Preferred Equity Investment Agreement Among MACK-CALI REALTY CORPORATION MACK- CALI REALTY, L.P. MACK-CALI PROPERTY TRUST MACK-CALI TEXAS PROPERTY, L.P. ROSELAND RESIDENTIAL TRUST ROSELAND RESIDENTIAL HOLDING L.L.C. ROSELAND RESIDENTIAL L.P....
Exhibit 10.125
Preferred Equity Investment Agreement
Among
XXXX-XXXX REALTY CORPORATION
XXXX-XXXX REALTY, X.X.
XXXX-XXXX PROPERTY TRUST
XXXX-XXXX TEXAS PROPERTY, L.P.
ROSELAND RESIDENTIAL TRUST
ROSELAND RESIDENTIAL HOLDING L.L.C.
ROSELAND RESIDENTIAL L.P.
RPIIA-RLA, L.L.C.
and
RPIIA-RLB, L.L.C.
dated as of
February 27, 2017
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS |
3 | |
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ARTICLE II PURCHASE AND SALE |
13 | |
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Section 2.01 |
Commitment |
13 |
Section 2.02 |
Deposit |
13 |
Section 2.03 |
Purchase and Sale at the Closing |
14 |
Section 2.04 |
Closing Deliverables |
14 |
Section 2.05 |
Additional Commitment |
15 |
Section 2.06 |
Investors’ Failure to Fund |
17 |
Section 2.07 |
Use of Proceeds |
17 |
Section 2.08 |
MCRC Parties’ Participation Right |
18 |
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP PARTIES AND THE MCRC PARTIES |
19 | |
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Section 3.01 |
Organization and Authority of the Partnership Parties |
19 |
Section 3.02 |
Capitalization |
20 |
Section 3.03 |
Subsidiaries |
21 |
Section 3.04 |
No Conflicts; Consents |
22 |
Section 3.05 |
Financial Statements |
22 |
Section 3.06 |
Undisclosed Liabilities |
23 |
Section 3.07 |
Absence of Certain Changes, Events and Conditions |
23 |
Section 3.08 |
Material Contracts |
24 |
Section 3.09 |
Title to Assets |
27 |
Section 3.10 |
Owned and Leased Real Property |
27 |
Section 3.11 |
Legal Proceedings; Governmental Orders |
29 |
Section 3.12 |
Compliance With Laws; Permits |
29 |
Section 3.13 |
Environmental Matters |
30 |
Section 3.14 |
Employee Benefit Matters |
32 |
Section 3.15 |
Employment Matters |
33 |
Section 3.16 |
Taxes |
34 |
Section 3.17 |
Insurance |
35 |
Section 3.18 |
Brokers |
36 |
Section 3.19 |
REIT Requirements |
36 |
Section 3.20 |
Private Placement |
37 |
Section 3.21 |
Solvency |
37 |
Section 3.22 |
Anti-Takeover Provision |
37 |
Section 3.23 |
Foreign Corrupt Practices Act |
37 |
Section 3.24 |
Money Laundering Laws |
38 |
Section 3.25 |
Office of Foreign Assets Control |
39 |
Section 3.26 |
Investment Company |
41 |
Section 3.27 |
Arm’s-Length Transaction |
41 |
Section 3.28 |
Organization and Authority of the MCRC Parties |
42 |
Section 3.29 |
No Conflicts; Consents |
43 |
Section 3.30 |
Arm’s-Length Transaction |
43 |
Section 3.31 |
Legal Proceedings; Governmental Orders |
43 |
Section 3.32 |
Ownership of the Partnership Parties. Other than |
44 |
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF INVESTORS |
44 | |
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Section 4.01 |
Organization and Authority of the Investors |
44 |
Section 4.02 |
No Conflicts; Consents |
44 |
Section 4.03 |
Investment Purpose |
45 |
Section 4.04 |
Brokers |
45 |
Section 4.05 |
Legal Proceedings |
45 |
Section 4.06 |
Independent Investigation |
46 |
Section 4.07 |
No Public Market |
47 |
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ARTICLE V COVENANTS |
47 | |
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Section 5.01 |
Conduct of Business Prior to the Closing |
47 |
Section 5.02 |
Access to Information |
47 |
Section 5.03 |
Director and Officer Indemnification and Insurance |
48 |
Section 5.04 |
Governmental Approvals and Other Third-party Consents |
48 |
Section 5.05 |
Closing Conditions |
49 |
Section 5.06 |
Public Announcements |
49 |
Section 5.07 |
Further Assurances |
50 |
Section 5.08 |
Transfer Taxes |
50 |
Section 5.10 |
Reservation of Securities |
50 |
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ARTICLE VI CONDITIONS TO CLOSINGS |
51 | |
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Section 6.01 |
Conditions to Obligations of All Parties |
51 |
Section 6.02 |
Conditions to Obligations of the Investors |
51 |
Section 6.03 |
Conditions to Obligations of the MCRC Parties and the Partnership Parties |
53 |
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ARTICLE VII INDEMNIFICATION |
54 | |
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Section 7.01 |
Survival |
54 |
Section 7.02 |
Indemnification By the MCRC Parties |
55 |
Section 7.03 |
Indemnification By the Partnership Parties |
55 |
Section 7.04 |
Indemnification By the Investors |
55 |
Section 7.05 |
Certain Limitations |
56 |
Section 7.06 |
Indemnification Procedures |
57 |
Section 7.07 |
Exclusive Remedies |
59 |
Section 7.08 |
Tax Treatment of Indemnification Payments |
59 |
ARTICLE VIII TERMINATION |
60 | |
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Section 8.01 |
Termination |
60 |
Section 8.02 |
Effect of Termination |
61 |
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ARTICLE IX MISCELLANEOUS |
61 | |
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Section 9.01 |
Expenses |
61 |
Section 9.03 |
Notices |
62 |
Section 9.04 |
Interpretation |
64 |
Section 9.05 |
Headings |
65 |
Section 9.06 |
Severability |
65 |
Section 9.07 |
Entire Agreement |
65 |
Section 9.08 |
Successors and Assigns |
65 |
Section 9.09 |
No Third-party Beneficiaries |
65 |
Section 9.10 |
Amendment and Modification; Waiver |
65 |
Section 9.11 |
Governing Law; Submission to Jurisdiction; Waiver of Jury Trial |
66 |
Section 9.12 |
Specific Performance |
66 |
Section 9.13 |
Counterparts |
66 |
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EXHIBIT A |
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A-1 |
EXHIBIT B |
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XXXXXXX X |
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EXHIBIT E |
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EXHIBIT F |
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EXHIBIT G |
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XXXXXXX X |
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X-0 |
XXXXXXX I |
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I-1 |
EXHIBIT J |
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J-1 |
EXHIBIT X |
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X-1 |
PREFERRED EQUITY INVESTMENT AGREEMENT
This Preferred Equity Investment Agreement (this “Agreement”), dated as of February 27, 2017 (the “Execution Date”), is entered into by and among Roseland Residential, L.P., a Delaware limited partnership (together with its permitted successors, assigns and transferees, the “Partnership”), Xxxx-Xxxx Realty Corporation, a Maryland corporation (together with its permitted successors, assigns and transferees, “MCRC”), Xxxx-Xxxx Realty, L.P., a Delaware limited partnership (together with its permitted successors, assigns and transferees, “MCRLP”), Xxxx-Xxxx Property Trust, a Maryland real estate investment trust (together with its permitted successors, assigns and transferees, “MCPT”), Xxxx-Xxxx Texas Property, L.P., a Texas limited partnership (together with its permitted successors, assigns and transferees, “MCTP” and together with MCRC, MCRLP and MCPT, the “MCRC Parties”), Roseland Residential Trust, a Maryland real estate investment trust (together with its permitted successors, assigns and transferees, “RRT” or the “General Partner”), Roseland Residential Holding L.L.C., a Delaware limited liability company (together with its permitted successors, assigns and transferees, the “Limited Partner” and together with the General Partner and the Partnership, the “Partnership Parties”) and RPIIA-RLA, L.L.C., a Delaware limited liability company (together with its permitted successors, assigns and transferees, “Rockpoint Class A Preferred Holder”), and RPIIA-RLB, L.L.C., a Delaware limited liability company (together with its permitted successors, assigns and transferees, “Rockpoint Class B Preferred Holder” and, together with Rockpoint Class A Preferred Holder, the “Investors”). The MCRC Parties, the Partnership Parties and the Investors shall be referred to herein collectively as the “Parties”, and each, a “Party”.
RECITALS
WHEREAS, MCRC, an indirect beneficial owner of the Partnership, has elected to be treated, has operated, and, in accordance with the covenants contained in the Second Amended and Restated LP Agreement (as defined below), will continue to operate as a real estate investment trust pursuant to Sections 856 through 860 of the Code (a “REIT”);
WHEREAS, MCRC is the sole general partner of MCRLP;
WHEREAS, RRT is the general partner of the Partnership and is owned by the following Affiliates of MCRC in the percentages set forth opposite such Affiliate’s name: (i) MCRLP: 89.16%; (ii) MCPT: 10.55%, which is in turn 100% owned by MCRLP; and (iii) MCTP: 0.29%, which is in turn 99% owned by MCRLP and 1% owned by MCRC;
WHEREAS, the Partnership has authorized three (3) classes of membership interests designated as “Common Units”, “Class A Preferred Partnership Units” and “Class B Preferred Partnership Units” (the Class A Preferred Partnership Units and Class B Preferred Partnership Units, collectively, the “Preferred Units”), each with the rights, preferences, powers, restrictions and limitations set forth in the Second Amended and Restated Limited and Restated Partnership Agreement (as defined below);
WHEREAS, the General Partner currently owns 99.9% of the Common Units and the Limited Partner currently owns 0.1% of the Common Units;
WHEREAS, prior to the Closing (as defined below), the Partnership has not issued any Preferred Units;
WHEREAS, the Investors desire to commit to invest up to an aggregate of $300,000,000 (the “Total Commitment”) in the Partnership, based upon a net asset value of the Partnership of $1,230,000,000 as of Closing, by acquiring Preferred Units on the terms and conditions set forth herein;
WHEREAS, the Investors desire to invest an initial aggregate amount of $150,000,000 in the Partnership and be admitted as partners in the Partnership by collectively acquiring one hundred fifty thousand (150,000) Preferred Units (the “Initial Purchased Units”) at the Closing on the terms and conditions set forth herein;
WHEREAS, Rockpoint Class A Preferred Holder agrees and commits to subscribe for additional Class A Preferred Partnership Units for an additional aggregate investment of up to $150,000,000 pursuant to Drawdowns (as defined below), and the Partnership agrees to issue to the Rockpoint Class A Preferred Holder additional Class A Preferred Partnership Units in exchange therefor on such Drawdown Dates (as defined below) on the terms and conditions set forth herein (the “Additional Commitment”) and in the Second Amended and Restated LP Agreement (as defined below);
WHEREAS, the MCRC Parties and/or their Affiliates have the right to acquire up to $200,000,000 of Preferred Units following the expiration of the Commitment Term (as defined below) on the terms and conditions set forth herein;
WHEREAS, the Partnership and certain of its Subsidiaries (as defined below), directly or indirectly own or lease interests in various multifamily residential and/or commercial properties and/or vacant land (collectively, the “Real Properties”, and each individually, a “Real Property”);
WHEREAS, the terms and conditions by which the Partnership has been governed prior to the Closing are set forth in that certain Amended and Restated Agreement of Limited Partnership, dated as of December 22, 2015 (the “Original LP Agreement”), by and among the General Partner and the Limited Partner;
WHEREAS, concurrently herewith, and as a condition of the willingness of the Investors to consummate the transactions contemplated by this Agreement, the Investors, the General Partner and the Limited Partner shall amend and restate in its entirety the Original LP Agreement in the form attached hereto as Exhibit A (the “Second Amended and Restated LP Agreement”);
WHEREAS, concurrently herewith, the Investors, the General Partner, MCRLP, MCPT and MCTP shall enter into that certain Shareholders Agreement of the General Partner (the “Shareholders Agreement”) and amend and restate the Bylaws of the General Partner (the “Bylaws”);
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following terms have the meanings specified or referred to in this Article I:
“2015 Balance Sheet” has the meaning set forth in Section 3.05.
“2016 Balance Sheet” has the meaning set forth in Section 3.05.
“2016 Balance Sheet Date” has the meaning set forth in Section 3.05.
“2016 Income Statement” has the meaning set forth in Section 3.05.
“Active Projects” has the meaning set forth in Section 3.08(a)(i).
“Additional Commitment” has the meaning set forth in the Recitals.
“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. For the avoidance of doubt, neither of the Investors nor any of their Affiliates shall be considered an Affiliate of any MCRC Party or Partnership Party for any purpose hereunder; provided, further that no portfolio company of an Investor shall be deemed an Affiliate any Investor.
“Agreement” has the meaning set forth in the preamble.
“Ancillary Agreements” shall mean, collectively, the Registration Rights Agreement, the Recourse Agreement, the Indemnification Agreement, the Shared Services Agreement, the Shareholders’ Agreement, the Bylaws and the Credit Enhancement Agreement.
“Benefit Plan” has the meaning set forth in Section 3.14(a).
“Board of Trustees” has the meaning set forth in Section 9.02.
“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in New York, New York are authorized or required by Law to be closed for business.
“Bylaws” means the bylaws of the General Partner, as amended and in effect on or immediately prior to the date hereof.
“Closing” has the meaning set forth in has the meaning set forth in Section 2.03(b).
“Closing Date” has the meaning set forth in Section 2.03(b).
“Code” means the Internal Revenue Code of 1986, as amended.
“Commitment Term” means the period commencing on the Closing Date and ending on the earlier to occur of (i) the date on which Investor’s Total Commitment has been funded to the Partnership and (ii) any Commitment Termination Event.
“Commitment Termination Event” has the meaning set forth in Section 2.05(e).
“Common Units” has the meaning set forth in the Recitals.
“Company Leases” has the meaning set forth in Section 3.10(e).
“Competing Businesses” has the meaning set forth in Section 9.02.
“Controlled Subsidiary” or “Controlled Subsidiaries”, with respect to any entity, any Subsidiary of such entity (other than as set forth in clause (iii)(y) of the definition of such term), other than a Non-Controlled Subsidiary or Limited Control Subsidiary of such entity.
“Controlled Subsidiary Balance Sheets” has the meaning set forth in Section 3.05.
“Credit Enhancement Agreement” means that certain Discretionary Demand Promissory Note between the Partnership, as borrower, and MCRLP, as lender, dated as of the Closing Date.
“Deposit” has the meaning set forth in Section 2.02.
“Direct Claim” has the meaning set forth in Section 7.06(c).
“Disclosure Letter” means that certain Disclosure Letter to Preferred Equity Investment Agreement executed by and between the Parties concurrently with the execution and delivery of this Agreement.
“Dollars or $” means the lawful currency of the United States of America.
“Drawdown” has the meaning set forth in Section 2.05(b).
“Drawdown Amount” has the meaning set forth in Section 2.05(c)(i).
“Drawdown Date” has the meaning set forth in Section 2.05(b).
“Drawdown Notice” has the meaning set forth in Section 2.05(b).
“Employees” means those Persons employed by the Partnership Parties or their respective Subsidiaries immediately prior to the Closing.
“Employment Agreements” has the meaning set forth in Section 3.15(b).
“Encumbrance(s)” means any lien, pledge, mortgage, deed of trust, security interest, charge, claim, easement, encroachment or other similar encumbrance.
“Environmental Claim” means any action, suit, claim, investigation or other legal proceeding by any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, assessment, evaluation, monitoring or otherwise delineating the presence or Release of any Hazardous Material, prevention or minimization of a Release or threatened release of Hazardous Materials, governmental response, removal or remediation, corrective action, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials in, on, under, to or emanating from any real property; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit with respect to any real property.
“Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); (b) Releases or threatened Releases of Hazardous Materials or materials containing Hazardous Materials; or (c) concerning the presence of, exposure to, or the management, manufacture, use, handling, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes, without limitation, the following (including any amendments thereto, their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq. (“CERCLA”); the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §§ 5101 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §§ 136 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq.; the Atomic Energy Act, 42 U.S.C. §§ 2011 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.
“Environmental Notice” means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to the presence, Release of, or exposure to, any Hazardous Materials in, on, under, to or emanating from any real property or to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.
“Environmental Permit” means any Permit, letter, clearance, consent, waiver, closure, exemption, agreement, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law.
“Equity Grants” has the meaning set forth in Section 3.15(c).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
“Escrow Agent” has the meaning set forth in Section 2.02.
“Execution Date” has the meaning set forth in the Preamble.
“Expenses” has the meaning set forth in Section 9.01.
“Financial Statements” has the meaning set forth in Section 3.05.
“Fundamental Representations” has the meaning set forth in Section 7.01.
“General Partner” has the meaning set forth in the Recitals.
“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any arbitrator, court or tribunal of competent jurisdiction.
“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination, award or consents entered by or with any Governmental Authority.
“Hazardous Materials” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or man-made, that is hazardous, acutely hazardous, toxic, pollutant, contaminant or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products including crude oil and any fractions thereof, natural gas, synthetic gas, and any mixtures thereof, mold, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation and polychlorinated biphenyls.
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
“Indebtedness” means any of the following: (a) the principal of (1) any indebtedness for borrowed money, including bank overdrafts, (2) any obligations evidenced by bonds, debentures, notes or other similar instruments (including, without limitation, any seller notes issued in connection with any acquisition), and (3) any obligations, contingent or otherwise, under banker’s acceptance credit or similar facilities, (b) any obligations to pay the deferred purchase price of property or services, except trade accounts payable and other current liabilities arising in the Ordinary Course of Business, (c) any obligations with respect to hedging, swaps or similar arrangements, (d) any guaranty of any of the foregoing, (e) obligations to pay rent or other
payment amounts under leases that would be required to be classified as a capital lease on a balance sheet prepared on a consistent basis or (f) accrued interest or premium (if any) applicable to, and premiums, penalties or other costs or expenses that would arise as a result of repayment of, any of the foregoing.
“Indemnification Agreement” has the meaning set forth in Section 6.02(c)(vii).
“Indemnification Threshold” has the meaning set forth in Section 7.05(a).
“Indemnified Party” has the meaning set forth in Section 7.05.
“Indemnifying Party” has the meaning set forth in Section 7.05.
“Initial Purchased Units” has the meaning set forth in the Recitals.
“Investor” has the meaning set forth in the preamble.
“Investor Indemnified Party” has the meaning set forth in Section 7.02.
“Investor Parties” has the meaning set forth in Section 9.02.
“Key Executives” means, individually and collectively: (i) Xxxxxxx X. XxXxxxx; (ii) Xxxxxxxx Xxxxxx; (iii) Xxxxxx Xxxxxx Xxxxxxxx; (iv) Xxxxxxx Xxxx; (v) Xxxx Xxxxxx; (vi) Xxxx Xxxxx; (vii) Xxxxxxx Xxxxx; (viii) Xxxxxx Xxxxx; and (ix) Xxxxxx Xxxxx.
“Knowledge of the Partnership Parties” or “the Partnership Parties’ Knowledge” or any other similar knowledge qualification, means the actual knowledge of the Key Executives or their successors as persons with substantially similar responsibilities toward the Partnership Parties after a commercially reasonable inquiry of their subordinates.
“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, judgment, decree, other requirement or rule of law of any Governmental Authority.
“Limited Control Subsidiary” or “Limited Control Subsidiaries”, means Harborside Unit A Urban Renewal, L.L.C. and Epsteins C Lofts, L.L.C.
“Limited Controlled Subsidiary Balance Sheets” has the meaning set forth in Section 3.05.
“Limited Partner” has the meaning set forth in the Recitals.
“Losses” means losses, damages, liabilities, penalties, actions, suits, proceedings (including any investigations, arbitrations, litigation, regulatory proceedings or inquiries), demands, claims, causes of action, Taxes, costs or expenses, including all incidental, consequential, special and indirect damages to the extent actually incurred and which were reasonably foreseeable, as well as reasonable attorneys’ fees, defense costs, consultant fees and other out-of-pocket expenses incurred in connection with investigating, enforcing or defending any right to indemnification, provided, however, that in no event shall Losses include punitive
damages or damages based on any multiple of revenue or income unless, and only the extent, actually awarded to a Governmental Authority or other third party.
“OFAC” has the meaning set forth in Section 3.25(a).
“Material Adverse Effect” means any event, occurrence, fact, condition or change that individually or in the aggregate, is (or would reasonably expected to be) materially adverse to (a) the business, results of operations, financial condition or assets of the Partnership Parties and their respective Subsidiaries, taken as a whole, or (b) the ability of the MCRC Parties or the Partnership Parties to consummate the transactions contemplated hereby or perform their respective obligations hereunder; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Partnership operates; (iii) any changes in financial, banking or securities markets in general, including any disruption thereof and any decline in the price of any security or any market index or any change in prevailing interest rates; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by this Agreement or any action taken (or omitted to be taken) with the written consent of or at the written request of the Investors; (vi) any matter disclosed in the Disclosure Letter and schedules thereto; (vii) any changes in applicable Laws or accounting rules; (viii) the announcement, pendency or completion of the transactions contemplated by this Agreement, or the identity of Investors, including losses or threatened losses of employees, customers, suppliers, distributors or others having relationships with the Partnership; (ix) any natural or man-made disaster or acts of God; or (x) any failure by the Partnership to meet any internal or published projections, forecasts or revenue or earnings predictions (provided that the underlying causes of such failures (subject to the other provisions of this definition) shall not be excluded).
“Material Contracts” has the meaning set forth in Section 3.08(a).
“Material Organizational Documents” means all certificates of incorporation, by-laws, certificates of formation, operating agreements, limited partnership agreements, limited liability company agreements, partnership agreements, shareholders agreements, joint venture agreements, including all amendments thereto, of the Partnership Parties and their respective Subsidiaries.
“MC Indemnified Party” has the meaning set forth in Section 7.04.
“MC Opportunity Group” has the meaning set forth in Section 9.02.
“MCPT” has the meaning set forth in the Recitals.
“MCRC” has the meaning set forth in the Recitals.
“MCRC Parties” has the meaning set forth in the Recitals.
“MCRC Parties Representations” has the meaning set forth in Section 7.01.
“MCRLP” has the meaning set forth in the Recitals.
“MCTP” has the meaning set forth in the Recitals.
“Money Laundering Laws” has the meaning set forth in Section 3.24(a).
“Notice of Default” has the meaning set forth in Section 2.06.
“Non-Controlled Subsidiary” or “Non-Controlled Subsidiaries” means Riverpark at Xxxxxxxx I Urban Renewal, L.L.C., ELMAJO Urban Renewal Associates, LLC, Estuary Urban Renewal Unit B, LLC, Millrose Developers, L.L.C., and Belle Associates, L.L.C.
“Ordinary Course of Business” means the ordinary course of business of the Partnership Parties, taken as a whole, or the Partnership, as applicable, consistent with the past practices of the Partnership Parties or the Partnership, as applicable, or the ordinary course of the normal, day-to-day operations of the respective Subsidiaries of the Partnership Parties or the Real Properties.
“Organizational Documents” means all certificates of incorporation, by-laws, certificates of formation, operating agreements, limited partnership agreements, limited liability company agreements, partnership agreements, shareholders agreements, joint venture agreements, voting agreements, voting trusts, proxies or other organizational documents, including all amendments thereto, of the Partnership Parties, their respective Subsidiaries or any other entity in which the Partnership Parties have a direct or indirect interest and which is in the ownership chain with respect to any Real Property or operations of the Partnership Parties or their respective Subsidiaries.
“Original LP Agreement” has the meaning set forth in the Recitals.
“Owned Real Property” has the meaning set forth in Section 3.10(a).
“Partnership” has the meaning set forth in the Preamble.
“Partnership Party” has the meaning set forth in the Preamble.
“Participation Right” has the meaning set forth in Section 2.08.
“Party” has the meaning set forth in the Preamble.
“Parties” has the meaning set forth in the Preamble.
“Partnership Parties” has the meaning set forth in the Recitals.
“Permits” means all permits, licenses, franchises, approvals, authorizations, and consents required to be obtained from Governmental Authorities.
“Permitted Encumbrances” means: (a) liens for Taxes that are not yet due and payable; (b) rights of setoff or bankers’ liens upon or security interests in deposits of cash in favor of
banks or other depository institutions; (c) liens arising from precautionary UCC financing statements regarding operating leases of personal property or fixtures or consignments of personal property or fixtures; (d) liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto; (e) liens incurred in connection with the shipping of goods or assets on the related goods or assets and proceeds thereof in favor of the shipper of such goods or assets; (f) any interest or title of a licensor, sublicensor, lessor or sublessor (as landlord or licensor only) under any license or lease agreement to the extent limited to the item licensed or leased; (g) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money or construction; (h) recorded easements, covenants, conditions, restrictions, rights-of-way and similar encumbrances if of record or reflected in the title policies, title commitments or reports or surveys delivered or made available to or obtained by the Investors, in each case before the date hereof, or if incurred after the date hereof to the extent incurred in the Ordinary Course of Business and the same do not materially and adversely impair the use or value of the assets subject thereto; (i) restrictions contained in condominium declarations and related documents if of record or reflected in the title policies, title reports or surveys delivered or made available to or obtained by the Investors, in each case before the date hereof, or if incurred after the date hereof to the extent incurred in the Ordinary Course of Business and the same do not materially and adversely impair the use or value of the assets subject thereto; (j) encumbrances or title defects reflected in any of the title policies, title commitments or reports or surveys which have been delivered or made available to or obtained by the Investors prior to the date hereof; (k) restrictions, pledges or other Encumbrances contained in the Organizational Documents delivered or made available to the Investors; (l) rights of tenants, as tenants only, under all leases for space at the Real Property reflected in Schedule 3.10(b) of the Disclosure Letter and under any other leases for space at the Real Property entered into in accordance with this Agreement (and any subordination and recognition agreements with respect thereto); (m) UCC financing statements where a tenant is “debtor” if the same do not materially and adversely impair the use or value of any Real Property; (n) un-bonded mechanics’ liens less than $2,000,000 in the aggregate filed against the Real Property, in each case that do not impair the current use or occupancy of the Real Property subject thereto; (o) mortgages, pledges, security interests or liens securing Indebtedness of the Partnership or any Subsidiary if of record or reflected in the title policies, title commitments or reports or surveys delivered or made available to or obtained by the Investors, in each case before the date hereof, or if incurred after the date hereof to the extent incurred in the Ordinary Course of Business and the same do not materially and adversely impair the use or value of the assets subject thereto; or (p) other non-monetary liens or imperfections on property that do not materially adversely affect title to, materially detract from the value of, or impair in any material respect the existing use of, the Real Property affected by such lien or imperfection.
“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.
“Preferred Units” has the meaning set forth in the Recitals.
“Preferred Unit Price” means the fixed purchase price of $1,000 for each Preferred Unit issued to the Investors or MCRC, as applicable, pursuant to this Agreement, which fixed purchase price shall also be applied to subsequent Drawdowns.
“Proceeding” has the meaning set forth in Section 3.11(a).
“Purchase Price” has the meaning set forth in Error! Reference source not found..
“Qualified Benefit Plan” has the meaning set forth in Section 3.14(b).
“Real Property” and “Real Properties” have the meanings set forth in the Recitals to this Agreement and includes all land, buildings, improvements and fixtures now or subsequently erected thereon and all appurtenances related thereto.
“Real Property Leases” has the meaning set forth in Section 3.10(a).
“Recourse Agreement” means that certain Recourse Agreement dated as of the date hereof by and between MCRC, MCRLP, MCPT, RRT and the Investors.
“Registration Rights Agreement” means that certain registration rights agreement dated as of the date hereof by and between the MCRC Parties, the Partnership Parties and the Holders specified therein.
“REIT” has the meaning set forth in the Recitals.
“Related Parties” means, with respect to any Person (i) any Affiliate of such specified Person; (ii) any subsidiary of such specified Person, (iii) any Person that holds a Material Interest in such specified Person; (iv) each Person that serves as an officer, director, partner, executor or trustee of such specified Person (or in a similar capacity); and (v) any Person with respect to which such specified Person serves as a general partner or a trustee (or in a similar capacity), provided, that a Related Party shall not include any portfolio company of any Person. For purposes of this definition, “Material Interest” means direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act) of voting securities or other voting interests representing at least ten percent (10%) of the outstanding voting power of a Person or equity securities or other equity interests representing at least ten percent (10%) of the outstanding equity securities or equity interests in a Person. Notwithstanding the foregoing or anything else in this Agreement to the contrary, however, for the avoidance of doubt, neither of the Investors nor any of their Related Parties shall be considered a Related Party of any MCRC Party or any Partnership Party for any purpose hereunder, and, provided, further that no portfolio company of an Investor shall be deemed a Related Party of any Investor.
“Release” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including, without limitation, ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).
“Representative” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.
“Reserved Units” has the meaning set forth in Section 3.02(a).
“RRT” has the meaning set forth in the Recitals.
“SEC” has the meaning set forth in Section 3.15(b).
“Second Amended and Restated LP Agreement” has the meaning set forth in the Recitals.
“Securities Act” has the meaning set forth in Section 4.03.
“Securities Exchange Act” means the U.S. Securities and Exchange Act of 1934, as amended.
“Shared Services Agreement” means that certain Shared Services Agreement, dated as of the Closing Date, between MCRLP and the Partnership.
“Shareholders Agreement” means that certain Shareholders Agreement dated as of the Closing Date by and between the General Partner, each of the Investors and each of the shareholders of the General Partner set forth on Schedule I thereto.
“Special Representations” has the meaning set forth in Section 7.01.
“Subsidiary” or “Subsidiaries” means, with respect to any entity, (i) any corporation of which a majority of the securities entitled to vote generally in the election of directors thereof, at the time as of which any determination is being made, are owned by such first entity, either directly or indirectly, (ii) any joint venture, general or limited partnership, limited liability company or other legal entity of which such first entity is the record or beneficial owner, directly or indirectly, a majority of the voting interests or the general partner or managing member and (iii) with respect to the Partnership, (x) each other Person (other than an individual) in which the Partnership owns a direct or indirect interest, including (y) any Non-Controlled Subsidiary and any Limited Control Subsidiary.
“Taxes” means (a) all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, (b) any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties, and (c) any liability for payment of amounts described in clause (a) or (b) whether as a result of assumption, transferee liability, or otherwise through operation of Law, and (d) any liability for the payment of amounts described in the foregoing clause (a), (b) or (c) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to indemnify any other Person or any other contract.
“Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document filed or required to be filed with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Tenant” means, each of the tenants leasing or occupying space in all or any portion of any or all of the Real Properties pursuant to the Real Property Leases.
“Termination Date” has the meaning set forth in Section 8.01(d)(iii).
“Third-Party Claim” has the meaning set forth in Section 7.06(a).
“Third Party Consents” shall mean all consents, approvals, authorizations and all Persons that are required in connection with (i) the execution, delivery and performance of, and the transactions contemplated by this Agreement, the Second Amended and Restated LP Agreement and the Ancillary Agreements by the MCRC Parties, the Partnership Parties or any of their respective Related Parties, Subsidiaries or Affiliates (as applicable) or (ii) the issuance of Preferred Units by the Partnership.
“Total Commitment” has the meaning set forth in the Recitals.
“U.S. GAAP” has the meaning set forth in Section 3.05.
“VDR” means that certain data room organized by the Partnership Parties and the MCRC Parties in connection with the transaction contemplated hereby, housed by xxx.xxxxxxxx.xxx.
“WARN Act” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.
ARTICLE II
PURCHASE AND SALE
Section 2.01 Commitment. The Investors agree to commit to invest up to an aggregate of $300,000,000 in the Partnership by acquiring Preferred Units through the purchase of the Initial Purchased Units at the Closing and through the purchase of additional Preferred Units pursuant to subsequent Drawdowns as requested by the Partnership from time to time during the Commitment Term, subject to the terms and conditions set forth herein. The Parties acknowledge a net asset value of the Partnership of $1,230,000,000 prior to Closing.
Section 2.02 Deposit. The Investors shall deposit on the date hereof the sum of $30,000,000.00 (the “Deposit”) in escrow in an interest bearing account with Royal Abstract Company (in such capacity, “Escrow Agent”). In the event that: (i) all of the closing conditions set forth in Sections 6.01 and 6.02 have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date); (ii) the MCRC Parties and the General Partner have advised the Investors in writing of their intention to consummate the Closing; and (iii) the Closing does not occur as a result of a failure by the Investors to purchase the Initial Purchased Units as then required in accordance with Section 2.03, the Deposit with any interest accumulated thereon (the “Escrow Funds”) shall be disbursed to the Partnership and the Partnership and the Investors shall immediately execute and deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to disburse all of the Escrow Funds to the Partnership. The Deposit and the Escrow Funds shall be governed exclusively by the terms of
this Agreement and the terms of the Escrow Agreement, dated as of February 27, 2017, by and between the Escrow Agent, the Investors and the Partnership.
Section 2.03 Purchase and Sale at the Closing.
(a) Subject to the terms and conditions set forth herein (including satisfaction or waiver of the terms and conditions set forth in Article VI), at the Closing, the Partnership shall sell to the Investors, and the Investors shall purchase from the Partnership, the Initial Purchased Units for an amount in cash equal to $150,000,000 (the “Purchase Price”). On the Closing Date, the Investors shall deliver the Purchase Price (less the Escrow Funds) to the Partnership in accordance with the wire instructions set forth on Exhibit B attached hereto, or as otherwise may be specified by the Partnership in writing to the Investors prior to the Closing. The Initial Preferred Units shall be allocated between Class A Preferred Partnership Units (which shall be purchased solely by the Rockpoint Class A Preferred Holder) and Class B Preferred Partnership Units (which shall be purchased solely by the Rockpoint Class B Preferred Holder) as set forth in Schedule 1 to the Second Amended and Restated LP Agreement.
(b) Subject to the terms and conditions of this Agreement, the purchase and sale of the Initial Purchased Units contemplated hereby shall take place at a closing (the “Closing”) to be held at 10 a.m., New York City time, on a date that is the first Business Day after the satisfaction or written waiver of the last of the conditions to Closing set forth in Article VI (other than conditions which, by their nature, are to be satisfied on the Closing Date), but in no event shall such Closing be less than eleven (11) Business Days following execution and delivery of this Agreement, at the offices of Seyfarth Xxxx LLP, 000 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000 or at such other time or on such other date or at such other place as the Partnership and the Investors may mutually agree in writing (the day on which the Closing takes place being the “Closing Date”).
Section 2.04 Closing Deliverables.
(a) At the Closing, Investors shall deliver or cause to be delivered to the Partnership:
(i) the Purchase Price (less the Escrow Funds) by wire transfer of immediately available funds to an account of the Partnership in accordance with the wire instructions set forth on 0 attached hereto.
(ii) all other agreements, documents, instruments or certificates required to be delivered by Investors at or prior to the Closing pursuant to Section 6.03 of this Agreement.
(b) At the Closing, the General Partner, on behalf of the Partnership Parties and the MCRC Parties shall deliver or cause to be delivered to Investors:
(i) Schedule 1 attached to the Second Amended and Restated LP Agreement, which shall reflect the Investors as the holders of the Initial Purchased Units; and
(ii) all other agreements, documents, instruments or certificates required to be delivered by the Partnership at or prior to the Closing pursuant to Section 6.02 of this Agreement.
(c) At the Closing, the Partnership and the Investors shall execute and deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to disburse all of the Escrow Funds to the Partnership.
Section 2.05 Additional Commitment.
(a) Except as provided by Section 2.05(e), subject to the terms and conditions of this Agreement, the purchase and sale of additional Class A Preferred Partnership Units pursuant to the Additional Commitment shall be effected through one or more Drawdowns. The Rockpoint Class A Preferred Holder shall, by executing and delivering a signature page to this Agreement, commit to purchase during the Commitment Term up to an additional number of Class A Preferred Partnership Units equal to the Total Commitment less the Purchase Price; provided, that the Partnership draws down the any remaining unfunded portion of the Additional Commitment prior to March 1, 2019.
(b) During the Commitment Term, the Rockpoint Class A Preferred Holder shall fund its Additional Commitment to purchase additional Class A Preferred Partnership Units in such amounts and at such times as the Partnership shall request from time to time during the Commitment Term by written notice given by the Partnership to the Rockpoint Class A Preferred Holder in accordance with Section 9.02 (each, a “Drawdown Notice”). Each drawdown by the Partnership pursuant to a Drawdown Notice is hereinafter referred to as a “Drawdown”. All Class A Preferred Partnership Units issued to the Rockpoint Class A Preferred Holder in connection with a Drawdown shall be sold to, and purchased by, the Rockpoint Class A Preferred Holder at a closing at which the Rockpoint Class A Preferred Holder shall fund in immediately available funds to an account of the Partnership in accordance with the wire instructions set forth on Exhibit B attached hereto (or as otherwise specified in the Drawdown Notice) no later than 11:00 a.m. (New York City time) on the date specified in the applicable Drawdown Notice (the “Drawdown Date”).
(c) Each Drawdown Notice shall provide:
(i) the number of Class A Preferred Partnership Units to be purchased by the Rockpoint Class A Preferred Holder on the Drawdown Date and the aggregate purchase price therefor, which shall be calculated as the number of Class A Preferred Partnership Units to be purchased multiplied by the Preferred Unit Price (the “Drawdown Amount”); provided, however, that the minimum Drawdown Amount which may be requested by the Partnership in a Drawdown Notice shall be $10,000,000;
(ii) the related Drawdown Date (which shall be at least fifteen (15) Business Days from and including the date of delivery of the Drawdown Notice, unless a shorter period is agreed to in writing by the Partnership and the Rockpoint Class A Preferred Holder);
(iii) the account of the Partnership to which the Drawdown Amount should be paid, and, if not specified, the funds shall be wired to the Partnership pursuant to the instructions set forth on 0 attached hereto; and
(iv) a certificate executed by the Chief Financial Officer of MCRC and by the General Partner, on behalf of the MCRC Parties and the Partnership Parties, respectively, certifying that the conditions set forth in Section 2.05(d) and applicable to them have been met.
(d) The obligations of Rockpoint Class A Preferred Holder to fund a Drawdown shall be subject to each of the following conditions specified below:
(i) The Fundamental Representations shall be true and correct in all material respects (except for those Fundamental Representations that are qualified by their terms by a reference to materiality, which Fundamental Representations as so qualified shall be true and correct in all respects) as if made on and as of the applicable Drawdown Date (except for those Fundamental Representations that address matters only as of a specified date, which shall be true and correct in all material respects as of that specified date);
(ii) The MCRC Representations shall be true and correct in all material respects (except for those MCRC Representations that are qualified by their terms by a reference to materiality, which MCRC Representations as so qualified shall be true and correct in all respects) as if made on and as of the applicable Drawdown Date (except for those MCRC Representations that address matters only as of a specified date, which shall be true and correct in all material respects as of that specified date);
(iii) The representations and warranties of the Partnership Parties contained in Article III, except the Fundamental Representations, are true and correct as if made on and as of the applicable Drawdown Date except where the failure to be true and correct would not, individually or in the aggregate, have a Material Adverse Effect.
(e) In the event that: (A) the Partnership does not draw down the full Additional Commitment prior to March 1, 2019; or (B) any of the conditions set forth in Section 2.05(d) are not met as of the applicable Drawdown Date (the occurrence of any such event described (A) or (B), a “Commitment Termination Event”), the Rockpoint Class A Preferred Holder’s obligation to fund the remaining unfunded portion of the Additional Commitment shall, at the election of the Rockpoint Class A Preferred Holder, terminate effective as of such date, unless the Rockpoint Class A Preferred Holder is in default in accordance with Section 2.06 of this Agreement at such date, in which case such obligation shall be governed in accordance with such Section. To the extent the Rockpoint Class A Preferred Holder does not elect to terminate its obligation to fund the remaining unfunded portion of the Additional Commitment, it shall have the right, at its option, to fund any undrawn portion of the Additional Commitment required to have been drawn by the Partnership prior to March 1, 2019 within 30 days following the applicable required draw date; provided, that if the Rockpoint Class A Preferred Holder elects to fund the required undrawn portion of the Additional Commitment, the Partnership’s failure to draw such amounts shall not be deemed a Commitment Termination Event and the Rockpoint Class A Preferred Holder’s right to terminate any remaining unfunded Additional Commitment as a result of such failure shall be waived.
(f) In connection with any Drawdown, the Rockpoint Class A Preferred Holder shall be required to purchase, subject to the terms and conditions set forth herein, the number of Class A Preferred Partnership Units equal to (x) the Drawdown Amount specified in the applicable
Drawdown Notice, divided by (y) the Preferred Unit Price; provided that Rockpoint Class A Preferred Holder shall not be required to purchase any Class A Preferred Partnership Units in connection with a Drawdown to the extent that such purchase, when aggregated with the Purchase Price and the amount of any Additional Commitment funded by all Drawdowns effected prior thereto, would cause the Investors to have funded an amount in excess of the Total Commitment.
Section 2.06 Investors’ Failure to Fund. If the Rockpoint Class A Preferred Holder fails to timely fund a required Drawdown on or before the corresponding Drawdown Date, the General Partner on behalf of the Partnership may elect, in its sole discretion, to declare the Rockpoint Class A Preferred Holder in default of its obligation to fund the Additional Commitment by delivering a notice of default to the Investors (a “Notice of Default”). In the event that the Partnership delivers a Notice of Default pursuant to this Section 2.06 or as otherwise permitted pursuant to the Second Amended and Restated LP Agreement, one or more of the MCRC Parties or RRT may make a demand loan to the Partnership in the amount of such related Drawdown Amount that has not been timely funded by the Rockpoint Class A Preferred Holder, which demand loan shall bear interest payable to the applicable MCRC Party at a rate of eighteen percent (18%) per annum, compounded monthly, as provided in the Second Amended and Restated LP Agreement. If the Rockpoint Class A Preferred Holder has not funded the required Drawdawn within thirty (30) calendar days of such Notice of Default, (x) the Partnership may thereafter pursue or exercise any and all rights and remedies provided pursuant to this Agreement, the Second Amended and Restated LP Agreement or afforded by law or equity and (y) MCRC or its Affiliates shall thereafter be entitled to exercise its Participation Right.
Section 2.07 Use of Proceeds. The proceeds from the issuance of Class A Preferred Partnership Units at the Closing and pursuant to any subsequent Drawdown shall be used by the Partnership and/or its Subsidiaries for any valid business purpose as determined in good faith by the General Partner and as so advised to the Investors, including, but not limited to (1) facilitate the development, acquisition and/or repositioning of residential real estate investment opportunities, as determined in good faith by the General Partner and in accordance with the terms of the Second Amended and Restated LP Agreement (including, without limitation, any consent rights of holders of Preferred Units thereunder); (2) to pay distributions of the Base Return (as defined in the Second Amended and Restated LP Agreement) to the Investors with respect to the Class A Preferred Partnership Units; (3) in the case of proceeds received at the Closing in connection with the acquisition of Monaco North and Monaco South, which will be approximately $140,000,000 pursuant to that certain: (i) Contribution and Exchange Agreement between Xxxxx Xxxxxxx and Xxxx-Xxxx Realty, L.P; (ii) Agreement Regarding Interests (FJG) dated January 18, 2017 by and among MC Roseland Monaco, L.L.C. and FJG Monaco, L.L.C.; (iii) Agreement Regarding Interests (PGM) dated January 12, 2017 by and among MC Roseland Monaco, L.L.C. and PGM Monaco, L.L.C.; (iv) Agreement Regarding Interests (Xxxxx) dated January 13, 0000 xxxxxxx XX Xxxxxxxx Xxxxxx, L.L.C. and 455-475 HMI Washington Blvd. LLC.; and (v) Agreement for Purchase and Sale of Membership Interests in Prurose Monaco Holdings, L.L.C. between The Prudential Insurance Company of America, Monaco Holdings, L.L.C., MC Roseland Monaco, L.L.C. and Prurose Monaco Holdings, L.L.C.; or (4) to make payments under the Shared Services Agreement or Credit Enhancement Agreement. In the event that the Partnership has not drawn down the full Additional Commitment amount prior to March
1, 2019, proceeds from any issuance of Class A Partnership Units to the Class A Rockpoint Holder on such dates to satisfy the obligations of the Partnership to fulfill the Partnership’s Additional Commitment draw obligations prior to March 1, 2019, as the case may be, may be temporarily held in cash or cash equivalents pending use by the Partnership for any purpose permitted by clause (1) or (2) of this Section 2.07.
Section 2.08 MCRC Parties’ Participation Right. Prior to March 1, 2022, following the earlier of (x) the date on which Investor’s Total Commitment has been funded to the Partnership or (y) the expiration of any 30 calendar day period following any delivery of a Notice of Default by the Partnership to the Investors pursuant to Section 2.06 if the default giving rise to such Notice of Default has not been cured by the expiration of such period, the MCRC Parties or their Affiliates will have the option to invest up to $200,000,000 in the Partnership by acquiring Class A Preferred Partnership Units with the attendant rights and obligations set forth in the Second Amended and Restated LP Agreement (the “Participation Right”), so long as at the time of such funding the General Partner determines in good faith and advises the Investors that the proceeds from such issuance or issuances shall be used by the Partnership for any valid business purpose, including, but not limited to (1) facilitate the development, acquisition and/or repositioning of residential real estate investment opportunities, as determined in good faith by the General Partner and in accordance with the terms of the Second Amended and Restated LP Agreement (including, without limitation, any consent rights of holders of Preferred Units thereunder); (2) to pay distributions of the Base Return (as defined in the Second Amended and Restated LP Agreement) to the Investors with respect to the Class A Preferred Partnership Units; (3) in the case of proceeds received in connection with the acquisition of Monaco North and Monaco South, which will be approximately $140,000,000 pursuant to that certain: (i) Contribution and Exchange Agreement between Xxxxx Xxxxxxx and Xxxx-Xxxx Realty, L.P; (ii) Agreement Regarding Interests (FJG) dated January 18, 2017 by and among MC Roseland Monaco, L.L.C. and FJG Monaco, L.L.C.; (iii) Agreement Regarding Interests (PGM) dated January 12, 2017 by and among MC Roseland Monaco, L.L.C. and PGM Monaco, L.L.C.; (iv) Agreement Regarding Interests (Xxxxx) dated January 13, 0000 xxxxxxx XX Xxxxxxxx Xxxxxx, L.L.C. and 455-475 HMI Washington Blvd. LLC.; and (v) Agreement for Purchase and Sale of Membership Interests in Prurose Monaco Holdings, L.L.C. between The Prudential Insurance Company of America, Monaco Holdings, L.L.C., MC Roseland Monaco, L.L.C. and Prurose Monaco Holdings, L.L.C.; or (4) to make payments under the Shared Services Agreement or Credit Enhancement Agreement; provided, however, that it is understood and agreed that it is not a valid business purpose to (A) use such proceeds for the primary purpose of replacing lower cost debt or equity of the Partnership or its Subsidiaries, (B) not promptly deploy such proceeds for a commercial purpose, other than retaining as cash on the Partnership’s balance sheet, or (C) use such proceeds for the primary purpose of diluting the Preferred Units held or beneficially owned by the Investors. The Participation Right shall terminate and shall no longer be of any effect if any Commitment Termination Event has occurred, unless the Rockpoint Class A Preferred Holder elects to fund any required undrawn portion of the Additional Commitment as provided in Section 2.05(e).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP PARTIES AND THE MCRC PARTIES
Representations and Warranties of the Partnership Parties:
Except as set forth in the correspondingly numbered Schedule of the Disclosure Letter (any item disclosed in any Schedule of the Disclosure Letter referenced by a particular Section in this Agreement shall be deemed to have been disclosed with respect to each other Schedule of the Disclosure Letter and Section in this Agreement to the extent the relevance of such disclosure to such other Schedule of the Disclosure Letter and Section in this Agreement is reasonably apparent from the text of such disclosure), each of the Partnership Parties jointly and severally represent and warrant to the Investors as follows:
Section 3.01 Organization and Authority of the Partnership Parties. The Partnership is a limited partnership duly organized, validly existing and in good standing under the Laws of the State of Delaware. The General Partner is duly formed and validly existing and in good standing as a real estate investment trust under the laws of the State of Maryland. The Limited Partner is a limited liability company validly existing and in good standing under the Laws of the State of Delaware. Each Partnership Party has all necessary limited partnership, trust, limited liability or other power and authority to (a) enter into this Agreement, the Second Amended and Restated LP Agreement and the Ancillary Agreements, to perform and carry out their respective obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, in each case as is applicable, and (b) in the case of RRT and the Partnership, also to own, operate or lease their respective properties and assets now owned, operated or leased by them, and to carry on their respective businesses as they are currently conducted. Each of RRT and the Partnership is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, have a Material Adverse Effect. The execution and delivery by each of the Partnership Parties of this Agreement and the Ancillary Agreements, the performance by the Partnership Parties of their obligations hereunder and thereunder and the consummation by the Partnership Parties of the transactions contemplated hereby and thereby have been duly authorized by all requisite limited partnership, trust, limited liability or other action on the part of each such Partnership Party. This Agreement and the Ancillary Agreements have been duly executed and delivered by each of the Partnership Parties, and (assuming due authorization, execution and delivery by Investors and the MCRC Parties) this Agreement and the Ancillary Agreements constitute legal, valid and binding obligations of each of the Partnership Parties, enforceable against the Partnership Parties in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
Section 3.02 Capitalization.
(a) Immediately prior to the Closing, the authorized common equity interests in the Partnership are owned 99.9% by General Partner and 0.1% by the Limited Partner. In addition, immediately prior to the Closing, the Partnership has not issued any Preferred Units. Upon consummation of the Closing, the authorized common equity of the Partnership will consist of 1,230,000 Common Units. In addition, upon consummation of the Closing, the Partnership shall have 150,000 Preferred Units issued and outstanding. All of the Common Units outstanding as of the date of this Agreement have been, and all of the Preferred Units and Common Units issued and outstanding as of the Closing, and all of the Preferred Units and Common Units when issued and outstanding following each Drawdown will be duly authorized, validly issued, fully paid and non-assessable, and free and clear of all Encumbrances, other than those Encumbrances set forth in Schedule 3.02(a) of the Disclosure Letter. The Partnership will reserve all necessary Preferred Units and Common Units for issuance and delivery upon consummation of this Agreement, including any and all Drawdowns and any and all future conversions (the “Reserved Units”).
(b) Immediately prior to and as of the Execution Date, the authorized common equity of the General Partner will consist of 25,000,000 common shares of beneficial interest, par value $0.01 per share, which 10,000 common shares will be issued and outstanding, and 5,000,000 preferred shares of beneficial interest, par value $0.01 per share, of which 125 are designated as 12.5% Series A Cumulative Non-Voting Preferred Shares (the “Series A Preferred Shares”), of which no preferred shares will be issued and outstanding. All of the common shares and Series A Preferred Shares of the General Partner outstanding as of the date of this Agreement have been duly authorized, validly issued, fully paid and non-assessable. The General Partner is owned by the following Affiliates of MCRC in the percentages set forth opposite such Affiliate’s name: (i) MCRLP: 89.16%; (ii) MCPT: 10.55%; and MCTP: 0.29%.
(c) At the Closing, the authorized common equity of the General Partner will consist of 25,000,000 common shares of beneficial interest, par value $0.01 per share, which 10,139 common shares will be issued and outstanding, and 5,000,000 preferred shares of beneficial interest, par value $0.01 per share, of which 125 are designated as Series A Preferred Shares of which no preferred shares will be issued and outstanding. All of the common shares and Series A Preferred Shares of the General Partner outstanding as of the Closing Date will be duly authorized, validly issued, fully paid and non-assessable. The General Partner is owned by the following Affiliates of MCRC in the percentages set forth opposite such Affiliate’s name : (i) MCRLP: 89.31%; (ii) MCPT: 10.41%; and MCTP: 0.28%.
(d) Except as set forth in the Material Organizational Documents or on Schedule 3.02(d) of the Disclosure Letter, there are no outstanding or authorized equity interests or options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the equity interests of the Partnership or any of its Controlled Subsidiaries or Limited Control Subsidiaries, or to the Partnership Parties’ Knowledge, its Non-Controlled Subsidiaries, or obligating the Partnership or any of its Controlled Subsidiaries or Limited Control Subsidiaries, or to the Partnership’s Knowledge, its Non-Controlled Subsidiaries, to issue or sell any equity interests of, or any other interest in, the Partnership or any of its Subsidiaries. Except as set forth in the Material Organizational Documents or on Schedule 3.02(d) of the Disclosure Letter, neither the Partnership nor any of its
Controlled Subsidiaries or Limited Control Subsidiaries, or to the Partnership Parties’ Knowledge, its Non-Controlled Subsidiaries, has any outstanding or authorized any equity appreciation, phantom equity, profit participation or similar rights. There are no voting trusts, equityholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Initial Purchased Units or any other equity securities of the Partnership or any of its Controlled Subsidiaries or Limited Control Subsidiaries or to the Partnership Parties’ Knowledge, its Non-Controlled Subsidiaries. Schedule 3.02(d) sets forth the preferred capital account and debt balances as of December 31, 2016 of each Controlled Subsidiary, and to the Knowledge of the Partnership Parties, each Non-Controlled Subsidiary and Limited Control Subsidiary.
(e) Upon consummation of the transactions contemplated by this Agreement, the Investors will acquire full title to the Initial Purchased Units, and all Preferred Units validly purchased by the Investors pursuant to the terms and conditions of this Agreement free and clear of all Encumbrances, other than those Encumbrances arising from acts of the Investors.
Section 3.03 Subsidiaries.
(a) Schedule 3.03(a) of the Disclosure Letter lists (i) each Controlled Subsidiary of the Partnership Parties, and (ii) its jurisdiction of incorporation or formation (as applicable). Other than as set forth in Schedule 3.03(a) of the Disclosure Letter, all of the equity interests in such Controlled Subsidiaries have been duly authorized, are validly issued, fully paid and non-assessable, and are owned of record and beneficially by the Partnership Party or the applicable Controlled Subsidiary set forth in Schedule 3.03(a) of the Disclosure Letter. Each such Controlled Subsidiary is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the Real Property is owned or leased by such Controlled Subsidiary or the operation of such Controlled Subsidiary’s business as currently conducted makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, have a Material Adverse Effect.
(b) Schedule 3.03(b) of the Disclosure Letter lists (i) each Non-Controlled Subsidiary and Limited Control Subsidiary of the Partnership Parties, and (ii) its jurisdiction of incorporation or formation (as applicable). To the Knowledge of the Partnership Parties, other than as set forth in Schedule 3.03(b) of the Disclosure Letter, all of the equity interests in such Non-Controlled Subsidiaries and Limited Control Subsidiaries are owned of record and beneficially by the Partnership Party or the applicable Subsidiary set forth in Schedule 3.03(b) of the Disclosure Letter and, to the Knowledge of the Partnership Parties, have been duly authorized, are validly issued, fully paid and non-assessable. To the Knowledge of the Partnership Parties, each such Non-Controlled Subsidiary and Limited Control Subsidiary is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the Real Property is owned or leased by such Non-Controlled Subsidiary or Limited Control Subsidiary or the operation of such Non-Controlled Subsidiary’s or Limited Control Subsidiary’s business as currently conducted makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, have a Material Adverse Effect. Other than as set forth in Schedules 3.03(a) and 3.03(b) of the Disclosure Letter, none of the Partnership Parties own, or have any interest (beneficial or
otherwise) in any ownership interests in any Person other than their Controlled Subsidiaries, the Non-Controlled Subsidiaries and the Limited Control Subsidiaries.
(c) Schedule 3.03(c) of the Disclosure Letter contains a true and correct organizational structure chart of the Partnership, showing the Partnership’s direct and indirect ownership in its Subsidiaries, including, for the avoidance of doubt, the direct and indirect ownership percentages of the Partnership with respect thereto.
(d) The Partnership Parties have provided or made available to the Investors all Material Organizational Documents of the Partnership Parties and their respective Subsidiaries.
Section 3.04 No Conflicts; Consents. The execution, delivery and performance by the Partnership Parties of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not: (a) result in a violation or breach of any provision of the Organizational Documents of any of the Partnership Parties or any of their respective Subsidiaries; (b) result in a violation or breach in any material respect of any provision of any Law or Governmental Order applicable to the Partnership Parties, or any of their respective Subsidiaries; or (c) except as set forth in Schedule 3.04 of the Disclosure Letter, require the consent, notice or other action by any Person under, conflict with in any material respect, result in a violation or breach of in any material respect, result in the creation or imposition of any lien, charge or encumbrance pursuant to, constitute a material default under or result in the acceleration of any Material Contract or any other contract, agreement or instrument material to any of the Partnership Parties. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority or third party is required by or with respect to the Partnership Parties or any of their respective Subsidiaries, in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, except for such filings as are set forth in Schedule 3.04 of the Disclosure Letter, all of which have been obtained prior to the date hereof and remain in full force and effect and such consents, approvals, Permits, Governmental Orders, declarations, filings or notices which, individually or in the aggregate, would not have a Material Adverse Effect.
Section 3.05 Financial Statements. Copies of the Partnership’s unaudited financial statements, consisting of (i) the unaudited balance sheet of the Partnership as of December 31, 2015 (the “2015 Balance Sheet”), and (ii) the unaudited balance sheet of the Partnership as of December 31, 2016 (the “2016 Balance Sheet”) and the unaudited statements of income, and retained earnings and partners’ equity for the year ended December 31, 2016 (the “2016 Income Statement” and, together with the 2015 Balance Sheet and the 2016 Balance Sheet, the “Financial Statements”) are included in the Disclosure Letter. The Financial Statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) on a consistent basis throughout the period involved and certified by management of the Partnership. The 2015 Balance Sheet and the 2016 Balance Sheet fairly present in all material respects the financial condition of the Partnership as of the respective dates they were prepared and the 2016 Income Statement fairly presents in all material respects the results of the operations of the Partnership for the periods indicated therein. The date of the 2016 Balance Sheet is referred to herein as the “2016 Balance Sheet Date”. Copies of the unaudited balance sheets of certain of the Partnership’s Controlled Subsidiaries (the “Controlled Subsidiary Balance Sheets”) and Limited Controlled Subsidiaries (the “Limited Controlled Subsidiary
Balance Sheets”) as of December 31, 2016 (which are not consolidated into the 2016 Balance Sheet) are included in the Disclosure Letter. The Controlled Subsidiary Balance Sheets and, to the Knowledge of the Partnership Parties, the Limited Controlled Subsidiary Balance Sheets, fairly present in all material respects the financial condition of such Controlled Subsidiaries and Limited Controlled Subsidiaries, as applicable, as of the respective dates they were prepared, and have been prepared on a consistent basis throughout the period involved. The Financial Statements, Controlled Subsidiary Balance Sheets and Limited Controlled Subsidiary Balance Sheets are set forth in Schedule 3.05 of the Disclosure Letter.
Section 3.06 Undisclosed Liabilities. None of the Partnership or the other Partnership Parties, their respective Controlled Subsidiaries or Limited Control Subsidiaries, or to the Knowledge of the Partnership Parties, their respective Non-Controlled Subsidiaries, have any liabilities, obligations or commitments of a type required to be reflected on a balance sheet prepared on a consistent basis, except (i) those which are adequately reflected or reserved against in the Balance Sheet as of the 2016 Balance Sheet Date; (ii) those which have been incurred in the Ordinary Course of Business since the 2016 Balance Sheet Date and which are not material in amount; (iii) those in connection with that certain Construction Loan Agreement dated February 3, 2017 between Epsteins C Lofts, L.L.C. and Provident Bank; (iv) those in connection with that certain Multifamily Loan and Security Agreement dated January 10, 2017 by and between Alterra I, L.L.C. and Alterra II, L.L.C. and Capital One Multifamily Finance, LLC; and (v) those set forth on Schedule 3.06 of the Disclosure Letter. There is no outstanding Indebtedness pursuant to which the Partnership or of its Subsidiaries is a borrower, obligor, debtor or other beneficiary, and either the General Partner or any MCRC Party or any of their respective Subsidiaries (other than the Partnership or any of its respective Subsidiaries) is a lender or obligee.
Section 3.07 Absence of Certain Changes, Events and Conditions. Except as set forth on Schedule 3.07 of the Disclosure Letter, from the 2016 Balance Sheet Date until the date of this Agreement, each of the Partnership Parties and their respective Controlled Subsidiaries and Limited Control Subsidiaries, and to the Knowledge of the Partnership Parties, their respective Non-Controlled Subsidiaries, have operated in the Ordinary Course of Business in all material respects and there has not been, with respect to any of the Partnership Parties or any of their respective Controlled Subsidiaries or Limited Control Subsidiaries, or to the Knowledge of the Partnership Parties, their respective Non-Controlled Subsidiaries, any:
(a) event, occurrence or development that, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect;
(b) material amendment of any of the Organizational Documents of the any of the Partnership Parties or any of their respective Subsidiaries;
(c) split, combination or reclassification of any of their respective equity interests;
(d) issuance, sale or other disposition of any equity interests, or grant of any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any equity interests;
(e) declaration or payment of any distributions on or in respect of any equity interests or redemption, purchase or acquisition of equity interests to any Person other than to the Partnership, any Subsidiary of the Partnership or any partner or member of a Subsidiary of the Partnership, other than with respect to distributions to MCRLP in connection with that certain Multifamily Loan and Security Agreement dated January 10, 2017 by and between Alterra I, L.L.C. and Alterra II, L.L.C. and Capital One Multifamily Finance, LLC.
(f) incurrence, assumption or guarantee of any Indebtedness, other than in the Ordinary Course of Business, in an aggregate amount exceeding $1,000,000, all of which are as set forth in Schedule 3.07 of the Disclosure Letter;
(g) sale or other disposition of any of the material assets shown or reflected on the 2016 Balance Sheet, including without limitation any Real Property, except for any assets sold or otherwise disposed of in the Ordinary Course of Business and having an aggregate value of less than $1,000,000;
(h) adoption, termination, amendment or material modification of any Benefit Plan;
(i) acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets or equity interests of, or by any other manner, any business or any Person or any division thereof;
(j) adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;
(k) settlement or compromise of any pending or threatened Proceeding, in each case excess of $250,000 and not covered in full by insurance;
(l) imposition of any Encumbrance, covenant, or other restriction on any asset tangible or intangible, except for Permitted Encumbrances or as would not, individually or in the aggregate, have a Material Adverse Effect;
(m) adoption or approval of any agreement that is or is reasonably expected to be a Material Contract or amendment or modification to the terms of, or renewal, waiver, or termination of, any Material Contract, insofar as not permitted pursuant to the terms of the Original LP Agreement, except as would not, individually or in the aggregate, have a Material Adverse Effect; or
(n) any agreement to do any of the foregoing, or any action or omission that would result in any of the foregoing.
Section 3.08 Material Contracts.
(a) Schedule 3.08(a) of the Disclosure Letter contains a true and complete list of each of the following contracts and agreements (such contracts and agreements, as amended, restated,
replaced, supplemented, or otherwise modified as of the date hereof, and the Real Property Leases, collectively being “Material Contracts”):
(i) all property management contracts, facility management contracts, property development contracts and construction management contracts of the Partnership Parties and their respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, their respective Non-Controlled Subsidiaries and Limited Control Subsidiaries, other than as set forth in the Material Organizational Documents, collectively listed on Schedule 3.08(a)(i) of the Disclosure Letter that are presently in construction where the expected aggregate acquisition and construction costs with respect to such Real Property exceeds $10,000,000 (the “Active Projects”);
(ii) each agreement that relates to the pending sale of any Controlled Subsidiary of a Partnership Party or any of the assets of any Partnership Party or any of their respective Controlled Subsidiaries, and, to the Partnership Parties’ Knowledge, their respective Non-Controlled Subsidiaries and Limited Control Subsidiaries, in each case where such transactions have not closed or, in the event such transactions have closed, where the Partnership Parties or any of their Subsidiaries continue to have ongoing liabilities or guarantees in respect of such transaction in each case for consideration in excess of $3,000,000;
(iii) each agreement that relates to the acquisition of any business, a material amount of stock or assets of any other Person or any real property (whether by merger, sale of stock, sale of assets or otherwise), in each case involving amounts in excess of $2,000,000, and in each case where such transactions have not closed or, in the event such transactions have closed, where the Partnership Parties or any of their respective Controlled Subsidiaries and, to the Partnership Parties’ Knowledge, their respective Non-Controlled Subsidiaries and Limited Control Subsidiaries, continue to have ongoing liabilities or guarantees in respect of such transaction;
(iv) all joint venture, partnership or other contract (however named) involving a capital contribution or sharing of profits, losses, costs or liabilities by any Partnership Parties or any of their respective Controlled Subsidiaries, and, to the Partnership Parties’ Knowledge, their respective Non-Controlled Subsidiaries and Limited Control Subsidiaries, with any other Person, except as contained in the Material Organizational Documents;
(v) the contracts and agreements relating to Indebtedness (including guarantees) of any Partnership Party or any of its respective Controlled Subsidiaries, and, to the Partnership Parties’ Knowledge, their respective Non-Controlled Subsidiaries and Limited Control Subsidiaries, in each case having an outstanding principal amount in excess of $2,000,000, except as contained in the Material Organizational Documents;
(vi) other than such employment contracts that are terminable at the option of either party upon less than three (3) months prior notice and that include compensation provisions for non-executive employees that are standard within the industry in which the Partnership Parties operate, all contracts for the employment for any period of time whatsoever, or in regard to the employment, or restricting the employment, of any employee of the
Partnership or any of its Controlled Subsidiaries, and, to the Partnership Parties’ Knowledge, its Non-Controlled Subsidiaries and Limited Control Subsidiaries;
(vii) all agreements for the payment of severance benefits, retention bonuses or so-called “sale bonuses” to any Employees of the Partnership Parties or their respective Controlled Subsidiaries, and, to the Partnership Parties’ Knowledge, their respective Non-Controlled Subsidiaries and Limited Control Subsidiaries;
(viii) all contracts between the Partnership Parties or their respective Controlled Subsidiaries, or to the Partnership Parties’ Knowledge, their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries, and any Related Parties (other than the Partnership or any of its Subsidiaries), involving a dollar amount over $1,000,000 or that is otherwise material to any Partnership Party;
(ix) any contribution agreement or tax contribution agreement, other than as set forth in the Material Organizational Documents and which is in excess of $250,000 or $2,000,000 in the aggregate;
(x) any hedging, futures, options or other derivative contract to the extent any such arrangement is unrelated to a property loan and such arrangement provides for or would otherwise require future payments or disbursements, or would impose any liability on the Partnership Parties;
(xi) any agreement relating to settlement of any administrative or judicial proceedings within the past five (5) years or otherwise currently still in effect, which if adversely determined, would result in a Material Adverse Effect; and
(xii) any other agreement, contract, arrangement or understanding of any Partnership Party or any of their respective Subsidiaries that is otherwise material to the Partnership Parties and their respective Subsidiaries taken as a whole and that was not otherwise included in the VDR or otherwise recorded against the Real Properties.
(b) Schedule 3.08(b) of the Disclosure Letter identifies all guaranties made by a Partnership Party of Indebtedness that is owed any Subsidiary of a Partnership Party which is in excess of $2,000,000 which are in effect as of the date hereof.
(c) Except as set forth in the Material Organization Documents, Schedule 3.08(c) of the Disclosure Letter identifies any contract providing for indemnification to or from any person with respect to liabilities in excess of $2,000,000 relating to any current or former business of a Partnership Party, their respective Subsidiaries or any predecessor Person.
(d) Each Material Contract (i) was entered into in the Ordinary Course of Business and (ii) is valid and binding on the Partnership Party or Controlled Subsidiary, or to the Knowledge of the Partnership Parties, Non-Controlled Subsidiary or Limited Control Subsidiary party thereto, as the case may be, and, to the Knowledge of the Partnership Parties, the counterparties thereto, and is in full force and effect and (iii) upon consummation of the transactions contemplated by this Agreement, each Material Contract shall continue in full force and effect without penalty or other adverse consequence. Neither any Partnership Party nor any
of its respective Controlled Subsidiaries, or to the Knowledge of the Partnership Parties, its respective Non-Controlled Subsidiaries or Limited Control Subsidiaries is in breach of, or default under, any Material Contract, except in each case for such breaches or defaults that would not have a Material Adverse Effect, individually or in the aggregate, and no party to any Material Contract has provided or received notice of any intention to terminate, not renew, or challenge the validity or enforceability of any Material Contract. No event has occurred that, with notice or lapse of time, is or is reasonably expected to constitute a material breach or default, or permit the termination, modification, or acceleration under any Material Contract, except for such terminations, modifications, or accelerations that would not, individually or in the aggregate, have a Material Adverse Effect. There are no negotiations pending or in progress to revise any Material Contract in any material respect, other than change orders, changes in scope, or other changes in the Ordinary Course of Business with respect to construction agreements.
(e) The Partnership Parties have provided or made available to the Investors true, accurate and complete copies of all Material Contracts (including the Real Property Leases).
(f) Schedule 3.08(f) of the Disclosure Letter identifies any contracts, arrangements, agreements or understandings (whether oral or written) of any nature whatsoever between (i) the General Partner, on the one hand, and the Partnership or any of its Subsidiaries, on the other, and (ii) the Partnership or its Subsidiaries, on the one hand, and any MCRC Party or any of its Subsidiaries (other than the Partnership or its Subsidiaries), on the other, other than the Credit Enhancement Agreement and Shared Services Agreement.
Section 3.09 Title to Assets. The Partnership Parties and their respective Controlled Subsidiaries, and to the Partnership Parties’ Knowledge, their respective Non-Controlled Subsidiaries and Limited Control Subsidiaries, have good title to their respective assets free and clear of Encumbrances other than Permitted Encumbrances.
Section 3.10 Owned and Leased Real Property.
(a) Schedule 3.10(a) of the Disclosure Letter correctly identifies the owner and, when applicable, city and state of all Real Property and interest in Real Property owned in fee by each Partnership Party or any of their respective Subsidiaries (the “Owned Real Property”) and contains, a true and complete list of each commercial lease of any portion of any Real Property for which the annual base rent is in excess of $250,000 and the term is in excess of five (5) years (as amended, restated, replaced, supplemented, or otherwise modified to date, the “Real Property Leases”). The Partnership Parties have provided or made available to the Investors true, accurate and complete copies of all currently effective owner’s title insurance policies and surveys for each Owned Real Property in the possession of the Partnership. Schedule 3.10(a) identifies Real Properties (i) that either the Partnership or one of its Controlled Subsidiaries manages the day-to-day operations of, (ii) that a Limited Control Subsidiary manages the day-to-day operations of, and (iii) all other Real Property. With respect to each Owned Real Property:
(i) the identified owner of each parcel of Owned Real Property has fee simple title to such Owned Real Property, free and clear of any Encumbrance, as set forth in the
applicable currently effective owner’s title insurance policy delivered or made available to the Investors in accordance with Section 3.10(a), except for Permitted Encumbrances;
(ii) any Encumbrance, covenant, or other restriction recorded against such Owned Real Property does not and is not reasonably expected to materially impair the ability to use or develop or construct upon any such Owned Real Property in the operation of the business of the owner thereof as presently conducted or development of or construction upon such Owned Real Property as currently contemplated for the business intended to be conducted thereon; and
(iii) there are no parties (other than the Partnership Parties and the MCRC Parties) in possession of such Owned Real Property, other than (1) tenants under any leases disclosed in Schedule 3.10(a) of the Disclosure Letter who are in possession of space to which they are entitled, (2) tenants under leases for which the annual base rent is less than $250,000 and (3) other Persons in possession of de minimis space.
(b) Schedule 3.10(b) of the Disclosure Letter contains a complete and accurate rent roll of each for the Real Properties in which there are tenants as of December 31, 2016.
(c) Except as contained in any of the Organizational Documents of the Subsidiaries, there are no outstanding options, rights of first offer or rights of first refusal to purchase or acquire any of the Real Properties or any portion thereof or interest therein.
(d) There are no pending or, to the Knowledge of any Partnership Party, threatened condemnation proceedings with respect to all or any portion of the Real Property.
(e) Schedule 3.10(e) of the Disclosure Letter sets forth a true, correct, and complete list of all leases, subleases, licenses, or other occupancy agreements pursuant to which any Partnership Party or any of their respective Controlled Subsidiaries, and to the Partnership Parties’ Knowledge, their respective Non-Controlled Subsidiaries and Limited Control Subsidiaries, leases, subleases, licenses, or otherwise occupies (whether as tenant or subtenant) any real property, including all amendments, restatements, replacements, supplements and other modifications thereto (collectively, the “Company Leases”). The Partnership Parties have delivered or made available to the Investors true and complete copies of the Company Leases. Each Company Lease is a valid and binding obligation of the tenant, subtenant, licensee, or occupant thereunder and, to the Knowledge of the Partnership Parties, the landlord, sublandlord, licensor, or other non-occupant party thereunder, and is in full force and effect; neither the Partnership Parties nor any of their Controlled Subsidiaries, nor, to the Knowledge of the Partnership Parties any of their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries, has received from the landlord, sublandlord, licensor, or other non-occupant party any written notice of a material default by the tenant, subtenant, licensee, or occupant under any Company Lease which remains uncured, and no such party is in material default under any Company Lease, and all rent thereunder has been paid current; neither any Partnership Party nor any of their Controlled Subsidiaries, nor, to the Knowledge of the Partnership Parties any of their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries, has given any written notice of a material default by the applicable landlord, sublandlord, licensor, or other non-occupant party with respect to any Company Lease which remains uncured. None of the Partnership Parties or any of their respective Controlled Subsidiaries, or, to the Partnership
Parties’ Knowledge, their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries has assigned, transferred, mortgaged, deeded in trust, or encumbered any interest in any Company Lease, except for any Permitted Encumbrances or as set forth on Schedule 3.10(e) of the Disclosure Letter.
(f) With regard to the Real Property Leases, except as set forth in Schedule 3.10(f) of the Disclosure Letter: (i) the Real Property Leases are valid and binding obligations of the landlord thereunder and, to the Knowledge of the Partnership Parties, the Tenants thereunder, and are in full force and effect; (ii) neither the Partnership Party nor any of their Controlled Subsidiaries, nor, to the Knowledge of the Partnership Parties any of their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries, has received any written notice of a material default by the applicable landlord under any Real Property Lease which remains uncured; (iii) neither any Partnership Party nor any of their Controlled Subsidiaries, nor, to the Knowledge of the Partnership Parties any of their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries, has given any written notice of a material default by the applicable Tenant under any Real Property Lease which remains uncured; and (iv) except as expressly set forth in the Real Property Leases, no Tenant is entitled, now or in the future, to any concession, rebate, offset, allowance or free rent for any period nor to the Knowledge of the Partnership Parties has any such material claim been asserted in writing by any Tenant.
Section 3.11 Legal Proceedings; Governmental Orders.
(a) Except as set forth in Schedule 3.11(a) of the Disclosure Letter, there are no actions, suits, claims, inquiries, investigations, audits or other legal proceedings (each, a “Proceeding”) involving, pending or, to the Knowledge of any Partnership Party, threatened against, or by a Partnership Party any of their respective Controlled Subsidiaries, or to the Knowledge of the Partnership Parties, their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries, or affecting any of their respective properties or assets (or by or against the Partnership Parties or their respective Subsidiaries or Affiliates), which if determined adversely to any Partnership Party or their respective Subsidiaries, either individually or in the aggregate, would result in a Material Adverse Effect.
(b) Except as set forth in Schedule 3.11(b) of the Disclosure Letter, there are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against or affecting the Partnership Parties their respective Controlled Subsidiaries, or to the Knowledge of the Partnership Parties, their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries, or any of their respective properties or assets which would, either individually or in the aggregate, result in a Material Adverse Effect.
Section 3.12 Compliance With Laws; Permits.
(a) Except as set forth in Schedule 3.12(a) of the Disclosure Letter, each of the Partnership Parties and their respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, Non-Controlled Subsidiaries or Limited Control Subsidiaries, are and have in the past been in compliance with all Laws applicable to it or their respective business, properties or assets, except where the failure to be in compliance would not have a Material Adverse Effect.
(b) All Permits required for the Partnership Parties or their respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, Non-Controlled Subsidiaries or Limited Control Subsidiaries, to conduct their respective businesses or, with respect to any Active Project, to develop or construct upon the Real Property relating thereto as currently contemplated for the business intended to be conducted thereon, have been obtained by it and are valid and in full force and effect, except where the failure to be in compliance would not have a Material Adverse Effect.
(c) None of the representations and warranties contained in Section 3.12 shall be deemed to relate to environmental matters (which are governed by Section 3.13), employee benefits matters (which are governed by Section 3.14), employment matters (which are governed by Section 3.15) or tax matters (which are governed by Section 3.16).
Section 3.13 Environmental Matters.
(a) Except as set forth in Schedule 3.13(a) of the Disclosure Letter, or as would not, individually or in the aggregate, have a Material Adverse Effect:
(i) the Partnership Parties and their respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries, are, and at all times during the past five (5) years have been, in compliance with all Environmental Laws and have not received any written Environmental Notice or any Environmental Claim that any of the Partnership Parties or their respective Subsidiaries are not in compliance with applicable Environmental Laws, which is unresolved;
(ii) neither the Partnership Parties nor any of their respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries, has received any written Environmental Notices claiming any Subsidiary or any Real Property is not in compliance with applicable Environmental Laws, which is unresolved;
(iii) the Partnership Parties and their respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries, have obtained and are as of the date hereof, and at all times during the past five (5) years have been, in compliance with all Environmental Permits required to conduct the business of the Partnership Parties and their respective Subsidiaries in the Ordinary Course of Business and such Environmental Permits are valid and in full force and effect;
(iv) there are no Environmental Claims or Proceedings pursuant to any Environmental Law pending against any of the Partnership Parties or any of their respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries, or, to the Knowledge of the Partnership Parties, threatened, against any of the Partnership Parties or any of their respective Subsidiaries; and
(v) none of the Partnership Parties nor any of their Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries, has assumed or retained, by contract, any obligation of any third
party under any Environmental Law or concerning any Hazardous Material that would reasonably be expected to result in material liability or any other material obligation to the Partnership Parties or any of their respective Subsidiaries under any applicable Environmental Law.
(b) Except as set forth in Schedule 3.13(b) of the Disclosure Letter, or as would not, individually or in the aggregate, have a Material Adverse Effect, and subject to the next sentence of this Section 3.13(b), to the Knowledge of the Partnership Parties: no Hazardous Materials are or have been present in contravention of Environmental Laws, and there is and has been no Release of any Hazardous Materials nor any remediation or corrective action of any kind relating thereto in, on, at, under, to or from (i) the Real Properties in the past five (5) years or (ii) any properties formerly owned, operated or leased by the Partnership Parties or their respective Subsidiaries within the past five (5) years in connection with the business of the Partnership Parties or any of their respective Subsidiaries. Notwithstanding the preceding provisions of this Section 3.13(b), (i) certain of the operating Real Properties as specifically identified on Schedule 3.10(a) of the Disclosure Letter are known to be developed where Hazardous Materials may be present; (ii) certain of the operating Real Properties as specifically identified on Schedule 3.10(a) of the Disclosure Letter are known to be developed on what is commonly referred to in the real estate development industry as “historic fill”, which consists of unclassified materials that may, in fact, contain substances that may exceed environmental contaminant levels as defined by Environmental Laws; and (iii) the Real Properties that have not yet been developed and fully investigated for the presence of Hazardous Materials may contain Hazardous Materials that will require remediation under applicable Laws, whether resulting from “historic fill”, a previous owner’s operations or otherwise, and these Real Properties are specifically identified on Schedule 3.10(a) as properties subject to this disclosure. Except as set forth above and in the accompanying Schedules, or as would not, individually or in the aggregate, have a Material Adverse Effect, to the Knowledge of the Partnership Parties there are no Hazardous Materials in, on, at, under, to or from the Real Properties that require remediation pursuant to Environmental Law.
(c) To the Knowledge of the Partnership Parties, none of the Real Property nor any real property formerly owned, operated or leased within the past five years by the Partnership Parties or any of their respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries, is listed on, or, to the Knowledge of the Partnership Parties, has been proposed for listing on, the National Priorities List or the Comprehensive Environmental Response Compensation and Liability Information System under CERCLA, or any similar state list.
(d) The Partnership Parties have previously made available to the Investors any and all material Environmental Permits, environmental reports, studies, audits, records, sampling data, site assessments and other similar material documents with respect to the Real Properties or pertaining to compliance with Environmental Law with respect to such Real Property in the possession of the Partnership Parties or any of their respective Controlled Subsidiaries.
(e) Except as contained in Sections 3.04, 3.11(b), and 3.17 the representations and warranties set forth in this Section 3.13 are the sole and exclusive representations and warranties of the Partnership Parties regarding environmental matters.
Section 3.14 Employee Benefit Matters.
(a) Schedule 3.14(a) of the Disclosure Letter contains a list of each material “employee benefit plan” as defined by Section 3(3) of ERISA, or any material benefit, retirement, employment, consulting, compensation, incentive, bonus, option, restricted equity, equity appreciation right, phantom equity, change in control, severance, welfare and fringe-benefit agreement, or other material plan, policy and program, in effect and covering one or more Employees, former employees of a Partnership Party or its respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, its respective Non-Controlled Subsidiaries, or current or former directors of the Partnership or its Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, its Non-Controlled Subsidiaries or Limited Control Subsidiaries, and is maintained, sponsored, or contributed to by the Partnership or its Subsidiaries, or under which the Partnership or its Subsidiaries have any material liability for premiums or benefits (as listed on Schedule 3.14(a) of the Disclosure Letter, each, a “Benefit Plan”).
(b) Except as set forth in Schedule 3.14(b) of the Disclosure Letter, or as would not have a Material Adverse Effect, to the Knowledge of the Partnership Parties, each Benefit Plan and related trust complies with all applicable Laws (including ERISA and the Code). Each Benefit Plan that is intended to be qualified under Section 401(a) of the Code (a “Qualified Benefit Plan”) has received a favorable determination letter from the Internal Revenue Service, or with respect to a prototype plan, can rely on an opinion letter from the Internal Revenue Service to the prototype plan sponsor, to the effect that such Qualified Benefit Plan is so qualified and that the plan and the trust related thereto are exempt from federal income Taxes under Sections 401(a) and 501(a), respectively, of the Code, and, to the Knowledge of the Partnership Parties, nothing has occurred that could reasonably be expected to cause the revocation of such determination letter from the Internal Revenue Service or the unavailability of reliance on such opinion letter from the Internal Revenue Service. Except as set forth in Schedule 3.14(b) of the Disclosure Letter, or as would not have a Material Adverse Effect, all benefits, contributions and premiums required by and due under the terms of each Benefit Plan or applicable Law have been timely paid in accordance with the terms of such Benefit Plan and the terms of all applicable Laws.
(c) Except as set forth in Schedule 3.14(c) of the Disclosure Letter, no Benefit Plan: (i) is subject to the minimum funding standards of Section 302 of ERISA or Section 412 of the Code; or (ii) is a “multi-employer plan” (as defined in Section 3(37) of ERISA).
(d) Except as set forth in Schedule 3.14(d) of the Disclosure Letter and other than as required under Section 4980B of the Code or other applicable Law, no Benefit Plan provides benefits or coverage in the nature of health, life or disability insurance following retirement or other termination of employment (other than death benefits when termination occurs upon death).
(e) Except as set forth in Schedule 3.14(e) of the Disclosure Letter, or as would not have a Material Adverse Effect: there is no pending or, to the Knowledge of the Partnership Parties, threatened action relating to a Benefit Plan (other than routine claims for benefits).
(f) Except as set forth in Schedule 3.14(f) of the Disclosure Letter, or as would not have a Material Adverse Effect, no Benefit Plan exists that could: (i) result in the payment to any Employee, director or consultant of any money or other property; or (ii) accelerate the vesting of or provide any additional rights or benefits to any Employee, director or consultant, in each case, as a result of the execution of this Agreement. Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will result in “excess parachute payments” within the meaning of Section 280G(b) of the Code.
(g) The representations and warranties set forth in this Section 3.14 are the sole and exclusive representations and warranties of the Partnership Parties regarding employee benefit matters.
Section 3.15 Employment Matters.
(a) Except as set forth in Schedule 3.15(a) of the Disclosure Letter, none of the Partnership Parties nor any of their Controlled Subsidiaries, and to the Partnership Parties’ Knowledge, their Non-Controlled Subsidiaries or Limited Control Subsidiaries, are a party to, or bound by, any collective bargaining or other agreement with a labor organization representing any of its Employees. Except as set forth in Schedule 3.15(a) of the Disclosure Letter, since January 1, 2014, there has not been, nor, to the Knowledge of the Partnership Parties, has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor activity or dispute affecting the Partnership or its Subsidiaries.
(b) Except as set forth on Schedule 3.15(b) of the Disclosure Letter, all Persons employed by the Partnership or its Subsidiaries are employees at will and there are no contracts between the Partnership or any of its Controlled Subsidiaries, and to the Partnership’s Knowledge, any of its Non-Controlled Subsidiaries or Limited Control Subsidiaries, and any Employee of the Partnership or its Subsidiaries, including employment agreements, loans or promissory notes, change in control agreements, stay agreements and separation pay agreements (“Employment Agreements”). Employment Agreements for Xxxxxxxx Xxxxxx and Xxxxxx Xxxxxx Xxxxxxxx are made publicly available through MCRC’s filings with the Securities and Exchange Commission (“SEC”). The Partnership (through the General Partner) is also a party to the following Employment Agreements: (i) Executive Employment Agreement for Xxxx Xxxxx, dated April 20, 2016; (ii) Executive Employment Agreement for Xxxxxxx Xxxxx, dated April 20, 2016; (iii) Executive Employment Agreement for Xxxxxx Xxxxx, dated April 20, 2016; and (iv) Executive Employment Agreement for Xxxxxx Xxxxx, dated April 21, 2016.
(c) Except as set forth on Schedule 3.15(c) of the Disclosure Letter or as provided in this Section 3.15(c), there are no long term incentive arrangements, stock options, bonus agreements or stock purchase plans (“Equity Grants”) of any kind in favor of any Employees of the Partnership or its Subsidiaries. All future Equity Grants in the Partnership or its Subsidiaries requires the approval of the Executive Compensation and Option Committee of MCRC. Equity Grant agreements for Xxxxxxxx Xxxxxx and Xxxxxx Xxxxxx Xxxxxxxx are made publicly available through MCRC’s filings with the SEC. The Partnership (through the General Partner) is also a party to the following Equity Grants: (i) Xxxx-Xxxx Realty Corporation 2016 Time-Based Long-Term Incentive Plan Award Agreement for Xxxx Xxxxx, dated March 8, 2016; (ii) Xxxx-Xxxx Realty Corporation 2016 Performance-Based Long-Term Incentive Plan Award Agreement for
Xxxx Xxxxx, dated March 8, 2016; (iii) Xxxx-Xxxx Realty Corporation 2016 Time-Based Long-Term Incentive Plan Award Agreement for Xxxxxxx Xxxxx, dated March 8, 2016; (iv) Xxxx-Xxxx Realty Corporation 2016 Performance-Based Long-Term Incentive Plan Award Agreement for Xxxxxxx Xxxxx, dated March 8, 2016; (v) Xxxx-Xxxx Realty Corporation 2016 Time-Based Long-Term Incentive Plan Award Agreement for Xxxxxx Xxxxx, dated March 8, 2016; (vi) Xxxx-Xxxx Realty Corporation 2016 Performance-Based Long-Term Incentive Plan Award Agreement for Xxxxxx Xxxxx, dated March 8, 2016; (vii) Xxxx-Xxxx Realty Corporation 2016 Time-Based Long-Term Incentive Plan Award Agreement for Xxxxxx Xxxxx, dated March 8, 2016; and (viii) Xxxx-Xxxx Realty Corporation 2016 Performance-Based Long-Term Incentive Plan Award Agreement for Xxxxxx Xxxxx, dated March 8, 2016.
(d) Except as set forth in Schedule 3.15(d) of the Disclosure Letter or as would not have a Material Adverse Effect: (i) the Partnership is in compliance with all applicable Laws pertaining to employment and employment practices (including the WARN Act) to the extent they relate to Employees of the Partnership; and (ii) there are no actions, suits, claims, investigations or other legal proceedings against the Partnership pending, or to the Knowledge of the Partnership Parties, overtly threatened in writing to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former employee of the Partnership, including, without limitation, any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay or any other employment related matter arising under applicable Laws.
(e) A true, complete and correct copy of the form of non-competition, non-solicitation, confidentiality or similar agreement currently in force with the current Employees of the Partnership and any material variances therefrom has been made available to Investors.
(f) The representations and warranties set forth in this Section 3.15 are the Partnership Parties’ sole and exclusive representations and warranties regarding employment matters.
Section 3.16 Taxes.
(a) Except as set forth in Schedule 3.16 of the Disclosure Letter:
(i) Each of the Partnership Parties and their respective Controlled Subsidiaries, and to Partnership Parties’ Knowledge, their respective Non-Controlled Subsidiaries and Limited Control Subsidiaries, have filed (taking into account any valid extensions) all material Tax Returns required to be filed. Such Tax Returns are true, complete and correct in all material respects. No Partnership Party nor any of their respective Controlled Subsidiaries, or to the Partnership Parties’ Knowledge, their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries, is currently the beneficiary of any extension of time within which to file any material Tax Return other than extensions of time to file Tax Returns obtained in the Ordinary Course of Business. All material Taxes due and owing by the Partnership Parties and their respective Subsidiaries (whether or not shown on a Tax Return) have been paid or, to the extent not delinquent, are included in the liability for current Taxes reflected on the 2016 Balance Sheet or have accrued since the 2016 Balance Sheet Date in the
Ordinary Course of Business in amounts consistent with amounts paid an incurred in the most recent comparable prior period.
(ii) No extensions or waivers of statutes of limitations have been given or requested with respect to any material Taxes of any Partnership Party or their respective Controlled Subsidiaries, or to the Partnership Parties’ Knowledge, their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries.
(iii) There are no material ongoing, pending or threatened actions, suits, claims, investigations or other legal proceedings by any taxing authority against a Partnership Party, their respective Controlled Subsidiaries, or to the Partnership Parties’ Knowledge, their Non-Controlled Subsidiaries or Limited Control Subsidiaries. No material deficiencies for any Taxes have been proposed, asserted or assessed against a Partnership Party or any of its Controlled Subsidiaries, or to the Partnership Parties’ Knowledge, its Non-Controlled Subsidiaries or Limited Control Subsidiaries that have not been fully paid. There are no Tax liens on any assets a Partnership Party, any of its Controlled Subsidiaries, or to the Partnership Parties’ Knowledge, its Non-Controlled Subsidiaries or Limited Control Subsidiaries, other than liens for Taxes not yet due and payable.
(iv) No Partnership Party nor any of their respective Controlled Subsidiaries, nor, to the Partnership Parties’ Knowledge, their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries is a party to any Tax-sharing agreement.
(v) All material Taxes which a Partnership Party or any of its respective Controlled Subsidiaries, or to the Partnership Parties’ Knowledge, its respective Non-Controlled Subsidiaries or Limited Control Subsidiaries is obligated to withhold from amounts owing to any employee, creditor or third party have been paid or accrued.
(vi) No Partnership Party nor any Subsidiary has engaged in a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(1) (or any analogous provision of state, foreign or local Tax Law).
(b) The Partnership Parties and each of the Partnership Parties’ respective Controlled Subsidiaries, and to the Partnership Parties’ Knowledge, respective Non-Controlled Subsidiaries or Limited Control Subsidiaries has at all times during its existence been properly treated for federal income tax purposes either as a partnership or as an entity disregarded from its owner, and none of them is or has been either an association taxable as a corporation or a “publicly traded partnership” within the meaning of Section 7704(b) of the Code, except with respect to any of the Partnership Parties’ Controlled Subsidiaries, or to the Partnership Parties’ Knowledge, its Non-Controlled Subsidiaries or Limited Control Subsidiaries, that has had in effect an election to be a “taxable REIT subsidiary” (as defined in Section 856(l) of the Code) with respect to the Investors at all times from and after the later of the Closing or the date the Partnership acquired a direct or indirect interest in such Controlled Subsidiary, or to the Partnership Parties’ Knowledge, its Non-Controlled Subsidiaries or Limited Control Subsidiaries.
Section 3.17 Insurance. The Partnership maintains or causes its Controlled Subsidiaries to maintain and to the Knowledge of the Partnership Parties, their respective Non-
Controlled Subsidiaries and Limited Control Subsidiaries maintain, insurance with reputable insurers, licensed to do business in the state in which their respective Real Properties are located, in such amounts and with such coverages as the Partnership has reasonably determined to be prudent in accordance with industry standards. The Partnership or its Affiliates have maintained insurance on the Real Properties with reputable insurers, licensed to do business in the state in which their respective Real Properties are located, for the shorter of (i) the period in which the Partnership or its Affiliates have owned and controlled such Real Properties or (ii) the past five (5) years), in such amounts and with such coverages as the Partnership has or its Affiliates have reasonably determined to be prudent in accordance with industry standards. Schedule 3.17 of the Disclosure Letter sets forth a list, as of the date hereof, of all material insurance policies currently maintained by the Partnership and each of its Controlled Subsidiaries, or with respect to which the Partnership or any of its Controlled Subsidiaries is a named insured or otherwise the beneficiary of coverage (collectively, the “Insurance Policies”). Such Insurance Policies currently maintained are in full force and effect on the date of this Agreement and all premiums due on all Insurance Policies have been paid. Except as set forth on Schedule 3.17 of the Disclosure Letter, there are no material outstanding unpaid claims under any such Insurance Policies, and neither the Partnership nor any of its Controlled Subsidiaries or, to the Knowledge of the Partnership Parties, its Non-Controlled Subsidiaries or Limited Control Subsidiaries, has received any refusal of coverage under the Insurance Policies. Neither the Partnership nor any of its Controlled Subsidiaries or, to the Knowledge of the Partnership Parties, its Non-Controlled Subsidiaries or Limited Control Subsidiaries, has received from any insurance company which issues insurance on the Real Properties or any board of fire underwriters, any written notice of any material defect or inadequacy in connection with the Real Properties that has not been cured or will not be cured prior to the Closing Date.
Section 3.18 Brokers. Except for Xxxxx Fargo Securities, LLC (or its affiliate Eastdil Secured, LLC), no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of a Partnership Party.
Section 3.19 REIT Requirements. At all times from and after the Closing Date, the Partnership and its Subsidiaries shall be (and, in the case of a Drawdown Date, have been) operated in a manner so that: (a) the Partnership satisfies the gross income tests provided in Section 856(c)(2) and (3) of the Code as if the Partnership were a REIT; (b) the Partnership satisfies the tests provided in Section 856(c)(4) of the Code as if the Partnership were a REIT; and (c) the Partnership does not incur liability for federal, state and local income and excise Taxes, including Taxes under Sections 857(b), 860(c) or 4981 of the Code, as if the Partnership were a REIT. Neither the Partnership, nor its Subsidiaries, holds any asset the disposition of which would cause the Partnership to pay Tax under the rules similar to Section 1374 of the Code under Treasury Regulations Section 1.337(d)-7 or any similar or successor provision, as if the Partnership were a REIT. No Indebtedness of the Partnership or any of its Subsidiaries is an “applicable high-yield discount obligation” (as such term is defined in Section 163(i) of the Code and determined as if the obligor under such Indebtedness were a corporation for federal income tax purposes). Neither the Partnership nor any Subsidiary holds any asset the disposition of which would be treated as a “prohibited transaction” within the meaning of Section 857(b)(6) of the Code, as if the Partnership were a REIT. No Partnership Party nor any of their respective Subsidiaries has taken or is currently planning to take any action that could result in a
Partnership Party or any of their respective Subsidiaries being required to make any payment under any tax protection agreement or similar agreement. The foregoing representations are made without regard to the possible application of any “savings” or “cure” provisions of the Code (including Sections 856(c)(6), 856(c)(7) and 856(g)(5) of the Code).
Section 3.20 Private Placement. Assuming the accuracy of the representations and warranties of the Investors set forth in Article IV, the offer, sale, and issuance of the Preferred Units as contemplated hereby will be exempt from the registration requirements of the Securities Act the registration or qualification requirements of any applicable state securities Laws. No Partnership Party or any of their respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries, nor any Person acting on behalf of any such entity will take any action that would cause the loss of any such exemption. To the extent they are legally capable and authorized to do so, the Partnership Parties shall use commercially reasonable best efforts to ensure that their respective Non-Controlled Subsidiaries and Limited Control Subsidiaries, including any Person acting on their behalf, will prevent any such action that would cause the loss of any such exemption.
Section 3.21 Solvency. The Partnership and its Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, its Non-Controlled Subsidiaries and Limited Control Subsidiaries, are able to pay their respective debts (including trade debts) as they mature. The fair saleable value of all the assets and properties (including goodwill minus disposition costs) of the Partnership and its Subsidiaries, taken as a whole, exceeds the fair value of their liabilities.
Section 3.22 Anti-Takeover Provision. By resolutions adopted on December 24, 2015 by the Board of Trustees of RRT pursuant to Section 3-603(c) of the Maryland General Corporation Law (the “MGCL”), any Business Combination (as defined in Section 3-601(e) of the MGCL) between RRT and any Interested Stockholder or any Affiliate of an Interested Stockholder (as such terms are defined in Section 3-601 of the MGCL) is exempted from the provisions of Section 3-602 of the MGCL; and Section 15 of Article II of the Bylaws of RRT provides that Title 3, Subtitle 7 of the MGCL shall not apply to any acquisition by any person of shares of beneficial interest of RRT.
Section 3.23 Foreign Corrupt Practices Act. Except as would not, individually or in the aggregate, result in a Material Adverse Effect, neither the Partnership Parties, their respective Subsidiaries nor, to the Knowledge of any director, officer, agent, consultant, employee, Related Party or other Person acting on behalf (or who has acted on behalf) of the Partnership Parties or any their respective Subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by any of such Persons of the FCPA, as amended, or any similar anti-bribery or anti-corruption law, including, without limitation, taking any act “corruptly” (as the term is interpreted by the U.S. Department of Justice, the U.S. Securities and Exchange Commission, or by court decisions) in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA, and as interpreted by the U.S. Department of Justice, the U.S. Securities and Exchange Commission, or by court decisions) or any foreign political party or official thereof or any candidate for foreign political office, including, without limitation, any improper
contribution, gift, bribe, rebate, or kickback, and the Partnership Parties and their respective Subsidiaries and, to the Knowledge of the Partnership Parties and their Related Parties have conducted their businesses in compliance with the FCPA and all similar anti-bribery or anti-corruption laws, and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith. “Foreign officials” include foreign governmental officials, foreign governmental employees, and employees of business enterprises that are owned or controlled by foreign governments. Neither the Partnership Parties nor any of their respective Subsidiaries is currently conducting an investigation into any suspected or alleged violation of the FCPA of any similar anti-bribery or anti-corruption law. Neither the Partnership Parties nor any their respective Subsidiaries nor any director, officer, agent, consultant, employee, Related Party or other person acting on behalf of the Partnership Parties or any of their respective Subsidiaries, is (or for the last five years has been) under administrative, civil, or criminal investigation, indictment, information, or audit by any party, in connection with alleged or possible violations of the FCPA or any similar anti-bribery or anti-corruption law. Nor to the Knowledge of the Partnership Parties nor any of their respective Controlled Subsidiaries, or to the Partnership Parties’ Knowledge, their respective Non-Controlled Subsidiaries or Limited Control Subsidiaries is there any basis for any such investigation, indictment, information, or audit. Neither the Partnership Parties nor their respective Subsidiaries, nor any director, officer, or, to the Knowledge of the Partnership Parties, agent, consultant, employee, Related Parties, or other person acting (or who have acted) on behalf of the Partnership Parties or any of their respective Subsidiaries, has received notice from, or made a voluntary disclosure to, the U.S. Department of Justice or the U.S. Securities and Exchange Commission, or any other government entity regarding alleged or possible violations of the FCPA or similar anti-bribery or anti-corruption laws. The books of account and other financial records of the Partnership Parties and their respective Controlled Subsidiaries, or to the Partnership Parties’ Knowledge, their respective Non-Controlled Subsidiaries and Limited Control Subsidiaries (1) are materially accurate, complete, and correct; (2) accurately and fairly reflect all transactions and dispositions of assets; and (3) have been maintained in accordance with sound business practices, including the maintenance of adequate internal accounting controls, which, without limitation, are reasonably designed to detect and prevent violations of anti-bribery and anti-corruption laws, provide reasonable assurance that transactions are executed as documented in the books of account and other financial records, and that access to assets (including disposition of assets) is permitted only in accordance with management’s general or specific authorization. In addition, neither the Partnership Parties, nor their respective Controlled Subsidiaries, and to the Partnership Parties’ Knowledge, their Non-Controlled Subsidiaries or Limited Control Subsidiaries, have established or maintained (or are establishing or maintaining) a secret or unrecorded fund.
Section 3.24 Money Laundering Laws.
(a) Except as would not, individually or the aggregate, result in a Material Adverse Effect, neither the Partnership Parties nor any of their respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, Non-Controlled Subsidiaries or Limited Control Subsidiaries, nor, to the Knowledge of the Partnership Parties or any of their respective Subsidiaries, any director, officer, employee, or other Person acting on behalf of the Partnership Parties or their respective Subsidiaries, has engaged in, or is currently engaged in, a transaction, investment, undertaking, or activity in violation of the criminal provisions against applicable
money laundering under U.S. or applicable foreign law. The Partnership Parties and their respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, Non-Controlled Subsidiaries and Limited Control Subsidiaries, and, to the Knowledge of the Partnership Parties or any of their respective Subsidiaries, any director, officer, employee, or other Person acting on behalf of the Partnership Parties or their Subsidiaries, are in compliance with all applicable anti-money laundering requirements to prevent and detect money laundering under U.S. or applicable foreign law, including, without limitation, requirements to maintain compliance programs, maintain customer and transaction records, conduct customer due diligence, and report suspicious, cash or other transactions to government authorities (collectively, the “Money Laundering Laws”). In the United States, the criminal provisions against money laundering are codified at 18 U.S.C. §§ 1956 and 1957, and the anti-money laundering requirements, include, without limitation, the requirements of the Bank Secrecy Act, as amended by the USA PATRIOT Act, 31 U.S.C. §§ 5311 et seq., and its implementing regulations, 31 C.F.R. Chapter X.
(b) Except as would not, individually or the aggregate, result in a Material Adverse Effect, neither the Partnership Parties nor any of their respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, Non-Controlled Subsidiaries or Limited Control Subsidiaries, nor, to the Knowledge of the Partnership Parties or any of their respective Subsidiaries, any owner, director, officer, employee or other person acting on behalf of the Partnership Parties or their respective Subsidiaries, (i) is under investigation by any Governmental Entity for, or has been charged with, or convicted of, money laundering or any crimes which in the United States would be predicate crimes to money laundering, or any violation of any of the Money Laundering Laws; (ii) has been assessed civil or criminal penalties under any of the Money Laundering Laws; or (iii) has had any of its funds seized or forfeited in any action under any of the Money Laundering Laws. Neither Partnership Parties nor any of their respective Subsidiaries to the Knowledge of the Partnership Parties has any investor whose investment in the Partnership Parties or their respective Subsidiaries has been or will be derived from, or related to, any illegal activities, including, without limitation, prohibited money laundering activities.
Section 3.25 Office of Foreign Assets Control.
Except as would not, individually or the aggregate, result in a Material Adverse Effect,
(a) the Partnership Parties, their respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, their respective Non-Controlled Subsidiaries and Limited Control Subsidiaries, and, to the Knowledge of the Partnership Parties and any of their respective Subsidiaries, any director, officer, employee, agent, distributor, consultant, Affiliate, or other Person acting on behalf of the Partnership Parties and their respective Subsidiaries have at all times fully complied with, and are currently in full compliance with, (i) all applicable U.S. and foreign government laws and regulations concerning the exportation of any products, technology, technical data or services, including those administered by, without limitation, the U.S. Department of Commerce, the U.S. Department of State, and the U.S. Department of the Treasury; (ii) U.S. and international economic and trade sanctions, including, but not limited to, those administered by the Office of Foreign Assets Control (“OFAC”) within the U.S.
Department of the Treasury; and (iii) all laws and regulations administered by the Bureau of Customs and Border Protection in the U.S. Department of Homeland Security;
(b) neither the Partnership Parties nor any of their respective Subsidiaries, nor, to the Knowledge of the Partnership Parties or any of their respective Subsidiaries, any director, officer, employee, agent, distributor, consultant, Affiliate, or other Person acting on behalf of the Partnership Parties or their respective Subsidiaries, has engaged in, or is currently engaged in, any sales, exports, re-exports, imports, or other activities in, relating to, or involving, directly or indirectly, countries subject to U.S. economic sanctions, including Cuba, the Crimea Region of Ukraine, Iran, Syria, and Sudan, or that otherwise would be prohibited if performed by U.S. persons or entities;
(c) neither the Partnership Parties nor any of their respective Subsidiaries, nor, to the Knowledge of the Partnership Parties or any of their respective Subsidiaries, any director, officer, employee, agent, distributor, consultant, affiliate, other person acting on behalf of the Partnership Parties or their respective Subsidiaries, is (1) listed on, or owned or controlled by, fifty (50%) or more in the aggregate, directly or indirectly, a person or persons listed on, (i) the List of Specially Designated Nationals and Blocked Persons maintained by OFAC or any other list of known or suspected terrorists, terrorist organizations, or other prohibited persons made publicly available or provided to the Partnership Parties or any of their respective Subsidiaries by any agency of the government of the United States or any jurisdiction in which the Partnership Parties or any of their respective Subsidiaries are doing business; (ii) the Bureau of Industry and Security of the United States Department of Commerce “Denied Persons List,” “Entity List,” or “Unverified List”; (iii) the Office of Defense Trade Controls of the United States Department of State “List of Debarred Parties”; or (iv) any lists of restricted persons or entities maintained by any other U.S. government authority; or (2) or has engaged in business transactions or other dealings with, or is currently engaged in business transactions or other dealings with, an entity listed on, or owned or controlled by, fifty percent (50%) or more in the aggregate, directly or indirectly, a person or persons listed on, (i) the List of Specially Designated Nationals and Blocked Persons maintained by OFAC or any other list of known or suspected terrorists, terrorist organizations, or other prohibited persons made publicly available or provided to the Partnership Parties or any of their respective Subsidiaries by any agency of the government of the United States or any jurisdiction in which the Partnership Parties or any of their respective Subsidiaries are doing business; (ii) the Bureau of Industry and Security of the United States Department of Commerce “Denied Persons List,” “Entity List,” or “Unverified List”; (iii) the Office of Defense Trade Controls of the United States Department of State “List of Debarred Parties”; or (iv) any lists of restricted persons or entities maintained by any other U.S. government authority; or (3) operating, organized in, or resident in, or acting on behalf of a Government of, or involved in business arrangements or other transactions with, a countries subject to U.S. economic sanctions, including Cuba, the Crimea Region of Ukraine, Iran, Syria, and Sudan, or any person owned or controlled, fifty percent (50%) or more in the aggregate, directly or indirectly, by any such person or persons, or (3) a person who has been determined by competent authority to be subject to the prohibitions contained in Executive Order 13224, 66 Fed. Reg. 49,079 (Sept. 25, 2001) (Executive Order Blocking Property and Prohibiting Transactions with Persons who Commit, Threaten to Commit, or Support Terrorism), Executive Order 13382, 70 Fed. Reg. 38,567 (July. 1, 2005) (Executive Order Blocking Property of Weapons of Mass Destruction Proliferators and
Their Supporters), or any other similar prohibitions contained in the laws administered by, and regulations of, OFAC or in any enabling legislation or other executive orders in respect thereof;
(d) neither the Partnership Parties nor any of their respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, Non-Controlled Subsidiaries or Limited Control Subsidiaries, nor, to the Knowledge of the Partnership Parties or any of their respective Subsidiaries, any director, officer, employee, agent, distributor, consultant, affiliate, or other person acting on behalf of the Partnership Parties or their respective Subsidiaries has made a voluntary disclosure to governmental regulatory authorities reporting violations of laws or regulations relating to the export or re-export of products, technology, software, services or other information from the United States or any other jurisdiction;
(e) neither the Partnership Parties nor any of their respective Controlled Subsidiaries, and to the Knowledge of the Partnership Parties, Non-Controlled Subsidiaries or Limited Control Subsidiaries, nor, to the Knowledge of the Partnership Parties or any of their respective Subsidiaries, any director, officer, employee, agent, distributor, consultant, Affiliate, or other Person acting on behalf of the Partnership Parties or their respective Subsidiaries, have participated or are currently participating in, or have cooperated or are currently cooperating with, an unsanctioned international boycott within the meaning of Section 999 of the Internal Revenue Code of 1986, as amended; and
(f) if, in the future, the Partnership Parties or any of their respective Subsidiaries determines that any of the foregoing was incorrect as of the date hereof or has ceased to be correct, the Partnership Parties agree to promptly notify the Investors. The Partnership Parties agree and acknowledge that if at any time it is discovered that any of the foregoing representations were incorrect as of the date hereof or have ceased to be correct, or if otherwise required by the laws and regulations administered and enforced by OFAC, the Investors may undertake appropriate action, including but not limited to, segregation, blocking, freezing, or termination of the interests of the Partnership Parties and their respective Subsidiaries. The Partnership Parties further agree and acknowledge that neither the Partnership Parties nor any of their respective Subsidiaries will have any claim against the Investors for any form of damages as a result of any of the foregoing actions.
Section 3.26 Investment Company. None of the Partnership Parties is, nor will be after giving effect to the issuance of the Preferred Units and the application of the proceeds thereof, an “investment company” within the meaning of the Investment Company Act of 1940, as amended, nor will any of the Partnership Parties be required to register as an “investment company” under the Investment Company Act of 1940, as amended.
Section 3.27 Arm’s-Length Transaction. The Partnership Parties acknowledge and agree that the Investors are acting solely in the capacity of arm’s-length purchasers with respect to this Agreement and the transactions contemplated hereby. The Partnership Parties further acknowledge that the Investors are not acting as a financial advisor or fiduciary (or in any similar capacity) of the Partnership Parties or any of their respective Subsidiaries with respect to this Agreement, the Second Amended and Restated LP Agreement, the Ancillary Agreements and any other related documents to which the Investors are or will be a party and the transactions contemplated hereby and thereby and any advice given by the Investors or any of their
Representatives or agents in connection with this Agreement, the Second Amended and Restated LP Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby is merely incidental to the Investors’ purchase of the Preferred Units. The Partnership Parties further represent to the Investors that their decision to enter into this Agreement, the Second Amended and Restated LP Agreement, the Ancillary Agreements and each of the other related documents to which the Investor is a party has been based solely on the independent evaluation of the Partnership Parties or their Representatives. The Partnership Parties further acknowledge that Investors have not made any promises or commitments other than as set forth in this Agreement, the Second Amended and Restated LP Agreement, the Ancillary Agreements or related documents, including any promises or commitments for any additional investment by the Investors in the Partnership, except to the extent that the Investors may be party to, and as provided in, this Agreement, the Ancillary Agreements, any related documents, or any other agreement executed and delivered in connection therewith.
Representations and Warranties of the MCRC Parties:
Except as set forth in the correspondingly numbered Schedule of the Disclosure Letter (any item disclosed in any Schedule of the Disclosure Letter referenced by a particular Section in this Agreement shall be deemed to have been disclosed with respect to each other Schedule of the Disclosure Letter and Section in this Agreement to the extent the relevance of such disclosure to such other Schedule of the Disclosure Letter and Section in this Agreement is reasonably apparent from the text of such disclosure.), each of the MCRC Parties jointly and severally represent and warrant to the Investors as follows:
Section 3.28 Organization and Authority of the MCRC Parties. MCRC is a corporation validly existing and in good standing under the laws of the State of Maryland. MCPT is validly existing and in good standing as a real estate investment trust under the laws of the State of Maryland. MCRLP is a limited partnership duly organized, validly existing and in good standing under the Laws of the State of Delaware. MCTP is a limited partnership duly organized and validly existing under the Laws of the State of Texas. Each MCRC Party has all necessary limited partnership, corporate, trust, limited liability or other power and authority to (a) enter into this Agreement, the Second Amended and Restated LP Agreement and the Ancillary Agreements, to carry out their respective obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, in each case as is applicable. The execution and delivery by each of the MCRC Parties of this Agreement, the Second Amended and Restated LP Agreement and the Ancillary Agreements, the performance by the MCRC Parties of their obligations hereunder and thereunder and the consummation by the MCRC Parties of the transactions contemplated hereby and thereby have been duly authorized by all requisite limited partnership, trust, limited liability or other action on the part of each such MCRC Party. This Agreement, the Second Amended and Restated LP Agreement and the Ancillary Agreements have been duly executed and delivered by each of the MCRC Parties, and (assuming due authorization, execution and delivery by Investors and the Partnership Parties) this Agreement, the Second Amended and Restated LP Agreement and the Ancillary Agreements constitute legal, valid and binding obligations of each of the MCRC Parties, enforceable against the MCRC Parties in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting
creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
Section 3.29 No Conflicts; Consents. The execution, delivery and performance by the MCRC Parties of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not: (a) result in a violation or breach of any provision of the Organizational Documents of any of the MCRC Parties; (b) result in a violation or breach in any material respect of any provision of any Law or Governmental Order applicable to the MCRC Parties; or (c) require the consent, notice or other action by any Person under, conflict with in any material respect, result in a violation or breach of in any material respect, result in the creation or imposition of any lien, charge or encumbrance pursuant to, constitute a material default under or result in the acceleration of any material contract or any other contract, agreement or instrument material to any of the MCRC Parties. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority or third party is required by or with respect to the MCRC Parties, in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, all of which have been obtained prior to the date hereof and remain in full force and effect and such consents, approvals, Permits, Governmental Orders, declarations, filings or notices which, individually or in the aggregate, would not have a Material Adverse Effect.
Section 3.30 Arm’s-Length Transaction. The MCRC Parties acknowledge and agree that the Investors are acting solely in the capacity of arm’s-length purchasers with respect to this Agreement and the transactions contemplated hereby. The MCRC Parties further acknowledge that the Investors are not acting as a financial advisor or fiduciary (or in any similar capacity) of the MCRC Parties or any of their respective Subsidiaries with respect to this Agreement, the Second Amended and Restated LP Agreement, the Ancillary Agreements and any other related documents to which the Investors are or will be a party and the transactions contemplated hereby and thereby and any advice given by the Investors or any of their Representatives or agents in connection with this Agreement, the Second Amended and Restated LP Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby is merely incidental to the Investors’ purchase of the Preferred Units. The MCRC Parties further represent to the Investors that their decision to enter into this Agreement, the Second Amended and Restated LP Agreement, the Ancillary Agreements and each of the other related documents to which the Investor is a party has been based solely on the independent evaluation of the MCRC Parties or their Representatives. The MCRC Parties further acknowledge that Investors have not made any promises or commitments other than as set forth in this Agreement, the Second Amended and Restated LP Agreement, the Ancillary Agreements or related documents, including any promises or commitments for any additional investment by the Investors in the Partnership, except to the extent that the Investors may be party to, and as provided in, this Agreement, the Second Amended and Restated LP Agreement, the Ancillary Agreements, any related documents, or any other agreement executed and delivered in connection therewith.
Section 3.31 Legal Proceedings; Governmental Orders.
(a) Except as set forth in Schedule 3.31(a) of the Disclosure Letter, there are no Proceedings involving, pending or, to the knowledge of the MCRC Parties, threatened, against a MCRC Party or any of their respective Subsidiaries or affecting any of their respective properties
or assets (or by or against the MCRC Parties or their respective Subsidiaries or Affiliates), which if determined adversely to any MCRC Party, their respective Subsidiaries, either individually or in the aggregate, would result in a Material Adverse Effect.
(b) Except as set forth in Schedule 3.31(b) of the Disclosure Letter, there are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against or affecting the MCRC Parties their respective Subsidiaries (other than the Partnership Parties), or any of their respective properties or assets which would, either individually or in the aggregate, result in a Material Adverse Effect.
Section 3.32 Ownership of the Partnership Parties. Other than as set forth on Schedule 3.32 of the Disclosure Letter, all of the equity interests in each Partnership Party have been duly authorized, are validly issued, fully paid and non-assessable, and are owned of record and beneficially by the MCRC Party or applicable Subsidiary of a MCRC Party set forth in Schedule 3.32 of the Disclosure Letter, and no Person owns, either beneficially or otherwise any equity interest in any Partnership Party other than as set forth on Schedule 3.32.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INVESTORS
The Investors represent and warrant to each of the Partnership Parties that the statements contained in this Article IV are true and correct.
Section 4.01 Organization and Authority of the Investors. Each of the Investors is a limited liability company duly organized, validly existing and in good standing under the Laws of the state of Delaware. The Investors each have all necessary limited liability company power and authority to enter into this Agreement, to carry out their respective obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by the Investors of this Agreement, the performance by the Investors of their respective obligations hereunder and the consummation by the Investors of the transactions contemplated hereby have been duly authorized by all requisite limited liability company action on the part of each of the Investors. This Agreement has been duly executed and delivered by each of the Investors, and (assuming due authorization, execution and delivery by the MCRC Parties and the Partnership Parties) this Agreement constitutes a legal, valid and binding obligation of each of the Investors, enforceable against each such Investor in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
Section 4.02 No Conflicts; Consents. The execution, delivery and performance by each Investor of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not: (a) result in a violation or breach of any provision of the operating agreement of any Investor; (b) result in a violation or breach of any provision of any Law or Governmental Order applicable to the Investors; or (c) require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default under or result in the acceleration of any agreement to which any Investor is a party, except in the cases of clauses (b) and (c), where the violation, breach, conflict, default, acceleration or failure to give notice would
not have a Material Adverse Effect on such Investor ‘s ability to consummate the transactions contemplated hereby. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to any Investor in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, except for such filings as may be required under the HSR Act and such consents, approvals, Permits, Governmental Orders, declarations, filings or notices which have already been obtained and would not have a Material Adverse Effect on each Investor’s ability to consummate the transactions contemplated hereby.
Section 4.03 Investment Purpose. Except as otherwise contemplated herein, the Investors are acquiring the Initial Purchased Units solely for their own respective accounts for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act of 1933, as amended (the “Securities Act”) or any state securities laws. Each Investor acknowledges that the Initial Purchased Units are not registered under the Securities Act, or any state securities laws, and that the Initial Purchased Units may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable. Each Investor is able to bear the economic risk of holding the Initial Purchased Units for an indefinite period (including total loss of their respective investments). Each Investor is an “accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated under the Securities Act and has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risk of its investment.
Section 4.04 Brokers. Except for Xxxxx Fargo Securities, LLC (or its affiliate Eastdil Secured, LLC), no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Investors.
Section 4.05 Legal Proceedings.
(a) There are no actions, suits, claims, investigations or other legal proceedings pending or, to such Investor’s knowledge, overtly threatened in writing against or by any Investor or any Affiliate of such Investor that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.
(b) Neither of the Investors nor any of their Affiliates nor any officer, director or key employee of any of the foregoing, nor, to the knowledge of the Investors, the limited partners thereof (i) appears on the Specially Designated Nationals and Blocked Persons List of OFAC or on any other similar list maintained by OFAC pursuant to any authorizing statute, executive order or regulation, (ii) has its principal place of business or the majority of its business operations (measured by revenues) located in a country in which transactions are prohibited by (A) United States Executive Order 13224, Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, (B) the United States Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, (C) the United States Trading with the Enemy Act of 1917, as amended, (D) the United States International Emergency Economic Powers Act of 1977, as amended, or
(E) OFAC regulations, (iii) has been convicted of or charged with a felony relating to money laundering, or (iv) who is under investigation by any Governmental Authority for money laundering.
(c) To comply with applicable U.S. anti-money laundering laws and regulations, all payments and contributions by each Investor to the Partnership and all payments and distributions to such Investor from the Partnership will only be made in such Investor’s name and to and from a bank account of a bank based or incorporated in or formed under the laws of the United States or a bank that is not a “foreign shell bank” within the meaning of the U.S. Bank Secrecy Act (31 U.S.C. § 5311 et seq.), as amended, and the regulations promulgated thereunder by the U.S. Department of the Treasury, as such regulations may be amended from time to time. Neither of the Investors, nor any of their respective Subsidiaries, nor, to the knowledge of the Investors, any director, partner, officer, employee, or other Person acting on behalf of the Investors or their respective Subsidiaries, has engaged in, or is currently engaged in, a transaction, investment, undertaking, or activity in violation of the criminal provisions against applicable money laundering under U.S. or applicable foreign law. The Investors and their respective Subsidiaries and, to the knowledge of the Investors, any director, officer, employee, or other Person acting on behalf of the Investors or their Subsidiaries, are in compliance with all Money Laundering Laws.
(d) Except as would not result in a material adverse effect, neither of the Investors any of their respective Subsidiaries, and to the knowledge of the Investors, any owner, partner, director, officer, employee or other person acting on behalf of the Investors or their respective Subsidiaries, (i) is under investigation by any Governmental Entity for, or has been charged with, or convicted of, money laundering or any crimes which in the United States would be predicate crimes to money laundering, or any violation of any of the Money Laundering Laws; (ii) has been assessed civil or criminal penalties under any of the Money Laundering Laws; or (iii) has had any of its funds seized or forfeited in any action under any of the Money Laundering Laws. To the knowledge of the Investors, neither the Investors nor any of their respective Subsidiaries has any investor whose indirect investment in the Partnership has been or will be derived from, or related to, any illegal activities, including, without limitation, prohibited money laundering activities.
Section 4.06 Independent Investigation. Each Investor has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Partnership Parties and their respective Subsidiaries, and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Partnership Parties and their respective Subsidiaries for such purpose. Each Investor acknowledges and agrees that to the maximum extent permitted by law and as a material inducement to the Partnership’s execution and delivery of this Agreement (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, such Investor has relied solely upon its own investigation and the express representations and warranties of the Partnership Parties and of the MCRC Parties set forth in Article III of this Agreement, and (b) none of the Partnership Parties or MCRC Parties have made any representation as to the Partnership Parties, MCRC Parties or this Agreement, except as expressly set forth in Article III of this Agreement.
Section 4.07 No Public Market. Each Investor acknowledges that no public market now exists for the Preferred Units or the Common Units into which such Preferred Units may be converted, and that the Partnership has made no assurances that a public market will ever exist for the Preferred Units or the Common Units.
ARTICLE V
COVENANTS
Section 5.01 Conduct of Business Prior to the Closing. From the date hereof until the Closing Date, except as otherwise provided in this Agreement or consented to in writing by the Investors (which consent shall not be unreasonably withheld, conditioned or delayed), the Partnership Parties shall: (a) conduct the business of the Partnership Parties in the Ordinary Course of Business; and (b) use commercially reasonable efforts to maintain and preserve intact the current organization, business and franchise of the Partnership Parties and to preserve the rights, franchises, goodwill and relationships of its Employees, customers, lenders, suppliers, regulators and others having business relationships with such Partnership Parties, respectively. From the date hereof until the Closing Date, except as consented to in writing by Investors (which consent shall not be unreasonably withheld, conditioned or delayed), no Partnership Party shall take any action that would cause any of the changes, events or conditions described in Section 3.07 to occur.
Section 5.02 Access to Information. From the date hereof until the Closing, the Partnership Parties shall: (a) afford the Investors and their Representatives reasonable access to and the right to inspect all of the Real Properties, properties, assets, premises, books and records, contracts, agreements and other documents and data related to the Partnership Parties and their respective Subsidiaries and, to the extent within the control of the Partnership Parties, the Non-Controlled Subsidiaries and Limited Control Subsidiaries; (b) furnish the Investors and their Representatives with such financial, operating and other data and information related to the Partnership Parties and their respective Subsidiaries, and, to the extent in control of the Partnership Parties, their Non-Controlled Subsidiaries and Limited Control Subsidiaries, as the Investors or any of their Representatives may reasonably request; and (c) cooperate with and instruct the Representatives of the Partnership Parties and their respective Subsidiaries to cooperate with the Investors in its investigation of the Partnership Parties and their respective Subsidiaries; provided, however, that any such investigation shall be conducted during normal business hours upon reasonable advance notice to the Partnership Parties, under the supervision of the Partnership Parties’ personnel and in such a manner as not to interfere with the normal operations of the Partnership Parties and their respective Subsidiaries. All requests by the Investors for access pursuant to this Section 5.02 shall be submitted or directed exclusively to Xxxx Xxxxx or such other individuals as the Partnership Parties may designate in writing from time to time. Notwithstanding anything to the contrary in this Agreement, the Partnership Parties shall not be required to disclose any information to the Investors if such disclosure would, in the reasonable discretion of the Partnership Parties based on the reasonable advice of counsel: (x) cause significant harm to the Partnership or its business; (y) jeopardize any attorney-client or other applicable legal privilege; or (z) contravene any applicable Law, fiduciary duty or binding agreement entered into prior to the date of this Agreement, provided that the Partnership Parties shall use reasonable best efforts to mitigate any such impediments described in this sentence. Subsequent to the date hereof and prior to the Closing, without the written consent of the
Partnership, which may be withheld for any reason, the Investors shall not contact any lender, investor, joint venture partner, Tenant of or supplier to the Partnership or any Subsidiary of the Partnership with respect to matters related to the Partnership Parties; provided that, for the avoidance of doubt, the Investors may continue to contact any lender, investor, joint venture partner, Tenant of or supplier to the Partnership or any Subsidiary of the Partnership with respect to matters unrelated to the Partnership Parties or in the ordinary course of business of the Investors.
Section 5.03 Director and Officer Indemnification and Insurance.
(a) Investors agree that all rights to indemnification, advancement of expenses and exculpation by the Partnership Parties now existing in favor of each Person who is now, or has been at any time prior to the date hereof or who becomes prior to the Closing Date, a manager, an officer or director of the Partnership, as provided in the certificate of limited partnership or the Second Amended and Restated LP Agreement of the Partnership, in each case as in effect on the date of this Agreement, or pursuant to any other agreements in effect on the date hereof and disclosed in Schedule 5.03(a) of the Disclosure Letter, shall survive the Closing Date and shall continue in full force and effect in accordance with their respective terms.
(b) The obligations of the Partnership Parties under this Section 5.03 shall not be terminated or modified in such a manner as to adversely affect any manager, director or officer to whom this Section 5.03 applies without the consent of such affected manager, director or officer (it being expressly agreed that the managers, directors and officers to whom this Section 5.03 applies shall be third-party beneficiaries of this Section 5.03, each of whom may enforce the provisions of this Section 5.03).
(c) As long as the Investors have a designee on the board of trustees of the General Partner, the General Partner shall maintain directors’ and officers’ liability insurance providing coverage in such amounts and on such terms as is customary for members of the board of directors of MCRC. Such insurance shall include coverage for all members of the board of trustees of the General Partner, including any member designated by the Investors. The Investors hereby acknowledge and agree that the General Partner’s directors’ and officers’ liability insurance policy in effect as of the Closing Date, a copy of which has been furnished to the Investors, complies with this Section 5.03(c) as of the date hereof.
(d) Upon or prior to the election of any trustee to the board of trustees of the General Partner pursuant to the Second Amended and Restated Limited Partnership Agreement, the General Partner shall deliver to the Investors (i) an Indemnification Agreement between the General Partner and such trustee, in substantially the form attached hereto as Exhibit E and duly executed by an authorized officer of the General Partner and (ii) written evidence of an effective directors and officers liability insurance policy meeting the requirements of this Section 5.03.
Section 5.04 Governmental Approvals and Other Third-party Consents.
(a) Each Party hereto shall, as promptly as possible, use its reasonable best efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities and other third parties that may be or become necessary for its
execution and delivery of this Agreement and the performance of its obligations pursuant to this Agreement. Each Party shall reasonably cooperate with the other Party and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. The Parties hereto shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals. Each Party acknowledges and agrees that it has independently determined, based on the information available to it and with the advice of its own legal counsel, that no filing or notification pursuant to the HSR Act is required with respect to the transactions contemplated by this Agreement.
(b) All analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals made by or on behalf of either Party or its Affiliates before any Governmental Authority or the staff or regulators of any Governmental Authority in connection with the transactions contemplated hereunder (but, for the avoidance of doubt, not including any interactions between the Partnership Parties or their respective Subsidiaries and Governmental Authorities in the Ordinary Course of Business, any disclosure which is not permitted by Law or any disclosure containing confidential information with respect to either Party) shall be disclosed to the other Party hereunder in advance of any joint filing, submission or attendance (subject to applicable attorney-client or other legal privilege), it being the intent that the Parties will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any such joint analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals. Each Party shall give notice to the other Party with respect to any joint meeting, discussion, appearance or contact with any Governmental Authority or the staff or regulators of any Governmental Authority, with such notice being sufficient to provide the other Party with the opportunity to attend and participate in such meeting, discussion, appearance or contact.
(c) The Partnership and the Investors shall give all notices to, and obtain all consents from, all third parties that are described in Schedule 3.04 of the Disclosure Letter.
Section 5.05 Closing Conditions. From the date hereof until the Closing, each Party hereto shall use commercially reasonable best efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in Article VI hereof.
Section 5.06 Public Announcements. Unless otherwise required by applicable Law (based upon the reasonable advice of counsel), the Investors shall not make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the Partnership. None of the MCRC Parties nor the Partnership Parties shall make any public announcements in respect of this Agreement without the written consent of Investors. Notwithstanding the foregoing, the MCRC Parties shall be permitted to make any and all required disclosures of this Agreement and the transactions contemplated thereunder to the SEC, including, but not limited to, filing this Agreement with the SEC in connection with a Form 8-K or 10-K within four (4) Business Days of its execution, subject to the right of the Investors and their counsel to review copies of any such proposed filing or filings in advance thereof and comment thereon, and the obligation of the MCRC Parties to accept any comments reasonably requested by the Investors or their counsel with respect to the description of the Investors in such filing or filings. The Partnership Parties and the MCRC Parties agree to cooperate in good faith
to jointly prepare and release a press release or other form of public announcement relating to the entry of the transactions contemplated hereby.
Section 5.07 Further Assurances. Following the Closing, each of the MCRC Parties and the Partnership Parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances, and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.
Section 5.08 Transfer Taxes. All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred by the Partnership or any of the Partnership’s Subsidiaries in connection with this Agreement (including any real property transfer Tax and any other similar Tax resulting from the issuance of the Preferred Units to Investors) shall be borne and paid by the General Partner when due, without any special allocation (other than pro rata allocation to Persons other than Investors) of such expense to one or more partners under the Second Amended and Restated LP Agreement. The Partnership shall timely file or cause to be filed any Tax Return or other document with respect to such Taxes or fees (and the Investors shall cooperate with respect thereto as necessary at no cost to Investors). The expenses relating to filing any such Tax Return shall be borne by the MCRC Parties.
Section 5.09 REIT Covenants. The Partnership shall at all times through and including the end of the calendar year following the first date on which there are no Preferred Units outstanding, cause the representations in Section 3.16(b) and Section 3.19 to remain true, correct and complete. Without limitation on Investors’ rights pursuant to Section 5.02, the Partnership’s shall cause to be provided to the Investors, at the Partnership’s cost: (a) within 25 days after the end of each calendar quarter, an estimate of the Partnership’s gross assets as of such quarter-end (broken down by amount and asset type for purposes of and as specified in Section 856(c)(4) of the Code) and gross income for the year through such quarter-end (broken down by income type as determined for purposes of and as specified in Section 856(c)(2) and (3) of the Code), (b) at least five (5) Business Days prior to each quarterly estimated tax payment date for calendar year corporations, an estimate of each Investor’s share of the Partnership’s taxable income or loss with respect to such calendar quarter, and (c) within 25 days after the end of each taxable year, (i) final gross assets as of such year-end (broken down by amount and asset type for purposes of and as specified in Section 856(c)(4) of the Code) and gross income for such year (broken down by income type as determined for purposes of and as specified in Section 856(c)(2) and (3) of the Code), and (ii) estimated information necessary for the Investors to prepare any required 1099-DIV forms. This Section 5.09 shall survive the termination of this Agreement for so long as the Investors own any Preferred Units or Common Units.
Section 5.10 Reservation of Securities. The Partnership shall at all times keep available, free from preemptive rights, the full amount of Reserved Units sufficient for the purpose of effecting any and all Drawdowns and any and all conversions of the Preferred Units issuable pursuant to this Agreement, the Second Amended and Restated LP Agreement, the Ancillary Agreements and any related documents. For as long as any of the Preferred Units contemplated by this Agreement remain unissued or outstanding, the Partnership shall keep available, free from preemptive rights, Common Units sufficient for the purpose of effecting the
conversion of those unissued or outstanding Preferred Units in the full number of Common Units issuable upon the conversion of the unissued or outstanding Preferred Units. All Preferred Units, whether issued at the Closing or any Drawdown, and all Common Units delivered in respect to the Preferred Units, shall be newly issued, duly authorized and validly issued, fully paid and non-assessable, free from preemptive rights and free of any Lien or adverse claim other than any such restrictions under this Agreement or applicable state and federal securities Laws.
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.01 Conditions to Obligations of All Parties. The obligations of each Party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:
(a) No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.
(b) The Partnership Parties and the MCRC Parties shall have received all consents, authorizations, orders and approvals from the Governmental Authorities and all third parties referred to in Section 3.04 and Section 3.29, and the Investors shall have received all consents, authorizations, orders and approvals from the Governmental Authorities referred to in Section 4.02, in each case, in form and substance reasonably satisfactory to the Investors and MCRC Parties and Partnership Parties, as applicable, and no such consent, authorization, order and approval shall have been revoked.
Section 6.02 Conditions to Obligations of the Investors. The obligations of the Investors to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Investors’ waiver, at or prior to the Closing, of each of the following conditions, as specified below:
(a) The representations and warranties of the Partnership Parties and of the MCRC Parties contained in Article III shall be true and correct in all material respects as of the Closing Date (except for such representations and warranties that are qualified by their terms by a reference to materiality, which representations and warranties as so qualified shall be true and correct in all respects) as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, which shall be true and correct in all material respects as of that specified date).
(b) Each of the Partnership Parties and the MCRC Parties shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement to be performed or complied with by such Parties prior to or on the Closing Date.
(c) On or prior to the Closing Date, the Partnership Parties and the MCRC Parties shall deliver, or cause to be delivered, to the Investors:
(i) the Second Amended and Restated LP Agreement, duly executed by the General Partner and the Limited Partner;
(ii) The Shared Services Agreement by and between the General Partner and MCRC, a copy of which is attached hereto as Exhibit C;
(iii) The Credit Enhancement Agreement by and between the General Partner and MCRC or its Affiliates, a copy of which is attached hereto as Exhibit D;
(iv) The Registration Rights Agreement, a copy of which is attached hereto as Exhibit F;
(v) The Recourse Agreement, a copy of which is attached hereto as Exhibit G;
(vi) The Shareholders Agreement, a copy of which is attached hereto as Exhibit H;
(vii) The Bylaws of the General Partner, a copy of which is attached hereto as Exhibit L;
(viii) an Indemnification Agreement between the General Partner and each of the trustees elected as of the date hereof by the Investors pursuant to the terms of the Preferred Units, in substantially the form attached hereto as 0 (the “Indemnification Agreement”) and duly executed by an authorized officer of the General Partner and written evidence of an effective directors and officers’ liability insurance policy meeting the requirements of Section 5.03;
(ix) a certificate, dated as of the Closing Date, duly executed by the Secretary of MCRC and by the General Partner certifying that: (i) attached thereto are true and complete copies of all resolutions adopted by the respective Boards of Directors of MCRC Parties and the Partnership Parties authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby; (ii) attached thereto are true and complete copies of all Organizational Documents of the MCRC Parties and the Partnership Parties, together with any and all amendments thereto;
(x) a certificate, dated as of the Closing Date, duly executed by the Secretary (or equivalent officer) of MCRC and by the General Partner certifying the names and signatures of the officers of MCRC Parties and the Partnership Parties authorized to sign this Agreement, the Second Amended and Restated LP Agreement and each Ancillary Agreement;
(xi) evidence of receipt of all necessary consents, approvals or waivers with respect to any Person (including any consent, approval or waiver in respect of any contract, license or permit) as required to be obtained by the MCRC Parties or Partnership Parties or any of their Subsidiaries or Related Parties in connection with the execution and delivery of this Agreement or any other Ancillary Agreement, the performance by the MCRC Parties or Partnership Parties or any of their Subsidiaries or Related Parties of their respective obligations
hereunder and thereunder or the consummation of the transactions contemplated hereby or thereby;
(xii) An opinion of Seyfarth Xxxx LLP, counsel to the MCRC Parties and the Partnership Parties, dated the Closing Date, in substantially the form attached hereto as Exhibit I, an opinion of Seyfarth Xxxx LLP, tax counsel to the MCRC Parties and the Partnership Parties, regarding REIT matters, dated the Closing Date, in substantially the form attached hereto as Exhibit J, an opinion of Seyfarth Xxxx LLP, Delaware counsel to the MCRLP and Partnership in substantially the form attached hereto as Exhibit I, and an opinion of Xxxxxxx Xxxxx LLP, Maryland counsel to MCRC, MCPT and RRT, dated the Closing Date, in substantially the form attached hereto as Exhibit K;
(xiii) a properly completed Internal Revenue Service Form 8875 with respect to any Subsidiary that is (or is treated as) a corporation for federal income tax purposes, with Rockpoint Class A Preferred Holder (and any other REIT designated by the Investors) as the REIT (or REITs) named therein and having an effective date as of each Closing Date, duly executed by such Subsidiary, together with evidence reasonably satisfactory to the Investors of Investors’ authority to file such form with the Internal Revenue Service;
(xiv) Schedule 1 attached to the Second Amended and Restated LP Agreement, which shall reflect the Investors as the holder of the Initial Purchased Units;
(xv) Such other documents relating to the transactions contemplated hereby as the Investors or its counsel may reasonably request; and
(xvi) The amount to be reimbursed to the Investors by the MCRC Parties pursuant to Section 9.01;
(xvii) A certificate duly executed by the Chief Executive Officer and the Chief Financial Officer of MCRC and by the General Partner certifying that, as of the Closing Date, each of the conditions set forth in Sections 6.01(a), Section 6.01(b) and Section 6.02 (solely with respect to the MCRC Parties’ and Partnership Parties’ obligations thereunder) has been satisfied (except to the extent waived in writing by the Investors).
Section 6.03 Conditions to Obligations of the MCRC Parties and the Partnership Parties. The obligations of the MCRC Parties and the Partnership Parties to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or the Partnership’s waiver, at or prior to the Closing, of each of the following conditions:
(a) The representations and warranties of the Investors contained in Article IV shall be true and correct in all material respects as of the Closing Date (except for such representations and warranties that are qualified by their terms by a reference to materiality, which representations and warranties as so qualified shall be true and correct in all respects) as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, which shall be true and correct in all material respects as of that specified date).
(b) The Investors shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement to be performed or complied with by them prior to or on the Closing Date.
(c) On or prior to the Closing Date, the Investors shall deliver, or cause to be delivered, to the Partnership:
(i) a certificate, dated the Closing Date and signed by a duly authorized officer of the Investors, that each of the conditions set forth in Section 6.01 and Section 6.03(b) have been satisfied;
(ii) the Second Amended and Restated LP Agreement, duly executed by Investor;
(iii) cash in an amount equal to the Purchase Price (less the Escrow Funds) by wire transfer in immediately available funds, in accordance with the wire instructions set forth on Exhibit B attached hereto, or as otherwise may be specified by the Partnership in writing to the Investors prior to the Closing at least three (3) Business Days prior to the Closing Date.
ARTICLE VII
INDEMNIFICATION
Section 7.01 Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is fifteen (15) months from the Closing Date; provided, however, that the representations and warranties in: (i) Section 3.01 (Organization and Authority of the Partnership); Section 3.02 (Capitalization); Section 3.04 (No Conflicts; Consents); Section 3.18 (Brokers); Section 3.19 (REIT Requirements); Section 3.20 (Private Placement) (collectively, the “Fundamental Representations”); (ii) 0 (Organization and Authority of the MCRC Parties); Section 3.29 (No Conflicts; Consents); Section 3.30 (Arm’s-Length Transaction); Section 3.31 (Legal Proceedings; Governmental Orders) and Section 3.32 (Ownership of Partnership Parties) (collectively, the “MCRC Parties Representations”); and (iii) Section 3.14 (Employee Benefit Matters), Section 3.16 (Taxes), Section 3.22 (Anti-Takeover Provision) (collectively, the “Special Representations”), shall in each case survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus 60 days. None of the covenants or other agreements contained in this Agreement shall survive the Closing Date pursuant to this Agreement other than those which by their terms contemplate performance after the Closing Date, and each such surviving covenant and agreement shall survive the Closing for the period contemplated by its terms. For the avoidance of doubt, the Parties acknowledge and agree that the applicable survival periods set forth in this Section 7.01, except for with respect to the Fundamental Representations, MCRC Parties Representations and Special Representations, are intended to shorten the period otherwise provided by Law during which claims for breach of representations, warranties and covenants can be made, and that any such claims must be made on or prior to the expiration date of applicable survival period set forth in this Section 7.01 or be forever barred. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching Party to the breaching Party on or
prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of such survival period and such claims shall survive until finally resolved.
Section 7.02 Indemnification By the MCRC Parties. Subject to the other terms and conditions of this Article VII, from and after the Closing, the MCRC Parties shall jointly and severally save, defend and indemnify each of the Investors, and each of their respective partners, directors, officers, members, agents, employees, Related Parties, Affiliates, Subsidiaries, direct and indirect owners and equity holders, and each of the successors and assigns of all of the foregoing persons (each, an “Investor Indemnified Party”) (who for purposes of this Article VII are express third party beneficiaries of this Article VII) against, and shall hold each Investor and Investor Indemnified Party harmless from and against, and shall compensate and reimburse each of the foregoing for, on an after-tax basis, any and all Losses asserted against, incurred, suffered or sustained by, or imposed upon, such Investor or Investor Indemnified Party based upon, arising out of, with respect to or by reason of the following (such Losses to be determined without regard to any qualification or exception contained therein relating to materiality, “Material Adverse Effect” or any similar materiality qualification or standard):
(a) any inaccuracy in or breach of any of the Fundamental Representations; or
(b) any inaccuracy in or breach of the MCRC Parties Representations.
Section 7.03 Indemnification By the Partnership Parties. Subject to the other terms and conditions of this Article VII, from and after the Closing, the Partnership Parties shall jointly and severally save, defend and indemnify each Investor and any Investor Indemnified Party against, on an after-tax basis, and shall hold each Investor and Investor Indemnified Party harmless from and against, any and all Losses asserted against, incurred, suffered or sustained by, or imposed upon, such Investor or Investor Indemnified Party based upon, arising out of, with respect to or by reason of the following:
(a) any inaccuracy in or breach of any of the representations or warranties of the Partnership Parties contained in Article III (other than the Fundamental Representations or the MCRC Parties Representations) (such Losses to be determined without regard to any qualification or exception contained therein relating to materiality, “Material Adverse Effect” or any similar materiality qualification or standard);
(b) any breach, non-compliance or non-fulfillment of any covenant, agreement or obligation to be performed by any Partnership Party pursuant to this Agreement, which, by their terms, contemplate performance after the Closing; or
(c) to the extent that the indemnity contemplated by Section 7.02 is insufficient to hold any Investor Indemnified Party harmless from and indemnified against such Loss, but solely to the extent of such insufficiency.
Section 7.04 Indemnification By the Investors. Subject to the other terms and conditions of this Article VII, from and after the Closing, the Investors shall jointly and severally save, defend and indemnify the MCRC Parties, the Partnership Parties, and each of their respective partners, directors, officers, members, agents, employees, Related Parties, Affiliates, Subsidiaries, direct and indirect owners and equity holders, and each of the successors and
assigns of all of the foregoing persons (each, an “MC Indemnified Party”) against, and shall hold such MC Indemnified Party harmless from and against, any and all Losses asserted against, incurred, suffered or sustained by, or imposed upon, any such MC Indemnified Party based upon, arising out of, with respect to or by reason of:
(a) any inaccuracy in or breach of any of the representations or warranties of the Investors contained in Article IV (such Losses to be determined without regard to any qualification or exception contained therein relating to materiality, “Material Adverse Effect” or any similar materiality qualification or standard); or
(b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by the Investors pursuant to this Agreement.
Section 7.05 Certain Limitations. The Party making a claim under this Article VII is referred to as the “Indemnified Party”, and the Party against whom such claims are asserted under this Article VII is referred to as the “Indemnifying Party”. The indemnification provided for in Section 7.02 and Section 7.03 shall be subject to the following limitations:
(a) Neither the MCRC Parties nor the Partnership Parties shall be liable to the Investors or any other Investor Indemnified Party for Losses entitled to be indemnified under Section 7.02 or Section 7.03 until such time as the aggregate amount of all Losses under Section 7.02 or Section 7.03 exceeds $1,500,000 (the “Indemnification Threshold”), in which event the MCRC Parties or Partnership Parties, as applicable, shall be required to pay or be liable for all Losses for which the Investors and other Investor Indemnified Parties are entitled to be indemnified hereunder (including any Losses below the Indemnification Threshold).
(b) The maximum aggregate amount of all Losses for which the Partnership Parties may be liable pursuant to Section 7.03, except with respect to breaches of Fundamental Representations, shall not exceed $300,000,000. The aggregate amount of all Losses for which the Investors may be liable pursuant to Section 7.04 shall not exceed $300,000,000.
(c) Notwithstanding the foregoing, the limitations set forth in Section 7.05(a) and Section 7.05(b) shall not apply to Losses based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any Fundamental Representations or in the case of fraud found to have been committed by the Indemnifying Party by a court of competent jurisdiction in a judgment which has become final in that it is no longer subject to appeal or review.
(d) Notwithstanding anything to the contrary herein, the sole and exclusive remedy for indemnification pursuant to Section 7.03(a) hereof shall be made in accordance with Section 9(g) of the Second Amended and Restated LP Agreement, and the Investor Indemnified Parties shall not seek recourse for claims under Section 7.03(a) by any other means.
(e) Upon making any payment in respect of claim as provided for in this Article VII, the Indemnifying Party will, to the extent of such payment, be subrogated to all rights of Indemnified Party against any third person (other than an insurance company) in respect of the Loss to which such payment related; provided, however, that (i) the Indemnifying Party shall then be in compliance with its obligations under this Agreement in respect of such Loss and (ii) until Indemnified Party fully recovers payment of its Loss, any and all claims of the
Indemnifying Party against any such third person on account of such payment will be subordinated in right of payment to Indemnifying Party’s rights against such third person. Without limiting the generality or effect of any other provision hereof, each such Indemnifying Party and Indemnified Party will duly execute upon request all instruments reasonably necessary to evidence and perfect the above-described subrogation and subordination rights. To the extent that insurance proceeds or other third party proceeds are received after payment has been made by an Indemnifying Party, the Indemnified Party shall promptly pay to the Indemnifying Party an amount equal to such proceeds (up to, but not in excess of, the amount previously paid by the Indemnifying Party to the Indemnified Party). Any payment hereunder shall be treated as provided by the Code and applicable Treasury Regulations in order to comply with Section 7(d) of the Second Amended and Restated LP Agreement consistent with the economic arrangement of the Parties.
(f) The Indemnified Party shall seek to mitigate the amount of any Losses to the extent, if any, required by applicable law. Without limiting the foregoing, Losses shall be calculated net of actual payments received by an Indemnified Party pursuant to such Indemnified Party’s existing insurance policies (net of reasonable collection costs). Each Indemnified Party hereby agrees to use commercially reasonable efforts to collect any and all insurance proceeds to which it may be entitled in respect of any such Losses that may reduce or eliminate any applicable Losses to the same extent as it would if such Losses were not subject to indemnification hereunder; it being understood that no Indemnified Party shall be obligated to bring a lawsuit against any insurer to obtain a recovery under any insurance policies with respect to any particular Losses and the failure of an Indemnified Party to obtain recovery under any insurance policies despite using commercially reasonable efforts to do so shall not in any way affect or modify such Indemnified Party’s rights to which the Indemnified Party would have otherwise been entitled pursuant to this Article VII.
(g) The amount of Losses payable by an Indemnifying Party pursuant to this Article VII shall be without duplication, and in no event shall an Indemnified Party be indemnified under different provisions of this Agreement for the same Losses.
Section 7.06 Indemnification Procedures.
(a) Third-Party Claims. If any Indemnified Party receives written notice of the assertion or commencement of any action, suit, claim or other legal proceeding made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “Third-Party Claim”) against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party prompt written notice thereof. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party is materially prejudiced thereby. Such notice by the Indemnified Party shall describe the Third-Party Claim in reasonable detail, shall include copies of any written demand or complaint to the extent reasonably available and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third-Party Claim at the Indemnifying Party’s
expense and by the Indemnifying Party’s own counsel reasonably satisfactory to the Indemnified Party; provided that if the parties (including any impleaded parties) to any such Third-Party Claims include both such Indemnified Party and the Indemnifying Parties and based on advice of such Indemnified Party’s counsel there are legal defenses available to such Indemnified Party that are different from or additional to those available to the Indemnifying Parties, such Indemnified Party shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such Third-Party Claims and the Indemnifying Party shall promptly and periodically reimburse reasonable fees and expenses of such separate counsel to the Indemnified Party. In the event that the Indemnifying Party assumes the defense of any Third-Party Claim with counsel reasonably acceptable to the Indemnified Party, subject to Section 7.06(b), it shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third-Party Claim. The Indemnified Party shall have the right at its own cost and expense, to participate in the defense of any Third-Party Claim with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. If the Indemnifying Party elects not to compromise or defend such Third-Party Claim or fails to promptly notify the Indemnified Party in writing of its election to defend as provided in this Agreement, the Indemnified Party may, subject to Section 7.06(b), pay, compromise, defend such Third-Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third-Party Claim. The Indemnifying Party shall promptly and periodically reimburse the reasonable fees and expenses of counsel to the Indemnified Party with respect to a Third Party Claim solely to the extent that the Indemnifying Party: (i) fails to assume the defense of such claim; and (ii) fails to dispute in good faith by written notice within thirty days of receipt of notice of the Third Party Claim that such Indemnifying Party is obligated to provide indemnification under this Agreement with respect to such Third Party Claim. The MCRC Parties, the Partnership Parties and the Investors shall cooperate with each other in all reasonable respects in connection with the defense of any Third-Party Claim, including making available records relating to such Third-Party Claim (subject to applicable legal privilege) and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third-Party Claim.
(b) Settlement of Third-Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third-Party Claim without the prior written consent of the Indemnified Party (which consent shall not be unreasonably conditioned, delayed or withheld). Whether or not the Indemnifying Party assumes the defense of a Third Party Claim pursuant to Section 7.06(a), the Indemnified Party shall not admit any liability with respect to, or settle, compromise or discharge, or offer to settle, compromise or discharge, and shall not otherwise have the right to consent or agree to any monetary or non-monetary relief, including injunctive relief or other equitable remedies with respect to, such Third Party Claim without the Indemnifying Party’s prior written consent (which consent shall not be unreasonably conditioned, delayed or withheld).
(c) Direct Claims. Any claim by an Indemnified Party on account of a Loss which does not result from a Third-Party Claim (a “Direct Claim”) shall be asserted by the Indemnified Party by giving the Indemnifying Party prompt written notice thereof. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its
indemnification obligations. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have 30 days after its receipt of such notice to respond in writing to such Direct Claim. During such 30-day period, the Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim (subject to the right of the Indemnified Party to preserve applicable legal privilege), and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall reasonably assist the Indemnifying Party’s investigation by giving such information and reasonable assistance as the Indemnifying Party or any of its professional advisors may reasonably request, subject to the right of the Indemnified Party to preserve applicable legal privilege. If the Indemnifying Party does not so respond within such 30-day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.
(d) Notwithstanding the foregoing, to the extent that the undertaking to save, defend, indemnify, compensate or reimburse set forth in in this Article VII may be unenforceable because it is violative of any law or public policy, the applicable Indemnifying Party, shall contribute the maximum portion which it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Parties in respect of such Losses: (i) to which the Indemnified Party would have otherwise been entitled pursuant to this Article VII; and (ii) that such Indemnifying Party, would have been otherwise required to indemnify pursuant to this Article VII.
Section 7.07 Exclusive Remedies. Except with respect to fraud or with respect to claims related to or with respect to the Second Amended and Restated LP Agreement or any Ancillary Agreements, after the Closing Date, the indemnification provisions contained in this Article VII shall, subject to the last sentence of this Section 7.07, constitute the sole and exclusive remedy of the Parties with respect to any breach of any of the representations, warranties, covenants or agreements contained in this Agreement. Notwithstanding anything to the contrary contained herein, subject to the last sentence of this Section 7.07, the liability of the MCRC Parties for claims arising under this Agreement shall be exclusively limited to indemnification for claims for breaches by the Partnership Parties of the Fundamental Representations and breaches by the MCRC Parties of the MCRC Parties Representations as provided under this Article VII. Notwithstanding the foregoing, the provisions of this Section 7.07 will not, however, restrict the right of any Party to seek specific performance or other equitable remedies in connection with any breach of any of the covenants to be performed after Closing pursuant to Section 9.12.
Section 7.08 Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the Parties as an adjustment to the Purchase Price paid for Preferred Units for Tax purposes, unless otherwise required by Law or as otherwise provided in Section 9(g) of the Second Amended and Restated LP Agreement.
ARTICLE VIII
TERMINATION
Section 8.01 Termination. This Agreement may be terminated at any time prior to the Closing:
(a) by the mutual written consent of each of the MCRC Parties and the Partnership Parties, on the one hand, and the Investors, on the other hand;
(b) by the Investors by written notice delivered to the MCRC Parties and Partnership Parties if:
(i) The Investors are not then in material breach of any provision of this Agreement and there has been a material breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by any of the MCRC Parties or Partnership Parties pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article VI and such breach, inaccuracy or failure cannot be cured by the MCRC Parties or the Partnership Parties within fifteen (15) Business days after such MCRC Party or Partnership Party receives written notice from the Investors of such breach or failure; or
(ii) (A) all of the closing conditions set forth in Sections 6.01 and 6.03 have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date); (B) the Investors have advised the Partnership in writing of their intention to consummate the Closing; and (C) the Closing does not occur as a result of a failure by the Partnership to issue the Initial Purchased Units as then required in accordance with Section 2.03.
(c) by any of the Partnership Parties or the MCRC Parties by written notice to the Investors if:
(i) none of the MCRC Parties or the Partnership Parties are then in material breach of any provision of this Agreement and there has been a material breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by the Investors pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article VI and such breach, inaccuracy or failure cannot be cured by the Investors within fifteen (15) Business days after the Investors receives written notice from any Partnership Party of such breach or failure; or
(ii) (A) all of the closing conditions set forth in Sections 6.01 and 6.02 have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date); (B) the MCRC Parties and the General Partner have advised the Investors in writing of their intention to consummate the Closing; and (C) the Closing does not occur as a result of a failure by the Investors to purchase the Initial Purchased Units as then required in accordance with Section 2.03.
(d) by the Investors or the Partnership Parties in the event that:
(i) there shall be any Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited;
(ii) any Governmental Authority shall have issued a Governmental Order restraining or enjoining the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable; or
(iii) the transaction contemplated hereby has not been consummated by December 31, 2017 (the “Termination Date”), unless extended by written agreement of the Investors and the Partnership Parties, provided, however, that this right to terminate shall not be available to any Party whose failure to fulfill any obligations under this Agreement has been the cause, or results in, the failure to close the transaction contemplated hereby by such date.
Section 8.02 Effect of Termination.
(a) In the event of the termination of this Agreement in accordance with this Article, this Agreement shall forthwith become void and there shall be no liability on the part of any Party hereto except as set forth in Sections 3.22, 5.06, 5.09 (to the extent set forth therein), 2.02 and 5.10, this Article VIII and Article IX.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Expenses. Except as otherwise expressly provided herein and conditioned upon the Closing, all reasonable costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors, accountants and brokers, including Eastdil Secured (“Expenses”), incurred in connection with this Agreement and the transactions contemplated hereby shall be borne by the Partnership, and the Partnership shall reimburse each Investor (i) on or within thirty (30) calendar days of the Closing Date for all reasonable out-of-pocket Expenses incurred by such Investor prior to the Closing Date, and (ii) following the Closing Date for all reasonable out-of-pocket Expenses incurred by such Investor in connection with each Drawdown; provided, that, on or prior to each the Closing Date or such Drawdown date, as applicable, the Investors shall furnish to the Partnership written evidence of such reasonable out-of-pocket Expenses reasonably acceptable to the Partnership. If the Closing does not occur, all Expenses shall be paid by the Party incurring such costs and expenses.
Section 9.02 Renunciation of Opportunities. The MCRC Parties and the Partnership Parties hereby renounce (and the MCRC Board of Directors in its own capacity and in its capacity as general partner of MCRLP) and the MCPT Board of Trustees have adopted resolutions renouncing) any interest or expectancy of the MCRC Parties or Partnership Parties or any Subsidiary or Related Party of the MCRC Parties or Partnership Parties (collectively, the “MC Opportunity Group”) in, or in being offered an opportunity to participate in, any and all business opportunities that are presented to the holders of Preferred Units or their Subsidiaries or Related Parties (including, without limitation, any representative or Affiliate of such holders of Preferred Units serving on the board of trustees of the General Partner (the “Board of Trustees”) or the board of directors or other governing body of any Subsidiary or Related Party of the MCRC Parties or Partnership Parties) (collectively, the “Investor Parties”), except as otherwise provided in this Section 9.02. Without limiting the foregoing renunciation, each member of the MC Opportunity Group (a) acknowledges that the Investor Parties are in the business of making investments in, and have or may have investments in, other businesses
similar to and that may compete with the businesses of the MC Opportunity Group (“Competing Businesses”) and (b) agrees that the Investor Parties shall have the unfettered right to make investments in or have relationships with other Competing Businesses independent of their investments in the Partnership. By virtue of an Investor Party holding securities of the Partnership or by having persons designated by or Affiliated with such Investor Party serving on or observing at meetings of any of the Board of Trustees, committee or otherwise, no Investor Party shall have any obligation to any member of the MC Opportunity Group or any other holder of securities of the MCRC Parties or Partnership Parties to refrain from competing with any member of the MC Opportunities Group, making investments in or having relationships with Competing Businesses, or otherwise engaging in any commercial activity and no MCRC Party, Partnership Party, any of its respective Subsidiaries or Related Parties or any other holder of securities of any MCRC Parties or Partnership Party, shall have any right with respect to any investment or activities undertaken by such Investor Party. No Investor Party shall be obligated to communicate or present any particular investment opportunity to any member of the MC Opportunity Group even if such opportunity is of a character that, if presented to the any member of the MC Opportunity Group, could be taken by the such entity, provided such Investor Party shall have acted in good faith and such opportunity shall not have been offered to such person in his or her capacity as a trustee of the General Partner. Each Investor Party shall continue to have the right for its own respective account or to recommend to others any such particular investment opportunity.
Section 9.03 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission and receipt) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 9.03):
If to a Partnership Party: |
x/x Xxxxxxxx Xxxxxxxxxxx Xxxxx Xxxxxxxxxx 0, 000 Xxxxxx Xxxxxx, Xxxxx 000 Xxxxxx Xxxx, XX 00000 Facsimile: (000) 000-0000 E-mail: xxxxx@xxxxxxxxxxx.xxx Attention: Xxxx Xxxxx |
with a copy to (which shall not constitute notice): |
Xxxx-Xxxx Realty Corporation Harborside 3, 000 Xxxxxx Xxxxxx, Xxxxx 000 Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000 Email:xxxxxxx@xxxx-xxxx.xxx Attention: Xxxx Xxxxxx, Esq. Executive Vice President and General Counsel |
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with a copy to (which shall not constitute notice): |
Seyfarth Xxxx LLP 000 Xxxxxx Xxxxxx Xxx Xxxx, XX 00000 Facsimile: (000) 000-0000 E-mail: xxxxxxx@xxxxxxxx.xxx xxxxxxxx@xxxxxxxx.xxx Attention: Xxxx X. Xxxxxx Xxxxx Xxxxxxx |
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If to a MCRC Party:
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Xxxx-Xxxx Realty Corporation Harborside 3, 000 Xxxxxx Xxxxxx, Xxxxx 000 Xxxxxx Xxxx, XX 00000 Facsimile: (000) 000-0000 Email:xxxxxxx@xxxx-xxxx.xxx Attention: Xxxx Xxxxxx, Esq. Executive Vice President and General Counsel |
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with a copy to (which shall not constitute notice): |
Seyfarth Xxxx LLP 000 Xxxxxx Xxxxxx Xxx Xxxx, XX 00000 Facsimile: (000) 000-0000 E-mail: xxxxxxx@xxxxxxxx.xxx xxxxxxxx@xxxxxxxx.xxx Attention: Xxxx X. Xxxxxx Xxxxx Xxxxxxx |
If to Investors:
And |
RPIIA-RLA, L.L.C. RPIIA-RLB, L.L.C. 000 Xxxxxxxx Xxxxxx Xxxxxx, XX 00000 Facsimile: (000) 000-0000 E-mail: xxxxxx@xxxxxxxxxxxxxx.xxx xxxxxxxx@xxxxxxxxxxxxxx.xxx Attention: Xxxxxxx Xxxxx Xxxxxx Xxxxxxx
RPIIA-RLA, L.L.C. RPIIA-RLB, L.L.C. Woodlawn Hall at Old Parkland 0000 Xxxxx Xxxxxx, Xxxxx 000 Xxxxxx, XX 00000 Facsimile: (000) 000-0000 E-mail: xxxxx@xxxxxxxxxxxxxx.xxx Attention: Xxx Xxxx |
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with a copy to (which shall not constitute notice): |
Xxxxxx, Xxxx & Xxxxxxxx LLP 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000 Xxx Xxxxxxx, XX 00000-0000 Facsimile: (000) 000-0000 E-mail: xxxxxx@xxxxxxxxxx.xxx xxxxxxxx@xxxxxxxxxx.xxx Attention: Xxxxx Xxxxx Xxxxx X. Xxxxxxx |
Section 9.04 Interpretation. For purposes of this Agreement: (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Letter and Exhibits mean the Articles and Sections of, and Disclosure Letter and Exhibits attached to, or provided in conjunction with, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof; and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted. The Disclosure Letter and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.
Section 9.05 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
Section 9.06 Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
Section 9.07 Entire Agreement. This Agreement, the Second Amended and Restated LP Agreement and the Ancillary Agreements constitute the sole and entire agreement of the Parties to this Agreement with respect to the subject matter contained herein, and supersede all prior and contemporaneous representations, warranties, understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement, the Exhibits and Disclosure Letter, the statements in the body of this Agreement will control.
Section 9.08 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Except as provided under the Second Amended and Restated LP Agreement and the Ancillary Agreements in accordance with the respective provisions thereof, neither Party may assign its rights or obligations hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed. No assignment shall relieve the assigning Party of any of its obligations hereunder, except to the extent set forth under the Second Amended and Restated LP Agreement or the Ancillary Agreements.
Section 9.09 No Third-party Beneficiaries. Except as provided in Article VII and Section 5.03, this Agreement is for the sole benefit of the Parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, other than with respect to permitted assignees or transferees of the Preferred Units in accordance with this Agreement, the Second Amended and Restated LP Agreement or the Ancillary Agreements and in accordance with the respective provisions thereof.
Section 9.10 Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party hereto. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
Section 9.11 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR XXX XXXXXX XX XXX XXXXX XX XXX XXXX IN EACH CASE LOCATED IN THE CITY OF NEW YORK AND NEW YORK COUNTY, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11(C).
Section 9.12 Specific Performance. The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.
Section 9.13 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means
of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
[Remainder of page intentionally left blank; signature page follows]
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
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ROSELAND RESIDENTIAL HOLDING L.L.C., a Delaware limited liability company | ||
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By: |
ROSELAND RESIDENTIAL TRUST, a | |
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Maryland real estate investment trust, its sole | |
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member | |
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By: |
/s/ Xxxxxxx X. XxXxxxx |
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Name: Xxxxxxx X. XxXxxxx | |
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Title: Chief Executive Officer | |
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ROSELAND RESIDENTIAL, L.P., a Delaware limited partnership | ||
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By: |
ROSELAND RESIDENTIAL TRUST, a | |
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Maryland real estate investment trust, its | |
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general partner | |
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By: |
/s/ Xxxxxxx X. XxXxxxx |
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Name: Xxxxxxx X. XxXxxxx | |
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Title: Chief Executive Officer | |
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ROSELAND RESIDENTIAL TRUST, a Maryland real estate investment trust | ||
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By: |
/s/ Xxxxxxx X. XxXxxxx |
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Name: Xxxxxxx X. XxXxxxx | |
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Title: Chief Executive Officer | |
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XXXX-XXXX REALTY, L.P., a Delaware limited partnership | ||
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By: |
XXXX-XXXX REALTY CORPORATION, a | |
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Maryland corporation, its general partner | |
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By: |
/s/ Xxxxxxx X. XxXxxxx |
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Name: Xxxxxxx X. XxXxxxx | |
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Title: President and Chief Operating Officer |
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XXXX-XXXX PROPERTY TRUST, a Maryland real estate investment trust | ||
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By: |
/s/ Xxxxxxx X. XxXxxxx |
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Name: Xxxxxxx X. XxXxxxx | |
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Title: President and Chief Operating Officer | |
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XXXX-XXXX TEXAS PROPERTY, L.P., a Texas limited partnership | ||
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By: |
XXXX-XXXX SUB XVII, INC., a Delaware corporation, its general partner | |
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By: |
/s/ Xxxxxxx X. XxXxxxx |
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Name: Xxxxxxx X. XxXxxxx | |
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Title: President and Chief Operating Officer | |
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XXXX-XXXX REALTY CORPORATION, a | ||
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Maryland corporation | ||
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By: |
/s/ Xxxxxxx X. XxXxxxx |
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Name: Xxxxxxx X. XxXxxxx | |
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Title: President and Chief Operating Officer |
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RPIIA-RLA, L.L.C. | |
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By |
/s/ Xxx X. Xxxx |
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Name: Xxx X. Xxxx | |
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Title: Vice President | |
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RPIIA-RLB, L.L.C. | |
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By |
/s/ Xxx X. Xxxx |
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Name: Xxx X. Xxxx | |
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Title: Vice President |
EXHIBIT A
Second Amended and Restated LP Agreement
SECOND AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
ROSELAND RESIDENTIAL, L.P.
Dated as of , 2017
TABLE OF CONTENTS
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Page |
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1. |
DEFINITIONS |
4 |
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2. |
TERMS AND CONDITIONS |
23 |
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3. |
TERM |
28 |
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4. |
SCOPE AND PURPOSES; AUTHORITY |
29 |
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5. |
CAPITAL ACCOUNTS, CONTRIBUTIONS AND DEFAULT |
29 |
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6. |
NON-RECOURSE NATURE OF PREFERRED INTEREST |
33 |
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7. |
ALLOCATION OF PROFITS AND LOSSES |
33 |
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8. |
RESTRICTIONS ON SALE OF CERTAIN PROPERTIES. |
37 |
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9. |
DISTRIBUTIONS |
39 |
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10. |
MANAGEMENT |
44 |
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11. |
FINANCIAL AND TAX MATTERS |
48 |
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12. |
RESTRICTIONS ON THE DISPOSITION OF PARTNERSHIP INTERESTS; APPROVED SALES |
55 |
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13. |
GENERAL PARTNER’S PURCHASE RIGHTS; PARTNERSHIP’S REDEMPTION/PURCHASE RIGHTS |
58 |
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14. |
APPRAISAL; VALUATION; FAIR MARKET VALUE. |
64 |
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15. |
TERMINATION AND DISSOLUTION; BANKRUPTCY CONSENTS REQUIRED |
66 |
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16. |
INDEMNIFICATION |
67 |
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17. |
PARTNERS’ AUTHORITY AND OTHER ACTIVITIES |
68 |
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18. |
NOTICES |
68 |
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19. |
AMENDMENT |
69 |
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20. |
WAIVER OF PARTITION; NATURE OF INTEREST |
70 |
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21. |
BENEFITS OF AGREEMENT; NO THIRD-PARTY RIGHTS |
70 |
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22. |
CONFIDENTIALITY COVENANTS |
70 |
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23. |
GENERAL PROVISIONS |
71 |
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES: |
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Schedule 1 - |
Commitments; Capital Contributions; Partnership Units; Percentage Interests |
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Schedule 2 - |
Major Decisions |
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Schedule 3 - |
Subsidiaries |
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Schedule 4 - |
Principles of Conversion to Common Interests |
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EXHIBITS: |
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Exhibit A - |
Form of Shared Services Agreement |
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Exhibit B - |
Form of Credit Enhancement Services Agreement |
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Exhibit C - |
Form of Indemnity Agreement |
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Exhibit D - |
Example (Special Allocation of Modified Net Income) |
THE PARTNERSHIP INTERESTS DESCRIBED IN THIS SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF ROSELAND RESIDENTIAL, L.P. HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY JURISDICTION. THE PARTNERSHIP INTERESTS MAY NOT BE SOLD OR OTHERWISE DISPOSED OF, OR OFFERED FOR SALE OR OTHER DISPOSITION, UNLESS A REGISTRATION STATEMENT UNDER THOSE LAWS IS THEN IN EFFECT, OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS IS THEN APPLICABLE, AND UNLESS THE PROVISIONS OF SECTION 12 ARE SATISFIED.
SECOND AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
ROSELAND RESIDENTIAL, L.P.
THIS SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (as it may be amended or supplemented from time to time, this “Agreement”) of ROSELAND RESIDENTIAL, L.P., a Delaware limited partnership (the “Partnership”), is entered into as of , 2017 (the “Effective Date”), by and among ROSELAND RESIDENTIAL TRUST, a Maryland real estate investment trust, as the general partner of the Partnership (together with its permitted successors, assigns and transferees, “RRT,” and the “General Partner”), RPIIA-RLA, L.L.C., a Delaware limited liability company (together with its permitted successors, assigns and transferees, “Rockpoint Class A Preferred Holder”), and RPIIA-RLB, L.L.C., a Delaware limited liability company (together with its permitted successors, assigns and transferees, “Rockpoint Class B Preferred Holder”, and together with Rockpoint Class A Preferred Holder, the “Rockpoint Preferred Holders”, each a Limited Partner), such other Persons who are admitted to the Partnership as Partners and, solely with respect to Sections 8(b) and 10(g)(iii), XXXX-XXXX REALTY CORPORATION, a Maryland corporation and an indirect owner of the Partnership (“MCRC”), and XXXX-XXXX REALTY, L.P., a Delaware limited partnership and an indirect owner of Partnership Interests (“MCRLP”). Capitalized terms in this Agreement shall have the meanings set forth in Section 1 or as defined elsewhere in this Agreement or in the annexed Schedules and Exhibits.
WHEREAS, the Partnership is a Delaware limited partnership formed on September 24, 2015; and
WHEREAS, the Amended and Restated Agreement of Limited Partnership (the “Original Agreement”) of the Partnership was entered into as of December 22, 2015, by RRT and Roseland Residential Holding, LLC, a Delaware limited liability company (“RRH”, as a Limited Partner, and, together with the General Partner, the “Initial Partners”); and
WHEREAS, MCRC, has elected to be treated, and has operated and will continue to operate, as a real estate investment trust (a “REIT”) pursuant to Sections 856 through 860 of the Code; and
WHEREAS, MCRC is the sole general partner of MCRLP; and
WHEREAS, RRT is owned by the following Affiliates of MCRC in the percentages set forth opposite such Affiliate’s name: (i) MCRLP: 89.31%; (ii) Xxxx Xxxx Property Trust, a Maryland real estate investment trust (“MCPT”): 10.41%; and (iii) Xxxx-Xxxx Texas Property, L.P., a Texas limited partnership (“MCTP”): 0.28%.
WHEREAS, under the Original Agreement, RRT was the sole General Partner and RRH was the sole Limited Partner; and
WHEREAS, it is intended that the Partnership (directly or through its Subsidiaries) shall: (i) own and operate real property and do anything else that is permitted under this Agreement and under the Act; and (ii) engage in any and all activities necessary or incidental to the foregoing, in each case subject to the terms, conditions and restrictions set forth herein (the “Business”); and
WHEREAS, the Partnership now desires to obtain investment capital from the Rockpoint Preferred Holders and to admit each Rockpoint Preferred Holder as a Limited Partner; and
WHEREAS, RRH is withdrawing from the Partnership simultaneously with the execution and delivery of this Agreement and shall cease to be a Limited Partner as of the Effective Date; and
WHEREAS, the Partners desire to enter into and amend and restate the Original Agreement in its entirety, and provide for the operation and management of the Partnership, the Business, the allocation and distribution of the profits and losses thereof, and such other matters as are set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, undertakings and agreements contained herein, the parties hereby amend and restate the Original Agreement in its entirety and agree as follows:
1. DEFINITIONS. THE FOLLOWING TERMS SHALL HAVE THE MEANINGS INDICATED OR REFERRED TO BELOW.
(a) “Acceptance Notice” shall have the meaning set forth in Section 12(d).
(b) “Act” means the Delaware Revised Uniform Limited Partnership Act (6 Del. C. Section 17-101 et seq.), as amended from time to time.
(c) “Adjusted Capital Account Deficit” means the deficit balance, if any, in a Partner’s Capital Account as of the end of the Fiscal Year, increased by any amount which such Partner is obligated to restore or deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-(2)(i)(5), and decreased by the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6).
(d) “Affiliate” means, when used with reference to a specified Person, any other Person that directly or indirectly through one or more intermediaries Controls or is Controlled by or is under common Control with the specified Person. For the avoidance of doubt, none of the Rockpoint Investors or their respective Affiliates shall be considered an Affiliate of the Partnership, RRT, RRH, MCRC, MCRLP, MCPT or any other MCRC Party or Partnership Party, each as defined in the Preferred Equity Investment Agreement, for any purpose hereunder.
(e) “Agreement” shall have the meaning set forth in the Preamble.
(f) “Alternative IPO Entity” shall have the meaning set forth in Section 13(f)(iii).
(g) “Anti-Terrorism Laws” means any law relating to terrorism or money-laundering, including Executive Order No. 13224 and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA Patriot Act Public Law 107-56), as amended.
(h) “Applicable Entity” means any Person (other than an individual) in which the Partnership owns a direct or indirect interest, other than a Subsidiary.
(i) “Appraiser” shall have the meaning set forth in Section 14(a).
(j) “Approved Sale” shall have the meaning set forth in Section 12(e).
(k) “Available Cash” means, for any period, all cash receipts of the Partnership, other than any amounts taken into account in determining Net Proceeds from Capital Events, including cash receipts from the operation of the Partnership, including (without duplication) from any Subsidiaries or Applicable Entities (including any reduction in reserves available to the Partnership), less (without duplication) the portion thereof used during that period:
(i) to pay debt service and any other amounts due on other indebtedness of the Partnership or of any Subsidiary or Applicable Entity incurred in accordance with the terms of this Agreement or the governing document of such Subsidiary or Applicable Entity, as applicable;
(ii) to pay, in the discretion of the General Partner, any operating expenses of the Partnership or any Subsidiary or Applicable Entity;
(iii) to pay, in the discretion of the General Partner, any leasing commissions, tenant inducements or similar items; provided that such leasing commissions and tenant inducements are within the parameters set forth on schedules of market rates for such items, determined on a market by market basis;
(iv) to make capital expenditures of the Partnership or any Subsidiary or Applicable Entity to the extent permitted under this Agreement;
(v) in the reasonable discretion of the General Partner, to establish or increase reasonable reserves; and
(vi) to pay, in the reasonable discretion of the General Partner, priority payments to joint venture partners, together with interest accrued thereon pursuant to the applicable joint venture agreement.
(l) “Bankruptcy” means any debt relief action undertaken under Title 11 of the United States Code, as amended from time to time (or any corresponding provisions of succeeding law), and all rules and regulations promulgated thereunder or under any other existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or similar law, rule or regulation for the relief of debtors.
(m) “Base Return” means the Rockpoint Class A Base Return, the MC Class A Base Return and/or the RRT Base Return, as the context requires.
(n) “Business” shall have the meaning set forth in the Recitals.
(o) “Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in New York, New York are authorized or required by law to be closed for business.
(p) “Call Notice” shall have the meaning set forth in Section 13(g)(i).
(q) “Call Right” shall have the meaning set forth in Section 13(g)(i).
(r) “Capital Account” shall have the meaning set forth in Section 5(a)(i).
(s) “Capital Commitment” shall have the meaning set forth in Section 5(b)(i).
(t) “Capital Contributions” means, with respect to a Partner, (i) all cash, cash equivalents or the Fair Market Value of the property contributed to or deemed contributed to the Partnership as of the Effective Date (net of liabilities assumed or otherwise secured by such property), as listed on Schedule 1 (which, in the case of RRT, shall equal one billion two hundred thirty million dollars ($1,230,000,000), and (ii) any other cash, cash equivalents or the Fair Market Value of other property contributed (net of liabilities assumed or otherwise secured by such property) in the future by a Partner to the capital of the Partnership and approved by the General Partner and otherwise subject to the terms and conditions of this Agreement.
(u) “Capital Events” means an Approved Sale or sale, exchange, condemnation (or similar eminent domain taking or disposition outside the ordinary course of business in lieu thereof), destruction by casualty, or other disposition, or financing or refinancing of all or any portion of any of the Properties or any interests in any Subsidiary. Without limiting the generality of the foregoing, Capital Event shall include any transaction with respect to a
Permitted Sale Property in which gain or loss is recognized for federal income tax purposes as determined by Tax Decision.
(v) “Change of Control” shall mean, with respect to any Person, the occurrence of any of the following in one or a series of related transactions: (i) an acquisition by any other Person or “group” (as described in Rule 13d-5(b)(1) under the Securities Exchange Act of 1934), of more than fifty percent (50%) of the voting rights or equity interests in such Person; (ii) a merger or consolidation of such Person that constitutes or could result in a transfer of more than fifty percent (50%) of the voting rights in such Person; or (iii) a recapitalization, reorganization or other transaction involving such Person that constitutes or could result in a transfer of more than fifty percent (50%) of the voting rights in such Person.
(w) “Claims” shall have the meaning set forth in Section 16(c).
(x) “Class A Capital Contributions” means the total Capital Contributions made by any Class A Preferred Holder in respect of its Class A Preferred Partnership Units, as set forth opposite such holder’s name on Schedule 1, as the same may be revised from time to time by the General Partner in accordance with this Agreement.
(y) “Class A Capital Event Cash Flow” means Net Proceeds from Capital Events excluding any amounts taken into account in determining Class B Capital Event Cash Flow.
(z) “Class A Preferred Holders” means, at any time, holders of Class A Preferred Partnership Units.
(aa) “Class A Preferred Partnership Units” shall mean preferred Partnership Units that shall have such rights and preferences as specified in this Agreement that are applicable to Class A Preferred Partnership Units.
(bb) “Class A Waterfall Value” shall have the meaning set forth in Section 14(b).
(cc) “Class B Capital Contributions” means the total Capital Contributions made by any Class B Preferred Holder in respect of its Class B Preferred Partnership Units, as set forth opposite such holder’s name on Schedule 1.
(dd) “Class B Capital Event Cash Flow” means Net Proceeds from Capital Events relating to any of the Permitted Sale Properties, but only to the extent of any Permitted Sale Property Gain attributable to such Permitted Sale Property. The amount of any Class B Capital Event Cash Flow shall be determined by Tax Decision, and in any event shall not be less than the Permitted Sale Property Gain arising from the event that gave rise to such Class B Capital Event Cash Flow.
(ee) “Class B Preferred Holders” means holders of Class B Preferred Partnership Units.
(ff) “Class B Preferred Issuance Limitation” shall have the meaning set forth in Section 2(b)(viii).
(gg) “Class B Preferred Partnership Units” shall mean preferred Partnership Units that shall have such rights and preferences as specified in this Agreement that are applicable to Class B Preferred Partnership Units.
(hh) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor Federal revenue code of the United States.
(ii) “Common Holder” shall mean each Person who is the holder of a Common Interest.
(jj) “Common Interest” means, with respect to any holder of Common Partnership Units, such holder’s Partnership Interest in connection with such Common Partnership Units at any particular time.
(kk) “Common Partnership Units” means Partnership Units other than any Partnership Units representing Preferred Interests.
(ll) “Confidential Information” shall have the meaning set forth in Section 22.3(a).
(mm) “Contributing Partner” shall have the meaning set forth in Section 5(b)(iii).
(nn) “Contribution Shortfall” shall have the meaning set forth in Section 5(b)(iii).
(oo) “Control” means, with respect to any Person, the power to direct the management and policies of such Person, directly or indirectly through one or more intermediaries, whether through the direct or indirect ownership of a majority of the voting securities of such Person, by agreement, through the ability to elect a majority of those persons exercising governing authority over such Person or otherwise, and the terms “Controlled” and “Controlling” have the meaning correlative to the foregoing.
(pp) “Conversion Election” shall have the meaning set forth in Section 13(f)(i).
(qq) “Credit Enhancement Services Agreement” shall have the meaning set forth in Section 10(g)(ii).
(rr) “Default Date” shall have the meaning set forth in Section 5(b)(iii).
(ss) “Default Loan” shall have the meaning set forth in Section 5(b)(iii).
(tt) “Defaulting Partner” shall have the meaning set forth in Section 5(b)(iii).
(uu) “Deficiency” shall mean the aggregate of the MC Deficiency and the Rockpoint Deficiency.
(vv) “Deficiency Return” means a return (calculated like interest), (i) in the case of the Rockpoint Class A Preferred Holder, of (A) fifteen percent (15%) per annum in any case in which clause (B) does not apply, and (B) eighteen percent (18%) per annum starting in any calendar quarter in which (I) (y) the cumulative Levered Net Operating Income in respect of such calendar quarter (determined as provided in Section 11(c)(v)), equals or exceeds (z) the maximum amount of cumulative Distributions to such Rockpoint Class A Preferred Holder in respect of such quarter pursuant to Section 9(a)(i)(B) or 9(a)(ii)(B), and (II) the actual amount of cumulative Distributions to such Rockpoint Class A Preferred Holder in respect of such quarter pursuant to such Sections, taking into account the True Up Adjustment in respect of such quarter, is less than the amount in clause (I)(z) (such event described in the foregoing clause (B), a “Rockpoint Class A Base Return Default”), and ending when the Rockpoint Class A Base Return Default has been cured, and (ii) in the case of MC Class A Preferred Holder, six and sixty-one thousandths of a percent (6.061%) per annum, in each case compounded monthly and based on a thirty (30)-day month and three hundred sixty (360)-day year, calculated with respect to the amount of its respective Unreturned Deficiency Balance.
(ww) “Depreciation” means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such Fiscal Year or other period, except that (i) with respect to any property the Gross Asset Value of which differs from its adjusted tax basis for federal income tax purposes and which basis is being eliminated by use of the remedial allocation method pursuant to Regulations Section 1.704-3(d), Depreciation shall be the amount of book basis recovered for such year under the rules of Regulations Section 1.704-3(d)(2), and (ii) with respect to any other property the Gross Asset Value of which differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such Fiscal Year or other period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization or other cost recovery deduction for such Fiscal Year or other period is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner.
(xx) “Distribution Make-Whole” means, with respect to any amount paid or distributed with respect or reference to the Rockpoint Class A Preferred Holder’s Unreturned Class A Capital Contributions or the Rockpoint Class B Preferred Holder’s Class B Capital Contributions, in either case during the Lockout Period, an amount equal to the sum of (a) fifty percent (50%) of the amount so paid or distributed, reduced (but not below zero) by (b) (i) Distributions theretofore made to the Rockpoint Class A Preferred Holder pursuant to Sections 9(a)(i), 9(a)(ii)(A) and/or 9(a)(ii)(B), and (ii) in the case of the Rockpoint Class B Preferred Holder, Distributions theretofore made to the Rockpoint Class B Preferred Holder pursuant to Section 9(a)(iii). The Base Return applicable to an amount paid or distributed shall be determined based on a weighted average amount of Unreturned Capital Contributions outstanding from the Effective Date to the date of payment or distribution.
(yy) “Distributions” shall mean all distributions of Available Cash or Net Proceeds From Capital Events made to a Partner pursuant to Section 9.
(zz) “Early Purchase” shall have the meaning set forth in Section 13(b).
(aaa) “Effective Date” shall have the meaning set forth in the Preamble.
(bbb) “Embargoed Person” means any Person or government subject to trade restrictions under U.S. law (including the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder).
(ccc) “Event of Default” shall have the meaning set forth in Section 26(a).
(ddd) “Excluded Securities” shall have the meaning set forth in Section 2(b)(vii).
(eee) “Excluded Securities Offering” shall mean any Securities issued or to be issued, or offered or to be offered, by the Partnership or any Subsidiary which are (i) subject to the MC Subscription Right, (ii) Excluded Securities, or (iii) subject to the Class B Preferred Issuance Limitation.
(fff) “Executive Order No. 13224” means the Executive Order No. 13224, effective September 24, 2001, relating to “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism”.
(ggg) “Exercise Period” shall have the meaning set forth in Section 2(b)(iii)(C).
(hhh) “Exercising Holder” shall have the meaning set forth in Section 2(b)(iii)(C).
(iii) “Fair Market Value” shall have the meaning set forth in Section 14(b).
(jjj) “FIRPTA Event” means a violation of the covenant in Section 8(a) or Section 9(d)(i).
(kkk) “First Hurdle Percentage” means, at any time, (a) with respect to any Rockpoint Class A Preferred Holder, (i) the Class A Capital Contributions made by Rockpoint Class A Preferred Holder at such time, divided by (ii) the sum of (A) the amount in clause (i) plus (B) any Class A Capital Contributions made by MC Class A Preferred Holder (if any) at such time, plus (C) the RRT Initial Capital Contribution at such time (the amount in clause (ii), the “Denominator”), (b) with respect to RRT, the amount in clause (C) above divided by the Denominator at such time, and (c) with respect to the MC Class A Preferred Holder, the amount in clause (B) above divided by the Denominator at such time. For the sake of clarity, the sum of all First Hurdle Percentages shall at all times equal 100%.
(lll) “Fiscal Year” means January 1 through December 31.
(mmm) “Foreign Corrupt Practices Act” means the Foreign Corrupt Practices Act of the United States, 15 U.S.C. Sections 78a, 78m, 78dd-1, 78dd-2, 78dd-3, and 78f-1, as amended, if applicable, or any similar law of any jurisdiction outside the United States where the Partnership or any of its Subsidiaries transacts business.
(nnn) “General Partner” shall have the meaning set forth in the Preamble.
(ooo) “GP Law Firm” shall have the meaning set forth in Section 23(o).
(ppp) “Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed or deemed contributed by a Partner to the Partnership shall be the gross Fair Market Value of such asset at the time of contribution or deemed contribution, which as of the Effective Date shall be the amount set forth in the applicable schedule to the Supplemental Letter with respect to such asset;
(ii) The Gross Asset Values of all Partnership assets shall be adjusted to equal their respective gross Fair Market Values as of the following times: (a) the acquisition of an additional Partnership Interest in the Partnership by any new or existing Partner in exchange for more than a de minimis Capital Contribution; (b) the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property (other than cash) as consideration for a Partnership Interest in the Partnership; (c) the liquidation of the Partnership within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); and (d) in such other circumstances as may be determined by the General Partner and permissible under Regulations Section 1.704-1(b)(2)(iv)(f); provided, however, that the adjustments pursuant to clauses (a) and (b) above shall be made only if such adjustments are necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership, but shall be made in connection with the application of Section 14 if necessary to cause Rockpoint Class A Preferred Holder to receive an amount greater than it would otherwise receive without such adjustments;
(iii) The Gross Asset Value of any Partnership asset distributed to any Partner shall be adjusted to equal the gross Fair Market Value (taking Code Section 7701(g) into account) of such asset on the date of distribution; and
(iv) The Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and subparagraph (vii) of the definition of “Profit” and “Loss”, provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (iv) to the extent an adjustment pursuant to subparagraph (ii) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (iv).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to subparagraphs (i), (ii) or (iv) above, such Gross Asset Value shall thereafter be adjusted by subtracting the Depreciation taken into account with respect to such asset for purposes of computing Profit and Loss. To the extent that the General Partner is permitted to determine the Gross Asset Value of
any asset hereunder, such determination shall be made reasonably and in good faith and the General Partner shall give each Partner written notice of its determination of such Gross Asset Value and a thirty (30) calendar day period to object to such determination. If a Partner objects to a determination of Gross Asset Value, the General Partner will engage an independent appraiser to determine Gross Asset Value of such asset or property. The Gross Asset Value of the Partnership’s assets has been adjusted as of the Effective Date under subparagraph (ii)(a) of this definition. This definition of Gross Asset Value shall be interpreted consistently with the provisions of Section 7(c)(ii).
(qqq) “Hurdle Return” shall have the meaning set forth in Section 9(a)(ii)(F).
(rrr) “Indemnified Party” and “Indemnified Parties” shall have the meaning set forth in Section 16(c).
(sss) “Indemnity Agreement” means an indemnity agreement substantially in the form annexed hereto as Exhibit C.
(ttt) “Initial Notice” shall have the meaning set forth in Section 10(b).
(uuu) “Initial Partners” shall have the meaning set forth in the Recitals.
(vvv) “Institutional Investors” means any domestic or foreign banks, entity of any governmental authority (including any quasi-governmental entity), investment banks, insurance companies, pension funds, trusts, venture capital funds, private equity funds, or other similar institutions or other Persons, parties or investors’ (including, but not limited to, grantor trusts, owner trusts, special purpose corporations, REMICs, REITs, or other similar or comparable investment vehicles; provided, however, that, (i) an individual may not qualify as an “Institutional Investor”, and (b) in order to qualify as an “Institutional Investor”, any Person together with its Affiliates described hereinabove must have assets, or assets under management, in excess of $1,000,000,000; provided further that any Person described hereinabove shall not be subject to ERISA.
(www) “IRR” means the annual percentage rate, equal to the return calculated by Microsoft Excel utilizing the XIRR function assuming the specified contributions and distributions are made on the actual day such contribution or distribution occurred and compounded monthly and based on a thirty (30)-day month and three hundred sixty (360)-day year. Any Distribution Make-Whole paid shall be deemed to have been paid on March 1, 2022 for purposes of calculating the Hurdle Return pursuant to Section 9.
(xxx) “IRS” shall have the meaning set forth in Section 11(e)(i).
(yyy) “Levered Net Operating Income” means gross operating revenue reduced by operating expenses and interest expense, determined in accordance with United States Generally Accepted Accounting Principles, consistently applied. In the case of any Subsidiary or Applicable Entity, the Partnership shall include its share of such amounts of such Subsidiary or Applicable Entity based on the Partnership’s interest in such Subsidiary or Applicable Entity (including any rights to preferred distributions to the Partnership or to third parties).
(zzz) “Limited Partner” means any Person who has been admitted to the Partnership as a limited partner pursuant to the terms of this Agreement and has not ceased to be a limited partner, including, without limitation, each Preferred Holder (in its capacity as holder of Preferred Interests). “Limited Partners” mean all such Persons.
(aaaa) “Lockout Period” shall have the meaning set forth in Section 13(b).
(bbbb) “Major Decisions” shall have the meaning set forth in Section 10(b).
(cccc) “MC Class A Base Return” means a return (calculated like interest) of six and sixty-one thousandths of a percent (6.061%) per annum, compounded monthly and based on a thirty (30)-day month and three hundred sixty (360)-day year, calculated with respect to the Unreturned Class A Capital Contributions of the MC Class A Preferred Holder per month (it being understood that (a) MC Class A Base Return shall not include any MC Deficiency, and (b) no MC Class A Base Return shall accrue on the amount of any MC Deficiency).
(dddd) “MC Class A Preferred Holder” shall have the meaning set forth in Section 2(b)(vi).
(eeee) “MC Deficiency” means the excess, if any, of (I) the maximum amount of cumulative Distributions to the MC Class A Preferred Holder in respect of a calendar month pursuant to Section 9(a)(i)(B) or 9(a)(ii)(B), over (II) the actual amount of cumulative Distributions to the MC Class A Preferred Holder in respect of such month pursuant to such Sections (determined as if any distribution following the tenth (10th) calendar day following such month were not with respect to such month).
(ffff) “MC Subscription Right” shall have the meaning set forth in Section 2(b)(vi).
(gggg) “MCPT” shall have the meaning set forth in the Recitals.
(hhhh) “MCRC” shall have the meaning set forth in the Preamble.
(iiii) “MCRLP” shall have the meaning set forth in the Preamble.
(jjjj) “MCTP” shall have the meaning set forth in the Recitals.
(kkkk) “Modified Net Income” shall have the meaning set forth in Section 7(b)(viii).
(llll) “Net Proceeds From Capital Events” means the gross cash received by the Partnership including, without duplication, from any Subsidiaries or Applicable Entities, as a result of a Capital Event (including the release of any reserves established under clause (v) below) (without duplication), and provided no reductions in the following clauses (i) through (v) shall reduce the Net Proceeds from a Capital Event with respect to a Permitted Sale Property to an amount less than the Permitted Sale Property Gain resulting from such Capital Event), less:
(i) the portion thereof used to pay the costs and expenses of such transaction;
(ii) the portion thereof used to pay debt service and any other amounts due on indebtedness of the Partnership or of any Subsidiary or Applicable Entity incurred in accordance with the terms of this Agreement or the governing document of such Subsidiary or Applicable Entity, as applicable;
(iii) the portion thereof used for the acquisition, development, capital improvement or construction of a Property (or any portion thereof) or any assets of the Partnership permitted by this Agreement, or used for the payment of leasing commissions, tenant inducements or similar items, or used for the repayment of all or any portion of construction or other financing provided for the Property (or any portion thereof) or any assets of the Partnership, provided any such action was in each case approved in accordance with this Agreement;
(iv) if the Capital Event is the condemnation (or similar eminent domain taking or disposition in lieu thereof), destruction by casualty, or similar occurrence with respect to the Property (or any portion thereof) or all or substantially all of the assets of the Partnership, the amount, if any, of any insurance or condemnation award or similar payment received by the Partnership which is used for restoration or replacement of a Property (or any portion thereof) or the affected assets of the Partnership, in each case as approved pursuant to this Agreement;
(v) the portion thereof established, in the discretion of the General Partner, as a reasonable reserve; and/or
(vi) the portion thereof used in the reasonable discretion of the General Partner, to pay priority payments to joint venture partners, together with interest accrued thereon, pursuant to the applicable joint venture agreement.
(mmmm) “Non-Exercising Holder” shall have the meaning set forth in Section 2(b)(iii)(C).
(nnnn) “Nonrecourse Deductions” shall have the meaning set forth in Regulations Section 1.704-2(b)(1).
(oooo) “Offer Period” shall have the meaning set forth in Section 12(d).
(pppp) “Option Properties Representations” shall have the meaning set forth in Section 5(c)(ii).
(qqqq) “Original Agreement” shall have the meaning set forth in the Recitals.
(rrrr) “Over-allotment Notice” shall have the meaning set forth in Section 2(b)(iii)(C).
(ssss) “Partner” shall mean the General Partner, any Limited Partner and any Person which owns, and pursuant to this Agreement is permitted to own, a Partnership Interest and that executes this Agreement (or a counterpart signature page hereof, a joinder hereto or any other agreement or agreements by which such Person agrees to be bound by the terms of this Agreement), and is admitted as a Partner pursuant to the terms of this Agreement, but such term shall not include any Person who has ceased to own any Partnership Interests.
(tttt) “Partner Nonrecourse Debt” shall have the meaning set forth in Section 1.704-2(b)(4) of the Regulations.
(uuuu) “Partner Nonrecourse Debt Minimum Gain” shall have the meaning set forth in Section 1.704-2(i)(2) of the Regulations and shall be determined in accordance with Section 1.704-2(i)(3) of the Regulations.
(vvvv) “Partner Nonrecourse Deductions” has the meaning assigned to such term in Regulations Section 1.704-2(i).
(wwww) “Partnership” shall have the meaning set forth in the Preamble.
(xxxx) “Partnership Interest” means, with respect to any Partner, such Partner’s entire interest in the Partnership at any particular time, including, without limitation, such Partner’s right to share in Profits and Losses and to receive Distributions pursuant to this Agreement and any and all benefits to which such Partner may be entitled as provided in this Agreement and, subject to this Agreement, the Act, together with the obligation of such Partner to comply with all the terms and provisions of this Agreement.
(yyyy) “Partnership Interest Certificate” shall have the meaning set forth in Section 24(b).
(zzzz) “Partnership Interest Liquidation Value” shall have the meaning set forth in Section 14(b).
(aaaaa) “Partnership Minimum Gain” shall have the meaning set forth in Sections 1.704-2(b)(2) and 1.704-2(d) of the Regulations.
(bbbbb) “Partnership Representative” shall have the meaning set forth in Section 11(e)(iv).
(ccccc) “Partnership Securities” shall have the meaning set forth in Section 2(b)(ii).
(ddddd) “Partnership Units” means the Partnership Interest of a Partner expressed in the form of units.
(eeeee) “Percentage Interest” means, as to each Partner, the percentage set forth opposite such Partner’s name on Schedule 1 attached hereto calculated by the aggregate Capital Contributions made by such Partner divided by the aggregate Capital Contributions made by all
Partners, as such percentage and schedule as may be adjusted and revised by the General Partner from time to time in accordance with this Agreement.
(fffff) “Permitted Partnership Interest Acquisition” shall have the meaning set forth in Section 13(i).
(ggggg) “Permitted Sale Properties” means the Properties set forth in the applicable schedule to the Supplemental Letter. For the avoidance of doubt, in no event may the Partnership directly or indirectly through any Subsidiary or otherwise acquire any Property where the Partnership cannot unilaterally (without any qualification) block a sale of such Property.
(hhhhh) “Permitted Sale Property Gain” means the amount of the Partnership’s Profit, or gain allocable under Section 7(b), attributable to any Capital Event or other event that results in either a sale or revaluation of any such Permitted Sale Property for purposes of maintaining Capital Accounts. For the sake of clarity, (a) the Permitted Sale Property Gain shall be the amount of such Profit or gain arising from any such Capital Event or other event (other than items that would not give rise to recognized (under principles contained in Regulations Section 1.704-1(b)(2)(iv)) gain for Federal income tax purposes) or revaluation, (b) with respect to any Permitted Sale Property owned in an entity treated as a partnership for federal income tax purposes in which the Partnership owns an interest, Permitted Sale Property Gain with respect to such Permitted Sale Property shall be determined as if the Partnership owned directly its share of such Permitted Sale Property. The Partners intend that (i) Permitted Sale Property Gain result in the Rockpoint Class B Preferred Holder receiving cumulative allocations of taxable gain, and Distributions, equal to ten percent (10%) of all taxable gain with respect to Permitted Sale Properties (other than taxable gain arising under Section 704(c) by reason of the ownership of such Permitted Sale Properties by RRT prior to the Effective Date), (ii) no allocations of taxable gain to the Rockpoint Class A Preferred Holder with respect to such Permitted Sale Properties, and (iii) Permitted Sale Property Gain be determined by applying Section 704(c) principles to each Permitted Sale Property separately (as opposed to the interest in the entity that owns (directly or indirectly) the Permitted Sale Property), and this Agreement shall be interpreted consistently with such intent.
(iiiii) “Permitted Transfer” shall have the meaning set forth in Section 12(b).
(jjjjj) “Person” means any individual, sole proprietorship, partnership, limited partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, limited liability partnership, institution, or other entity.
(kkkkk) “Preemptive Holder” shall have the meaning set forth in Section 2(b)(iii)(A).
(lllll) “Preemptive Rights Notice” shall have the meaning set forth in Section 2(b)(iii)(C).
(mmmmm) “Preferred Capital Call” shall have the meaning set forth in Section 5(b)(ii).
(nnnnn) “Preferred Capital Call Due Date” shall have the meaning set forth in Section 5(b)(ii).
(ooooo) “Preferred Equity Investment Agreement” shall mean the Preferred Equity Investment Agreement by and among MCRC, MCRLP, MCPT, MCTP, RRT, RRH, the Partnership and the Rockpoint Preferred Holders, dated as of February 27, 2017, as such agreement may be amended from time to time.
(ppppp) “Preferred Interest” means, with respect to any holder of either Class A Preferred Partnership Units or Class B Preferred Partnership Units, the holder’s Partnership Interest in connection with such Class A Preferred Partnership Units or Class B Preferred Partnership Units at any particular time.
(qqqqq) “Preferred Holder” shall mean each Rockpoint Preferred Holder and each other Person who is the holder of a Preferred Interest.
(rrrrr) “Profit” and “Loss” shall mean, for each Fiscal Year or other period, an amount equal to the Partnership’s net taxable income or loss for such year or period as determined for federal tax purposes (including separately stated items) in accordance with the accounting method and rules used by the Partnership and in accordance with Section 703(a) of the Code with the following adjustments:
(i) Any items of income, gain, loss and deduction which are specially allocated to a Partner under Section 7(b) shall not be taken into account in computing Profit or Loss under this Agreement;
(ii) Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Profit and Loss (pursuant to this definition) shall be included in determining Profit or Loss hereunder by adding such amount of income to taxable income or taxable loss;
(iii) Any expenditure of the Partnership described in Section 705(a)(2)(B) of the Code or treated as a Code Section 705(a)(2)(B) expenditure pursuant to the Regulations and not otherwise taken into account in computing Profit and Loss (pursuant to this definition) shall be included in determining Profit or Loss hereunder by deducting such expenditure from such taxable income or taxable loss;
(iv) In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to subparagraphs (ii) or (iii) of the definition of “Gross Asset Value”, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profit and Loss;
(v) Gain or loss resulting from the disposition of Partnership property shall be computed by reference to the Gross Asset Value of such property, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;
(vi) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into
account Depreciation for such Fiscal Year, computed in accordance with the definition of Depreciation; and
(vii) To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Section 734(b) of the Code or Section 743(b) of the Code is required pursuant to Section 1.704-l(b)(2)(iv)(m)(4) of the Regulations to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Partnership Interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Profit or Loss.
(sssss) “Properties” means the Permitted Sale Properties and any other real property assets (including leasehold interests) in which the Partnership owns an interest, directly or indirectly through one or more Subsidiaries, Applicable Entities or Affiliates, or may acquire an interest, directly or indirectly, through one or more Subsidiaries, Applicable Entities or Affiliates. Each of the separate Properties is referred to herein as a “Property.”
(ttttt) “Proposed Investor” shall have the meaning set forth in Section 2(b)(iii)(A).
(uuuuu) “Proposed Price” shall have the meaning set forth in Section 12(d).
(vvvvv) “Proposed Purchaser” shall have the meaning set forth in Section 12(e).
(wwwww) “Proposed Sale Notice” shall have the meaning set forth in Section 12(d).
(xxxxx) “Proposed Terms” shall have the meaning set forth in Section 12(d).
(yyyyy) “Proposed Third Party Investor” shall have the meaning set forth in Section 2(b)(iv)(A).
(zzzzz) “Public Liquidity Event” shall have the meaning set forth in Section 12(b)(ii).
(aaaaaa) “Purchase Payments” shall have the meaning set forth in Section 13(d).
(bbbbbb) “Put/Call Interests” shall have the meaning set forth in Section 13(a).
(cccccc) “Put Notice” shall have the meaning set forth in Section 13(g)(ii).
(dddddd) “Put Right” shall have the meaning set forth in Section 13(g)(ii).
(eeeeee) “Recourse Agreement” shall mean the Recourse Agreement by and among RRT, MCRLP, MCRC, and the Rockpoint Preferred Holders, dated as of the Effective Date, as such agreement may be amended from time to time.
(ffffff) “Registration Rights Agreement” shall mean the Registration Rights Agreement by and among MCRC, MCRLP, MCPT, RRT, and the Rockpoint Preferred Holders, dated as of the Effective Date, as such agreement may be amended from time to time.
(gggggg) “Regulations” means the final or temporary regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
(hhhhhh) “REIT” shall have the meaning set forth in the Recitals.
(iiiiii) “REIT Opinion” shall have the meaning set forth in Section 13(i).
(jjjjjj) “REIT Owners” shall have the meaning set forth in Section 13(b).
(kkkkkk) “REIT Requirements” shall have the meaning set forth in Section 11(g)(i).
(llllll) “Representatives” means a Person’s directors, managers, officers, shareholders, members, partners, employees, agents and individuals under principles of agency law.
(mmmmmm) “Revised Partnership Audit Procedures” means the provisions of Subchapter C of Subtitle A, Chapter 63 of the Code, as amended by P.L. 114-74, the Bipartisan Budget Act of 2015 (together with any subsequent amendments thereto, Regulations promulgated thereunder, and published administrative interpretations thereof) or any similar procedures established by a state, local, or non-U.S. taxing authority.
(nnnnnn) “Rockpoint Capital Commitment” shall have the meaning set forth in Section 5(b)(ii).
(oooooo) “Rockpoint Class A Base Return” means a return (calculated like interest) of six and sixty-one thousandths of a percent (6.061%) per annum, compounded monthly and based on a thirty (30)-day month and three hundred sixty (360)-day year, calculated with respect to the Unreturned Class A Capital Contributions of the Rockpoint Class A Preferred Holder per month (it being understood that (a) Rockpoint Class A Base Return shall not include any Rockpoint Deficiency, and (b) Rockpoint Class A Base Return shall accrue on the amount of any Unreturned Class A Capital Contributions funded with a Default Loan only from and after the time (and to the extent) principal payments are made or deemed made on such Default Loan). Rockpoint Class A Base Return shall be subject to adjustment as provided in Section 26(b)(i)(A).
(pppppp) “Rockpoint Class A Base Return Default” shall have the meaning set forth in the definition of “Deficiency Return.”
(qqqqqq) “Rockpoint Class A Preferred Holder” shall have the meaning set forth in the Preamble.
(rrrrrr) “Rockpoint Class B Preferred Holder” shall have the meaning set forth in the Preamble.
(ssssss) “Rockpoint Control Party” means Rockpoint Group, L.L.C.
(tttttt) “Rockpoint Deficiency” for any calendar month means the excess, if any, of (I) the Rockpoint Class A Base Return for such month, over (II) the actual amount of cumulative Distributions to the Rockpoint Class A Preferred Holder in respect of such month pursuant to Sections 9(a)(i)(B) and 9(a)(ii)(B) (determined as if any distribution following the tenth (10th) calendar day following such month were not with respect to such month).
(uuuuuu) “Rockpoint Minimum Equity and Control Requirements” shall mean that an Affiliate of the Rockpoint Control Party shall directly or indirectly, at all times: (i) own at least twenty-five percent (25%) of the Partnership Units held by the Rockpoint Class A Preferred Holder; (ii) own at least twenty-five percent (25%) of the Partnership Units held by the Rockpoint Class B Preferred Holder; and (iii) Control the Rockpoint Preferred Holders.
(vvvvvv) “Rockpoint Preferred Holders” shall have the meaning set forth in the Preamble.
(wwwwww) “Rockpoint REIT II” shall have the meaning set forth in Section 11(g)(i).
(xxxxxx) “Rockpoint REIT Interests” shall have the meaning set forth in Section 13(a).
(yyyyyy) “Rockpoint REITs” shall have the meaning set forth in Section 11(g)(i).
(zzzzzz) “Rockpoint Special Notice Parties” shall mean Xxxxxxx Xxxxx, Xxx Xxxx, Xxxxxx Xxxx, Xxxxxx Xxxxxxx and Xxxxx Xxxxx at Xxxxxx Xxxx & Xxxxxxxx or such other Persons who shall be designated by the Rockpoint Preferred Holders in a notice delivered to the Partnership and the General Partner.
(aaaaaaa) “ROFO Exercise Period” shall have the meaning set forth in Section 2(b)(iv)(C).
(bbbbbbb) “ROFO Holders” shall have the meaning set forth in Section 2(b)(iv)(A).
(ccccccc) “ROFO Rights Notice” shall have the meaning set forth in Section 2(b)(iv)(C).
(ddddddd) “Roseland Option Properties” shall have the meaning set forth in Section 5(c)(i).
(eeeeeee) “RP Approved Sale” shall have the meaning set forth in Section 12(e).
(fffffff) “RP Law Firm” shall have the meaning set forth in Section 23(o).
(ggggggg) “RP Trustee” shall have the meaning set forth in Section 10(a)(iii).
(hhhhhhh) “RP Uncured Funding Default” shall have the meaning set forth in Section 5(b)(iii).
(iiiiiii) “RRH” shall have the meaning set forth in the Recitals.
(jjjjjjj) “RRT” shall have the meaning set forth in the Preamble.
(kkkkkkk) “RRT Base Return” means a return (calculated like interest) of six and sixty-one thousandths of a percent (6.061%) per annum, compounded monthly and based on a thirty (30)-day month and three hundred sixty (360)-day year, calculated with respect to the Unreturned RRT Capital Contributions.
(lllllll) “RRT Competitor” shall mean any Person whose primary business is that of an operator, manager or developer of residential rental real property of a comparable class to the Properties, excluding, however, financial investors in such rental real property (e.g., pension funds, life insurance companies, equity funds and other passive investors).
(mmmmmmm) “RRT Initial Capital Contribution” means one billion two hundred seventeen million seven hundred thousand dollars ($1,217,700,000). The RRT Initial Capital Contribution shall not change following the Effective Date other than by reason of the application of Sections 5(c)(i) and 9(g).
(nnnnnnn) “RRT Shareholders Agreement” means the Shareholders Agreement by and among RRT, MCRLP, MCPT, Xxxx-Xxxx Texas Property, L.P. and the Rockpoint Preferred Holders, dated the Effective Date, as it may be amended from time to time.
(ooooooo) “Sale Period” shall have the meaning set forth in Section 12(d).
(ppppppp) “Second Hurdle Percentage” means, at any time, with respect to a Class A Preferred Holder, a percentage determined by taking fifty percent (50%) of the First Hurdle Percentage of such Class A Preferred Holder at such time.
(qqqqqqq) “Second Notice” shall have the meaning set forth in Section 10(b).
(rrrrrrr) “Section 12(e) Notice” shall have the meaning set forth in Section 12(e).
(sssssss) “Securities” means, with respect to any Person including the Partnership: (i) partnership interests, shares or other equity interests; (ii) obligations, evidences of indebtedness or other securities or interests convertible or exchangeable into shares,
partnership interests or other equity interests; and (iii) warrants, options or other rights to purchase or otherwise acquire shares, partnership interests or other equity interests.
(ttttttt) “Securities Act” means the Securities Act of 1933, as amended.
(uuuuuuu) “Shared Services Agreement” shall have the meaning set forth in Section 10(g)(i).
(vvvvvvv) “Specified Amount” shall have the meaning set forth in Section 9(d)(i).
(wwwwwww) “Subsidiary” means, with respect to any Person, another Person as to which a majority of the total voting power of such other Person is at the time owned or controlled, directly or indirectly, by that first Person or one or more of the other Subsidiaries of that first Person or a combination thereof. To the extent “Subsidiary” is used herein without reference to a Person, such Person shall be deemed to be the Partnership. The Subsidiaries of the Partnership as of the Effective Date are set forth on Schedule 3 attached hereto.
(xxxxxxx) “Supplemental Letter” means that Supplemental Letter Agreement, dated the Effective Date, by and among the General Partner, the Partnership, the Rockpoint Preferred Holders and the other parties hereto.
(yyyyyyy) “Tax Decision” has the meaning set forth in Section 11(e)(v).
(zzzzzzz) “TMP” shall have the meaning set forth in Section 11(e)(iii).
(aaaaaaaa) “Transaction Documents” means this Agreement, the Preferred Equity Investment Agreement, the Registration Rights Agreement, the Recourse Agreement, the Shared Services Agreement, the Credit Enhancement Services Agreement, the Indemnity Agreement, the RRT Shareholders Agreement, the Escrow Agreement, and the Supplemental Letter.
(bbbbbbbb) “Transfer” shall have the meaning set forth in Section 12(a).
(cccccccc) “TRS” shall have the meaning set forth in Section 11(g)(iii).
(dddddddd) “True Up Adjustment” shall mean the quarterly adjustment to certain Distributions referred to in the proviso to the first sentence of Section 9(e).
(eeeeeeee) “UCC” shall have the meaning set forth in Section 24(a).
(ffffffff) “Uncured Event of Default” shall have the meaning set forth in Section 26(b)(i)(B).
(gggggggg) “Unreturned Class A Capital Contributions” means, for any Class A Preferred Holder at any time, the Class A Capital Contributions of such Class A Preferred Holder reduced (but not below zero) by Distributions to such Class A Preferred Holder under Section 9(a)(ii)(C).
(hhhhhhhh) “Unreturned Deficiency Balance” means, at any time, (i) in the case of Rockpoint Class A Preferred Holder, the cumulative amounts of any Rockpoint Deficiency, increased by the accrued Deficiency Return with respect thereto and decreased (but not below zero) by Distributions to Rockpoint Class A Preferred Holder under Sections 9(a)(i)(A) and 9(a)(ii)(A), and (ii) in the case of MC Class A Preferred Holder, the cumulative amounts of any MC Deficiency, increased by the accrued Deficiency Return with respect thereto and decreased (but not below zero) by Distributions to MC Class A Preferred Holder under Sections 9(a)(i)(A) and 9(a)(ii)(A).
(iiiiiiii) “Unreturned RRT Capital Contributions” means, at any time, the RRT Initial Capital Contribution reduced (but not below zero) by Distributions to RRT under Section 9(a)(ii)(E).
(jjjjjjjj) “Valuation Firm” shall mean an independent and unaffiliated nationally recognized firm that specializes in the valuation of real estate assets in which neither the General Partner nor Rockpoint Preferred Holders or their respective Affiliates have a direct or indirect ownership interest or other affiliation (including as a joint venture partner to the General Partner or the Rockpoint Preferred Holders or their respective Affiliates); provided, that it is agreed that the prior engagement of a firm does not constitute an other affiliation that would render such firm unable to serve for purposes of this definition.
2. TERMS AND CONDITIONS
(a) Organization. The Partnership was formed pursuant to the Certificate of Limited Partnership filed with the Secretary of State of the State of Delaware and operated pursuant to the Original Agreement. Except to the extent set forth in this Agreement, the rights, powers, duties and obligations of the Partnership and of each Partner shall be governed by the Act, and the Partnership shall be taxed as a partnership for Federal income tax purposes. In the event of any inconsistency between this Agreement and the Act, to the extent permitted by applicable law, the terms of this Agreement shall govern. RRT hereby continues as a Partner of the Partnership and RRH is withdrawing as a Limited Partner simultaneously with the execution and delivery of this Agreement and shall cease to be a Limited Partner as of the Effective Date. Each other Person being admitted as a Limited Partner shall as of the Effective Date be admitted upon the terms and conditions of this Agreement, upon such Person’s execution and delivery of this Agreement and upon funding, as a Capital Contribution, the amount set forth on Schedule 1 attached hereto.
(b) Partnership Interests; Preemptive Rights; Right of First Offer.
(i) Each Partner’s Partnership Interest shall be personal property for all purposes. No Partner will have any individual ownership rights with respect to any assets owned by the Partnership.
(ii) Prior to a Public Liquidity Event and so long as a Rockpoint Preferred Holder holds Preferred Interests, except for (A) up to $200 million of Class A Preferred Partnership Units issued to a MC Class A Preferred Holder as provided in Section 2(b)(vi) and (B) Excluded Securities as provided in Section 2(b)(vii), none of the Partnership,