
CONDITIONS" refers to the existence or presence of
any Hazardous Materials on, in, under, or at, the
Projects (including air, soil and groundwater) or
any portion of any of them.
(e) "HAZARDOUS MATERIAL" or "HAZARDOUS
MATERIALS" shall mean:
(i) any chemical, pollutant,
contaminant, pesticide, petroleum or
petroleum product or by product,
radioactive substance, solid waste
(hazardous or extremely hazardous),
special, dangerous or toxic waste,
substance, chemical or material
regulated, listed, limited or
prohibited under any Environmental Law,
including without limitation: (i)
friable or damaged asbestos, asbestos
containing material, presumed asbestos-
containing material, polychlorinated
biphenyls ("PCBS"), solvents and waste
oil; (ii) any "hazardous substance" as
defined under CERCLA; and (iii) any
"hazardous waste" as defined under
RCRA; and
(ii) even if not prohibited,
listed, limited or regulated by an
Environmental Law, all pollutants,
contaminants, hazardous, dangerous or
toxic chemical materials, wastes or any
other substances, including without
limitation, any industrial process or
pollution control waste (whether or not
hazardous within the meaning of RCRA)
which could pose a hazard to the
environment, or the health and safety
of any person or impair the use or
value of any portion of the Projects.
(f) "RELEASE" means any spill, discharge,
leak, migration, emission, escape, injection,
dumping or other release or threatened release of
any Hazardous Material into the environment,
whether or not notification or reporting to any
Governmental Authority was or is required. Release
includes, without limitation, historical releases
and the meaning of Release as defined under CERCLA.
(g) "QUALIFIED CONSULTING FIRM" shall mean
a first-class nationally or regionally recognized
environmental engineering and/or consulting firm.
(h) "TANK" or "TANKS" means above-ground
and underground storage tanks, vessels and related
equipment, including appurtenant pipes, lines and
fixtures, containing or previously containing any
Hazardous Material or fraction thereof.
11.2 WARRANTIES. Contributor and each
Property Owner hereby represents and warrants as
follows with respect to each Project as of the
Effective Date and as of the Closing:
(a) Contributor and each Property Owner has
made available or delivered to Acquiror originals
(or true, complete and accurate copies) of all (if
any) of the following documents:
(i) All approvals, plans,
specifications, test borings,
percolation tests, engineering studies,
surveys or other environmental data
concerning the Projects;
(ii) All permits (including
Environmental Permits), approvals,
registrations, Tank registration and/or
closure documentation, certificates,
applications, notices, orders,
directives, legal pleadings,
correspondence or other documents of
any nature that Contributor, Property
Owners, any tenant of Property Owners,
any of Property Owners' predecessors-
in-title or any tenant of Property
Owners' predecessors-in-title have
submitted to, or received from, any
Governmental Authority regarding the
Projects and their use, compliance or
non-compliance with Environmental Laws;
and
(iii) The results of any
investigation of any of the Projects
including, but not limited to, Phase I
or Phase II site assessments, asbestos
inspection and/or removal reports,
tests or investigations of soil or
other substrate air, groundwater,
surface water, or the building
interior, and any testing or
investigation results relating to the
removal or abandonment of any Tanks
from the Projects.
(b) The Project has been and continues to
be owned and operated in full compliance with all
Environmental Laws and Environmental Permits.
(c) There are no pending: (i) claims,
complaints, notices, correspondence or requests for
information received by the Property Owners with
respect to any violation or alleged violation of
any Environmental Law or Environmental Permit or
with respect to any corrective or remedial action
for or cleanup of the Project or any portion
thereof; and (ii) written correspondence, claims,
complaints, notices, or requests for information
from or to the applicable Property Owner regarding
any actual, potential or alleged liability or
obligation under or violation of any Environmental
Law or Environmental Permit with respect to the
Project or any portion thereof.
(d) There have been no Releases of a
Hazardous Material on, in, under or at the Project
or any portion thereof. To Contributor's knowledge,
none of the Projects are listed, proposed or
nominated for listing on the National Priorities
List pursuant to CERCLA, the Comprehensive
Environmental Response and Liability Information
System or on any other similar list of sites under
analogous state laws.
(e) There are no Tanks at, on or under any
or all of the Projects; no Property Owner has
removed, closed or abandoned any Tanks at the
Project; and any and all Tanks that have heretofore
been removed from or closed at the Projects have
been removed or closed in accordance with all
Environmental Laws.
(f) There are no PCBs or friable or damaged
asbestos at the Project.
(g) There has been no storage, treatment,
disposal, generation, transportation or Release of
any Hazardous Materials by any Property Owner or
its predecessors in interest, or by any other
person or entity for which a Property Owner is or
may be held responsible, on, in, under or at the
Project (or any portion thereof) in violation of,
or which could give rise to any claim, obligation
or liability under, Environmental Laws.
12. CONDITIONS PRECEDENT TO CLOSING.
12.1 ACQUIROR'S CONDITIONS PRECEDENT. In
addition to the other conditions enumerated in this
Agreement, the following shall be additional
conditions precedent ("CONDITIONS PRECEDENT") to
Acquiror's obligation to close hereunder:
(a) TITLE INSURANCE. Title Company shall be
irrevocably committed to issue a title insurance
policy to Acquiror for the Projects pursuant to
Section hereof.
(b) PHYSICAL CONDITION. The physical
condition of each Project shall be substantially
the same on the Closing Date as on the Effective
Date, reasonable wear and tear excepted.
(c) NO MATERIAL ADVERSE CHANGE. Since the
date of execution of this Agreement, there shall
not have been any change, circumstance or event
which has had or would reasonably be expected to
have a material adverse effect on the transactions
contemplated by this Agreement taken as a whole.
(d) DELIVERY OF DOCUMENTS. All of the
documents and agreements required to be delivered
and performed pursuant to Section have been so
delivered and performed.
(e) PENDING ACTIONS. At the Closing, there
shall be no administrative agency, litigation or
governmental proceeding of any kind whatsoever,
pending or threatened, that, after the Closing
would, in Acquiror's sole discretion, materially
and adversely affect the value or marketability of
any Project or the Projects as a whole, or the
ability of Acquiror to operate any or all of the
Projects in the manner it is (they are) being
operated on the Effective Date.
(f) REAL ESTATE TAXES. As of the Closing,
there shall have been no actual or pending
reassessment to materially increase the value of
any Project for the purpose of calculating real
estate taxes or any increase in the real estate tax
rate applicable to any Project.
(g) ZONING. On the Closing Date, no
proceedings shall be pending or threatened that
could or would involve the material change,
redesignation, redefinition or other modification
of the zoning classifications of (or any building,
environmental, or code requirements applicable to)
any or all of the Projects, or any portion thereof,
or any property adjacent to any Project.
(h) FLOOD INSURANCE. As of the Closing, if
any Project is located in a flood plain, Acquiror
shall have obtained flood plain insurance in form
and substance acceptable to Acquiror.
(i) UTILITIES. On the Closing, no
moratorium or proceeding shall be pending or
threatened materially affecting the availability,
at regular rates and connection fees, of sewer,
water, electric, gas, telephone or other services
or utilities servicing the Projects.
(j) EXISTING INDEBTEDNESS. Except as is
otherwise mutually and reasonably agreed by
Acquiror and Contributor, Acquiror shall have been
provided with a pay-off letter (the "PAY-OFF
LETTER") issued by each mortgagee holding an
Existing Mortgage, setting forth the amount of
principal and interest outstanding under the
Existing Notes at the Closing. Acquiror shall also
have been provided with a statement of account from
each other creditor holding any indebtedness of the
Property Owners, setting forth the amount necessary
to retire such Assumed Indebtedness, which such
statement(s) of account shall also constitute Pay-
Off Letters for purposes of this Agreement.
(k) BANKRUPTCY. As of Closing, no
Contributor, no Property Owner and no Project is
the subject of any bankruptcy proceeding for which
approval of this transaction has not been given and
issued by the applicable bankruptcy court.
(l) REPRESENTATIONS AND WARRANTIES TRUE.
The representations and warranties of Contributor
and Property Owners contained in this Agreement
shall be true and correct as of the Closing, in all
respects, as though such representations and
warranties were made on such date.
(m) COVENANTS PERFORMED. All covenants,
obligations and agreements of Contributor and
Property Owners required to be performed on or
prior to the Closing shall have been performed, in
all material respects.
12.2 CONTRIBUTOR'S CONDITIONS PRECEDENT. The
following shall be Conditions Precedent to
Contributor's obligation to close hereunder:
(a) REPRESENTATIONS AND WARRANTIES TRUE.
The representations and warranties of Acquiror
contained in this Agreement shall be true and
correct as of the Closing, in all respects, as
though such representations and warranties were
made on such date.
(b) COVENANTS PERFORMED. All covenants,
obligations and agreements of Acquiror and the
Operating Partnership required to be performed on
or prior to the Closing shall have been performed,
in all material respects.
(c) DELIVERY OF DOCUMENTS. All of the
documents and agreements required to be delivered
and performed pursuant to Section have been so
delivered and performed.
12.3 MUTUAL CONDITIONS PRECEDENT. The
following shall be additional Conditions Precedent
to the obligations of each of Contributor and
Acquiror to close hereunder:
(a) MANAGEMENT AGREEMENTS. As of the
Closing, the Operating Partnership shall have
entered into mutually acceptable agreements with
Hoyt Properties, Inc. with respect to the
management of the Projects.
(b) NO INJUNCTION. There shall not be in
effect any order, writ, injunction, judgment or
decree which enjoins or prohibits consummation of
the transactions contemplated hereby.
13. CLOSING DELIVERIES.
13.1 CONTRIBUTOR'S. At the Closing (or such
other times as may be specified below), Contributor
shall deliver or cause to be delivered to Acquiror
the following, in form and substance reasonable
acceptable to Acquiror and its counsel:
(a) ASSIGNMENT OF CONTRACTS. An assignment,
executed by Contributor and the Operating
Partnership, to the Operating Partnership of
Contributor's right, title and interest in and to
the Assigned Interest.
(b) CLOSING STATEMENT. A closing statement
conforming to the proration and other relevant
provisions of this Agreement (the "CLOSING
STATEMENT") duly executed by Contributor and the
Property Owners.
(c) ORGANIZATIONAL DOCUMENTS. (i) Copies
of the organizational documents of Acquiror and
Property Owners, certified by their states of
organization and certified good standing
certificates from such states, (ii) certified good
standing certificates for Property Owners from the
Secretary of State of Colorado and (iii) a copy,
certified by the Secretary of Contributor, of the
resolutions of Contributor's board authorizing the
transactions described herein.
(d) PARTNERSHIP AGREEMENT DOCUMENTS. The
Partnership Agreement Adoption Materials, duly
executed by Contributor.
(e) LP UNIT SCHEDULE. A schedule (the "LP
UNIT SCHEDULE") showing the allocation of LP Units
to each LP Unit Recipient, duly executed by
Contributor.
(f) CLOSING CERTIFICATE. A certificate,
signed by Contributor, Property Owners and the LP
Unit Recipients, certifying to Acquiror that the
representations and warranties of Contributor and
the LP Unit Recipients contained in this Agreement
are true and correct, in all material respects, as
of the Closing, and that all covenants required to
be performed by Contributor and Property Owners
prior to the Closing have been performed, in all
material respects.
(g) REDEMPTION AGREEMENT. The Redemption
Agreement, executed by Contributor.
(h) REGISTRATION RIGHTS AGREEMENT. The
Registration Rights Agreement, executed by
Contributor.
(i) LEGAL OPINION. An opinion of counsel,
as to such matters as counsel to Acquiror may
reasonably request prior to the Closing.
(j) MANAGEMENT AGREEMENT. Management
Agreement, executed by Wellington Properties
Investments, L.P.
(k) TENANT ESTOPPELS. Tenant Estoppels
pursuant to Section in form and substance
satisfactory to Acquiror.
(l) LENDER ESTOPPELS. Estoppel letters
from each lender under the Existing Mortgage Debt
in form and substance satisfactory to Acquiror.
(m) AFFIDAVITS. Owner's affidavits to the
extent reasonably and customarily required by the
Title Company to issue the Title Policy to the
Operating Partnership and to close this transaction
in accordance with the terms hereof, and any other
documents which are reasonably and customarily
required by the Title Company to provide the
endorsements and to issue the Title Policy subject
only to the Permitted Exceptions.
(n) PERMITS AND APPROVALS. Evidence
reasonably satisfactory to Acquiror to the effect
that the Property Owners possess the material
licenses, permits, approvals, zoning exceptions and
approvals, consents and orders of government
entities relating to the ownership, operation and
use of the Projects, including, without limitation,
certificates of occupancy for the Projects, and
assignments thereof to the Operating Partnership to
the extent they are assignable.
(o) TERMINATIONS. Terminations, effective
no later than the Closing, of those Contracts which
Acquiror and Contributor have agreed that the
Operating Partnership shall not assume.
(p) LIEN WAIVERS. Affidavits or other
evidence reasonably satisfactory to Acquiror that
no person has a right now or in the future to file
any liens against the Projects for brokerage
commissions or fees in connection with the Leases
or the transactions set forth herein.
(q) BOOKS AND RECORDS. Delivery to the
offices of the Operating Partnership of the
original Leases and Contracts (or copies if the
originals cannot be located) and to the extent now
or subsequently coming into the possession or
control of Contributor or Property Owners: copies
or originals (including information stored
electronically) of all books and records of
account; contracts; copies of correspondence with
tenants and suppliers; receipts for deposits;
unpaid bills and other papers or documents which
pertain to the Projects; all advertising materials,
booklets, keys and other items, if any, used in the
operation of the Projects; and the original "as-
built" plans and specifications and all other
available plans and specifications. The Contributor
or Property Owners shall cooperate with Acquiror
after the Closing to provide to the Operating
Partnership any such information stored
electronically and to answer questions of Acquiror
from time to time regarding pre-Closing matters
(e.g., in connection with the preparation of tax
returns or financial statements).
(r) OTHER. Such other documents and
instruments as may reasonably be required by
Acquiror, its (or its underwriters' or lenders')
counsel or the Title Company and that may be
necessary to consummate the transaction that is the
subject of this Agreement and to otherwise give
effect to the agreements of the parties hereto.
13.2 ACQUIROR'S. At the Closing (or such
other times as may be specified below), Acquiror
shall deliver or cause to be delivered to
Contributor the following, in form and substance
reasonably acceptable to Contributor and its
counsel:
(a) REGISTRATION CERTIFICATE. A certificate
from Acquiror's transfer agent, attesting to the
registration of the LP Units in the books and
records of the Operating Partnership.
(b) PARTNERSHIP AGREEMENT. A copy of the
Operating Partnership Agreement, duly certified by
the secretary of Acquiror as true, complete and
correct.
(c) AMENDMENT. The Amendment, duly executed
by Acquiror.
(d) ORGANIZATIONAL DOCUMENTS. (i) A copy
certified by the State of Maryland Department of
Assessments and Taxation of the Amended and
Restated Declaration of Trust of Acquiror and a
certified good standing certificate for Acquiror
from the State of Maryland; (ii) a copy certified
by the Secretary of State of the State of Delaware
of (x) the certificate of limited partnership of
the Operating Partnership and (y) a good standing
certificate of the Operating Partnership; (iii) a
certified good standing certificate for the
Operating Partnership (and, if required in the
reasonable determination of Contributor, for
Acquiror) from the Secretary of the States in which
the Projects are located; and (iv) a copy,
certified by the Secretary of Acquiror, of the
resolution of Acquiror's board of trustees,
authorizing the transactions described herein.
(e) ASSIGNMENT OF CONTRACTS. An assignment
of the Assigned Interest duly executed by Acquiror.
(f) CLOSING STATEMENT. A Closing Statement
duly executed by Acquiror and Operating
Partnership.
(g) LP UNIT SCHEDULE. The LP Unit Schedule,
duly executed by Acquiror.
(h) ELECTION TO BOARD. [ Intentionally
deleted ]
(i) CLOSING CERTIFICATE. A certificate,
signed by Acquiror and the Operating Partnership,
certifying to Contributor that the representations
and warranties of Contributor and the Operating
Partnership contained in this Agreement are true
and correct as of the Closing, and that all
covenants required to be performed by Contributor
and the Operating Partnership prior to the Closing
have been performed.
(j) OTHER. Such other documents and
instruments as may reasonably be required by
Contributor, its counsel or the Title Company and
that are necessary to consummate the transaction
which is the subject of this Agreement and to
otherwise effect the agreements of the parties
hereto.
14. BROKERAGE.
Each party hereto represents and warrants to
the other that it has dealt with no brokers or
finders in connection with this transaction except
Tim Richey and Michael Winn of Cushman & Wakefield
(the "BROKER") and that no other broker, finder or
other party is entitled to a commission, finder's
fee or other similar compensation as a result
hereof. Contributor shall be liable for payment of
any commission due the Broker as a result of this
transaction. Contributor hereby indemnifies,
protects and defends and holds Acquiror harmless
from and against all losses, claims, costs,
expenses, damages (including, but not limited to,
attorneys' fees of counsel selected by Acquiror)
resulting or arising from the claims of Broker or
any other broker, finder or other such party,
claiming by, through or under the acts or
agreements of Contributor. Acquiror hereby
indemnifies, defends and holds Contributor harmless
from and against all losses, claims, costs,
expenses, damages (including, but not limited to,
attorneys' fees of counsel selected by Contributor)
resulting or arising from the claims of any broker,
finder or other such party claiming by, through or
under acts or agreements of Acquiror. The
obligations of this Section shall survive any
termination of this Agreement and the Closing
indefinitely, and shall not be merged into any of
the conveyancing documents delivered at the
Closing.
15. LP UNIT RECIPIENTS.
The parties hereto acknowledge and agree that
Contributor shall distribute certain LP Units which
it may receive at the Closing to the LP Unit
Recipients, all of which are members of
Contributor.
15.1 LP UNIT SCHEDULE. Contributor hereby
directs Acquiror to cause the Operating Partnership
to deliver to Contributor, at Closing, LP Units
issued in the names of and for distribution to
Contributor and those LP Unit Recipients set forth
on the LP Unit Schedule. Each such person shall
receive that number of LP Units (subject to
appropriate rounding to eliminate fractional LP
Units) as shall be set forth on the LP Unit
Schedule.
15.2 LP UNIT RECIPIENTS. With respect to
the provisions of Sections (Transfer
Requirements), (Investment Representation) and
(Indemnification), each LP Unit Recipient shall be
bound by the representations, warranties and
covenants of Contributor that are applicable to the
LP Unit Recipients (as if references to Contributor
were references to the LP Unit Recipients), the LP
Units or the Conversion Shares and shall receive
the benefit of representations, warranties and
covenants of Acquiror with respect to Contributor
(as if references to Contributor were references to
the LP Unit Recipients), the LP Units or the
Conversion Shares.
16. DEFAULT.
16.1 REMEDIES.
(a) If representations and warranties of a
party hereto (a "DEFAULTING PARTY") contained
herein shall not be true and correct on the
Effective Date or on the Closing Date, or if such
party fails to perform any of the covenants and
agreements contained herein to be performed by such
party (including the obligation to close), any
other party hereto (a "NON-DEFAULTING PARTY") may
elect: (x) in the event the Closing has not
occurred, either to (i) terminate all Non-
Defaulting Parties' obligations under this
Agreement by written notice to all other parties,
in which event all Non-Defaulting Parties shall
retain all rights and remedies available to them,
or (ii) close, if no Non-Defaulting Parties have
elected (i), to close, in which event any Non-
Defaulting Parties may file an action for either or
both of specific performance and damages to compel
Defaulting Parties, as the case may be, to cure all
or any of such default(s), in whole or in part,
whereupon the Non-Defaulting Parties shall be
entitled to adjust the Contribution Consideration
to reflect the cost of such action and cure, and
all reasonable expenses incurred by the Non-
Defaulting Parties in connection therewith,
including, but not limited to, attorneys' fees of
the Non-Defaulting Parties' counsel; or (y) in the
event the Closing has occurred, to pursue whatever
remedies they may have at law or in equity.
Notwithstanding anything to the contrary herein and
in addition to any other remedies of the Non-
Defaulting Parties, the Non-Defaulting Parties
shall be entitled to recover actual and
consequential damages suffered thereby by reason of
any Defaulting Party's defaults hereunder and/or
any delay occasioned thereby.
(b) All rights and remedies of any party
hereunder are cumulative and in addition to any
rights and remedies which such party may have under
applicable law. The exercise of any one right or
remedy against one party hereto will not deprive
the exercising party of any right or remedy against
that party or any other parties hereto. No right,
power or remedy conferred upon or reserved to a
party under this Agreement is exclusive of any
other right, power or remedy in this Agreement, but
each and every such right, power and remedy shall
be cumulative and concurrent and shall be in
addition to any other right, power and remedy given
hereunder or under this Agreement, or now or
hereafter existing at law, in equity or by statute.
16.2 NO MERGER; SURVIVAL. No representation,
warranty or covenant made in this Agreement shall
be merged into any of the conveyancing documents
delivered at the Closing, but each shall survive
for the periods of time specified in this
Agreement. Except as may otherwise be specifically
provided in this Agreement, any party shall have
the right to claim a breach of the covenants set
forth in Section , and any other covenant set forth
in this Agreement that specifically obligates
either or both of them on a pre-closing basis only,
at any time after the Closing. Nothing contained in
the immediately preceding sentence shall limit the
remedies that may be available to any party in the
event another party breaches a post-closing
covenant set forth in this Agreement.
16.3 LITIGATION EXPENSES. In the event of
litigation between the parties with respect to any
Project, this Agreement, the performance of their
respective obligations hereunder or the effect of a
termination under this Agreement, the losing party
shall pay all costs and expenses incurred by the
prevailing party in connection with such
litigation, including, but not limited to,
reasonable attorneys' fees of counsel selected by
the prevailing party. The parties hereby further
acknowledge and agree that in the event of
litigation between them, as contemplated above, and
the resolution of that litigation through
compromise, settlement, or partial judgment, the
court before which such litigation is initially
brought shall have the right to allocate
responsibility, between the parties thereto, for
all costs and expenses (including, but not limited
to, attorneys' reasonable fees) incurred by both
Contributor and Acquiror in the pursuit of that
litigation resolved through compromise, settlement
or partial judgment. Notwithstanding any provision
of this Agreement to the contrary, the obligations
of the parties under this Section shall survive
termination of this Agreement and the Closing, if
applicable, and shall not be merged into any of the
conveyancing documents delivered at Closing.
17. INDEMNIFICATION.
17.1 BY CONTRIBUTORS AND LP UNIT RECIPIENTS.
For a period of two years from the Closing Date
(except for Claims related to any tax or related to
Claims for breach of the representations or
warranties in Section (Environmental), for which
the survival period shall be the applicable statute
of limitation related to such Claim), Contributor
and each LP Unit Recipient hereby agree, jointly
and severally, to indemnify, defend and hold
harmless Acquiror, Partnership and their respective
trustees, officers, employees and other affiliates,
from and against all actions, causes of action,
suits, debts, dues, accounts, reckonings, bonds,
bills, covenants, contracts, controversies,
promises, trespasses, damages, judgments,
executions, penalties, fines, claims, liabilities
and demands whatsoever, in law or equity ("CLAIM")
asserted against, resulting to, imposed upon, or
incurred, directly or indirectly, by any such
person or the assets transferred to such person
pursuant to this Agreement by reason of, arising
out of, or resulting from (i) the inaccuracy or
breach of any representation or warranty of
Contributor or any Property Owner contained in or
made pursuant to this Agreement, including closing
certificates (regardless of whether such breach is
deemed "material"); (ii) the breach of any covenant
of Contributor or any Property Owner contained in
this Agreement (regardless of whether such breach
is deemed "material"); or (iii) any Claim accruing
prior to the Closing Date.
17.2 BY ACQUIROR AND OPERATING PARTNERSHIP.
For a period of two years from the Closing Date
(except with respect to the inaccuracy of any form
or report filed with the SEC in which case the
survival period shall be the applicable statute of
limitations) and subject to the terms and
conditions of this Article , Acquiror and Operating
Partnership hereby agree, jointly and severally, to
indemnify, defend and hold harmless Contributor
from and against all Claims asserted against,
resulting to, imposed upon or incurred by any such
person, directly or indirectly, by reason of,
arising out of or resulting from (i) the inaccuracy
or breach of any representation or warranty of
Acquiror and Operating Partnership contained in or
made pursuant to this Agreement (regardless of
whether such breach is deemed "material") or (ii)
the breach of any covenant of Acquiror and
Operating Partnership contained in this Agreement
(regardless of whether such breach is deemed
"material").
17.3 REMEDIES UPON FRAUD. Nothing in this
Agreement shall be deemed to limit any right or
remedy of any party at law or in equity for
criminal activity or acts constituting fraud,
notwithstanding anything contained herein to the
contrary.
17.4 INDEMNIFICATION OF THIRDPARTY CLAIMS.
The obligations and liabilities of any party to
indemnify any other under this Article with
respect to Claims relating to third parties shall
be subject to the following terms and conditions:
(a) NOTICE AND DEFENSE. The party or
parties to be indemnified (whether one or more, the
"INDEMNIFIED PARTY") shall give the party from whom
indemnification is sought (the "INDEMNIFYING
PARTY") written notice of any such Claim prior to
the expiration of the survival period to which the
Claim relates, and the Indemnifying Party shall
undertake the defense thereof by representatives
chosen by it. Failure to give such notice shall
not affect the Indemnifying Party's duty or
obligations under this Article , except to the
extent the Indemnifying Party is prejudiced
thereby. So long as the Indemnifying Party is
defending any such Claim actively and in good
faith, the Indemnifying Party shall have the right
to settle such Claim in its sole discretion,
provided that the Indemnifying Party shall not,
without the written consent of the Indemnified
Party, settle or compromise any Claim or consent to
the entry of any judgment which does not include as
an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party
of a release from any direct or indirect
indebtedness, guaranty, endorsement, claim, loss,
damage, deficiency, cost, expense, obligation or
responsibility, fixed or unfixed, known or unknown,
asserted or unasserted, liquidated or unliquidated,
secured or unsecured ("LIABILITY") in respect of
such Claim. If there is a reasonable probability
that a Claim may materially and adversely affect
the Indemnified Party other than as a result of
money damages or other money payments, the
Indemnified Party shall have the right to retain
its own counsel to defend against the portion of
the Claim not involving monetary relief, and the
cost of such counsel shall be any and all damages,
Claims, losses, expenses, costs, interest,
obligations, and Liabilities, including, without
limitation, all reasonable attorneys' fees and
expenses in collecting a Claim, enforcing a right
to indemnification hereunder ("LOSS AND EXPENSE")
of the Indemnifying Party. The Indemnified Party
shall make available to the Indemnifying Party or
its representatives all records and other materials
required by them and in the possession or under the
control of the Indemnified Party, for the use of
the Indemnifying Party and its representatives in
defending any such Claim, and shall in other
respects give reasonable cooperation in such
defense. An Indemnified Party includes any Unit
Recipient who has received Units pursuant to the
transactions contemplated by this Agreement, and
any such Person shall be entitled to enforce a
Claim for indemnification hereunder in such
Person's own right.
(b) FAILURE TO DEFEND. If the Indemnifying
Party, within a reasonable time after notice of any
such Claim, fails to defend such Claim actively and
in good faith, the Indemnified Party will (upon
further notice and the failure of the Indemnifying
Party to commence the defense of such Claim within
thirty (30) days after such further notice) have
the right to undertake the defense, compromise or
settlement of such Claim or consent to the entry of
a judgment with respect to such Claim, on behalf of
and for the account and risk of the Indemnifying
Party, and the Indemnifying Party shall thereafter
have no right to challenge the Indemnified Party's
defense, compromise, settlement or consent to
judgment.
17.5 PAYMENT. The Indemnifying Party shall
promptly pay the Indemnified Party any amount due
under this Article . Upon judgment, determination,
settlement or compromise of any Indemnified Claim
pursuant to the provisions hereof, the Indemnifying
Party shall pay promptly on behalf of the
Indemnified Party, and/or to the Indemnified Party
in reimbursement of any amount theretofore required
to be paid by it, the amount so determined by
judgment, determination, settlement or compromise
pursuant to the provisions hereof, and all other
Loss and Expenses of the Indemnified Party with
respect thereto, unless in the case of a judgment
an appeal is made from the judgment. If the
Indemnifying Party desires to appeal from an
adverse judgment, then the Indemnifying Party shall
post and pay the cost of the security or bond to
stay execution of the judgment pending appeal.
Upon the payment in full by the Indemnifying Party
of such amounts, the Indemnifying Party shall
succeed to the rights of such Indemnified Party, to
the extent not waived in settlement, against the
third party who made such Indemnified Claim.
17.6 JURISDICTION. Any suit, action or
proceeding against Contributor or any LP Unit
Recipient with respect to this Article may be
brought in the courts of the State of Wisconsin or
in the U.S. District Court for the Eastern District
of Wisconsin as Acquiror in its sole discretion may
elect, and Contributor and each LP Unit Recipient,
by acceptance of any LP Units, shall be deemed to
accept the nonexclusive jurisdiction of those
courts for the purpose of any suit, action or
proceeding. In addition, Contributor and each LP
Unit Recipient shall be deemed to irrevocably
waive, to the fullest extent permitted by law, any
objection which such person may have to the laying
of venue of any suit, action or proceeding arising
out of or relating to this Section or any judgment
entered by any court in respect to any part thereof
brought in the State of Minnesota and to further
irrevocably waive any claim that any suit, action
or proceeding brought in the State of Minnesota has
been brought in an inconvenient forum.
17.7 NO WAIVER. The closing of the
transactions contemplated by this Agreement shall
not constitute a waiver by any party of its rights
to indemnification hereunder, regardless of whether
the party seeking indemnification otherwise has
knowledge of the breach, violation or failure of
condition constituting the basis of the Claim at or
before the Closing, and regardless of whether such
breach, violation or failure is deemed to be
"material."
18. NOTICES.
Any notice, demand or request which may be
permitted, required or desired to be given in
connection therewith shall be given in writing and
directed to Contributor and Acquiror as follows:
Contributor:
Plymouth Partners, II, LLC
708 South Third Street, Suite 108
Minneapolis, MN 55415
Acquiror:
Stonehaven Realty Trust
18650 W. Corporate Drive, Suite 300
Brookfield, WI 53045
Attn: Duane H. Lund
Notices shall be deemed properly delivered and
received when and if either (i) personally
delivered, including via facsimile; or (ii) on the
first business day after deposit with a commercial
overnight courier for delivery on the next business
day. Any party may change its address for delivery
of notices by properly notifying the others
pursuant to this Section.
19. MISCELLANEOUS.
19.1 SUCCESSORS AND ASSIGNS. The terms,
conditions and covenants of this Agreement shall be
binding upon and shall inure to the benefit of the
parties and their respective nominees, successors,
beneficiaries and assigns; provided, however, no
direct or indirect conveyance, assignment or
transfer of any interest whatsoever of, in or to
any or all of the Assigned Interest or of this
Agreement shall be made by Contributor or Acquiror
during the term of this Agreement.
19.2 BENEFIT. This Agreement is for the
benefit only of the parties hereto and their
nominees, successors, beneficiaries and assignees
as permitted in Section above and no other person
or entity shall be entitled to rely hereon, receive
any benefit herefrom or enforce against any party
hereto any provision hereof.
19.3 FURTHER ASSURANCES. All actions
required to be taken pursuant to this Agreement to
effectuate the transaction contemplated herein
shall be taken promptly and in good faith by
Contributor or Acquiror, as the case may be.
Contributor and Acquiror shall use their
reasonable, diligent and good faith efforts, and
shall reasonably cooperate with and assist the
other in its efforts, to obtain or cause to be
obtained, any and all consents and approvals of
third parties (including, but not limited to,
governmental authorities) that may be necessary in
connection with the transaction contemplated
hereby. Contributor, the Operating Partnership and
Acquiror agree to (i) furnish with, or cause to be
furnished to, the other party such documents or
further assurances, and (ii) perform, or cause to
be performed, such undertakings as the other party
may reasonably request at any time in connection
with (x) the transaction contemplated by, and (y)
the respective obligations of Contributor, the
Operating Partnership, and Acquiror, as the case
may be, set forth in, this Agreement.
19.4 ENTIRE AGREEMENT. This Agreement
constitutes the entire understanding between the
parties with respect to the transaction
contemplated herein, and all prior or
contemporaneous oral agreements, understandings,
representations and statements, and all prior
written agreements, understandings, letters of
intent and proposals are merged into this
Agreement. Neither this Agreement nor any
provisions hereof may be waived, modified, amended,
discharged or terminated except by an instrument in
writing signed by the party against which the
enforcement of such waiver, modification,
amendment, discharge or termination is sought, and
then only to the extent set forth in such
instrument.
19.5 TIME OF THE ESSENCE. Time is of the
essence of this Agreement. If any date herein set
forth for the performance of any obligations by
Contributor, Acquiror or the Operating Partnership
or for the delivery of any instrument or notice as
herein provided should be on a Saturday, Sunday or
legal holiday, the compliance with such obligations
or delivery shall be deemed acceptable on the next
business day following such Saturday, Sunday or
legal holiday. As used herein, the term "LEGAL
HOLIDAY" means any state or federal holiday for
which financial institutions or post offices are
generally closed in the State of Wisconsin for
observance thereof.
19.6 CONDITIONS PRECEDENT. The waiver of any
particular Condition Precedent shall not constitute
the waiver of any other.
19.7 CONSTRUCTION. This Agreement shall not
be construed more strictly against one party than
against the other merely by virtue of the fact that
it may have been prepared by counsel for one of the
parties, it being recognized that both Contributor
and Acquiror have contributed substantially and
materially to the preparation of this Agreement.
The headings of various Sections in this Agreement
are for convenience only, and are not to be
utilized in construing the content or meaning of
the substantive provisions hereof. References to
Contributor shall be deemed to be references to the
Contributor of particular Projects in the context
of provisions relating to Projects.
19.8 GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the
laws of the State of Wisconsin.
19.9 PARTIAL INVALIDITY. The provisions
hereof shall be deemed independent and severable,
and the invalidity or partial invalidity or
enforceability of any one provision shall not
affect the validity of enforceability of any other
provision hereof.
19.10 WAIVER OF CONDITIONS PRECEDENT.
Acquiror and Contributor shall each have the right,
in its sole and absolute discretion, to waive any
Condition Precedent for its benefit contained in
this Agreement.
19.11 CERTAIN SECURITIES MATTERS. No sale of
Shares or LP Units is intended by the parties by
virtue of their execution of this Agreement. Any
sale of Shares or LP Units referred to in this
Agreement will occur, if at all, upon the Closing.
19.12 COUNTERPARTS. This Agreement may be
executed in any number of identical counterparts,
any of which may contain the signatures of less
than all parties, and all of which together shall
constitute a single agreement.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement on the
date first above written.
PLYMOUTH PARTNERS II, LLC, a limited
liability company
By: /S/ Steven B. Hoyt
Name: Steven B. Hoyt
Title: Member
CONTRIBUTORS:
/S/ Steven B. Hoyt
Steven B. Hoyt
/S/ Michelle L. Hoyt
Michelle L. Hoyt
ACQUIROR:
Stonehaven Realty Trust, a
Maryland real estate investment trust
By: /S/ Robert F. Rice
Name: Robert F. Rice
Title: President
SCHEDULE OF EXHIBITS
Exhibit A
Property Information
Exhibit B
Designation of Units
Exhibit C
Redemption Agreement
Exhibit D
Due Diligence Information
LIST OF SCHEDULES
EXHIBIT A
Property Address Square Feet
5005 Cheshire Lane, City of Plymouth, County of
Hennipen, Minnesota 26,186
5015 Cheshire Land, City of Plymouth, County of
Hennipen, Minnesota 26,186
5025 Cheshire Lane, City of Plymouth, County of
Hennipen, Minnesota 26,186
EXHIBIT B
DESIGNATION OF UNITS
SCHEDULE TO WELLINGTON PROPERTIES INVESTMENTS, L.P.
("PARTNERSHIP") PARTNERSHIP AGREEMENT DESIGNATING
THE RIGHTS, LIMITATIONS AND PREFERENCES OF THOSE
UNITS OF PARTNERSHIP INTEREST ISSUED PURSUANT TO
THE CONTRIBUTION AGREEMENT DATED FEBRUARY 29, 2000
AMONG PLYMOUTH PARTNERS II, LLC, AS CONTRIBUTOR,
PARTNERSHIP AND WELLINGTON PROPERTIES TRUST
Designation: Class B Preferred
Units
Preferences: None
Distributions: Quarterly on April
15, July 15, October 15,
and January 15 of each
year, commencing April 15,
2000
Distribution Rate: 6%. The Class B
Preferred Units shall have
no other distribution
rights under Section 5.1 of
the Partnership Agreement.
Redemption Rights:
(a) Redeemable for preferred shares of
beneficial interest of Wellington Properties Trust
at any time after the first anniversary of issuance
at an exchange ratio determined by assuming a per
share price of $4.35 and a per unit face value of
$901,063.35.
(b) The 6% Class B Preferred Units shall
not be subject to Section 8.6 of the Partnership
Agreement.
EXHIBIT D
DUE DILIGENCE INFORMATION
To be delivered to Acquiror
- - Rent Roll. A rent roll ("Rent Roll") of the
Projects (and, in addition, Property Owners'
most recent rent roll of the Projects),
containing the following information for each
tenant:
- - Full name of tenant as shown on the Lease
- - Description of space leased to tenant,
including suite number and square feet of net
rentable area
- - Term of Lease with commencement and
expiration dates
- - Options to extend term
- - Options to expand space
- - Annual base rental
- - Annual reimbursements for taxes, CAM,
merchants' association and other expenses
- - Percentage rental
- - Dates through which base and percentage
rental have been paid
- - Rental collected in advance
- - Defaults by tenant
- - Security deposit and interest accrued thereon
- - Operating Statements. Operating statements of
the Projects for 1997, 1998 and YTD 1999
("Operating Statements"), including statements
of cash flow and year-end balance sheets, and
statements of income, expense, accounts payable
and accounts receivable for each such year.
- - Commission Schedule and Agreements. A schedule
("Commission Schedule") and copies of all
commission agreements related to the Leases or
the Projects.
- - Service Contracts. A list together with copies
of all management, service, supply, equipment
rental and other contracts related to the
operation of the Projects ("Service Contracts").
- - Leases. Copies of all leases and occupancy
agreements including all amendments, guarantees,
and side letters; provided side letters can be
made available at the offices of the property
manager.
- - Tenant Information:
- - Tenants' allocation of CAM, real estate taxes
and insurance reimbursements for 1998 and
1999
- - A gross sales report for the last 3 years
(and current year if available) for each
tenant paying percentage rent
- - Tax Statements. Copies or a summary of ad
valorem tax statements for the current or most
recently available tax period and for the prior
36 months including the Projects' tax
identification number(s).
- - Tangible Personal Property. A current inventory
of all tangible personal property and fixtures.
- - List of Capital Improvements. A list of all
capital improvements performed on the Projects
within the prior 24 months.
- - Budget. Property Owners' most recent budget for
the Projects, including the forthcoming year, if
applicable.
- - Insurance. Copies of Property Owners'
certificate of insurance for the Projects, all
insurance policies, a loss history, a list of
any current claims relating to the Projects, and
any notices received by insurance carriers.
- - Plans and Specifications. A schedule of and 2
copies of the Plans and Specifications.
- - Approvals. Copies of all approvals with respect
to the improvements.
To be made available at the offices of
Contributor's Property Manager, to the extent in
Contributor's or its property manager's possession
or control:
- - Tenant Information:
- - Financial statements of all tenants under
Leases covering prior 2 years
- - Information relative to tenant payment
history
- - All tenant correspondence
- - Maintenance Records. All maintenance work
orders for the prior 12 months.
- - Reports. Any environmental, soil, structural
engineering and drainage reports, assessments,
audits and surveys.
- - Existing Survey. All existing surveys of the
Projects.
- - Site Plans. All site plans relating to the
Projects.
- - Square Footage. A square footage breakdown of
the Projects by building.
- - As-Built Plans and Specifications. All as-built
construction, architectural, mechanical,
electrical, plumbing, landscaping and grading
plans and specifications relating to the
Projects and any major capital repairs or tenant
improvements (including bay depths and fire
protection specifications).
- - Parking Information. A parking plan (which may
be reflected in the Survey) showing the number
of parking spaces for the Projects, and a
comparison to the number of parking spaces for
the Projects required by zoning requirements
applicable to the Projects.
- - Permits and Warranties. Copies of all warranties
and guaranties, permits, certificates of
occupancy, licenses and other approvals.
- - Operating Information. Copies of all utilities
bills relating to the Projects for the prior 12
calendar months and a list of any utility
company deposits, all service contract billings,
all certificates of insurance of each tenant,
details of any reserves and the back-up for any
projections upon which the reserves are based,
year-to-date general ledger, and accounts
receivable aging report.
- - Management Report. Copies of monthly management
reports for the Projects for the past 2 calendar
years and for the current year-to-date.
- - Proceedings. Copies of any documents or
materials relating to any litigation,
investigation, condemnation, or proceeding of
any kind pending or threatened affecting any of
the Projects or the ability of Property Owners
to consummate the transaction contemplated by
this Agreement.
- - General. Any other documents or information
pertaining to the Projects in Contributor's
possession or control or in the possession or
control of Contributor's agents or independent
contractors.
EXHIBIT 99.1
PRESS RELEASE DATED FEBRUARY 24, 2000
Stonehaven Adds Internet Solutions to
Commercial Real Estate
Business by Acquiring NETLink International
THURSDAY, FEBRUARY 24, 2000 4:30 PM
- BusinessWire
MINNEAPOLIS, Feb 24, 2000 (BUSINESS WIRE) --
Expansion allows company to capitalize on
growing
Internet real estate business Stonehaven Realty
Trust, a Minneapolis-based real estate
company, (AMEX:RPP) announced today that it has
acquired St. Paul-based NETLink
International, a privately held Internet
consulting and web development company. The
acquisition will enhance Stonehaven's current
real estate business by adding
technology/e-commerce products and services to
its operations. NETLink will be a
Stonehaven subsidiary.
Stonehaven, formerly Wellington Properties
Trust, currently owns properties in Minnesota
and Wisconsin. NETLink is developing a full
menu of new technology solutions designed for
real estate owners and operators. The
technology will allow landlords to integrate
customer
relationships on-line and enhance management,
leasing and maintenance operations. These
services will be offered to a variety of
property owners under Stonehaven's SPACElink(SM)
brand. Stonehaven plans to announce specific
SPACElink(SM) products in the coming
weeks.
"In the near future, the $3 trillion commercial
real estate sector will integrate on-line
technology to enhance off-line management and
leasing operations," said Duane Lund, CEO
of Stonehaven. "The acquisition of NETLink and
the development of our SPACElink(SM)
system allows Stonehaven to capitalize on this
growing opportunity more quickly and
effectively by bringing e-commerce and e-
business experts in-house."
The NETLink acquisition was structured as an
all-stock and option package valued at $7.5
million. NETLink's CEO Odeh Muhawesh will
continue as CEO of NETLink and will become a
member of Stonehaven's board of directors. Mary
Henschel will continue as president of
NETLink, and Ann Wessels, NETLink's CFO, now
holds the same position at Stonehaven. A
total of 37 NETLink technology professionals
were added to the team at Stonehaven. The
company expects the acquisition to accelerate
its growth rate and add to projected calendar
2000 earnings.
NETLink International, established in 1987, is
an Internet consulting and web development
firm with worldwide expertise in network
integration, security and support, document
management, custom application development,
groupware and e-business consulting. Some
of NETLink's clients include 3M, Edina Realty,
MyFreeDesk and numerous major Twin Cities
law firms.
"We are very excited about our new venture with
Stonehaven," said Mary Henschel, NETLink
president. "The commercial real estate sector
is ripe for technological advancements, and we
can leverage our technical expertise to help
Stonehaven achieve its vision. Becoming part of
a public company will also help us attract
highly talented technical staff and grow our
employee base more quickly." NETLink will
continue to offer its existing services in addition
to the SPACElink(SM) solutions.
More information about SPACElink(SM) solutions
can be found at www.stonehvn.com. Media
should contact Amanda Kohls at (612) 344-1035
for interviews with Duane Lund, Stonehaven
CEO, or Mary Henschel, NETLink president.
Certain matters discussed within this press
release may be deemed to be forward looking
statements within the meaning of the Private
Securities Litigation Reform Act of 1995.
Although Stonehaven Realty Trust believes the
expectations reflected in such forward looking
statements are based on reasonable assumptions,
it can give no assurance that its
expectations will be attained. Factors that
could cause actual results to differ materially
from
Stonehaven's expectations include changes in
local or national economic or real estate
conditions and other risks detailed from time
to time in the company's SEC reports and
filings, including its S-4 and S-11
Registration Statements as well as its annual
report on
Form 10-K, quarterly reports on Form 10-Q and
periodic reports on Form 8-K. The Company
assumes no obligation to update or supplement
forward looking statements that become
untrue because of subsequent events.
Copyright (C) 2000 Business Wire. All rights
reserved.
Distributed via COMTEX.
CONTACT: BlueFire Partners for Stonehaven
Realty Trust,
Minneapolis
Amanda Kohls or Joanne
Henry
Phone: 612-344-1035
WEB PAGE: http://www.businesswire.com
GEOGRAPHY: MINNESOTA
INDUSTRY CODE: REAL ESTATE
INTERNET
E-COMMERCE
NETWORKING
MERGERS/ACQ
EXHIBIT 99.2
PRESS RELEASE DATED MARCH 9, 2000
STONEHAVEN CLOSES $6.7 MILLION TRANSACTION;
DEAL INCREASES
COMPANY'S MINNESOTA HOLDINGS TO MORE THAN
300,000 SQUARE FEET
THURSDAY, MARCH 09, 2000 9:00 AM
- PRNewswire
MINNEAPOLIS, Mar 9, 2000 /PRNewswire via COMTEX/
- -- Stonehaven Realty Trust (AMEX:RPP), a
Minneapolis-based real estate company, announced
today the closing of a $6.7 million transaction
in which it acquired a three property, 78,500
square foot portfolio in Plymouth, Minn. This
increases the company's holdings in Minnesota to
more than 300,000 square feet. The portfolio,
which is new construction and 100 percent leased,
is located off I-494 in the Plymouth Technology
Park. The transaction was structured as an
umbrella partnership (UPREIT), which allowed the
company to issue partnership units in exchange
for the properties.
"This acquisition fits well with our new
technology initiative announced last week," said
Robert F.
Rice, Stonehaven president. "We will use the
SPACElink(SM) online technology being developed
by our subsidiary NETLink to manage this
property."
Last week, the Company announced the
acquisition of NETLink International, an Internet
consulting
and web development company.
Stonehaven, formerly Wellington Properties
Trust, is a Minneapolis-based real estate company.
The
company currently owns properties in Minnesota
and Wisconsin. More information about
Stonehaven can be found at
http://www.stonehvn.com.
Certain matters discussed within this press
release may be deemed to be forward looking
statements
within the meaning of the Private Securities
Litigation Reform Act of 1995. Although Stonehaven
Realty Trust believes the expectations
reflected in such forward looking statements are
based on
reasonable assumptions, it can give no
assurance that its expectations will be attained.
Factors that
could cause actual results to differ materially
from Stonehaven's expectations include changes in
local or national economic or real estate
conditions and other risks detailed from time to
time in the
company's SEC reports and filings, including
its S-4 and S-11 Registration Statements as well as
its
annual report on Form 10-K, quarterly reports
on Form 10-Q and periodic reports on Form 8-K.
The Company assumes no obligation to update or
supplement forward looking statements that
become untrue because of subsequent events.
For more information contact Amanda Kohls, 612-
344-1035, or Joanne Henry, 612-344-1011, both
of BlueFire Partners for Stonehaven Realty
Trust.
SOURCE Stonehaven Realty Trust
(C) 2000 PR Newswire. All rights reserved.
http://www.prnewswire.com
CONTACT: Amanda Kohls, 612-344-1035, or
Joanne Henry, 612-344-1011, both
of BlueFire Partners
for Stonehaven Realty Trust
WEB PAGE: http://www.stonehvn.com
GEOGRAPHY: Minnesota
INDUSTRY CODE: RLT
MLM
SUBJECT CODE: RLE
