CONTRIBUTION AND SALE AGREEMENT by and among The Parties Identified on Schedule A as the Contributors, on the one hand, and American Campus Communities, Inc. and American Campus Communities Operating Partnership LP together as the Contributee, on the...
Exhibit 99.1
by and among
The Parties Identified on Schedule A
as
the Contributors,
on the one hand,
the Contributors,
on the one hand,
and
American Campus Communities, Inc.
and
American Campus Communities Operating Partnership LP
together as
the Contributee,
on the other hand
the Contributee,
on the other hand
Dated as of December 2, 2005
TABLE OF CONTENTS
Page | ||||
ARTICLE 1 CERTAIN DEFINITIONS |
1 | |||
ARTICLE 2 SUBJECT OF CONVEYANCE |
9 | |||
Section 2.1 Conveyances of the Property |
9 | |||
Section 2.2 Conveyances of Equity Interests |
10 | |||
Section 2.3 Forms of Conveyances |
11 | |||
ARTICLE 3 VALUE AND PAYMENT TERMS |
11 | |||
Section 3.1 Contribution Value |
11 | |||
Section 3.2 Issuance of Units |
11 | |||
Section 3.3 Assumption of Indebtedness |
12 | |||
Section 3.4 Cash Consideration |
12 | |||
Section 3.5 Withdrawn Property |
12 | |||
Section 3.6 Property Manager Due Diligence Fee |
13 | |||
Section 3.7 Retained Amount |
13 | |||
ARTICLE 4 XXXXXXX MONEY |
13 | |||
Section 4.1 Deposit and Investment of Xxxxxxx Money |
13 | |||
Section 4.2 Agreement of the Escrowee |
13 | |||
Section 4.3 Form; Failure to Deposit |
14 | |||
Section 4.4 Disposition of Xxxxxxx Money |
14 | |||
Section 4.5 Independent Consideration |
14 | |||
ARTICLE 5 SURVEY AND TITLE |
15 | |||
Section 5.1 Survey |
15 | |||
Section 5.2 Title |
15 | |||
ARTICLE 6 DUE DILIGENCE |
16 | |||
Section 6.1 Due Diligence Materials to be Delivered |
16 | |||
Section 6.2 Due Diligence Materials To Be Made Available |
19 | |||
Section 6.3 Physical Due Diligence |
19 | |||
Section 6.4 Due Diligence/Termination Right |
20 | |||
Section 6.5 Service Contracts, Equipment Leases and Insurance Policies |
20 | |||
Section 6.6 Operating Partnership’s Responsibilities |
20 | |||
Section 6.7 Contributee’s Agreement to Indemnify |
21 | |||
Section 6.8 Changes to Property Documents |
21 | |||
Section 6.9 Disclosure Schedules |
21 | |||
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS |
21 | |||
Section 7.1 Operating Representations and Warranties |
21 | |||
Section 7.2 Contributing Party Representations and Warranties |
27 | |||
Section 7.3 Effect of Investigation |
28 | |||
Section 7.4 Definition of Knowledge |
28 |
i
Page | ||||
ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE OPERATING
PARTNERSHIP |
28 | |||
Section 8.1 Representations and Warranties |
28 | |||
Section 8.2 Definition of Knowledge |
32 | |||
ARTICLE 9 COVENANTS |
32 | |||
Section 9.1 Conduct of the Business of the Contributors |
32 | |||
Section 9.2 Conduct of the Business of the Contributee |
34 | |||
Section 9.3 Commercially Reasonable Efforts |
35 | |||
Section 9.4 Good Faith Cooperation |
35 | |||
Section 9.5 Public Announcements |
35 | |||
Section 9.6 Investor Representations |
36 | |||
Section 9.7 Board Seat/Observation Rights |
36 | |||
Section 9.8 No Solicitation |
37 | |||
Section 9.9 Confidentiality — Contributors |
37 | |||
Section 9.10 Confidentiality – Contributee |
37 | |||
ARTICLE 10 CLOSING |
37 | |||
Section 10.1 The Closing |
37 | |||
Section 10.2 Deliveries at the Closing by the Contributors |
37 | |||
Section 10.3 Deliveries at the Closing by the Contributee |
40 | |||
Section 10.4 Fees and Expenses |
41 | |||
Section 10.5 No Warranties |
41 | |||
ARTICLE 11 ADJUSTMENTS |
44 | |||
Section 11.1 Adjustments at the Closing Date |
44 | |||
Section 11.2 Adjustment for Assessments |
45 | |||
Section 11.3 Other Adjustments |
45 | |||
Section 11.4 Post-Closing Reconciliation; Errors in Calculations |
45 | |||
Section 11.5 First Quarterly Distributions |
45 | |||
Section 11.6 Survival |
45 | |||
ARTICLE 12 CONDITIONS PRECEDENT TO CLOSING |
45 | |||
Section 12.1 Conditions to Obligations of the Contributors |
45 | |||
Section 12.2 Conditions to Obligations of the Company and the Operating Partnership |
46 | |||
ARTICLE 13 NO BROKERS |
47 | |||
ARTICLE 14 CASUALTY LOSS |
47 | |||
Section 14.1 Casualties |
47 | |||
Section 14.2 Interim Repairs |
47 | |||
Section 14.3 Casualties Other than Major Casualties |
48 | |||
ARTICLE 15 CONDEMNATION |
48 | |||
ARTICLE 16 PRE-CLOSING DEFAULT AND REMEDIES |
48 | |||
Section 16.1 Pre-Closing Defaults and Remedies |
48 |
ii
Page | ||||
Section 16.2 Special Remedies of the Contributee |
49 | |||
Section 16.3 Special Remedy of Contributors |
50 | |||
Section 16.4 Liquidated Damages |
50 | |||
ARTICLE 17 TAX MATTERS |
51 | |||
Section 17.1 Payment of Taxes by the Contributing Parties |
51 | |||
Section 17.2 Payment of Current Taxes |
52 | |||
Section 17.3 Survival |
52 | |||
ARTICLE 18 EMPLOYEE MATTERS |
52 | |||
ARTICLE 19 INDEMNIFICATION |
53 | |||
Section 19.1 By the Contributors |
53 | |||
Section 19.2 By the Contributee |
53 | |||
Section 19.3 Cooperation |
54 | |||
Section 19.4 Insurance |
54 | |||
Section 19.5 Claims for Indemnification |
55 | |||
Section 19.6 Right of Offset |
56 | |||
Section 19.7 Limitations on Indemnification Obligations |
56 | |||
Section 19.8 Survival |
56 | |||
Section 19.9 Payment of Indemnification Obligations |
56 | |||
ARTICLE 20 NOTICE |
57 | |||
ARTICLE 21 MISCELLANEOUS |
58 | |||
Section 21.1 Survival of Representations and Warranties |
58 | |||
Section 21.2 Entire Agreement; Third-Party Rights |
58 | |||
Section 21.3 Amendment |
58 | |||
Section 21.4 Assignment |
58 | |||
Section 21.5 Governing Law |
58 | |||
Section 21.6 Jurisdiction |
59 | |||
Section 21.7 Section Headings |
59 | |||
Section 21.8 Severability |
59 | |||
Section 21.9 No Other Rights or Obligations |
59 | |||
Section 21.10 Counterparts |
59 | |||
Section 21.11 Construction |
59 | |||
Section 21.12 Contributors Representatives |
59 | |||
Section 21.13 Attorneys’ Fees |
59 | |||
Section 21.14 Interpretation |
60 | |||
Section 21.15 Radon |
60 | |||
Section 21.16 1031 Exchange |
60 | |||
Section 21.17 Waiver of Jury Trial |
60 |
iii
SCHEDULES
Schedule A |
Contributors | |
Schedule B |
Allocated Xxxxxxx Money | |
Schedule C |
Assumed Loans | |
Schedule D |
Allocated Retained Amount | |
Schedule 2.1 |
Property Contributors | |
Schedule 2.1(a) |
Real Property | |
Schedule 2.1(c) |
Personal Property | |
Schedule 2.1(e) |
Service Contracts | |
Schedule 2.1(g) |
Retained Trademarks | |
Schedule 2.2 |
Equity Contributors and Contributing Parties | |
Schedule 3.1 |
Allocation of Contribution Value | |
Schedule 3.2(a) |
Contributors Representatives | |
Schedule 7.1(c)-1 |
Title Exceptions | |
Schedule 7.1(c)-2 |
Real Property Exceptions | |
Schedule 7.1(d) |
Personal Property Exceptions | |
Schedule 7.1(e) |
Pending Tenant Claims | |
Schedule 7.1(f) |
Equipment | |
Schedule 7.1(g) |
Casualty Losses | |
Schedule 7.1(j) |
Legal Requirements | |
Schedule 7.1(k) |
Environmental Matters | |
Schedule 7.1(l) |
Mold | |
Schedule 7.1(m) |
Litigation | |
Schedule 7.1(n) |
Utilities | |
Schedule 7.1(p) |
Notices | |
Schedule 7.1(s) |
Assumed Loan Documents | |
Schedule 7.1(t) |
Taxes | |
Schedule 7.3(i) |
Unit Issuances | |
Schedule 9.1(k) |
Rental Rates | |
Schedule 11.2 |
Assessments | |
EXHIBITS |
||
Exhibit A |
Form of Partnership Agreement Amendment | |
Exhibit B |
Form of Agency Agreement | |
Exhibit C |
Form of Registration Rights Agreement | |
Exhibit D |
Form of Distributee Agreement | |
Exhibit E |
Form of Xxxx of Sale | |
Exhibit F |
Form of Contract Assignment and Assumption Agreement | |
Exhibit G |
Form of Deed | |
Exhibit H |
Form of Equity Interest Assignment and Assumption Agreement | |
Exhibit I |
Form of Agreement Regarding Tax Matters | |
Exhibit J |
Form of Right of First Offer Agreement with Royal Development | |
Exhibit K |
Form of Addendum A | |
Exhibit L |
Form of Purchase and Sale Agreement | |
Exhibit M |
Form of Agreement Regarding Employee Matters |
iv
This CONTRIBUTION AND SALE AGREEMENT (this “Agreement”) dated as of December 2, 2005 (the
“Effective Date”) is made and entered by and among each of the entities identified on Schedule
A (each, a “Contributor” and collectively, the “Contributors”), on the one hand; and American
Campus Communities, Inc., a Maryland corporation (the “Company”), and American Campus Communities
Operating Partnership LP, a Maryland limited partnership (the “Operating Partnership” and, together
with the Company, the “Contributee”), on the other hand.
WHEREAS, the Contributors own and operate student housing properties; and
WHEREAS, the Contributors desire to transfer, convey, contribute and assign to the Operating
Partnership or its designees the properties and assets specified herein and the Contributee desires
to acquire the same from the Contributors, each in accordance with the terms and subject to the
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and of other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, do hereby agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms shall have the following meanings:
“Action” shall mean any claim, suit, litigation, labor dispute, arbitration, investigation or
other action or proceeding.
“Additional Property Information” shall have the meaning set forth in Section 6.2.
“Addendum A” shall mean an agreement substantially in the form attached hereto as Exhibit
K.
“Agreement” shall have the meaning set forth in the introduction hereto.
“Allocated Xxxxxxx Money” shall mean, for each Property, the portion of the aggregate Xxxxxxx
Money allocated to such Property as set forth on Schedule B.
“Anti-Terrorism Law” shall mean Executive Order 13224, as amended; the International Emergency
Economic Powers Act, 50 U.S.C. Sections 1701-06 et seq.; the Iraqi Sanctions Act, Pub.L. 101-513,
000 Xxxx. 0000-00; the United Nations Participation Act, 22 U.S.C. Section 287c; the Antiterrorism
and Effective Death Penalty Act; the International Security and Development Cooperation Act, 22
U.S.C. Section 2349 aa-9; the Terrorism Sanctions Regulations, 31 C.F.R. Part 595; the Terrorism
List Governments Sanctions Regulations, 31 C.F.R. Part 596; and the Foreign Terrorist Organizations
Sanctions Regulations, 31 C.F.R. Part 597.
“Assigned Value” shall have the meaning specified in Section 3.5.
“Assumed Loan Documents” shall mean, with respect to each Assumed Loan, all documents,
instruments and agreements evidencing, governing, securing and guaranteeing such Assumed Loan.
“Assumed Loans” shall mean all obligations listed on Schedule C regardless of whether
such obligations are assumed or paid at the Closing as provided in Section 3.3.
“Audit” shall have the meaning set forth in Section 17.1.
“Average Share Price” shall mean the average of the daily closing share prices of a Share on
the New York Stock Exchange during the four calendar months preceding the last full Business Day
prior to the expiration of the Inspection Period.
“Base Amount” shall mean, as to any Real Property, the aggregate number of beds located in
living units in such Real Property times $436.
“Beneficially Own” shall have the meaning set forth in the Exchange Act.
“Board” shall mean the Board of Directors of the Company.
“Books and Records” shall have the meaning set forth in Section 2.1(f).
“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks
in Austin, Texas are authorized or required by law to close.
“Cash Consideration” shall have the meaning set forth in Section 3.4.
“Casualty” shall have the meaning set forth in Section 14.1.
“Casualty Notice” shall have the meaning set forth in Section 14.1.
“Change in Control” shall mean (i) if the existing Board no longer constitutes a majority of
such board or (ii) the acquisition of voting securities of the Company by any “person” (as such
term is used in Section 13(d) of the Exchange Act) (other than the Company or any of its
Subsidiaries) or “group” (as defined in Section 13(d)(3) of the Exchange Act) with the result that
after such acquisition, such person or group Beneficially Owns more than 30% of the Company’s then
outstanding voting securities or (iii) the public announcement of an acquisition the consummation
of which would result in any person or group Beneficially Owning more than 30% of the Company’s
then outstanding voting securities.
“Claim” shall have the meaning set forth in Section 19.5.
“Claim Notice” shall have the meaning set forth in Section 19.5.
“Closing” shall mean the closing of the contributions of the Property or the related Equity
Interests.
2
“Closing Date” shall mean the date of the Closing, which shall occur on or before 30 days
after the Xxxxxxx Money becomes non-refundable pursuant to Section 4.4.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Common Units” shall mean common units of limited partnership interest in the Operating
Partnership.
“Common Unit Value” shall mean $23.50; provided, however, that in the event
that the Average Share Price is less than $23.50, then the Common Unit Value shall be equal to the
greater of (i) the Average Share Price and (ii) $22.50.
“Company” shall have the meaning set forth in the introduction hereto.
“Condemned Property” shall have the meaning set forth in Article 15.
“Confidentiality Agreement” shall mean the letter agreement, dated June 22, 2005, between
Royal Properties and the Contributee.
“Construction Warranties” shall have the meaning set forth in Section 2.1(h).
“Contract Assignment and Assumption Agreements” shall have the meaning set forth in
Section 10.2(a).
“Contributee” shall have the meaning set forth in the introduction hereto.
“Contributee Event of Default” shall have the meaning specified in Section 16.1(b).
“Contributee Indemnified Party” shall have the meaning set forth in Section 19.1(a).
“Contributee Material Adverse Effect,” with respect to the Contributee, shall mean a material
adverse effect (or any development that, insofar as reasonably can be foreseen, in the future is
reasonably likely to have a material adverse effect) on the business, properties, assets,
prospects, results of operations or financial condition of the Company and its Subsidiaries, taken
as a whole, or their ability to consummate the transactions contemplated by this Agreement, other
than (in each case) (i) changes contemplated by this Agreement or any other documents or
instruments executed and delivered in connection with the transactions contemplated by this
Agreement and/or (ii) any change in any Legal Requirements subsequent to the Effective Date.
“Contributing Party” shall have the meaning set forth in Section 2.2.
“Contribution Value” shall have the meaning set forth in Section 3.1.
“Contributor Event of Default” shall have the meaning specified in Section 16.1(a).
“Contributor Material Adverse Effect,” with respect to any Contributor or Contributing Party,
shall mean a material adverse effect (or any development that, insofar as reasonably can be
foreseen, in the future is reasonably likely to have a material adverse effect) on the business,
properties, assets, prospects, results of operations or financial condition of such
3
Contributor or Contributing Party, as the case may be, or its ability to consummate the
transactions contemplated by this Agreement, other than (in each case) (i) changes contemplated by
this Agreement or any other documents or instruments executed and delivered in connection with the
transactions contemplated by this Agreement and/or (ii) any change in any Legal Requirements
subsequent to the Effective Date.
“Contributor Tax Period” shall have the meaning set forth in Section 17.1.
“Contributors” shall have the meaning set forth in the introduction hereto.
“Contributors Closing Documents” shall have the meaning set forth in Section 10.2.
“Contributors Representatives” shall have the meaning set forth in Section 3.2(a).
“Covered Contributor Party” shall have the meaning set forth in Section 19.1.
“Damaged Property” shall have the meaning set forth in Section 14.1.
“Damages” shall have the meaning set forth in Section 19.1(a).
“Deeds” shall have the meaning set forth in Section 10.2(a).
“Distributee” shall mean any person who receives Units pursuant to this Agreement, in the case
of any of the Contributors that is an entity, pursuant to a distribution to its constituent
shareholders, partners or members, or pursuant to a distribution of Units received by any of the
Contributors as a nominee for an equity holder of a Contributor.
“Distributee Agreement” shall have the meaning set forth in Section 9.6.
“Xxxxxxx Money” shall have the meaning set forth in Section 4.1.
“Effective Date” shall have the meaning set forth in the introduction hereto.
“Equipment Leases” shall have the meaning set forth in Section 6.1(o).
“Equity Contributors” shall have the meaning set forth in Section 2.2.
“Equity Interests” shall mean, with respect to any entity, all ownership interests, both
voting and non-voting, that represent an equity interest in such entity, including, without
limitation, all stock, partnership interests (both general and limited) and membership interests.
“Escrowee” shall mean Heritage Title Company of Austin, Inc., Austin, Texas, Attention: Xxxxx
Xxxxxxx.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Exchange Portion” shall have the meaning set forth in Section 21.16.
“Fee” shall have the meaning set forth in Section 16.2(b).
4
“GAAP” shall have the meaning set forth in Section 8.1(f).
“Governing Law” shall have the meaning specified in Section 21.5.
“Governmental Authority” shall mean, with respect to any party or the Real Property, any
applicable agency, board, bureau, commission, department or body of any municipal, county, state or
federal governmental unit, or any subdivision thereof, having, asserting or acquiring jurisdiction
over such party or over all or any part of the Real Property or the management, operation, use or
improvement thereof.
“Hazardous Materials” shall mean any petroleum products, flammables, explosives, radioactive
materials, asbestos, radon or other hazardous waste including substances defined as “hazardous
substances,” “hazardous materials” or “toxic substances” in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Hazardous Materials Transportation Act, and
the Resources Conversation and Recovery Act, and any other material or substance whose use,
storage, handling or disposal is regulated by any applicable law or regulation concerning human
health and safety.
“Improvements” shall have the meaning set forth in Section 2.1(a).
“Income Tax Returns” shall have the meaning set forth in Section 17.1.
“Indebtedness” shall mean, with respect to any person, without duplication, (i) all
indebtedness of such person for borrowed money, whether secured or unsecured, (ii) all obligations
of such person under conditional sale or other title retention agreements relating to property
purchased by such person, (iii) all capitalized lease obligations of such person, (iv) all
obligations of such person under interest rate or currency hedging transactions (valued at the
termination value thereof) and (iv) all guarantees of such person of any such indebtedness of any
other person.
“Indemnification Amount” shall have the meaning specified in Section 19.9.
“Independent Consideration” shall have the meaning set forth in Section 4.5.
“Initial Deposit” shall have the meaning set forth in Section 4.1.
“Inspection Period” shall mean the period beginning on the Effective Date and ending 60 days
after the Effective Date.
“Insurance Coverage” shall have the meaning set forth in Section 9.1(g).
“Insurance Policies” shall have the meaning set forth in Section 6.1(c).
“Intangible Property” shall have the meaning set forth in Section 2.1(e).
“Land” shall have the meaning set forth in Section 2.1(a).
“Leases” shall have the meaning set forth in Section 2.1(d).
5
“Legal Requirements” shall have the meaning set forth in Section 7.1(c).
“Lenders” shall mean the lenders under or holders of the Assumed Loans.
“Liabilities” shall mean liabilities, Indebtedness, obligations, damages, commitments,
expenses, claims or guarantees of any nature (whether absolute, accrued, contingent or otherwise).
“Like-Kind Exchange” shall have the meaning set forth in Section 21.16.
“Loan Assumption Documents” shall have the meaning set forth in Section 3.3.
“Major Casualty” shall have the meaning set forth in Section 14.1.
“Material Taking” shall have the meaning set forth in Article 15.
“Non-Permitted Exceptions” shall have the meaning set forth in Section 5.2(b).
“Observation Rights” shall have the meaning set forth in Section 9.7.
“Operating Partnership” shall have the meaning set forth in the introduction hereto.
“Operating Statements” shall have the meaning set forth in Section 6.1(e).
“Owners” shall mean, collectively, the Contributing Parties, the Parent Entities and the
Equity Contributors.
“Parent Entity” shall have the meaning specified in Section 2.2.
“Partnership Agreement” shall mean the Amended and Restated Agreement of Limited Partnership
of the Operating Partnership.
“Partnership Agreement Amendment” shall mean the form of Amendment to Amended and Restated
Agreement of Limited Partnership of the Operating Partnership attached hereto as Exhibit A.
“Permits and Licenses” shall have the meaning set forth in Section 2.1(e).
“Permitted Exceptions” shall have the meaning set forth in Section 5.2(b).
“Personal Property” shall have the meaning set forth in Section 2.1(c).
“Preferred Unit Value” shall mean $26.75; provided, however, that in the event
that the Common Unit Value is less than $23.50, then the Preferred Unit Value shall be equal to the
Common Unit Value times 1.1383.
“Preferred Units” shall mean series A preferred units of limited partnership interest in the
Operating Partnership.
6
“Property” shall have the meaning set forth in Section 2.1.
“Property Contributors ” shall have the meaning set forth in Section 2.1.
“Property Documents” shall have the meaning set forth in Section 6.4.
“Property Information” shall have the meaning set forth in Section 6.1.
“Property Information Delivery Date” shall have the meaning set forth in Section 6.1.
“Proposed Acquisition Transaction” shall have the meaning set forth in Section 9.8.
“Purchase and Sale Agreements” shall mean the Purchase and Sale Agreements to be entered into
by the Operating Partnership and the Contributors in the attached hereto as Exhibit L.
“Qualifying Income” shall have the meaning set forth in Section 16.2(b).
“Real Property” shall have the meaning set forth in Section 2.1(b).
“Registration Rights Agreement” shall mean the registration rights and lock-up agreement to be
entered into by the Company, the Operating Partnership and the Holders (as defined therein) on or
prior to the Closing Date in the form attached hereto as Exhibit C.
“Rehired Employees” shall mean the individuals employed by Royal Apartments who will be
rehired by the Contributee after the Closing Date pursuant to the Agreement Regarding Employee
Matters.
“REIT” shall have the meaning set forth in Section 8.1(j)(ii).
“REIT Requirements” shall have the meaning set forth in Section 16.2(b).
“Rent Roll” shall have the meaning set forth in Section 6.1(a).
“Retained Amount” shall mean an aggregate amount equal to (i) $300,000 times the number of
Property Contributors plus (ii) 3.5% of the Assigned Value of the Property owned by the Equity
Contributors, which aggregate amount shall be allocated among the Contributors as set forth on
Schedule D.
“ROFO Agreement” shall mean the right of first offer agreement between Royal Apartments and
the Contributee in the form of Exhibit J.
“Royal Apartments” shall mean Royal Apartments USA, Inc.
“SEC” shall mean the Securities and Exchange Commission.
“SEC Documents” shall have the meaning set forth in Section 8.1(e).
“Securities Act” shall mean the Securities Act of 1933, as amended.
7
“Security Deposits” shall have the meaning set forth in Section 2.1(d).
“Service Contracts” shall have the meaning set forth in Section 2.1(e).
“Share” shall mean a share of common stock, par value $.01 per share, of the Company.
“Subsidiary” shall mean (i) any entity of which the Company (or other specified entity) shall
own directly or indirectly through a subsidiary, a nominee arrangement or otherwise (x) at least a
majority of the outstanding capital stock (or other shares of beneficial interest) or (y) at least
a majority of the partnership, joint venture or similar interests, and (ii) any entity in which the
Company (or other specified entity) is a general partner or joint partner, including, without
limitation, the Operating Partnership.
“Surveys” shall have the meaning set forth in Section 5.1.
“Survival Period” shall mean a period of one year after the Closing.
“Tax Opinion” shall have the meaning set forth in Section 16.2(b).
“Tax Matters Agreement” shall mean the Agreement Regarding Tax Matters in the form of
Exhibit I attached hereto.
“Taxes” shall mean all federal, state, county, local, foreign and other taxes of any kind
whatsoever (including, without limitation, income, profits, premium, estimated, excise, sales, use,
occupancy, gross receipts, franchise, ad valorem, severance, capital levy, production, transfer,
license, stamp, environmental, withholding, employment, unemployment compensation, payroll related
and property taxes, import duties and other governmental charges or assessments), whether or not
measured in whole or in part by net income, and including deficiencies, interest, additions to tax
or interest, and penalties with respect thereto, and including expenses associated with contesting
any proposed adjustment related to any of the foregoing.
“Tenants” shall have the meaning set forth in Section 2.1(d).
“Termination Notice” shall have the meaning set forth in Section 4.4.
“Title Commitments” shall have the meaning set forth in Section 5.2(a).
“Title Company” shall mean, with respect to the Real Property located in Texas, Heritage Title
Company of Austin, Inc., and, with respect to each other Real Property, Lawyer’s Title Insurance
Corporation, Chicago, Illinois.
“Title Policies” shall have the meaning set forth in Section 5.2(c).
“Title Review Period” shall have the meaning specified in Section 5.2(b).
“Trademarks” shall have the meaning set forth in Section 2.1(g).
8
“Unapproved Property” shall mean a Property as to which this Agreement has been terminated
pursuant to Sections 5.2(b), 5.2(c) or 16.1(a).
“Units” shall mean collectively, the Common Units and the Preferred Units.
“Withdrawn Property” shall have the meaning set forth in Section 3.5.
ARTICLE 2
SUBJECT OF CONVEYANCE
SUBJECT OF CONVEYANCE
Section 2.1 Conveyances of the Property. In accordance with the terms and conditions
of this Agreement and subject to the Contributee’s performance and satisfaction of the conditions,
covenants and obligations contained herein, each of the Contributors set forth on Schedule
2.1 (the “Property Contributors”) shall convey to the Operating Partnership or its designee all
of its right, title and interest in and to the following assets (or the Equity Interests in
entities owning all rights, title and interest to such assets as described in Section 2.2
hereof, as applicable):
(a) the real property listed on Schedule 2.1(a), along with the legal descriptions
thereof (collectively, the “Land”), and all of the improvements located on the Land, whether
completed or under construction (the “Improvements”);
(b) all rights, privileges, grants and easements appurtenant to the Contributor’s interest in
the Land and the Improvements, if any, including, without limitation, all of the Contributor’s
right, title and interest in and to all land lying in the bed of any public street, road or alley,
all mineral and water rights and all easements, licenses, covenants and rights-of-way or other
appurtenances used in connection with the beneficial use and enjoyment of the Land and the
Improvements (the Land and the Improvements and all such rights, privileges, easements, grants and
appurtenances are sometimes referred to herein as the “Real Property”);
(c) all personal property, fixtures, equipment and inventory, and (to the extent assignable)
computer programming and software owned or licensed by the Contributor, in each case located on or
used in connection with any of the Real Property, including but not limited to those items listed
on Schedule 2.1(c) (the “Personal Property”);
(d) all leases and other agreements with respect to the use and occupancy of the Real
Property, together with all amendments and modifications thereto and any guaranties provided
thereunder (the “Leases”), and all rents, additional rents, reimbursements, profits, income,
receipts, deposits, fees and any amounts deposited under the Leases in the nature of refundable
security (the “Security Deposits”) for the performance of the obligations of the parties occupying
space at the Real Property pursuant to the Leases (the “Tenants”);
(e) all of the Contributor’s right, title and interest in and to (i) all permits, licenses,
guaranties, approvals, certificates and warranties relating to the Real Property and the Personal
Property to the extent that any of the foregoing are assignable (including with such consents to
assignment as may be required and obtained pursuant to this Agreement) (collectively, the “Permits
and Licenses”); and (ii) the contracts and agreements listed on Schedule 2.1(e) for the
servicing, maintenance, management and operation of the Real Property,
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including, without limitation, equipment leases and other agreements affecting the Real
Property and all such contracts and agreements entered into subsequent to the Effective Date (the
“Service Contracts” and, together with the Permits and Licenses, the “Intangible Property”), in
each case to the extent assignable;
(f) all books, records, current promotional material, current tenant data, current leasing
material and forms, rent rolls for the 30 month period immediately preceding the Effective Date,
current rent rolls, files, statements, Tax returns, market studies, keys, plans, specifications,
reports, tests and other materials of any kind owned by the Contributor that are or may be used by
the Contributor in the use and operation of the Real Property or the Personal Property
(collectively, the “Books and Records”);
(g) except as set forth on Schedule 2.1(g), all trademarks, trade names or symbols, if
any, under which the Real Property (or any part thereof) is operated (the “Trademarks”), to the
extent assignable;
(h) all warranties and guaranties covering all or any part of the Real Property and the
Improvements, including, without limitation, manufacturer’s warranties relating to any Personal
Property and all warranties and guaranties provided by any general contractor, subcontractors or
materialmen providing labor and/or materials to the Real Property (collectively, the “Construction
Warranties”), to the extent assignable; and
(i) all other rights, privileges and appurtenances owned by the Contributor, if any, related
in any way to the rights and interests described above in this Section 2.1, in each case,
to the extent assignable.
The Real Property, the Personal Property, the Leases, the Security Deposits, the Intangible
Property, the Books and Records, the Trademarks, the Construction Warranties and the other property
interests being transferred pursuant to this Section 2.1 are hereinafter collectively
referred to as the “Property,” which term may mean all the Property of the Contributors
collectively, or, when so indicated by the context, may refer only to that portion of the Property
owned by an individual Contributor.
Section 2.2 Conveyances of Equity Interests. In accordance with the terms and
conditions of this Agreement and subject to the Contributee’s performance and satisfaction of the
conditions, covenants and obligations contained herein, each of the parties listed on Schedule
2.2 (each, a “Contributing Party” and collectively, the “Contributing Parties”) shall convey to
the Operating Partnership or its designee 100% of the Equity Interests in the parent entity (each,
a “Parent Entity” and collectively, the “Parent Entities”) of each Contributor listed on Schedule
2.2 (the “Equity Contributors”). The Contributors hereby agree that the Contributing Parties shall
have a valid, legal and enforceable obligation to convey and assign to the Operating Partnership or
its designee on the Closing Date their respective Equity Interests, on the terms and subject to the
conditions of this Agreement, and the Contributee shall have the right to seek specific performance
of such obligation in accordance with Section 16.2. The Contributors shall cause each
Contributing Party to consummate the conveyance and assignment of its respective Equity Interests
at Closing and, on or prior to Closing, to execute and deliver to the Operating Partnership an
Addendum A pursuant to which each such Contributing Party agrees to be bound
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by the terms of this Agreement with the same force and effect as if it were an original
signatory hereto.
Section 2.3 Forms of Conveyances. The parties agree that each Property located (a) in
the States of Texas, Tennessee, Arizona and Kentucky will be conveyed to the Operating Partnership
or its designee pursuant to Section 2.1 and (b) in the State of Florida will be conveyed to
the Operating Partnership or its designee pursuant to Section 2.2. Notwithstanding the
foregoing, in the event that, prior to 5:00 p.m., Central Time, on 10th Business Day
following the Effective Date, the Contributors Representatives provide evidence reasonably
satisfactory to the Contributee of the consent of each constituent partner of the Contributors that
own the Property located in the States of Arizona and Kentucky to the conveyance of the applicable
Property pursuant to Section 2.2, each such Property will be conveyed pursuant to
Section 2.2 and the Contribution Value shall be $245,000,000.
ARTICLE 3
VALUE AND PAYMENT TERMS
VALUE AND PAYMENT TERMS
Section 3.1 Contribution Value. Subject to the provisions of Section 2.3, the
total value assigned by the Contributee to the Property is $243,500,000 (the “Contribution Value”),
which shall be paid by the Operating Partnership at the Closing as set forth below and allocated
among the Real Property and the Personal Property as set forth in Schedule 3.1.
Section 3.2 Issuance of Units.
(a) Issuance. Prior to the expiration of the Inspection Period, the persons set forth
on Schedule 3.2(a), as the designated representatives of the Contributors (the
“Contributors Representatives”), will notify the Contributee in writing of the number and type of
Units each of the Contributors elect to receive at the Closing, if any, but in no event shall more
than an aggregate of 3,250,000 Units be issued at the Closing; provided that if the Contributors
elect to receive Units, they must receive not less than $15,000,000 of Units at the Closing, valued
at the Common Unit Value or the Preferred Unit Value, as applicable. If such notice is not
received by the Contributee prior to the expiration of the Inspection Period, the Contributors will
be deemed to have elected to receive 3,000,000 Common Units and no Preferred Units at the Closing.
The Contributors Representatives shall give the Contributee notice at least ten Business Days
before the Closing Date of the name, address and other reasonable information required by the
Company or the Operating Partnership of or relating to the Distributees to which the Units are to
be issued at the Closing. At the Closing, the Operating Partnership shall issue and deliver to the
Contributors Representatives that number of Common Units and/or Preferred Units that the
Contributors elected or deemed to have elected to receive pursuant to this Section 3.2(a).
(b) Rights, Preferences and Restrictions. The Units shall have the rights, terms and
preferences as set forth in the Partnership Agreement (as amended by the Partnership Agreement
Amendment). The Units issued at the Closing shall be subject to such restrictions on
transferability and shall have such registration rights as provided in the Registration Rights
Agreement and the Partnership Agreement Amendment.
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(c) Valuation. The value of the Common Units issued at the Closing shall equal the
Common Unit Value and the value of the Preferred Units issued at the Closing shall equal the
Preferred Unit Value.
Section 3.3 Assumption of Indebtedness. At the Closing, except as otherwise set forth
in this Section 3.3, the Operating Partnership or its designee shall assume and agree to
pay and perform all indebtedness and obligations of the Contributors under all Assumed Loans
relating to the Property, and, to the extent permitted by the respective Lenders, the Contributors
and their affiliates shall be released from any and all liability for such Assumed Loans. At the
Closing, the Operating Partnership shall execute and deliver all such documents and instruments
(the “Loan Assumption Documents”) reasonably required by the Lenders of the Assumed Loans being
assumed at the Closing to evidence such assumption and release in form satisfactory to such Lenders
and the Operating Partnership. In addition, the approval of the released Contributor, which
approval shall not be unreasonably withheld, delayed or conditioned, shall be required only with
respect to (i) the form of the release of liability under the Assumed Loans and (ii) the liability
under the Assumed Loans that may be incurred after the Closing Date by the released Contributor.
The Operating Partnership shall be responsible for all fees and costs associated with the
assumption of each of the Assumed Loans up to a maximum equal to 1% of the outstanding principal
amount of each Assumed Loan assumed at Closing. If a Lender (a) does not allow an assumption of an
Assumed Loan for any reason other than a failure of a Contributor to comply with the provisions of
this Section 3.3 or (b) requires substantially more onerous terms than those to which a
Contributor is subject, then the Contributee shall, at its election, either (1) prepay or defease
all such Assumed Loans, and Contributee shall be responsible for costs and penalties related
thereto, including but not limited to yield maintenance penalties, or (2) terminate this Agreement
in its entirety upon delivery of written notice thereof to the Contributors. If a Lender charges
an assumption fee in excess of 1% of the outstanding principal amount of such Assumed Loan, then
the Contributee shall so notify the Contributors, and the Contributors shall be responsible for any
excess assumption fee.
Section 3.4 Cash Consideration. At the Closing, the Operating Partnership shall pay
the Contributors, to accounts designated by the Contributors Representatives, an amount of cash
(the “Cash Consideration”) equal to (i) the Contribution Value minus (ii) the following
items: (a) the Initial Deposit, (b) the Xxxxxxx Money, (c) the outstanding principal balance plus
all accrued and unpaid interest thereon as of the Closing Date on the Assumed Loans, (d) the
Assigned Value of each Withdrawn Property, (e) the Retained Amount, (f) the net amount of
adjustments calculated pursuant to Article 11 (if such net amount is due the Operating
Partnership), (g) the number of Common Units to be issued at the Closing pursuant to Section
3.2(a) times the Common Unit Value and (h) the number of Preferred Units to be issued at the
Closing pursuant to Section 3.2(a) times the Preferred Unit Value; provided that the Units
comprising the Retained Amount shall not be deducted more than once for purposes of this
Section 3.4.
Section 3.5 Withdrawn Property. A “Withdrawn Property” shall be any Unapproved
Property, Damaged Property or Condemned Property as to which this Agreement has been terminated
pursuant to Section 5.2(b), Section 5.2(c), Section 14.1, Article
15 or Section 16.1(a). In the event any Property becomes a Withdrawn Property, the
Allocated Xxxxxxx Money shall be promptly returned to the Operating Partnership, Schedule C
shall be revised to
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delete the Assumed Loan associated with such Withdrawn Property from the definition of Assumed
Loans and the value assigned to such Withdrawn Property on Schedule 3.1 (the “Assigned
Value”) shall be deducted from the Contribution Value. In the event that prior to the Closing, the
aggregate number of beds contained in the Withdrawn Properties is greater than 1,000, this
Agreement may be terminated in its entirety at the election of the Contributee by written notice
given to the Contributors.
Section 3.6 Property Manager Due Diligence Fee. At the Closing, the Operating
Partnership shall pay to Royal Apartments a fee of $750,000 in cash as compensation for its time,
effort and expense in overseeing compilation of the Property Documents.
Section 3.7 Retained Amount. At the Closing, the Contributee shall retain an amount
in Units (or, if Units are not issued at the Closing, other commensurate consideration) equal to
the Retained Amount for payment to the Contributors Representatives after the expiration of the
Survival Period, subject to decrease as provided in Article 19, valued at the Common Unit
Value and/or the Preferred Unit Value, as the case may be; provided, however, that
if the Contributee has delivered a Claim Notice with respect to any Property, the Contributor
thereof or the Equity Interests related thereto prior to the expiration of the Survival Period as
provided in Section 19.5 but the Claim has not yet been resolved as of the expiration of
the Survival Period, then the Retained Amount applicable to each such Contributor less amounts
previously utilized to resolve any Claim relating to such Property, the Contributor thereof or the
Equity Interests related thereto shall continue to be retained until such Claim has been finally
resolved as provided in Article 19. Prior to payment of the Retained Amount to the
Contributors as directed by the Contributors Representatives, the distributions paid on the Units
comprising the Retained Amount shall be paid to the Contributors Representatives until such time
(if any) as they are used for offset pursuant to Section 19.6.
ARTICLE 4
XXXXXXX MONEY
XXXXXXX MONEY
Section 4.1 Deposit and Investment of Xxxxxxx Money. Prior to the Effective Date, the
Operating Partnership has caused to be deposited as initial xxxxxxx money with the Escrowee
$300,000 (the “Initial Deposit”). Within three Business Days following the Effective Date,
Contributee shall deposit or cause to be deposited as additional xxxxxxx money $650,000 with the
Escrowee. Within three Business Days after the expiration of the Inspection Period, Contributee
shall deposit or cause to be deposited as additional xxxxxxx money $1,200,000 (together with the
$650,000 xxxxxxx money, the “Xxxxxxx Money”). The Escrowee shall disburse the Initial Deposit and
the Xxxxxxx Money in the manner provided for in Section 4.4. The Escrowee shall be
authorized, at the Operating Partnership’s option, to invest the Initial Deposit and the Xxxxxxx
Money in an interest-bearing account at a federally-insured bank. Except as set forth in Section
4.4, the Operating Partnership shall be entitled to all interest accrued on the Initial Deposit and
the Xxxxxxx Money, regardless of whether the transactions contemplated by this Agreement are
closed.
Section 4.2 Agreement of the Escrowee. The Escrowee must sign this Agreement as
evidence that the Escrowee agrees to be bound by the obligations contained herein with respect to
the Initial Deposit and the Xxxxxxx Money. In the event that the Escrowee cannot comply with
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the obligations imposed pursuant to this Article 4, the Contributors and the
Contributee shall mutually and reasonably select another title company on or before the expiration
of ten days following written notice by either party to the other that said selection is required.
Section 4.3 Form; Failure to Deposit. The Initial Deposit and the Xxxxxxx Money shall
be in the form of a cashier’s check or the wire transfer to the Escrowee of immediately available
U.S. federal funds. If the Operating Partnership fails to timely deposit any portion of the
Xxxxxxx Money within the time periods required, the Contributors may terminate this Agreement by
written notice to the Contributee at any time prior to the date on which the Operating Partnership
deposits such portion of the Xxxxxxx Money, in which event the Initial Deposit and the Xxxxxxx
Money shall be returned to the Operating Partnership together with any accrued interest thereon.
Section 4.4 Disposition of Xxxxxxx Money. The Initial Deposit shall be fully
refundable to the Operating Partnership upon written notice from the Operating Partnership to the
Contributors (the “Termination Notice”) until the end of the Inspection Period. If the Contributee
terminates this Agreement for any reason subsequent to the end of the Inspection Period, the
Initial Deposit, together with accrued interest thereon, shall be paid to the Contributors, to the
accounts designated by the Contributors Representatives. If the Contributee elects to terminate
this Agreement prior to the end of the Inspection Period, the Escrowee shall pay the Initial
Deposit (less the Independent Consideration) to the Operating Partnership one Business Day
following receipt of the Termination Notice from the Operating Partnership, without notice to or
direction from the Contributors. The Xxxxxxx Money shall be fully refundable to the Operating
Partnership upon delivery of a Termination Notice until the later to occur of (i) the end of the
Inspection Period, (ii) the date of notice given by the Operating Partnership to Contributors that
the Operating Partnership and each of the Lenders have entered into a definitive agreement pursuant
to which the Operating Partnership will assume the respective Assumed Loan and (iii) 150 days after
the expiration of the Inspection Period. If the Contributee elects to terminate this Agreement
pursuant to the terms of the immediately preceding sentence, the Escrowee shall pay the Xxxxxxx
Money (less the Independent Consideration) to the Operating Partnership one Business Day following
receipt of the Termination Notice from the Operating Partnership, without notice to or direction
from the Contributors. In the event of a termination of this Agreement by either the Contributee
or the Contributors for any other reason, the Escrowee is authorized to deliver the Initial Deposit
and the Xxxxxxx Money (less the Independent Consideration) to the party hereto entitled to same
pursuant to the terms hereof on or before the fifth Business Day following receipt by the Escrowee
and the non-terminating party of written notice of such termination from the terminating party,
unless the other party hereto notifies the Escrowee that it disputes the right of the other party
to receive the Initial Deposit and the Xxxxxxx Money prior to the end of the fourth Business Day
following receipt of such termination notice.
Section 4.5 Independent Consideration. If the Contributee elects to terminate this
Agreement for any reason and is entitled to receive a return of the Initial Deposit and the Xxxxxxx
Money pursuant to the terms hereof, the Escrowee shall first disburse to the Contributors, to the
accounts designated by the Contributors Representatives, $100 as independent consideration for the
Contributors’ performance under this Agreement (the “Independent Consideration”), which shall be
retained by the Contributors in all instances.
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ARTICLE 5
SURVEY AND TITLE
SURVEY AND TITLE
Section 5.1 Survey. Within five Business Days from the Effective Date, the
Contributors shall deliver to the Operating Partnership all surveys of the Real Property (such
surveys, as may be updated or the new surveys obtained by the Contributee, the “Surveys”) in the
Contributors’ possession. The Contributee may elect, at Contributee’s expense, to obtain new
Surveys or updates to the existing Surveys.
Section 5.2 Title.
(a) Title Commitments. Within five Business Days from the Effective Date, the
Contributors, at the Contributors’ sole cost and expense, shall furnish to the Operating
Partnership a current owner’s title policy commitment (the “Title Commitments”) for each Property
for the issuance of an Owner’s Policy of Title Insurance to Contributee from the Title Company,
together with good legible copies of all documents constituting exceptions to the Contributors’
title as reflected in the Title Commitments.
(b) Title Review. At any time during the period commencing on the date that all Title
Commitments have been furnished to the Operating Partnership and ending 30 calendar days thereafter
(the “Title Review Period”), the Operating Partnership may object in writing to any liens,
encumbrances, and other matters reflected by the Title Commitments or the Surveys. All such
matters to which the Operating Partnership so objects shall be “Non-Permitted Exceptions”; if no
such objection notice is given during the Title Review Period, except as otherwise provided below,
all matters reflected by the Surveys and Title Commitments shall be “Permitted Exceptions.” If,
between the end of the Title Review Period and the Closing, the Operating Partnership receives
notice of additional liens, encumbrances or other matters not reflected in the initial Title
Commitments or the initial Surveys or otherwise becomes aware of such matters, the Operating
Partnership may submit a revised list adding additional Non-Permitted Exceptions. The Contributors
may, but shall not be obligated to, at their sole cost and expense, cure or remove all
Non-Permitted Exceptions and give the Contributee written notice of its intent with respect thereto
within five days after the Title Review Period expires or, if applicable, after delivery of any
revised list; provided, however, the Contributors, at their sole cost and expense,
shall be obligated to cure or remove by the Closing all mortgages, deeds of trust, judgment liens,
mechanic’s and materialmen’s liens, and other liens and encumbrances against the applicable
Property (other than liens for taxes and assessments which are not delinquent or relating to the
Assumed Loans) which either secure Indebtedness or can be removed by payment of a liquidated sum of
money, whether or not the Operating Partnership objects thereto during the Title Review Period, and
all such matters shall be deemed Non-Permitted Exceptions. If the Contributors do not timely cause
any of the Non-Permitted Exceptions to be removed, cured or otherwise omitted from the applicable
Title Commitment and timely written notice thereof to be given to the Contributee, the Contributee
may, at any time and at its election, (i) terminate this Agreement as to the Property to which such
Non-Permitted Exception relates, whereupon such Property shall become an Unapproved Property, (ii)
extend the Closing Date until three Business Days after the Contributors have caused all of the
Non-Permitted Exceptions to be removed, cured or otherwise omitted from the applicable Title
Commitment, or (iii) acquire the Property subject to the Non-Permitted Exceptions (other than
15
liens that the Contributors are obligated to cure or remove), in which event the Non-Permitted
Exceptions (other than liens that Contributors are obligated to cure or remove) subject to which
the Contributee elects to acquire the Property shall thereafter be Permitted Exceptions, and the
Contributee shall have the right to require that all or a portion of the Cash Consideration be
applied to discharge any such obligations at Closing.
(c) Delivery of Title Policies at Closing. In the event that the Title Company does
not issue at the Closing, or unconditionally commit at the Closing to issue, to the Operating
Partnership, extended coverage owner’s title policies in accordance with the Title Commitments,
insuring the Operating Partnership’s title to the applicable Property in the amount of the
applicable Assigned Value, subject only to the standard exceptions and exclusions from coverage
contained in such policy and the Permitted Exceptions (the “Title Policies”), then, at the
Operating Partnership’s option, by written notice thereof delivered to the Contributors, the
Operating Partnership may terminate this Agreement as to such Property, whereupon such Property
shall become an Unapproved Property.
ARTICLE 6
DUE DILIGENCE
DUE DILIGENCE
Section 6.1 Due Diligence Materials to be Delivered. Except as otherwise set forth in
this Section 6.1, within five Business Days after the Effective Date (the “Property
Information Delivery Date”), the Contributors shall furnish to the Operating Partnership the
following items with respect to each Property (collectively, the “Property Information”):
(a) A rent roll for the Property (the “Rent Roll”) prepared as of the first day of the month
in which this Agreement is executed, which Rent Roll shall reflect, as of the date thereof, with
respect to each Tenant: (i) the unit number; (ii) the name of such Tenant and the name and address
of the guarantor of such Tenant’s Lease; (iii) whether or not each unit is furnished; (iv) monthly
rental; (v) the amount of such Tenant’s Security Deposit, fees, deposits and/or prepaid rental;
(vi) the date through which such Tenant’s rent is paid; (vii) the commencement date and scheduled
expiration date of such Tenant’s Lease; (viii) whether or not such Tenant’s Lease provides an
option to renew, and if so, the period for which such Lease may be extended and the rental rate;
and (ix) the amount of any rental discounts, rebates, concessions and other items payable by the
landlord thereunder or in connection therewith. The Rent Roll shall be accompanied by the
applicable Contributor’s signed certification that the Rent Roll is true, complete, and correct as
of the date shown on such Rent Roll and that there has been no material adverse change with respect
to any item shown on the Rent Roll during the period from the date thereof to the date of such
certificate.
(b) A list, together with true, correct and complete copies of all Service Contracts.
(c) Copies of all insurance policies covering or affecting the Property, both casualty and
liability (the “Insurance Policies”).
(d) Copies of the tax statements for the preceding three calendar years on the Real Property,
the Improvements and the Personal Property and copies of all tax or other audits
16
and copies of all federal and state income tax returns filed by any Contributor and all
communications between any Contributor and the Internal Revenue Service or similar state agency for
the past five years, including notices of assessment and reports of revenue agents, with respect to
matters raised by the Internal Revenue Service in the course of any audits.
(e) A schedule that is true, correct and complete in all material respects as of the dates
thereof (“Operating Statements”) reflecting for each month of the three calendar years immediately
preceding the Effective Date and for the year-to-date income and operating and capital expenses,
including: (A) ad valorem taxes for the city, county and state; (B) annual insurance premiums for
such year for fire, extended coverage, xxxxxxx’x compensation, vandalism, and malicious mischief,
general liability, loss of rents, and other forms of insurance shown thereon; (C) expenses incurred
for such period for water, electricity, natural gas and other utility charges; (D) expenses for
such period for the repair of buildings and common areas; (E) occupancy rates; (F) total annual
rents collected from Tenants for such year; and (G) line item detail of all other expenses related
to the operation of the Property. The Operating Statements shall be accompanied by the applicable
Contributor’s signed certification that the Operating Statements are true, complete and correct in
all material respects as of the dates thereof.
(f) A schedule of the aggregate monthly rents collected for the calendar year immediately
preceding the Effective Date and for the year-to-date.
(g) The most recent capital and operating budgets pertaining to the Property and a complete
and, to the extent not included in clause (D) of Section 6.1(e), itemized list of all
repairs to the Property, if any, performed during the period of Contributors’ ownership of the
Property, in excess of $10,000 during the three calendar years immediately preceding the Effective
Date and for the year-to-date and $25,000 prior to such time, in each case as to any such single
repair.
(h) Copies of all as built plans and specifications of all Improvements in the possession of
the Contributors or their agents.
(i) All existing engineering reports, including, but not limited to, structural, plumbing,
electrical, mechanical and civil, in the possession of Contributors or their agents and that were
issued at any time within 30 months prior to the Effective Date.
(j) All existing soil and environmental reports in the possession of Contributors or their
agents.
(k) A detailed listing of all utilities servicing the Property, together with copies of the
most recent xxxx from each utility.
(l) The certificate(s) of occupancy (or similar permits or licenses) for the Improvements and
any amendments thereto, and, to the extent the same are in the possession of the Contributors or
their agents, all other permits or licenses issued by any Governmental Authority with respect to
the Property or the Contributors.
17
(m) Copies of all Construction Warranties and bonds in the possession of the Contributors or
their agents.
(n) A list of all underground improvements at the Property of which a Contributor has
knowledge, including treatment or storage tanks, sumps, or water, gas or oil xxxxx.
(o) A list of all personal property attached to, located upon or used in connection with the
Property and which is not owned by the Contributors but which the Contributors has the right to use
under lease, rental or other agreements (the “Equipment Leases”), accompanied by true, complete and
correct copies of such Equipment Leases.
(p) A current, aged, accounts receivable schedule.
(q) Copies of the Assumed Loan Documents.
(r) Copies of all marketing materials for the Property in use currently or at any time within
30 months prior to the Effective Date.
(s) A copy of the standard lease form(s) (with addendums) currently being used by
Contributors.
(t) All reports and materials in the Contributors’ possession relating to whether the Property
is in compliance with Title III and Title V of the Americans with Disabilities Act of 1990, Public
Law 101-336, as amplified by the final rule promulgated by the Department of Justice in Section 28
of the Code of Federal Regulations, Part 36.
(u) Copies of all pleadings and other filings with respect to any ongoing litigation pending
with respect to the Property or any Contributor and copies of any notice received threatening
litigation with respect to the Property or any Contributor.
(v) Copies of all notices sent by any Governmental Authority or agency or third party relating
to the compliance or noncompliance of the Property or any Contributor with any Legal Requirements.
(w) Organizational and other information regarding each Owner and Contributor, including a
listing of states where qualified to do business, within five days after each first becomes
available, but no later than 30 days before the expiration of the Inspection Period.
(x) For each Owner and Contributor, copies of option, warrant, subscription, voting, voting
trust, registration and other agreements to which an Owner or Contributor is a party or to which
any securities of any Owner or Contributor are subject; all documents restricting the issuance or
resale of any assets or securities of any Owner or Contributor (including buy-sell agreements,
rights of first refusal, first offer or similar preferential rights); copies of any other
agreements relating to the purchase or sale by any Owner or Contributor of its securities; all
reports filed with any state authority during the last three years; a list of all loans or other
arrangements (including guaranty and indemnification arrangements) between any
18
Owner or Contributor and its partners or members; a list of all interests that any Owner or
Contributor may have in tenant, customer or vendor business; all joint venture, operating, limited
liability and partnership agreements to which any Owner or Contributor is a party or that relate to
any Owner or Contributor; and copies of any guarantee issued by any Owner or Contributor (other
than as delivered pursuant to any other provision of this Section 6.1).
(y) Any other information reasonably requested by the Contributee.
Section 6.2 Due Diligence Materials To Be Made Available. To the extent such items
are in the Contributors’ possession, the Contributors shall make available to the Operating
Partnership for the Operating Partnership’s review at either the Property or at the principal
offices of Royal Apartments in Champaign, Illinois, at the Contributors option (provided that all
lease files shall be located at the Property), the following items and information (the “Additional
Property Information”) on or before the Property Information Delivery Date and continuing through
the Inspection Period, and the Operating Partnership at its expense shall have the right to make
copies of same:
(a) Maintenance work orders for the 30 months preceding the Effective Date and warranties, if
any, on roofs, air conditioning units, fixtures and equipment.
(b) True, correct and complete copies of all executed Leases.
(c) All Books and Records covering any period of time within 30 months prior to the Effective
Date.
Section 6.3 Physical Due Diligence. Commencing on the Effective Date and continuing
until the Closing, the Operating Partnership and its agents and representatives shall have
reasonable access to the Property at all reasonable times during normal business hours for the
purpose of conducting reasonably necessary inspections and tests, including Surveys and
architectural, engineering, geotechnical and environmental inspections and tests, and unit-by-unit
inspections of the Property. The Contributors and their agents and representatives shall cooperate
with the Operating Partnership and its agents and representatives in supplying such historical and
operational information as may be reasonably requested by such persons, including notices, permits,
or other written communications pertaining to the environmental or physical condition of the
Property. The Contributors hereby authorize the Operating Partnership and its agents and
representatives to enter upon the Property for the purpose of conducting the above inspections and
tests and agrees that such parties may take such samples as may be reasonably necessary to conduct
such inspections and tests; provided, however that, with respect to any Phase II
inspection of any Property, (i) at the Contributor’s request, Contributee shall split any or all
samples with the Contributor that owns the Property from which samples are taken and shall provide
one unit of each split sample to the applicable Contributor for its own independent testing and
evaluation, (ii) promptly upon receipt, the Contributee shall provide the applicable Contributor or
its legal counsel with any and all final results of sampling data of sample collected at such
Property, (iii) if the Contributee believes that the information generated during or as a result of
any tests, inspections or sampling requires notification to any Governmental Authority, the
Contributee shall so notify the applicable Contributor prior to any such notification, and the
obligation to report, unless otherwise specified by applicable law or regulation, shall rest solely
19
with the Contributor and (iv) the Contributee shall under no circumstances, except as may be
specifically required by applicable law or regulation or as specifically agreed to in writing by
the applicable Contributor, communicate with or notify any Governmental Authority or any private
party any information generated during or as a result of the tests, inspections or sampling prior
to Closing, other than the Contributee’s directors, officers, employees, consultants, agents and
representatives on a “need to know” basis.
Section 6.4 Due Diligence/Termination Right. The Contributee shall have through last
day of the Inspection Period in which to (a) examine, inspect, and investigate the Property
Information and the Additional Property Information (collectively, the “Property Documents”) and
the Property and, in the Contributee’s sole and absolute judgment and discretion, determine whether
the Property is acceptable to the Contributee. The Contributee may terminate this Agreement for
any reason whatsoever or no reason, at its sole and absolute discretion, at any time prior to the
expiration of the Inspection Period by providing a Termination Notice to the Contributors of the
Contributee’s election to terminate this Agreement.
Section 6.5 Service Contracts, Equipment Leases and Insurance Policies. No later than
15 days after the expiration of the Inspection Period, the Operating Partnership will advise the
Contributors in writing of which Service Contracts, Equipment Leases and Insurance Policies
(including any Service Contracts, Equipment Leases and Insurance Policies entered into after the
Effective Date in accordance with the terms hereof) it will assume and for which Service Contracts,
Equipment Leases and Insurance Policies the Operating Partnership requests that the Contributors
deliver written termination at or prior to Closing. If no such notice is timely delivered, then
all Service Contracts, Equipment Leases and Insurance Policies shall be assumed by the Contributee
at Closing. The Contributors shall use commercially reasonable efforts to terminate all Service
Contracts, Equipment Leases and Insurance Policies as to which the Contributee has requested
termination; provided, however, any such Service Contract, Equipment Lease or
Insurance Policy that the Contributors are unable to terminate after using commercially reasonable
efforts shall be assumed by the Contributee at Closing. For purposes of this Section 6.5,
no Contributor shall be required to pay any termination fee or penalty as part of its commercially
reasonable efforts to terminate a Service Contract, Equipment Lease or Insurance Policy. In the
event any Service Contract, Equipment Lease or Insurance Policy to be assumed by the Contributee
under this Section 6.5 is not assignable and the requisite consent to assignment cannot be
obtained despite the Contributor’s commercially reasonable efforts to obtain such consent, at the
Contributor’s option either (i) the Contributor shall terminate such Service Contract, Equipment
Lease or Insurance Policy and pay all applicable termination fees and other charges relates to the
termination thereof or (ii) the Contributor and the Contributee shall enter into an agency
agreement in the form of Exhibit B.
Section 6.6 Operating Partnership’s Responsibilities. In conducting any inspections,
investigations or tests of the Property and/or Property Documents, the Contributee and its agents
and representatives shall: (a) not unreasonably disturb the Tenants or unreasonably interfere with
their use of the Property pursuant to their respective Leases; (b) not unreasonably interfere with
the operation and maintenance of the Property; (c) not damage any part of the Property or any
personal property owned or held by any Tenant or any third party; (d) not injure or otherwise cause
bodily harm to the Contributors or their agents, guests, invitees, contractors and employees or any
tenants or their guests or invitees; (e) comply with all applicable Legal Requirements in
20
all material respects; (f) promptly pay when due the costs of all tests, investigations, and
examinations done with regard to the Property; (g) not permit any liens to attach to the Real
Property by reason of the exercise of its rights hereunder; and (h) repair any damage to the Real
Property resulting directly from any such inspection or tests.
Section 6.7 Contributee’s Agreement to Indemnify. The Contributee shall indemnify and
hold the Contributors harmless from and against any and all Liabilities (including reasonable
attorneys’ fees) arising out of the Operating Partnership’s inspections or tests permitted under
this Agreement or any violation of the provisions of Section 6.3 and Section 6.6;
provided, however, that the indemnity shall not extend (a) to protect the
Contributors from any pre-existing liabilities for matters merely discovered by the Contributee
(i.e., latent environmental contamination) or (b) to any Liabilities to the extent attributable to
the action or inaction of the Contributors or their agent or employees. The Contributee’s
obligations under this Section 6.7 shall survive the termination of this Agreement and
shall survive the Closing.
Section 6.8 Changes to Property Documents. The Contributors shall advise the
Operating Partnership in writing, within three Business Days thereof, of any material changes,
additions, deletions or modifications in or to any Property Documents delivered to the Operating
Partnership pursuant hereto and furnish the Operating Partnership with copies thereof.
Section 6.9 Disclosure Schedules. On or prior to the Effective Date, the Contributors
shall have delivered to the Contributee a draft of each disclosure schedule referenced herein. No
later than one week prior to the expiration of the Inspection Period, the Contributors shall
deliver to the Contributee final versions of each such disclosure schedule along with a redline
showing the changes made from the drafts thereof, whereupon such final schedules shall
automatically become part of this Agreement. Notwithstanding the foregoing, the Contributee shall
have the right to object to any matter shown on such final schedules, and the Contributors may, but
shall not be obligated to, revise such schedules. If the Contributors do not cause all of such
objections to be resolved to the satisfaction of the Contributee, the Contributee may at any time
prior to the Inspection Period terminate this Agreement in its entirety.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS
REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS
Section 7.1 Operating Representations and Warranties. In order to induce the Company
and the Operating Partnership to enter into this Agreement and to perform their respective
obligations hereunder, each Contributor hereby warrants and represents the following as to such
Contributor, as of the date one day prior to the date of expiration of the Inspection Period and as
of the Closing Date:
(a) Organization, Good Standing and Partnership Power. The Contributor is a general
or limited partnership, duly formed and validly existing under the laws of the jurisdiction in
which it was organized, is duly authorized to transact business under the laws of each state in
which the character of the properties owned or leased by it or the nature of its activities makes
such qualification necessary, except where the failure to be so qualified would not have a
Contributor Material Adverse Effect, has all requisite partnership power and authority to execute
and deliver this Agreement and all other documents and instruments to be executed and delivered
21
by it hereunder, and to perform its obligations hereunder and thereunder in accordance with
the terms and conditions hereof and thereof.
(b) Authorization; No Violation. Assuming the due and valid authorization, execution
and delivery of this Agreement by the Contributee, this Agreement, and the other agreements and
documents to be executed by the Contributor hereunder, will be the legal, valid and binding
obligation of the Contributor, enforceable against the Contributor in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, moratorium or similar laws relating
to creditors’ rights and general principles of equity. The performance by the Contributor, as
applicable, of its duties and obligations under this Agreement and the documents and instruments to
be executed and delivered by it hereunder will not (i) conflict with, or result in a breach of, or
default under, any provision of any of the organizational documents of the Contributor or any
agreement, instrument, decree, judgment, injunction, order, writ, law, rule or regulation, or any
determination or award of any court or arbitrator, to which the Contributor is a party or by which
its assets are or may be bound, except for any of the foregoing matters that, individually or in
the aggregate, would not have a Contributor Material Adverse Effect, or (ii) require any consent,
approval or authorization of, or declaration, filing or registration with, any Governmental
Authority or any other person or entity, except where the failure to obtain any such consent,
approval or authorization of, or filing or registration with, any governmental or regulatory
authority or other person or entity would not have a Contributor Material Adverse Effect.
(c) Ownership of Real Property. Except as set forth on Schedule 7.1(c)-1, the
Contributor has good and marketable title to its Real Property, free and clear of all liens (except
as disclosed in the applicable Title Commitment and the Survey). At Closing, the Contributor shall
have good and marketable title to its Real Property, free and clear of all liens (except as
disclosed in the applicable Title Commitment and the Survey), and no party shall have any rights
in, or to acquire, its Real Property, except for the rights of occupancy set forth in the Leases
and any rights or interests under any Permitted Exceptions. Except as set forth on Schedule
7.1(c)-2, to the Contributor’s knowledge, no default or breach of condition which, with notice
or lapse of time or both, could become a default or breach, currently exists (1) under any of the
documents evidencing any exception to the Contributor’s title to the Real Property or (2) with
respect to all applicable zoning, building, health, traffic, environmental, flood control, fire
safety, handicap and other applicable laws, regulations, ordinances and rulings of all local, state
and federal authorities and any other Governmental Authority having jurisdiction over the Real
Property or any portion thereof (“Legal Requirements”) which, in the case of clause (2), would have
a Contributor Material Adverse Effect.
(d) Ownership of Personal Property. All of the Personal Property relating to its Real
Property is listed on Schedule 2.1(c). The Contributor is the owner of all Personal
Property comprising its Property free and clear of all liens, claims, or encumbrances except liens
and security interests that will be released at or before Closing, and, except as set forth on
Schedule 7.1(d), all items of its tangible Personal Property are in working order in all
material respects.
(e) Tenants/Leases. The Rent Roll lists all Tenants of the Contributor’s Property.
With respect to each Tenant and its Lease, except as disclosed in Schedule 7.1(e), to
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the Contributor’s knowledge (i) such Lease is in full force and effect and no breach or
default on the part of the Contributor as landlord thereunder, or of such Tenant or guarantor under
such Lease, exists or remains unremedied, except as disclosed on the Rent Roll; (ii) such Lease has
not been modified in any material respect except to the extent that such modification is disclosed
in such Lease or any documents attached thereto; (iii) all material obligations of the Contributor
under such Lease required to have been performed by or prior to the Closing Date have been or will
be fully carried out and performed prior to the Closing; (iv) there are no agreements with such
Tenant for the performance of any material work except as set forth in such Leases; (v) except as
reflected in the Rent Roll, no rent called for under such Lease has been paid more than one month
in advance of its due date; (vi) except as reflected in the Rent Roll, such Tenant is not entitled
to any concession, rebate, allowance or period of occupancy free of rent under its Lease or any
other agreement with the Contributor; (vii) except as set forth on Schedule 7.1(e), there
are no pending claims asserted by such Tenant for offsets against rent or any other monetary claim
made against the Contributor as landlord; and (viii) there are no oral agreements with such
Tenants.
(f) Equipment. Except as set forth in the Property Information or on Schedule
7.1(f), to the Contributor’s knowledge, the internet infrastructure, plumbing, electrical or
air conditioning systems located on its Real Property is in working order in all material respects.
Except as set forth in the Property Information or on Schedule 7.1(f), each unit on its
Real Property contains the required appliances, smoke detector, carpeting, air conditioning and
heating equipment, and plumbing facilities, reasonably necessary to be a complete rental unit for
purposes of providing student housing consistent with historical practice.
(g) Casualty Losses. Except as set forth on Schedule 7.1(g), there has been
no damage to any portion of the Contributor’s Property caused by fire or casualty that has not been
fully repaired or restored.
(h) Payment of Bills. At Closing, there will be no unpaid bills or claims in
connection with the ownership, leasing and maintenance of its Property other than those for which
the Contributee has received a credit pursuant to Section 11.1.
(i) Service Contracts. There are no Service Contracts relating to its Real Property
other than those that are listed on Schedule 2.1(e), true and complete copies of which will
be delivered to Contributee pursuant to Section 6.1.
(j) Governmental Approvals. To the Contributor’s knowledge, except as set forth on
Schedule 7.1(j), the Contributor’s Property is now in compliance with all Legal
Requirements. To the Contributor’s knowledge, except as set forth on Schedule 7.1(j),
there are no petitions, actions, hearings, planned or contemplated, relating to or affecting the
zoning or use of its Property. To the Contributor’s knowledge, no license, permit or authorization
is necessary to own and operate its Property in accordance with its current operations, except
where the failure to have such license, permit or authorization would not have a Contributor
Material Adverse Effect.
(k) Environmental Reports. To the Contributor’s knowledge, except as disclosed on
Schedule 7.1(k), the Contributor’s Real Property is not currently in violation of any
23
applicable environmental law or regulation of any Governmental Authority having jurisdiction
over such Property. To the Contributor’s knowledge, except as disclosed on Schedule
7.1(k), the Contributor’s Real Property contains no Hazardous Materials. To the Contributor’s
knowledge, except as disclosed on Schedule 7.1(k), there are no storage tanks located on
the Contributor’s Real Property (either above or below ground).
(l) Mold. Except as set forth on Schedule 7.1(l), during the period of the
Contributor’s ownership of the Property, there has been no testing for or remediation of mildew,
mold or mold spores on the Contributor’s Property. To the Contributor’s knowledge, there is no
condition existing that would require remediation of mildew, mold or mold spores on the
Contributor’s Property.
(m) Litigation. Except as set forth on Schedule 7.1(m), there is no pending
or, to the Contributor’s knowledge, threatened, judicial, municipal or administrative proceedings
with respect to, or in any manner affecting its Property, including proceedings for or involving
tenant evictions, collections, condemnations, eminent domain, alleged building code, zoning or
environmental violations, or personal injuries or property damage alleged to have occurred on the
Contributor’s Real Property or by reason of the construction of any improvements thereon or the use
and operation of such Real Property or, to the Contributor’s knowledge, any present plan or study
by any Governmental Authority that in any material respect challenges, affects or would challenge
or affect the continued authorization of the ownership, construction, use, leasing, management,
maintenance and operation of such Real Property.
(n) Utilities. Except as set forth on Schedule 7.1(n), to the Contributor’s
knowledge all water, sewer, gas, electric, telephone, cable television and internet service,
drainage and other utility equipment, facilities and services required by any Legal Requirements or
reasonably necessary for the operation of the Contributor’s Real Property as it is now being
operated are installed and connected pursuant to valid permits, all connection charges have been
paid in full, and are adequate to service such Real Property consistent with historical practices.
Except as set forth on Schedule 7.1(n), to the Contributor’s knowledge, no fact, condition,
or proceeding exists which would result in the termination or impairment of the furnishing of or an
increase of rates (other than with respect to rate increases effecting all users) or services to
such Real Property of the foregoing utility services.
(o) Access. The Contributor has no knowledge of any fact or condition existing that
would result or could result in the termination or reduction of the current access from its Real
Property to the existing highways and roads that provide access to such Real Property, or of any
reduction in or to sewer or other utility services presently serving such Real Property.
(p) Notices. Except as disclosed on Schedule 7.1(p), the Contributor is not
aware of, and has not received, any notices from any insurance companies, Governmental Authorities
or from any other parties (i) of any conditions, defects or inadequacies with respect to its Real
Property (including health hazards or dangers, nuisance or waste), that have not been corrected and
that, if not corrected, would result in termination of insurance coverage or increase its costs
therefor, (ii) with respect to any violations of building codes and/or zoning ordinances or other
Legal Requirements with respect to its Real Property that have not been corrected, the
24
existence of which would have a Contributor Material Adverse Effect, (iii) of pending or
threatened condemnation proceedings with respect to its Real Property, (iv) of any proceedings that
could or would cause the change, redefinition or other modification of the zoning classification of
its Real Property, which change, redefinition or other modification would have a Contributor
Material Adverse Affect, or (v) of any violation or deficiency under the Americans with
Disabilities Act in the rental office or any other area of public accommodation. The Contributor
shall immediately notify the Contributee of any violations or conditions of which the Contributor
receives notice (whether written or oral).
(q) Solvency. There does not exist in effect with respect to the Contributor (i) any
general assignment for the benefit of creditors, (ii) any voluntary petition in bankruptcy, (iii)
any involuntary petition filed by the creditors of the Contributor, (iv) any appointment of a
receiver to take possession of all, or substantially all, of the assets of the Contributor, (v) any
attachment or other judicial seizure of all, or substantially all, of the assets of the
Contributor, (vi) any admission in writing of the inability of the Contributor to pay its debts as
they come due or (vii) any offer of settlement, extension or composition to the creditors
generally.
(r) Property Financials. The Operating Statements of the Contributor representing the
results of operations of the Contributor (including the results of operations of the Property owned
by the Contributor) that have been provided to the Contributee, fairly present the operating
results of the Contributor and its Property, in each case in accordance with accounting practices
applied on a basis consistent with the historical operating statements of the Contributor (except
as otherwise indicated thereon or in the notes thereto).
(s) Validity of Assumed Loan Documents. All of the Assumed Loan Documents are in full
force and effect and have not been further modified, and the Contributor has not received written
notice from the Lender of any such Assumed Loan, nor does it otherwise have knowledge, of any
default or event of default thereunder, except as set forth in Schedule 7.1(s).
(t) Taxes. Except as set forth in Schedule 7.1(t), the Contributor and each
of its predecessors have paid on a timely basis all material Taxes for which the Company or the
Operating Partnership could be held liable or in respect of which a claim may be made against the
Contributor or the Contributor’s Real Property and have timely filed (after giving effect to any
filing extension properly granted by a Governmental Authority having authority to do so) all
material returns and reports required to be filed for which the Operating Partnership could be held
liable or a claim made against the Contributor or its Real Property. The returns and reports were
accurate and complete in all material respects as of the date they were prepared. The Contributor
has not received written notice of any audit or other proceeding by any Governmental Authority with
respect to Taxes for which the Operating Partnership could be held liable or against which a claim
could be made and no agreement extending the period for assessment and collection has been executed
with respect thereto, and the Contributor otherwise has no knowledge with respect to any such
matter.
(u) Restrictions on Sale; Legend. The Contributor hereby acknowledges that the Units
are being issued and sold in a transaction not involving any public offering within the meaning of
the Securities Act and that the Units have not been registered under the Securities
25
Act. Except for any distributions of Units to the Distributees and without prejudice to the
Contributor’s and its Distributees’ rights at all times to sell or otherwise dispose of all or any
part of the Units pursuant to an effective registration statement under the Securities Act or under
an exemption from registration available under the Securities Act, the Contributor hereby agrees
not to offer, sell, transfer or otherwise dispose of any of the Units it is issued pursuant to this
Agreement in the absence of registration unless the Contributor delivers to the Company and the
Operating Partnership an opinion of a lawyer experienced in securities matters and reasonably
satisfactory to the Company and the Operating Partnership, in form and substance reasonably
satisfactory to the Company and the Operating Partnership, to the effect that the proposed sale,
transfer or other disposition may be effected without registration under the Securities Act and
under applicable state securities or “blue sky” laws. The Contributor hereby further acknowledges
that each certificate representing the Units shall bear a legend in substantially the following
form:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE COMPANY AND THE OPERATING
PARTNERSHIP HAVE BEEN FURNISHED WITH AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY AND THE OPERATING PARTNERSHIP, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY AND THE OPERATING PARTNERSHIP, TO THE EFFECT THAT SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION MAY BE
EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES OR
“BLUE SKY” LAWS.”
(v) Accredited Investor; Investment Intent. The Contributor and each of its
Distributees is an “accredited investor” as defined in Regulation D promulgated under the
Securities Act. Except for any distributions of Units to the Distributees, any Units acquired by
the Contributor or its Distributees will be so acquired for the Contributor’s and its Distributees’
own accounts for investment only and not with a view to, or with any intention of, a distribution
or resale thereof, in whole or in part, in violation of the Securities Act or state securities or
“blue sky” laws, without prejudice, however, to the Contributor’s and its Distributees’ rights at
all times to sell or otherwise dispose of all or any part of the Units pursuant to an effective
registration statement under the Securities Act or under an exemption from registration available
under the Securities Act.
(w) Employees. The Contributor does not have any employees.
(x) Absence of Certain Changes or Events. Since the date of the last Operating
Statement of the Contributor delivered to Contributee, the Contributor has conducted its business
only in the ordinary course of such business (taking into account historical practices).
26
(y) Anti-Terrorism Law. Neither the Contributor nor, to the Contributor’s knowledge,
any of its partners is described in, covered by or specially designated pursuant to, or affiliated
with any person described in, covered by or specially designated pursuant to, any Anti-Terrorism
Law or any list issued by any department or agency of the United States of America in connection
with any Anti-Terrorism Law.
(z) Information and Documents. The Property Information, including the Operating
Statements, and all other documents delivered by the Contributor to the Contributee pursuant to
this Agreement are and shall be true and complete in all material respects and fairly present the
information set forth as of the dates thereof in a manner that is not misleading in any material
respect and the Contributor has not omitted any information required to be included in order to
make the information furnished not misleading in any material respect.
Section 7.2 Contributing Party Representations and Warranties. In order to induce the
Company and the Operating Partnership to enter into this Agreement and to perform their respective
obligations hereunder, each Equity Contributor additionally warrants and represents the following
as of the Closing Date:
(a) Organization, Good Standing and Partnership Power. The Contributing Party will be
a general or limited partnership or a limited liability company, duly formed and validly existing
under the laws of the jurisdiction in which it was organized, will be duly authorized to transact
business under the laws of each state in which the character of the properties owned or leased by
it or the nature of its activities makes such qualification necessary, except where the failure to
be so qualified would not have a Contributor Material Adverse Effect, will have all requisite power
and authority to execute and deliver this Agreement and all other documents and instruments to be
executed and delivered by it hereunder, and to perform its obligations hereunder and thereunder in
accordance with the terms and conditions hereof and thereof.
(b) Authorization; No Violation. Assuming the due and valid authorization, execution
and delivery of this Agreement by the Contributee, the agreements and documents to be executed by
the Contributing Party hereunder will be the legal, valid and binding obligation of the
Contributing Party, enforceable against the Contributing Party in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium or similar laws relating to
creditors’ rights and general principles of equity.
(c) Capital Structure. (i) 100% of the Equity Interests of the Parent Entity shall be
owned by the Contributing Parties, (ii) 100% of the Equity Interests of the Contributor shall be
owned, directly or through a limited liability company, by the Parent Entity, (iii) all of the
Equity Interests of the Parent Entity will have been duly and validly issued, (iv) there will be no
Equity Interests of the Parent Entity issuable upon conversion or exchange of any security of the
Parent Entity and (v) no person will be entitled to any preemptive or similar right (A) to
subscribe for any Equity Interests of the Contributing Party or the Parent Entity or (B) with
respect to any of the transactions contemplated hereby.
(d) No Prior Activities. Except for the Liabilities incurred in connection with the
organization of the Contributing Party and the transactions contemplated hereby, neither the
27
Contributing Party nor the Parent Entity will have incurred any Liabilities or engaged in any
business or activities of any kind whatsoever or entered into agreements or arrangements with any
person or entity.
(e) No Undisclosed Liabilities. Neither the Contributor nor any of its Owners will
have any Liability of any type, except (i) Permitted Exceptions, (ii) prepaid rents, (iii)
refundable security deposits and (iv) the Assumed Loans, except Liabilities that, individually or
in the aggregate, would not have a Contributor Material Adverse Effect.
Section 7.3 Effect of Investigation. The Contributor agrees that the Contributee has
the right to inspect the Contributor’s Property and to investigate, test and review the information
provided in accordance with this Agreement. Notwithstanding anything to the contrary herein, the
effect of the representations and warranties made in this Agreement shall not be diminished or
deemed to be waived by any such inspections, tests or investigations made by the Contributee or its
agents or employees except to the extent the Contributee has knowledge of a breach of a
representation and warranty of a Contributor as a result of said inspections, tests or
investigations and fails to disclose same to the Contributors prior to Closing.
Section 7.4 Definition of Knowledge. As used in this Agreement, the terms to the
“Contributor’s knowledge” or “knowledge of the Contributor” shall mean only the current actual
knowledge of Xxxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxx, Xxxx X. Xxxxxx and Xxxxxxx
Xxxxx and the applicable regional manager, in each case after consultation with the on-site
property manager of the Real Property that is the subject of the representation or warranty being
made. Anything herein to the contrary notwithstanding, none of such persons shall have any
personal liability or obligation whatsoever with respect to any of the matters set forth in this
Agreement or any of the representations made by the Contributors being or becoming untrue,
inaccurate or incomplete in any respect.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE OPERATING PARTNERSHIP
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE OPERATING PARTNERSHIP
Section 8.1 Representations and Warranties. In order to induce the Contributors and
the Contributing Parties to enter into this Agreement and to perform their respective obligations
hereunder, the Company and the Operating Partnership hereby jointly and severally warrant and
represent the following:
(a) Organization, Good Standing and Corporate Power of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws of the State of
Maryland, is duly authorized to transact business under the laws of any state in which the
character of the properties owned or leased by it or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not have a Contributee
Material Adverse Effect, has all requisite corporate power and authority to execute and deliver
this Agreement and all other documents and instruments to be executed and delivered by it
hereunder, and to perform its obligations hereunder and thereunder in accordance with the terms and
conditions hereof and thereof.
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(b) Organization, Good Standing and Partnership Power of the Operating Partnership.
The Operating Partnership is a limited partnership duly organized and validly existing under the
laws of the State of Maryland, is duly authorized to transact business under the laws of any state
in which the character of the properties owned or leased by it or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified would not have a
Contributee Material Adverse Effect, has all requisite partnership power and authority to execute
and deliver this Agreement and all other documents and instruments to be executed and delivered by
it hereunder, and to perform its obligations hereunder and thereunder in accordance with the terms
and conditions hereof and thereof.
(c) Authorization; No Violation. Assuming the due and valid authorization, execution
and delivery of this Agreement by the Contributors, this Agreement and the other agreements and
documents to be executed and delivered by each of the Company and the Operating Partnership
hereunder, when duly executed and delivered, will be the legal, valid and binding obligation of
each of the Company and the Operating Partnership, enforceable against the Company and the
Operating Partnership in accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors’ rights and general
principles of equity. The performance by each of the Company and the Operating Partnership of its
respective duties and obligations under this Agreement and the documents and instruments to be
executed and delivered by each of them hereunder will not (i) conflict with, or result in a breach
of, or default under, any provision of any of the organizational documents of either of the Company
or the Operating Partnership or any agreements, instruments, decrees, judgments, injunctions,
orders, writs, laws, rules or regulations, or any determination or award of any court or
arbitrator, to which either of the Company or the Operating Partnership is a party or by which the
assets of either are or may be bound, except for any of the foregoing matters that, individually or
in the aggregate, would not have a Contributee Material Adverse Effect, or (ii) require any
consent, approval or authorization of, or declaration, filing or registration with, any applicable
Governmental Authority or other person or entity, except for customary disclosure filings with the
SEC, the SEC filings required under the Registration Rights Agreement, listing applications with
the New York Stock Exchange and state “blue sky” filings and except where the failure to obtain
such consent, approval or authorization of, or filing or registration with, any Governmental
Authority or other person or entity would not have a Contributee Material Adverse Effect.
(d) Units. The Units to be issued hereunder are or prior to the Closing will be duly
authorized and, when issued by the Contributee, will be validly issued under the terms of the
Partnership Agreement (as amended by the Partnership Agreement Amendment), free and clear of any
mortgage, pledge, lien, encumbrance, security interest, claim or rights of interest of any third
party of any nature whatsoever, other than restrictions under federal and applicable state
securities laws. The Shares to be issued by the Company upon exchange of the Units will be
reserved for future listing with the New York Stock Exchange prior to the date of issuance, and,
upon such issuance, will be fully paid and non-assessable, free and clear of any mortgage, pledge,
lien, encumbrance, security interest, claim or rights of interest of any third party of any nature
whatsoever, and subject to no restriction on transfer imposed by the Company other than pursuant to
the Registration Rights Agreement.
29
(e) SEC Documents. The Company has caused to be delivered to the Contributors
Representatives copies of the Company’s Annual Reports on Form 10-K for the year ended December 31,
2004 as filed with the SEC pursuant to the Exchange Act, the Company’s Quarterly Reports on Form
10-Q for the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005 as filed with the
SEC pursuant to the Exchange Act, all current reports on Form 8-K filed with the SEC pursuant to
the Exchange Act subsequent to December 31, 2004, the Company’s Proxy Statement for its 2005 annual
meeting of stockholders as filed with the SEC pursuant to the Exchange Act and the Company’s
Prospectus dated June 28, 2005 as filed with the SEC pursuant to Rule 424(b) under the Securities
Act, and the Company will cause to be delivered to the Contributors Representatives documents as
may be filed by the Company with the SEC between the Effective Date and the Closing Date
(collectively, the “SEC Documents”). The SEC Documents were or will be (i) prepared and filed in
material compliance with the rules and regulations promulgated by the SEC and applicable to such
SEC Documents, (ii) did not and will not, as of their respective dates, contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein in
order to make the statements contained therein, in light of the circumstances under which they were
made or will be made, not misleading (except to the extent such statements have been modified by
subsequently filed SEC Documents), and (iii) include all the documents (other than preliminary
material) that the Company was required to file with the SEC since August 17, 2004.
(f) Financial Statements. The consolidated financial statements included in the SEC
Documents have been prepared in accordance with generally accepted accounting procedures (“GAAP”)
applied on a consistent basis during the period involved (except as may be indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by applicable rules and
regulations of the SEC) and present fairly (subject, in the case of the unaudited statements, to
normal year-end audit adjustments) the consolidated financial position of the Company and its
consolidated Subsidiaries at the dates thereof and the consolidated results of operations and cash
flows for the periods then ended.
(g) Absence of Certain Changes or Events. Except as disclosed in the SEC Documents
filed with the SEC prior to the Effective Date, since September 30, 2005, the Company, the
Operating Partnership and each of their respective Subsidiaries has conducted its business only in
the ordinary course of such business (taking into account prior practices, including the
acquisition and disposition of properties and the issuance of securities), and there has not been
any change, circumstance or event that has resulted in a Contributee Material Adverse Effect.
(h) No Undisclosed Liabilities. None of the Company, the Operating Partnership nor
any Subsidiary has any Liabilities that could reasonably be expected to have a Contributee Material
Adverse Effect, except for (i) Liabilities reflected or reserved against in its September 30, 2005
unaudited consolidated balance sheet, (ii) Liabilities relating to outstanding leases that are not
required to be disclosed under GAAP or (iii) Liabilities incurred in the ordinary course of
business since the date of such balance sheet.
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(i) Capital Structure.
(i) As of November 30, 2005, (A) the authorized capital stock of the Company consisted
of 800,000,000 Shares and 200,000,000 shares of preferred stock, par value $.01 per share;
(B) the issued and outstanding shares of capital stock of the Company consisted of
17,190,000 Shares and no shares of preferred stock; and (C) all the outstanding shares of
capital stock of the Company have been duly and validly issued and are fully paid and
non-assessable.
(ii) As of November 30, 2005, there were (A) 17,190,000 Common Units outstanding and
held by the Company or its Subsidiaries, (B) 121,000 Common Units outstanding and held by
persons other than the Company or its Subsidiaries, (C) no Preferred Units outstanding and
(D) except as set forth on Schedule 7.3(i) and for issuance to the Contributor
and/or the Distributees, there is no issuance of Common Units or Preferred Units
contemplated.
(iii) Except as contemplated hereby, as set forth in paragraph (ii) above or under any
stock option, employee bonus plan (including the outperformance bonus plan for key
employees) or dividend reinvestment plan, there are no equity securities of the Company
issuable upon conversion or exchange of any security of the Company or the Operating
Partnership or any Subsidiary of either of them. No stockholder of the Company is entitled
to any preemptive or similar rights to subscribe for shares of capital stock of the Company.
(j) Taxes.
(i) Each of the Company and each of its Subsidiaries has (A) filed all tax returns and
reports required to be filed by it (after giving effect to any filing extension properly
granted by a Governmental Authority having authority to do so) and all such returns and
reports are accurate and complete in all material respects; and (B) paid (or the Company has
paid on its behalf) all Taxes shown on such returns and reports as required to be paid by
it, and the most recent financial statements contained in the SEC Documents reflect an
adequate reserve for all material Taxes payable by the Company (and by those Subsidiaries
whose financial statements are contained therein) for all taxable periods and portions
thereof through the date of such financial statements. Since August 17, 2004, the Company
has incurred no liability for Taxes under Sections 857(b), 860(c) or 4981 of the Code and
neither the Company nor any of its Subsidiaries has incurred any material liability for
Taxes other than in the ordinary course of business. To the Company’s knowledge, no event
has occurred, and no condition or circumstance exists, that presents a material risk that
any Taxes described in the preceding sentence will be imposed upon the Company. To the
Company’s knowledge, no deficiency for any Taxes has been proposed, asserted or assessed
against the Company or any of its Subsidiaries, and no requests for waivers of the time to
assess any such Taxes are pending.
(ii) The Company, beginning with its taxable year ended December 31, 2004, has been
organized and operated in conformity with the requirements for
31
qualification and taxation as
a real estate investment trust (a “REIT”) under the Code, and the current and proposed
method of operation of the Company will permit the
Company to continue to meet the requirements for qualification and taxation as a REIT
under the Code for so long as the Board deems it in the best interests of the Company’s
stockholders to remain so qualified for taxation as a REIT under the Code.
(k) No Default. Neither the Company nor the Operating Partnership nor any of their
respective Subsidiaries is in default under, or in violation of, any provision of its
organizational documents.
(l) Solvency. There is not in effect with respect to either the Company or the
Operating Partnership, nor has the Company or the Operating Partnership made (i) any general
assignment for the benefit of creditors, (ii) any voluntary petition in bankruptcy, (iii) any
involuntary petition in bankruptcy, (iv) any appointment of a receiver to take possession of all,
or substantially all, of the Company’s or the Operating Partnership’s assets, (v) any attachment or
other judicial seizure of all, or substantially all, of the Company’s or the Operating
Partnership’s assets, (vi) any admission in writing of its inability to pay its debts as they come
due or (vii) any offer of settlement, extension or composition to its creditors generally.
(m) Treatment as a Partnership. The Operating Partnership is a partnership for
federal and state and local income tax purposes.
(n) Form S-3. The Company meets all requirements and conditions of the SEC for
eligibility of its Shares as applicable on Form S-3.
Section 8.2 Definition of Knowledge. As used in this Agreement, the terms “Company’s
knowledge” or “Operating Partnership’s knowledge” or “knowledge of the Company” or “knowledge of
the Operating Partnership” shall mean only the “current actual knowledge” of Xxxxxxx X. Xxxxxxx,
Xx. and Xxxxx X. Xxxxxx. Anything herein to the contrary notwithstanding, none of such persons
shall have any personal liability or obligation whatsoever with respect to any of the matters set
forth in this Agreement or any of the representations made by the Company or the Operating
Partnership being or becoming untrue, inaccurate or incomplete in any respect. Nothing contained
in this Agreement shall limit the Distributees rights as equity holders of the Contributee under
federal or state securities laws.
ARTICLE 9
COVENANTS
COVENANTS
Section 9.1 Conduct of the Business of the Contributors. Each of the Contributors
covenants and agrees that between the Effective Date and the Closing Date, unless the Contributee
has consented in writing to any other act or omission (such consent not to be unreasonably
withheld, conditioned or delayed), it shall perform or observe the following with respect to the
Property for which it is responsible for conveying pursuant to this Agreement:
(a) The Contributor will operate and maintain its Property in the ordinary course of business
consistent with historical practice, except for ordinary wear and tear, and use all commercially
reasonable efforts to preserve for the Operating Partnership the relationships of such
Contributor’s Tenants, suppliers, managers and employees with respect to the Property (or
32
replacements), the failure to preserve any which would have a Contributor Material Adverse Effect.
The Contributor will not defer taking any actions or spending any of its funds (including,
without limitation, the expenditures of funds consistent with historical practice for capital
improvements on those projects commenced prior to the Effective Date), or otherwise manage the
Property in a manner substantially different from historical practice, due to the transactions
contemplated by this Agreement.
(b) The Contributor will not renew, extend or modify any of its Service Contracts except in
the ordinary course of its business consistent with historical practice and unless any such Service
Contract so renewed, extended or modified grants to the Contributor and its successors and assigns
a right to terminate on 30 days’ notice with no material cost to exercise such right.
(c) The Contributor shall not remove any Personal Property located in or on its Real Property,
except as may be required for repair and replacement or discarded in the ordinary course of
business consistent with historical practice. All replacements shall be free and clear of liens
and encumbrances (except for liens or encumbrances that will be released on or before Closing) and
shall be of quality at least substantially equivalent to the replaced items and shall be deemed
included in Personal Property to be contributed pursuant to this Agreement, without cost or expense
to the Operating Partnership, other than as expressly provided herein.
(d) The Contributor shall, upon request of the Contributee at any time after the Effective
Date, assist the Contributee in its preparation of audited statements of income and expense and
such other documentation as the Contributee may reasonably request, covering the period of the
Contributor’s ownership of its Real Property.
(e) The Contributor will make all required payments within any applicable grace period under
any Indebtedness secured by a lien on its Real Property, including, without limitation, the Assumed
Loans, and will comply with all material terms, covenants and conditions under any such
Indebtedness and under the leases on Personal Property and the Service Contracts. The Contributor
will pay all other accounts payable, including trade debt, prior to delinquency in accordance with
its past business practices, provided that, subject to Section 11.1(c), the Contributor
shall have the right to contest any such payment so long as it has made reasonable reserve
therefor.
(f) Except for the Permitted Exceptions, the Contributor shall not cause or permit its Real
Property, or any interest therein, to be alienated, mortgaged, licensed, encumbered or otherwise be
transferred.
(g) The Contributor will maintain and keep in full force and effect the hazard, liability and
casualty insurance (the “Insurance Coverage”) it is currently maintaining with respect to its Real
Property or substantially equivalent replacement policies.
(h) The Contributor shall promptly give the Contributee written notice of, and promptly
deliver to the Contributee, a true and complete copy of any written notice the Contributor may
receive, on or before the Closing Date, from any Governmental Authority
33
concerning a violation of
any applicable Legal Requirements pertaining to its Property or of any written notice of default
from the holder of any Assumed Loan.
(i) Except for actions taken in the ordinary course of business or in connection with the
transactions contemplated by this Agreement, neither Royal Apartments nor any of their affiliates
shall (1) increase the compensation or benefits paid to any Rehired Employee in excess of 3% of
such Rehired Employee’s current compensation effective on such Rehired Employee’s anniversary of
employment service or (2) adopt, enter into, amend or terminate any employment, consulting,
termination, severance or retention agreement to which a Rehired Employee is a party.
(j) All sums that become due and payable pursuant to the Service Contracts between the
Effective Date and the Closing Date shall be fully paid by the Contributor within customary time
periods, subject to the Contributor’s right to contest any invoice, provided that, subject to
Section 11.1(c), it has made a reasonable reserve therefor.
(k) The Contributor shall conduct leasing and advertising activities with respect to the
2006-2007 academic year in the ordinary course of its business consistent with historical practice.
The Contributor shall provide the Contributee on a weekly basis with leasing reports for such
academic year (which shall include lease terms and a listing of each Tenant entitled to a one time
or ongoing concession, rebate or incentive under its Lease or any other agreement with the
Contributor) and, to the extent available, with a comparison to its leasing activities for the two
years immediately preceding the Effective Date. Within 30 days after the Effective Date, the
Contributor and the Contributee shall agree on rental rates for new Leases and renewal Leases for
the 2006-2007 academic year for each Property owned by the Contributor, and at the time of such
agreement, shall reflect such rates on the listing to be attached hereto as Schedule
9.1(k). Prior to the expiration of the Inspection Period, Schedule 9.1(k) may be
modified by mutual agreement of the Contributors Representatives and the Contributee. At any time
and from time to time after the expiration of the Inspection Period, Schedule 9.1(k) may be
modified by the Contributee. The Contributor shall not enter into any new Lease or renewal Lease
(or otherwise amend, renew or extend any Lease) other than at the respective rental rates stated on
Schedule 9.1(k), as it may be modified in accordance with this Section 9.1(k).
(l) Except as provided to the contrary in Section 21.16, neither the Contributor nor
any of its affiliates shall enter discussions with, negotiate or contract with any other party for
the sale of any of the Property or any equity interests in the Contributor.
(m) The Contributor shall pay all reasonable costs of obtaining any of the licenses, permits
or authorizations described in Section 7.1(j) if such licenses, permits or authorizations
are required by applicable Legal Requirements prior to the Closing Date to own and operate its
Property in accordance with its current operations, which the failure to obtain would have a
Contributor Material Adverse Effect.
Section 9.2 Conduct of the Business of the Contributee. The Company and the Operating
Partnership covenant and agree that between the Effective Date and the Closing Date, unless the
Contributors Representatives have consented in writing to any other act or omission
34
(such consent
not to be unreasonably withheld, conditioned or delayed), the Company and the Operating Partnership
shall perform or observe the following:
(a) There shall be no Change in Control of the Company or the Operating Partnership.
(b) The Company shall continue to qualify as a REIT for federal income tax purposes and the
Operating Partnership shall continue to qualify as a partnership for federal income tax purposes.
Section 9.3 Commercially Reasonable Efforts. Each of the Contributors, on the one
hand, and the Company and the Operating Partnership, on the other hand, shall act in good faith and
shall not take, and shall use commercially reasonable efforts to cause its respective Subsidiaries,
if any, to refrain from taking, any action that would result in (i) any of the representations and
warranties of such party set forth in this Agreement that are qualified as to materiality becoming
untrue, (ii) any of such representations and warranties that are not so qualified becoming untrue
in any material respect or (iii) any of the conditions precedent to Closing set forth in
Article 12 not being satisfied.
Section 9.4 Good Faith Cooperation. Subject to the terms and conditions herein
provided, the parties to this Agreement shall (a) use all commercially reasonable efforts to
cooperate with each other in (i) determining which filings are required to be made prior to the
Closing Date with, and which consents, approvals, permits or authorizations are required to be
obtained prior to the Closing Date from, Governmental Authorities and the Lenders in connection
with the execution and delivery of this Agreement and the transactions contemplated hereby, (ii)
timely making all such filings and timely seeking all such consents, approvals, permits or
authorizations and (iii) preparing such financial statements (including pro forma financial
statements) as may be required by the Company or the Operating Partnership for incorporation in any
registration statement contemplated by the Registration Rights Agreement, or any filing required to
be made with the SEC or as may otherwise be required to enable the Company to satisfy its
obligations under applicable law or regulations; (b) use their commercially reasonable efforts to
obtain in writing any consents required from third parties necessary to effectuate the transactions
contemplated hereby; and (c) use their commercially reasonable efforts to take, or cause to be
taken, all other actions and do, or cause to be done, all other things reasonably necessary, proper
or appropriate to consummate and make effective the transactions contemplated by this Agreement.
If, at any time after the Closing Date, any further action is necessary or desirable to carry out
the purpose of this Agreement, the proper officers and directors and other duly authorized
representatives of the parties hereto shall take all such necessary action.
Section 9.5 Public Announcements. The initial press release relating to this
Agreement shall be made by the Company, subject to the prior written approval of the Contributors
Representatives as to form and content, which approval shall not be unreasonably withheld or
delayed. None of the Contributors, nor any of their partners, affiliates, representatives,
employees or agents, shall make any public statements regarding this Agreement or the transactions
contemplated hereby without the prior written consent of the Contributee, which consent shall not
be unreasonably withheld or delayed; provided, however, that nothing
35
contained in
this sentence shall in any way affect or restrict any Contributor from taking any action or
providing any information that it believes is reasonably necessary or appropriate to obtain any
consent that it is required to obtain in order to consummate the transactions
contemplated by this Agreement, in each case in accordance with and subject to the provisions
of the Confidentiality Agreement.
Section 9.6 Investor Representations. Each of the Contributors covenants and agrees
(a) that before any Units are distributed, either directly or indirectly, to a Distributee, the
Contributors will obtain from each Distributee (and deliver to the Company and the Operating
Partnership a fully executed copy of) an acknowledgment to and agreement with the Company and/or
the Operating Partnership in the form attached hereto as Exhibit D (the “Distributee
Agreement”); and (b) the Units distributed to each Distributee will be so distributed to the
Distributee in accordance with the interest of the Distributee in a Contributor, a Contributing
Party or any other entity owning, directly or indirectly, any interest in a Contributor or
Contributing Party. In the event any Distributee does not execute and deliver a Distributee
Agreement or is not an “accredited investor,” such Distributee will not be eligible to receive
Units. The provisions of this Section 9.6 shall survive the Closing.
Section 9.7 Board Seat/Observation Rights. If Units are issued at the Closing equal
to the lesser of (i) 3,250,000 Units or (ii) Units comprising at least 10% of the then outstanding
fully diluted Shares (on an as if converted basis), the Company shall cause Xxxxxxx X. Xxxxxxxx to
be appointed as a non-compensated member of the Board (provided that the Company shall reimburse
Xx. Xxxxxxxx for his reasonable travel expenses relating to his Board membership on the same basis
as the Company reimburses other members of the Board and Xx. Xxxxxxxx shall be entitled to
compensation, if any, as may be approved by the Board expressly for his benefit) and, for so long
as recipients of Units at the Closing continue to Beneficially Own Units (on an as if converted
basis) Units comprising at least 10% of the then outstanding fully diluted Shares, the Company
shall cause Xx. Xxxxxxxx to be nominated for reelection by the stockholders of the Company as a
member of the Board. Thereafter, if at least 1,000,000 Units are issued at the Closing, Xx.
Xxxxxxxx shall have full observation rights with respect to the Board, other than with respect to
executive sessions of independent directors and meetings of its committees (“Observation Rights”),
including the right to obtain full and timely notice of all meetings of the Board and to obtain
copies of all written and other materials disseminated to the Board; provided that he execute and
deliver to the Company a confidentiality agreement pursuant to which he will agree, among other
things, to treat confidentially any information furnished to him in connection with his exercise of
Observation Rights and to use all such information for informational purposes only. The
Observation Rights shall terminate upon the earlier of (i) the occurrence of the Company’s annual
meeting in 2008 or (ii) such time that the holders of Units issued at the Closing Beneficially Own
less than 50% of the Units issued at Closing. At Closing, Xx. Xxxxxxxx will enter into an
agreement with the Company pursuant to which he will agree (a) to fully comply with the Company’s
Code of Business Conduct and Ethics and Corporate Governance Guidelines, as they may be amended
from time to time, and (b) not to enter into any financial instrument with any public or private
entity to mitigate the financial price risk associated with Units held by Xx. Xxxxxxxx until such
time as he ceases to be a member of the Board or to possess Observation Rights. The provisions of
this Section 9.7 shall survive the Closing.
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Section 9.8 No Solicitation. None of the Contributors or Owners shall, nor shall they
permit any partner or affiliate of any Contributor Owner to, directly or indirectly, enter into,
solicit, initiate or continue any discussions or negotiations with, or encourage or respond to any
inquiries or proposals by, or participate in any negotiations with, or provide any information
to, or otherwise cooperate in any other way with, any person or entity other than the Contributee
and its respective officers, directors and representatives, concerning any sale of all or a portion
of the Property or the Contributors’ or the Parent Entities’ Equity Interests (each such
transaction being referred to herein as a “Proposed Acquisition Transaction”). Except as provided
to the contrary in Section 21.16, none of the Contributors or Owners is currently engaged
in discussions or negotiations with any person or entity other than the Contributee with respect to
any Proposed Acquisition Transaction.
Section 9.9 Confidentiality — Contributors. The Contributors shall ensure that all
confidential information that each such party or any of its respective representatives may now
possess or may hereafter create or obtain relating to the Property pursuant to the terms hereof,
the transactions contemplated hereby or the financial condition, results of operations, business,
properties, assets, Liabilities or future prospects of the Contributors or the Contributee, any of
their respective affiliates or subsidiaries or any of their respective tenants, customers or
suppliers, shall not be published, disclosed or made accessible by any of them without the prior
written consent of the Company; provided, however, that the restrictions of this
sentence shall not apply (i) to the extent the disclosure may otherwise be required by applicable
law, court process or by obligations pursuant to any listing agreement with any national securities
exchange or (ii) to the extent such information shall have otherwise become publicly available
other than as a result of a breach of the Confidentiality Agreement or other confidentiality
obligations on the part of any individual or entity.
Section 9.10 Confidentiality – Contributee. The Contributee shall ensure that all
confidential information that it or any of its respective representatives may now possess or may
hereafter obtain relating to Property pursuant to the terms hereof, the transactions contemplated
hereby or the financial condition, results of operations, business, properties, assets, Liabilities
or future prospects of the Contributors, any of their respective affiliates or Subsidiaries or any
of their respective tenants, customers or suppliers, shall not be published, disclosed or made
accessible by any of them without the prior written consent of the affected Contributor;
provided, however, that the restrictions of this sentence shall not apply (i) to
the extent the disclosure may otherwise be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities exchange or (ii) to the
extent such information shall have otherwise become publicly available other than as a result of a
breach of the Confidentiality Agreement or other confidentiality obligations on the part of the
Contributee.
ARTICLE 10
CLOSING
CLOSING
Section 10.1 The Closing. The Closing shall take place at the offices of the Escrowee
on the Closing Date.
Section 10.2 Deliveries at the Closing by the Contributors. At the Closing, each of
the Contributors will deliver or cause to be delivered to the Operating Partnership the following
and,
37
where appropriate, duly executed on behalf of all necessary parties thereto other than the
Company and the Operating Partnership (collectively, the “Contributors Closing Documents”):
(a) With respect to all Property conveyed to the Operating Partnership or its designee by the
Contributor as contemplated in Section 2.1, (i) a special warranty deed (collectively, the
“Deeds”) in substantially the form attached hereto as Exhibit G, with the inclusion of
state-specific provisions; (ii) a xxxx of sale in the form attached hereto as Exhibit E;
and (iii) an assignment and assumption agreement (collectively, the “Contract Assignment and
Assumption Agreements”) in the form attached hereto as Exhibit F.
(b) With respect to all Equity Interests conveyed to the Operating Partnership or its designee
as contemplated in Section 2.2, in lieu of a Deed, Xxxx of Sale and Contract Assignment and
Assumption Agreement for the related Property, an Assignment of Equity Interest in the form
attached hereto as Exhibit H (collectively, the “Equity Interest Assignment and Assumption
Agreements”), and an Addendum A executed by each Contributing Party.
(c) All original Leases and all other documents pertaining thereto.
(d) All other original documents or instruments referred to herein, including, without
limitation, the Property Documents; and keys to the Improvements, in each case, that are within the
possession of the Contributor or its agents.
(e) A letter to Tenants in a form reasonably satisfactory to the Company advising the Tenants
of the transactions to be consummated hereunder and directing that rent and other payments
thereafter be sent to the Operating Partnership or its designee, as the Operating Partnership shall
so direct.
(f) Any affidavits and such other documents or instruments required by the Title Company to
consummate the transactions contemplated hereby.
(g) Affidavits and other instruments, including but not limited to all organizational
documents of the Contributors and their general partners and the Contributing Parties, including
partnership agreements, operating agreements, bylaws, articles of incorporation and certificates of
good standing and/or existence reasonably requested by the Contributee evidencing the power and
authority of such entities to enter into and perform this Agreement and any documents to be
delivered hereunder and, if requested by the Contributee, a certified copy of all appropriate
corporate resolutions or membership or partnership actions.
(h) A certificate executed by each of the Contributors, in a form reasonably satisfactory to
the Company, stating that the representations and warranties made by the Contributors in this
Agreement are true and correct in all material respects as of the Closing Date, or if there have
been any changes, a description thereof.
(i) A Rent Roll for each Real Property, current as of a date not more than ten days prior to
the Closing Date, certified by a duly authorized representative of the appropriate Contributor as
being true and correct in all material respects.
38
(j) All proper instruments, in a form reasonably satisfactory to the Company, as shall be
reasonably required for the conveyance to the Operating Partnership of all right, title and
interest, if any, of any Contributor in and to any award or payment made, or to be made, (i) for
any taking in condemnation, eminent domain or agreement in lieu thereof of land
adjoining all or any part of the Real Property, (ii) for damage to the Land or the
Improvements or any part thereof by reason of change of grade or closing of any such street, road,
highway or avenue, and (iii) for any taking in condemnation or eminent domain of any part of the
Land or the Improvements.
(k) In order to avoid the imposition of the withholding tax payment pursuant to Section 1445
of the Code, a certificate signed by a duly authorized representative of each of the Contributors
to the effect that it is not a “foreign person” as that term is defined in Section 1445(f)(3) of
the Code.
(l) All such transfer and other tax declarations and returns and information returns, duly
executed and (if required) sworn to by each Contributor or Contributing Party and in a form
reasonably satisfactory to the Company, to the extent required by law in connection with the
conveyance of the Real Property or the Equity Interests, as the case may be, to the Operating
Partnership.
(m) Possession of the Real Property, subject only to the Leases and the Permitted Exceptions.
(n) The Loan Assumption Documents.
(o) The Distributee Agreements.
(p) An opinion of counsel to the Contributors reasonably satisfactory to the Contributee and
in a form to be mutually agreed upon by the Contributee and the Contributors Representatives.
(q) Evidence of all third party and partner or member consents required under agreements to
which any Owner or Contributor is a party to the transactions contemplated hereby, including
without limitation any required consent of the lenders holding the Assumed Loans and any required
consent to the transactions contemplated hereby.
(r) An estoppel letter from the Lenders with respect to the Assumed Loans setting forth the
unpaid principal amounts thereof and such other matters as the Contributee shall reasonably
request.
(s) The Registration Rights Agreement.
(t) The Partnership Agreement Amendment.
(u) The Tax Matters Agreement.
(v) The ROFO Agreement.
39
(w) The Addendum As.
(x) The Purchase and Sale Agreements.
(y) Such other documents as may be reasonably required or appropriate to effectuate the
consummation of the transactions contemplated by this Agreement, in forms reasonably satisfactory
to the Company.
Section 10.3 Deliveries at the Closing by the Contributee. At the Closing, the
Company and the Operating Partnership shall deliver or cause to be delivered to the Contributors
Representatives the following and, where appropriate, duly executed by all necessary parties
thereto other than the Contributors or the Contributing Parties.
(a) The Cash Consideration.
(b) Evidence of issuance of Units to be issued at the Closing.
(c) The Contract Assignment and Assumption Agreements.
(d) The Equity Interest Assignment and Assumption Agreements.
(e) The Loan Assumption Documents.
(f) A certificate executed by a duly authorized representative of the Company and the
Operating Partnership, in a form reasonably satisfactory to the Contributors Representatives,
stating that the representations and warranties made by the Company and the Operating Partnership
in this Agreement are true and correct in all material respects as of the Closing Date, or if there
have been any changes, a description thereof.
(g) Affidavits and other instruments, including but not limited to all organizational
documents of the Company and the Operating Partnership including limited partnership agreements,
filed copies of limited partnership certificates, articles of incorporation and certificates of
good standing and existence, reasonably requested by the Contributors Representatives evidencing
the power and authority of the Company and the Operating Partnership to enter into and perform this
Agreement and any documents to be delivered hereunder.
(h) An opinion of counsel to the Company reasonably satisfactory to the Contributors
Representatives and in a form to be mutually agreed upon by the Contributee and the Contributors
Representatives.
(i) The Partnership Agreement Amendment.
(j) The Registration Rights Agreement.
(k) The Tax Matters Agreement.
(l) The ROFO Agreement.
40
(m) The Purchase and Sale Agreements.
(n) Such other documents as may be reasonably required or appropriate to effectuate the
consummation of the transactions contemplated by this Agreement, in forms reasonably satisfactory
to the Contributors Representatives.
Section 10.4 Fees and Expenses. The Contributors shall pay for the existing Surveys,
the Title Commitment, the premium for standard coverage Title Policy, one-half of any escrow fee
charged by the Escrowee and all state, county and local transfer, documentary, ad valorem or
similar taxes imposed on the conveyance of the Real Property with respect to the Real Property
located in Florida and Kentucky. The Contributee shall pay for any new Surveys, any updates to the
existing Surveys, all costs associated with any inspections of the Property performed by or for the
Contributee, one-half of any escrow fee charged by the Escrowee, all premiums for any costs of the
Title Commitment attributable to extended coverage and any endorsements desired by the Contributee,
all state, county and local transfer, documentary, ad valorem or similar taxes imposed on the
conveyance of the Real Property with respect to the Property located in Tennessee and all mortgage
stamp taxes. All other costs and expenses incurred in connection with this Agreement shall be paid
by the Contributee or the Contributor, as applicable, as specified by the other provisions of this
Agreement or, if no provision is made in this Agreement, in accordance with customary title closing
practices in the county in which the Real Property is located (without regard to whether any
applicable Real Property is conveyed in fee or by transfer of Equity Interests). The provisions of
this Section 10.4 shall survive the Closing or the earlier termination of this Agreement.
Section 10.5 No Warranties.
(a) THE COMPANY AND THE OPERATING PARTNERSHIP ACKNOWLEDGE AND AGREE THAT, EXCEPT FOR THE
REPRESENTATIONS, WARRANTIES AND COVENANTS EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE CONTRIBUTORS
CLOSING DOCUMENTS, THE OPERATING PARTNERSHIP IS ACQUIRING THE PROPERTY IN ITS “AS IS, WHERE IS”
CONDITION “SUBJECT TO ALL FAULTS” AND SPECIFICALLY AND EXPRESSLY WITHOUT ANY WARRANTIES,
REPRESENTATIONS, COVENANTS OR GUARANTEES, EITHER EXPRESS OR IMPLIED, OF ANY KIND, NATURE, OR TYPE
WHATSOEVER FROM OR ON BEHALF OF THE CONTRIBUTORS. THE COMPANY AND THE OPERATING PARTNERSHIP
ACKNOWLEDGE THAT, EXCEPT FOR THE REPRESENTATIONS, WARRANTIES AND COVENANTS SET FORTH IN THIS
AGREEMENT OR THE CONTRIBUTORS CLOSING DOCUMENTS, NEITHER THE OPERATING PARTNERSHIP NOR THE COMPANY
HAS RELIED AND IS NOT RELYING ON ANY INFORMATION, DOCUMENT, REPORT, SALES BROCHURE OR OTHER
LITERATURE, MAPS OR SKETCHES, FINANCIAL INFORMATION, PROJECTIONS, PRO FORMAS OR STATEMENTS, THAT
MAY HAVE BEEN GIVEN BY OR MADE BY OR ON BEHALF OF THE CONTRIBUTORS. THE COMPANY AND THE OPERATING
PARTNERSHIP FURTHER ACKNOWLEDGE THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE
CONTRIBUTORS CLOSING DOCUMENTS, ALL MATERIALS RELATING TO THE PROPERTY THAT HAVE BEEN PROVIDED BY
41
THE CONTRIBUTORS HAVE BEEN PROVIDED WITHOUT ANY WARRANTY OR REPRESENTATION, EXPRESSED OR IMPLIED,
AS TO THEIR CONTENT,
SUITABILITY FOR ANY PURPOSE, ACCURACY, TRUTHFULNESS OR COMPLETENESS AND, EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, NEITHER THE OPERATING PARTNERSHIP NOR THE COMPANY SHALL HAVE ANY
RECOURSE AGAINST THE CONTRIBUTORS OR THEIR COUNSEL, ADVISORS, AGENTS, OFFICERS, DIRECTORS OR
EMPLOYEES FOR ANY INFORMATION IN THE EVENT OF ANY ERRORS THEREIN OR OMISSIONS THEREFROM. THE
COMPANY AND THE OPERATING PARTNERSHIP EACH REPRESENT THAT THEY ARE SOPHISTICATED AND EXPERIENCED IN
ALL MATTERS RELATING TO THE PROPERTY AND ARE RELYING SOLELY ON SUCH EXPERIENCE AND SOPHISTICATION
IN MAKING ALL DECISIONS WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREIN.
(b) THE COMPANY AND THE OPERATING PARTNERSHIP HEREBY ACKNOWLEDGE AND AGREE THAT, EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE CONTRIBUTORS CLOSING DOCUMENTS, THE CONTRIBUTORS HAVE
NOT MADE, DO NOT MAKE AND SPECIFICALLY DISCLAIM ANY REPRESENTATION OR WARRANTY, PROMISE, COVENANT,
AGREEMENT OR GUARANTEE OF ANY NATURE, EXPRESS OR IMPLIED, ORAL OR WRITTEN, AS TO OR REGARDING: (i)
THE QUALITY, NATURE, ADEQUACY OR PHYSICAL CONDITION, WHETHER LATENT OR PATENT, OF THE PROPERTY,
INCLUDING, BUT NOT LIMITED TO, THE STRUCTURAL ELEMENTS, FOUNDATION, ROOF, APPURTENANCES, ACCESS,
LANDSCAPING, PARKING FACILITIES OR THE ELECTRICAL, MECHANICAL, HVAC, PLUMBING, SEWAGE OR UTILITY
SYSTEMS, FACILITIES OR APPLIANCES AT OR IN CONNECTION WITH THE REAL PROPERTY, IF ANY; (ii) THE
EXISTENCE, QUALITY, NATURE, ADEQUACY, PHYSICAL CONDITION, OR LOCATION OF ANY UTILITIES SERVING THE
REAL PROPERTY; (iii) THE DEVELOPMENT POTENTIAL OF THE REAL PROPERTY, ITS HABITABILITY,
MERCHANTABILITY OR FITNESS, SUITABILITY OR ADEQUACY FOR ANY PARTICULAR PURPOSE; (iv) THE ZONING OR
OTHER LEGAL STATUS OF THE REAL PROPERTY OR THE POTENTIAL USE OF THE PROPERTY; (v) THE REAL
PROPERTY’S OR ITS OPERATIONS’ COMPLIANCE WITH ANY APPLICABLE LEGAL REQUIREMENTS; (vi) THE QUALITY
OF ANY LABOR OR MATERIALS RELATING IN ANY WAY TO THE REAL PROPERTY; (vii) COMPLIANCE WITH ANY
ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS,
INCLUDING THE EXISTENCE IN, ON OR UNDER THE PROPERTY OF ANY HAZARDOUS MATERIALS; OR (viii) THE
CONDITION OF TITLE TO THE REAL PROPERTY OR THE NATURE, STATUS AND EXTENT OF ANY RIGHT, ENCUMBRANCE,
LICENSE, RESERVATION, COVENANT, CONDITION, RESTRICTION OR ANY OTHER MATTER AFFECTING TITLE TO THE
PROPERTY.
(c) EXCEPT AND SOLELY TO THE EXTENT A CONTRIBUTOR OR EQUITY CONTRIBUTOR BREACHES ANY OF ITS
REPRESENTATIONS AND WARRANTIES UNDER ARTICLE 7 AND/OR THE CONTRIBUTORS CLOSING
42
DOCUMENTS,
EFFECTIVE AS OF CLOSING, AND WITHOUT ANY FURTHER ACT OR INSTRUMENT ON THE PART OF THE CONTRIBUTEE,
THE CONTRIBUTEE,
FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, SHALL BE DEEMED TO HAVE IRREVOCABLY AND
UNCONDITIONALLY WAIVED, RELEASED AND RELINQUISHED ANY CLAIMS, CAUSES OF ACTION, DEMANDS, LOSSES,
COSTS, INJURIES, DAMAGES, FEES (INCLUDING ATTORNEYS’ FEES AND DISBURSEMENTS), LIABILITY AND/OR
EXPENSES, INCLUDING COSTS UNDER ANY APPLICABLE ENVIRONMENTAL LAWS, STATUTES OR REGULATIONS AND/OR
ANY CLAIMS, LIABILITY OR RIGHT TO CONTRIBUTION OR INDEMNITY UNDER THE COMPREHENSIVE ENVIRONMENTAL
RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED, OR ANY OTHER LAW, STATUTE OR
REGULATION, WHICH THE CONTRIBUTEE OR ITS SUCCESSORS AND ASSIGNS NOW HAS OR MAY HAVE, WHETHER THE
SAME BE KNOWN OR UNKNOWN, LATENT OR PATENT, AGAINST ANY OF THE CONTRIBUTORS, ANY OF THE
CONTRIBUTING PARTIES, ANY OF THE PARENT ENTITIES, OR THEIR RESPECTIVE AGENTS, SUCCESSORS AND
ASSIGNS, OR ANY OTHER PERSON HAVING ANY INTEREST IN ANY OF THE CONTRIBUTORS, ANY OF THE
CONTRIBUTING PARTIES OR ANY OF THE PARENT ENTITIES BY REASON OF: (i) THE PRESENCE OF ANY HAZARDOUS
MATERIALS ON, UNDER OR ABOUT ANY OF THE PROPERTY NOW EXISTING OR HEREAFTER ARISING, INCLUDING THE
GROUNDWATER OR SURFACE WATERS THEREOF OR THE AIR, (ii) ANY PRIOR, PRESENT OR FUTURE ESCAPE,
SEEPAGE, RELEASE, DISCHARGE OR LEAKAGE OF ANY HAZARDOUS MATERIALS FROM THE PROPERTY OR ANY PORTION
THEREOF, INTO THE AIR OR UPON ANY LAND, SURFACE WATERS, GROUNDWATER, (iii) ANY PRIOR, PRESENT OR
FUTURE ENVIRONMENTAL DEFECT, ENVIRONMENTAL PROBLEM OR CONTAMINATION OF THE PROPERTY OR ANY PORTION
THEREOF, (iv) ANY PRIOR, PRESENT OR FUTURE REMEDIATION OR REMOVAL OR OTHER CORRECTIVE ACTION WHICH
MAY BE REQUIRED OR DESIRABLE WITH RESPECT TO THE PROPERTY PURSUANT TO ANY ENVIRONMENTAL LAWS OR
PURSUANT TO THE DIRECTION OR REQUEST OF ANY GOVERNMENTAL AUTHORITY OR (v) ANY PRIOR, PRESENT OR
FUTURE VIOLATION OF ANY LAW OR ANY ENVIRONMENTAL LAW AFFECTING THE PROPERTY AND/OR THE USE OR
OCCUPANCY THEREOF.
(d) IT IS UNDERSTOOD AND AGREED THAT THE CONTRIBUTION VALUE HAS BEEN ADJUSTED BY PRIOR
NEGOTIATION TO REFLECT THAT THE PROPERTY IS BEING CONVEYED AND CONTRIBUTED BY THE CONTRIBUTORS AND
ACQUIRED BY THE CONTRIBUTEE SUBJECT TO THE FOREGOING. THE PROVISIONS OF THIS SECTION 10.5
SHALL SURVIVE THE CLOSING AND DELIVERY OF THE CONTRIBUTORS CLOSING DOCUMENTS. NOTWITHSTANDING
ANYTHING TO THE CONTRARY, NOTHING CONTAINED IN THIS SECTION 10.5 SHALL IN ANY WAY LIMIT OR
EXPAND ANY CONTRIBUTOR’S LIABILITY FOR, OR THE CONTRIBUTEE’S RECOURSE AGAINST ANY CONTRIBUTOR FOR,
ANY BREACH BY ANY CONTRIBUTOR OR EQUITY CONTRIBUTOR OF ANY OF THE REPRESENTATIONS, WARRANTIES
43
OR
COVENANTS SET FORTH IN THIS AGREEMENT OR THE CONTRIBUTORS CLOSING DOCUMENTS.
ARTICLE 11
ADJUSTMENTS
ADJUSTMENTS
Section 11.1 Adjustments at the Closing Date. The following items shall be prorated
(without regard to whether any applicable Real Property is conveyed in fee or by transfer of Equity
Interests) as of midnight on the date preceding the Closing Date based on the actual number of days
in the month:
(a) Rents and other income and tenant charges due and payable for the month in which the
Closing occurs (whether then collected or not) shall be prorated based upon the Rent Rolls to be
prepared by each Contributor at Closing showing current Tenants. All moneys received from Tenants
from and after the Closing shall be applied by the Operating Partnership first to current rents and
other charges and then to any past due rents during the Operating Partnership’s ownership; any
balance representing past due rents prior to the Closing Date shall be remitted to the
Contributors. If rents and other tenant charges are received by the Contributors or the
Contributee after the Closing and are payable to the other party by reason of the allocation
provided in this Section 11.1(a), the appropriate sum shall be paid to the appropriate
party promptly after the completion of the month-end reconciliation thereof. After the Closing,
the Contributors shall not initiate and prosecute proceedings to collect their respective rents and
other tenant charges delinquent as of the Closing, but the Contributee shall use commercially
reasonable efforts to collect any delinquent rents and other tenant charges.
(b) At the Closing, the Contributors shall pay to the Operating Partnership an amount equal to
all Security Deposits and any prepaid rents relating to the Real Property and any other fees and/or
charges applicable to the current academic year or future academic years.
(c) At the Closing, the Contributors shall pay to the Operating Partnership an amount equal to
all reserves made by the Contributors, including but not limited to with respect to accounts
payable and Service Contracts pursuant to Sections 9.1(e) and (j), respectively.
(d) Utility charges payable by the Contributors, including, without limitation, electricity,
water and sewer bills. If there are meters on the Real Property, the Contributors will cause
readings of all said meters to be performed not more than three Business Days prior to the Closing
Date.
(e) Amounts payable under the Service Contracts.
(f) Real estate taxes and assessments due or payable for the calendar year. The proration of
real estate taxes shall be upon the basis of the tax rate for the preceding year applied to the
latest assessed valuation. If subsequent to the Closing Date, real estate taxes (by reason of
change in either assessment or rate or for any other reason) for the Real Property should be
determined to be higher or lower than those that are apportioned, a new computation shall be made,
and the Contributors agree to pay the Operating Partnership any increase shown by such
recomputation and vice versa.
44
(g) Any impounds which remain with the lenders in connection with the Assumed Loans and which
inure to the benefit of Contributee, including, but not limited to, impounds for real estate taxes,
insurance and replacement reserve escrow shall be credited to
Contributors at Closing; provided, however, that Contributee shall have
received commercially reasonable evidence as to the existence and amount of such impounds.
Section 11.2 Adjustment for Assessments. If on the Closing Date any Real Property or
part thereof shall be or shall have been affected by an assessment or assessments that are or may
become payable in installments, all the unpaid installments of any such assessment which is set
forth on Schedule 11.2 shall be paid and discharged by the Contributors on the Closing Date
and all other such adjustments shall be pro rated in the manner set forth in Section 11.1.
Section 11.3 Other Adjustments. All apportionments and prorations made hereunder
shall be made based on the number of days of ownership of the applicable Property in the period
applicable to the apportionment (e.g., collected rent for the month in which the Closing occurs
will be prorated based on the number of days of ownership for each entity divided by the number of
days in the month in which the Closing occurs and prorations of annual payments shall be made based
on the number of days of ownership in the applicable annual period). The Contributee shall receive
the benefits and burdens of ownership on the Closing Date.
Section 11.4 Post-Closing Reconciliation; Errors in Calculations. If on the Closing
Date the precise figures necessary for any of the foregoing adjustments are not capable of
determination, such adjustments shall be made on the basis of good faith estimates of the
Contributors and Contributee using currently available information, and final adjustments shall be
made promptly after precise figures are determined or available. Any errors in calculations or
adjustments shall be corrected or adjusted within 90 days after the Closing.
Section 11.5 First Quarterly Distributions. The first quarterly distribution on Units
to be issued at the Closing to which holders of such Units are entitled shall be pro rated based on
the number of days from the Closing Date to the end of such quarter.
Section 11.6 Survival. The provisions of this Article 11 shall survive the
Closing Date for one year. The provisions of this Article 11 with respect to readjustment
of real estate taxes shall survive the Closing Date for 90 days after the issuance of the
applicable tax xxxx.
ARTICLE 12
CONDITIONS PRECEDENT TO CLOSING
CONDITIONS PRECEDENT TO CLOSING
Section 12.1 Conditions to Obligations of the Contributors. The obligations of each
of the Contributors to convey its Property and to perform the other covenants and obligations to be
performed by the Contributors on the Closing Date shall be subject to satisfaction of, in addition
to the other conditions set forth herein, the following conditions (all or any of which may be
waived, in whole or in part, by the Contributors Representatives):
(a) The representations and warranties made by the Company and the Operating Partnership
herein shall be true and complete in all material respects (provided that such representations and
warranties qualified as to materiality shall be true and correct in all respects) with the same
force and effect as though such representations and warranties had been
45
made on and as of the
Closing Date; provided, however, that a failure of the foregoing condition shall
not give rise to a right of termination by the Contributors hereunder so long as such matters do
not have a Contributee Material Adverse Effect.
(b) The Company and the Operating Partnership shall have executed and delivered to the
Contributors Representatives and the Contributors all of the items and documents provided herein
for said delivery.
(c) The Company and the Operating Partnership shall have performed all covenants and
obligations undertaken by the Company and the Operating Partnership herein in all material respects
and complied with all conditions required by this Agreement to be performed or complied with by
them on or before the Closing Date.
(d) There shall not have been any changes, circumstances or events with respect to the Company
or the Operating Partnership that in the aggregate have resulted in a Contributee Material Adverse
Effect.
Section 12.2 Conditions to Obligations of the Company and the Operating Partnership.
The obligations of the Company and the Operating Partnership to accept title to the Property and
the Equity Interests and the Company’s and the Operating Partnership’s obligations to perform the
other covenants and obligations to be performed by the Company and the Operating Partnership on the
Closing Date shall be subject to satisfaction of the following conditions (all or any of which may
be waived, in whole or in part, by the Company or the Operating Partnership):
(a) The representations and warranties made by the Contributors and the Contributing Parties
herein shall be true and correct in all material respects (provided that such representations and
warranties qualified as to materiality shall be true and correct in all respects) with the same
force and effect as though such representations and warranties had been made on and as of the
Closing Date; provided, however, that a failure of the foregoing condition shall
not give rise to a right of termination by the Contributors hereunder so long as such matters do
not have a Contributor Material Adverse Effect.
(b) The Contributors shall have performed, and caused the Contributing Parties to have
performed, all covenants and obligations undertaken by the Contributors and the Contributing
Parties herein in all material respects and complied with all conditions required by this Agreement
to be performed or complied with by them on or before the Closing Date.
(c) The Contributors shall have executed and delivered to the Company and the Operating
Partnership, or caused the Contributing Parties to execute and deliver, all of the items and
documents provided herein for said delivery.
(d) There shall not have been any changes, circumstances or events with respect to the
Contributors, the Contributing Parties or the Property that in the aggregate have resulted in any
Contributor Material Adverse Effect.
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ARTICLE 13
NO BROKERS
NO BROKERS
The Contributors, jointly and severally, on the one hand, and the Contributee, on the other
hand, covenant and agree one with the other that, no real estate commissions, finders’ fees or
brokers’ fees have been or will be incurred in connection with this Agreement or the transactions
contemplated hereby, except for any fees payable under the terms of the partnership
agreements of the Contributors or pursuant to any other agreement among the Contributors,
severally, and Royal Apartments, none of which shall be the obligation of the Contributee. The
Contributors, jointly and severally, on the one hand, and the Contributee, on the other hand, shall
indemnify, defend and hold each other harmless from and against any Liabilities for commissions,
finders’ or brokers’ fees resulting from or arising out of the Contributee’s acquisition of the
Property hereunder asserted against either party by any broker or other person claiming by, through
or under the indemnifying party or whose claim is based on the indemnifying party’s acts or
omissions. The provisions of this Article 13 shall survive the Closing or other termination of
this Agreement.
ARTICLE 14
CASUALTY LOSS
CASUALTY LOSS
Section 14.1 Casualties. If at any time prior to the Closing Date all or any portion
of any Property (each, a “Damaged Property”) is destroyed or damaged as a result of fire or any
other casualty (a “Casualty”), the Contributors Representatives shall promptly give written notice
thereof (the “Casualty Notice”) to the Contributee. If the estimated cost to repair or restore the
Damaged Property following such Casualty equals or exceeds $500,000, such Casualty is herein called
a “Major Casualty.” Notwithstanding the occurrence of a Major Casualty, the Contributee shall not
have the right to terminate this Agreement as to the Damaged Property, provided that (a) the damage
resulting from the Casualty is covered by the Insurance Coverage, (b) subject to the rights of any
holders of Assumed Loans, the proceeds of any applicable Insurance Policy, together with credits
equal to the deductible under the Insurance Coverage and any amount by which the damage is not
covered by such insurance, shall be paid to the Operating Partnership at the Closing, (c) all
unpaid claims and rights in connection with the Casualty shall be assigned to the Operating
Partnership at Closing without in any manner affecting the consideration payable to the
Contributors Representatives hereunder, (d) there is rent interruption insurance in place for a
period of at least six months sufficient to cover any anticipated loss in revenue from the Damaged
Property resulting from such Casualty, and (e) there is no known material impediment to obtaining
all governmental approvals to permit the Damaged Property to be rebuilt or repaired. Upon the
occurrence of a Major Casualty, if any provision set forth in the preceding sentence is not
satisfied, the Contributee may terminate this Agreement as to the Affected Property only by written
notice to the Contributors Representatives within 15 days after receipt of the Casualty Notice. In
that event, such Damaged Property shall be treated as a Withdrawn Property under Section
3.5, and this Agreement shall continue in full force and effect as to all other Property.
Section 14.2 Interim Repairs. If a Property is the subject of a Major Casualty but
the Contributee either is not entitled to or does not terminate this Agreement as to such Damaged
Property pursuant to the provisions of this Article 14, then the appropriate Contributor
shall prior
47
to the Closing Date cause all temporary repairs to be made to the Damaged Property as
shall be required to prevent further deterioration and damage to the Damaged Property and to
protect public health and safety; provided that the cost of any such repairs shall not
exceed the amount of proceeds made available to such Contributor. The appropriate Contributor
shall have the right to be reimbursed from the proceeds of any insurance with respect to the
Damaged Property for the cost of such temporary repairs.
Section 14.3 Casualties Other than Major Casualties. If a Property is the subject of
a Casualty which is not a Major Casualty, this Agreement shall continue in full force and effect,
and (a) subject to the rights of any holders of the Assumed Loans, the proceeds of any applicable
Insurance Coverage, together with credits equal to the deductible under such Insurance Coverage and
any amount by which the damage is not covered by such insurance, shall be paid to the Operating
Partnership at Closing, and (b) all unpaid claims and rights in connection with the Casualty shall
be assigned to the Operating Partnership at Closing without in any manner affecting the
consideration payable to the appropriate Contributor hereunder.
ARTICLE 15
CONDEMNATION
CONDEMNATION
In the event of a Material Taking of any Property (the “Condemned Property”), the Contributee
shall have the right, at its sole option, to either (a) terminate this Agreement as to the
Condemned Property only by giving the appropriate Contributor written notice to such effect within
15 days after its receipt of written notification of any such occurrence or (b) accept title to the
Condemned Property without reduction of any consideration to be given to the appropriate
Contributor hereunder. Should the Contributee so terminate this Agreement as to Condemned Property
in accordance with this Article 15, such Condemned Property shall be treated as a Withdrawn
Property under Section 3.5 and this Agreement shall continue in full force and effect as to
all other Property. In the event that the Contributee either is not entitled to or elects not to
terminate this Agreement under this Article 15, or in the event of a taking which is not a
Material Taking, the appropriate Contributor shall, subject to the rights of the holder of any
existing mortgage, assign all proceeds of such taking to the Operating Partnership, and same shall
be the Operating Partnership’s sole property, and the Operating Partnership shall have the sole
right to settle any claim in connection with the Condemned Property. The term “Material Taking” as
to a Condemned Property or any portion thereof shall be defined to mean the institution of any
proceedings, judicial, administrative or otherwise, which (a) causes access to the Real Property to
be taken or materially diminished (i.e., following such taking the Real Property no longer has
access to a publicly dedicated street or traffic flow from and to the Real Property is materially
impaired), (b) results in parking no longer being in compliance with applicable zoning laws, or (c)
results in a taking of any portion of any buildings constituting the Improvements.
ARTICLE 16
PRE-CLOSING DEFAULT AND REMEDIES
PRE-CLOSING DEFAULT AND REMEDIES
Section 16.1 Pre-Closing Defaults and Remedies.
(a) Each of the following events shall be a “Contributor Event of Default”: (i) a failure by
a Contributor or any of its Contributing Parties to perform any of its obligations
48
hereunder
(including but not limited to delivery of any consent required to be delivered by such Contributor
or Contributing Party hereunder pursuant to the terms hereof), which failure continues for more
than 10 Business Days following receipt of notice thereof from the Contributee, or (ii) a failure
to satisfy any condition set forth in Sections 12.2(a) and (c). Upon the
occurrence of a Contributor Event of Default, the Contributee shall have the right to terminate its
obligation to consummate the transactions contemplated by this Agreement with respect to the
Property or the related Equity Interests, as applicable, as to which the Contributor
Event of Default relates by delivery of notice thereof to the Contributors, in which event
such Property shall become an Unapproved Property.
(b) Each of the following events shall be a “Contributee Event of Default”: (i) a failure by
the Contributee to perform any of its obligations hereunder (including but not limited to delivery
of any consent required to be delivered by the Contributee hereunder pursuant to the terms hereof),
which failure continues for more than ten Business Days following receipt of notice thereof from
the Contributors or (ii) a failure to satisfy any condition set forth in Sections 12.1(a)
and (c). Upon the occurrence of a Contributee Event of Default, the Contributors shall
have the right by written notice thereof to the Contributee to terminate their obligations to
consummate the transactions contemplated by this Agreement.
(c) Subject to the terms of this Article 16, upon any termination of this Agreement as
permitted under this Agreement, all rights and obligations of the parties under this Agreement,
other than those set forth in this Section 16.1(c), Sections 6.7, 9.5,
9.9, 9.10 and 10.4 and Article 20, shall terminate without
recourse, and this Agreement shall be of no further force or effect. Notwithstanding anything to
the contrary, neither the Contributee nor the Contributors shall be entitled to terminate this
Agreement pursuant to this Article 16 if such party’s willful breach of this Agreement has
prevented the consummation of the transactions contemplated hereby.
Section 16.2 Special Remedies of the Contributee.
(a) If the Contributee elects to terminate this Agreement in its entirety pursuant to
Section 6.4, the Contributee shall be entitled to a return of the Initial Deposit and the
Xxxxxxx Money and all interest accrued thereon. If the Contributee elects to terminate this
Agreement in its entirety pursuant to Section 3.5, the Contributee shall be entitled to a
return of the Xxxxxxx Money and all interest accrued thereon. If the Contributee elects to
terminate this Agreement with respect to a Withdrawn Property pursuant to Section 3.5, the
Contributee shall be entitled to a return of the Allocated Xxxxxxx Money with respect thereto and
all interest accrued thereon. In addition to the foregoing, in the event of a termination of this
Agreement pursuant to Sections 3.5 or 16.1(a) with respect to one or more
Unapproved Properties as a result of a Contributor Event of Default, (i) the Contributor which is
the subject of such Contributor Event of Default shall pay the Contributee the Fee or (ii) the
Contributee may, as an alternative remedy to that set forth in clause (i), seek specific
performance of the terms of this Agreement as to such Unapproved Property.
(b) As used in this Agreement, “Fee” shall be an amount equal to the lesser of (i) the Base
Amount, or (ii) the sum of (A) the maximum amount that can be paid to the Operating Partnership
without causing the Company to fail to meet the requirements of Sections
49
856(c)(2) and (3) of the
Code determined as if the payment of such amount did not constitute income described in Sections
856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code (“Qualifying Income”), as determined by
independent accountants to the Company, and (B) in the event the Company receives a letter from
legal counsel (the “Tax Opinion”) indicating that the Company has received a ruling from the
Internal Revenue Service holding that the Company’s receipt of the Base Amount would either
constitute Qualifying Income or would be excluded from gross income within the meaning of Sections
856(c)(2) and (3) of the Code (the “REIT
Requirements”) or that the receipt by the Company of the remaining balance of the Base Amount
following the receipt of and pursuant to such ruling would not be deemed constructively received
prior thereto, the Base Amount less the amount payable under clause (A) above. In the event that
the Operating Partnership is not able to receive the full Base Amount, the Contributors shall place
the unpaid amount in escrow and shall not release any portion thereof to the Operating Partnership
unless and until the Contributors Representatives receive either one or a combination of the
following: (i) a letter from the Company’s independent accountants indicating the maximum amount
that can be paid at that time without causing the Company to fail to meet the REIT Requirements, or
(ii) a Tax Opinion, in either of which events the Contributors shall pay to the Operating
Partnership the lesser of the unpaid Base Amount or the maximum amount stated in the letter
referred to in (i) above. All funds remaining in the escrow account shall be released to the
Contributors Representatives on the third anniversary of the Effective Date. Notwithstanding
anything contained in this Agreement to the contrary, in no event shall the aggregate amount of
Fees payable to the Contributee by the Contributors pursuant to this Section 16.2 exceed
$2,500,000.
(c) The Contributee shall not be entitled to, and waives all right to seek, any remedy other
than as set forth in this Section 16.2 that may be made available to the Contributee at
law, in equity or otherwise, including, but not limited to, seeking consequential, incidental,
speculative or punitive damages.
Section 16.3 Special Remedy of Contributors. If the Contributors elect to terminate
this Agreement pursuant to Section 16.1(b), the Contributors shall be entitled to receipt
of the Initial Deposit and the Xxxxxxx Money as their sole and absolute remedy.
Section 16.4 Liquidated Damages.
(a) THE CONTRIBUTORS HEREBY AGREE THAT, IF THEY TERMINATE THIS AGREEMENT PURSUANT TO
SECTION 16.1(b), THEY SHALL NOT BE ENTITLED TO ACTUAL DAMAGES PURSUANT TO THE TERMS OF THIS
AGREEMENT AND THAT THEY SHALL ONLY BE ENTITLED TO THE INITIAL DEPOSIT AND THE XXXXXXX MONEY AS
DESCRIBED ABOVE IN SECTION 16.3. THE CONTRIBUTEE AND THE CONTRIBUTORS AGREE THAT IT IS
IMPOSSIBLE TO CALCULATE WHAT THE CONTRIBUTORS’ ACTUAL DAMAGES WOULD BE IN THE EVENT OF ANY
PRE-CLOSING DEFAULT BY THE CONTRIBUTEE AND AGREE THAT THE AMOUNT OF THE INITIAL DEPOSIT AND THE
XXXXXXX MONEY IS A REASONABLE ESTIMATION THEREOF. THEREFORE, BY SIGNING THIS AGREEMENT, THE
CONTRIBUTORS ACKNOWLEDGE THAT THEIR RIGHT TO RETAIN THE INITIAL DEPOSIT AND THE XXXXXXX MONEY SHALL
CONSTITUTE
50
LIQUIDATED DAMAGES AND THEIR SOLE RIGHT AND REMEDY IN CONNECTION WITH THIS ARTICLE
16.
(b) THE CONTRIBUTEE HEREBY AGREES THAT, IF IT TERMINATES THIS AGREEMENT PURSUANT TO
SECTIONS 3.5, 5.2(b), 5.2(c), 6.4 OR 16.1(a), IT SHALL NOT
BE ENTITLED TO ACTUAL DAMAGES PURSUANT TO THE TERMS OF THIS AGREEMENT AND THAT IT SHALL ONLY BE
ENTITLED TO RETURN OF THE INITIAL DEPOSIT AND THE XXXXXXX MONEY, OR THE ALLOCATED XXXXXXX
MONEY, AND THE FEE, AS APPLICABLE, AS DESCRIBED IN SECTION 16.2(a). THE CONTRIBUTEE
AND THE CONTRIBUTORS AGREE THAT IT IS IMPOSSIBLE TO CALCULATE WHAT THE CONTRIBUTEE’S ACTUAL DAMAGES
WOULD BE IN THE EVENT OF ANY PRE-CLOSING DEFAULT BY ANY OR ALL OF THE CONTRIBUTORS AND AGREE THAT
THE AMOUNT OF THE INITIAL DEPOSIT AND THE XXXXXXX MONEY, OR THE ALLOCATED XXXXXXX MONEY, AND THE
FEE AS APPLICABLE, IS A REASONABLE ESTIMATION THEREOF. THEREFORE, BY SIGNING THIS AGREEMENT, THE
CONTRIBUTEE ACKNOWLEDGES THAT ITS RIGHT TO RETURN OF THE INITIAL DEPOSIT AND THE XXXXXXX MONEY, OR
THE ALLOCATED XXXXXXX MONEY, AND PAYMENT OF THE FEE, AS APPLICABLE, SHALL CONSTITUTE LIQUIDATED
DAMAGES AND, TOGETHER WITH THE RIGHT TO SPECIFIC PERFORMANCE PURSUANT TO SECTION 16.2(a),
ITS SOLE RIGHT AND REMEDY IN CONNECTION WITH THIS ARTICLE 16.
ARTICLE 17
TAX MATTERS
TAX MATTERS
Section 17.1 Payment of Taxes by the Contributing Parties. The parties agree that,
for federal income tax purposes, the transactions described in Article 2 shall be reported
as direct conveyances of the Property to the extent permitted by applicable Tax laws: (a) by the
Property Contributors through the direct conveyance of the Property pursuant to Section
2.1, or (b) by the Contributing Parties through the transfer of Equity Interests in the Parent
Entities pursuant to Section 2.2. The Contributing Parties will pay or provide for payment
of all Taxes due and payable on or after the Closing and will file all returns and reports required
to be filed on or after the Closing with respect to Taxes imposed on the Owners or the Contributors
for all taxable periods or portions thereof ending on or prior to the Closing; provided,
however, that real estate and personal property taxes for the current year shall be
prorated at the Closing in accordance with the terms and provisions of this Agreement and the
Contributing Parties shall have no liability therefor after the Closing or have any obligation to
file any returns or reports relating thereto. No later than six months after the Closing (or the
due date of the applicable return or report, if prior to the end of such six-month period), the
Contributing Parties or their agents shall cause to be filed any and all state and federal income
tax returns and reports required to be filed by the Owners or Contributors for the taxable period,
if any, ending upon the Closing (collectively, the “Income Tax Returns”). Under no circumstances
shall any Owner or Contributor (or its successors and assigns) amend any Income Tax Return of such
Owner or Contributor for any taxable period during which any Contributing Party owned an interest
in any such Owner or Contributor (“Contributor Tax Period”) unless (i) such amendment shall not
result in any additional Taxes, fees, penalties or interest being assessed against or owed by any
such Contributing Party, or (ii) the Contributors Representatives shall provide their prior written
51
consent to any such amendment. The parties agree and acknowledge that, upon the Closing: (A) the
then current taxable year of each Owner and Contributor for federal and state income tax purposes
shall conclude, (B) each such Owner and Contributor shall terminate for federal and state income
tax purposes effective upon the Closing and (C) there shall be a closing of the books of each such
Owner and Contributor and the profits, losses, credits and other partnership items of each Owner
and Contributor shall be allocated among the constituent partners of each such Owner and
Contributor for the taxable period ending upon the Closing. The Contributee agrees that it shall
cooperate and shall cause each Owner and Contributor to cooperate with the
Contributors Representatives and their agents with regard to the preparation and filing of any
and all Tax returns and reports hereunder and further agrees that it shall execute or cause to be
executed any and all such Tax returns and reports promptly after delivery of such Tax returns and
reports by the Contributors Representatives to the Contributee. In the event that any Governmental
Authority shall initiate an audit or investigation (collectively, an “Audit”) of any Owner and
Contributor or any Income Tax Return of any such Owner and Contributor that pertains to any
Contributor Tax Period, the Contributee shall immediately notify the Contributors Representatives
of such Audit. The Contributee shall provide the Contributing Parties and their agents with the
opportunity to participate in the resolution of any such Audit and the Contributing Parties shall
cooperate with the Contributee in the furnishing of information and other activities relating to
any such Audit; provided, however, that with respect to any federal or state income Tax Audit that
would not result in Tax liability to an Owner or Contributor (or the Operating Partnership or its
partners), the Contributing Party shall have such option to control such Audit (provided that the
Contributing Party shall consult with the Operating Partnership with regard to any such Audit);
provided, further, that without the prior written consent of the Contributors Representatives,
neither the Contributee nor any Owner or Contributor (or any successor or assign thereof) (i) shall
extend the statute of limitations or period of assessment with regard to any Taxes payable by any
Owner or Contributor and attributable to any Contributor Tax Period, or (ii) compromise or settle
any Audit, investigation or Tax controversy which would result in any additional Taxes, fees,
penalties or interest being assessed against or owed by any Contributing Party or its constituent
members.
Section 17.2 Payment of Current Taxes. The Operating Partnership is hereby authorized
by each of the Contributors with respect to its respective Property, in the Operating Partnership’s
sole discretion, to file any applicable proceeding for the current tax roll for a reduction of the
assessed valuation of the Property. The refund of Taxes, net of all expenses incurred in
connection therewith, if any, for any tax year for which the Contributor(s) or the Operating
Partnership shall be entitled to share in the refund shall be divided between the appropriate
Contributor(s) and the Operating Partnership in accordance with the apportionment of Taxes pursuant
to the provisions hereof. No Contributor shall be liable for any such expenses that exceed its
apportionment of Taxes.
Section 17.3 Survival. The provisions of this Article 17 shall survive the
Closing.
ARTICLE 18
EMPLOYEE MATTERS
EMPLOYEE MATTERS
Concurrently herewith, Royal Apartments and the Operating Partnership have entered into the
Agreement Regarding Employee Matters in the form of Exhibit M.
52
ARTICLE 19
INDEMNIFICATION
INDEMNIFICATION
Section 19.1 By the Contributors. Subject to Sections 19.4 and 19.6,
each Contributor agrees to severally indemnify, save and hold harmless the Company, the Operating
Partnership and their respective directors, officers, employees, agents, attorneys, representatives
and affiliates (each, a “Contributee Indemnified Party”), from and against any and all losses
(including, without limitation, diminution in value), Taxes, Liabilities, lawsuits,
deficiencies and demands (whether or not arising out of third-party claims), including, without
limitation, interest, penalties, lost profits and other losses, reasonable attorneys’ fees and all
amounts paid in investigation, defense or settlement of any of the foregoing (“Damages”), incurred
in connection with, arising out of, resulting from or incident to (i) the inaccuracy of any
representation or warranty made by such Contributor or its Contributing Parties in this Agreement,
Addendum A or the Contributors Closing Documents to which such Contributor is a signatory in any
material respect as of the date made or the Closing Date (provided that such representations and
warranties qualified as to materiality shall be true and correct in all respects); (ii) the failure
of such Contributor to comply with any covenant or agreement set forth in this Agreement; (iii) net
adjustments made pursuant to Article 11 that result in a debit to such Contributor to the
extent that the amount thereof could not or was not determined pursuant to Article 11 prior
to or as of the end of the periods described in Section 11.6, as applicable; (iv) the
breach by a Contributor of any of its fiduciary duties (including duties of disclosure) to any
other person or entity arising in connection with the transactions contemplated by this Agreement;
(v) any document filed or to be filed by or on behalf of the Contributor or any of its partners or
any direct or indirect shareholder, partner, member or affiliate of such Contributor (each, a
“Covered Contributor Party”) with any Governmental Authority or any other document prepared or
distributed by or on behalf of any Covered Contributor Party in connection with the transactions
contemplated hereby, including any document distributed in connection with the solicitation of
consents to the consummation by the Contributor or the Contributing Party of the transactions
contemplated by this Agreement, provided, however, that the foregoing shall not
apply to information supplied by the Company or the Operating Partnership in writing to the Covered
Contributor Party specifically for inclusion or incorporation by reference in any such document or
to any document prepared or filed by the Company or the Operating Partnership; (vi) Liabilities of
such Contributor to any partner, member, employee, consultant or agent on account of such person’s
present or former interest in or right to participate in the revenues or profits of such
Contributor, whether resulting from the purchase, redemption or acquisition of equity interests in
such Contributor or the termination of employment or other relationship with such Contributor or
otherwise; (vii) the inaccuracy in any material respect of any information supplied by the such
Contributor or any Covered Contributor Party in writing to the Contributee specifically for
inclusion or incorporation by reference in any document described in clause (v) of Section
19.2; or (viii) all matters set forth on Schedule 7.1(m). In no event will any
Contributor be liable for the indemnification obligations of any other Contributor under this
Section 19.1.
Section 19.2 By the Contributee. The Company and the Operating Partnership shall
jointly and severally indemnify and save and hold harmless each of the Contributors and their
respective directors, officers, partners, employees, agents, attorneys, representatives and
affiliates from and against any and all Damages incurred in connection with, arising out of,
resulting from or incident to (i) the inaccuracy of any representation or warranty in any material
53
respect as of the date made or deemed made; (ii) the failure to comply with any covenant or
agreement of, the Contributee in this Agreement or in any document delivered in connection herewith
that survives the Closing; (iii) net adjustments made pursuant to Article 11 that result in
a credit to the Contributors to the extent that the amount thereof could not or was not determined
pursuant to Article 11 prior to or as of the end of the periods described on Section
11.6, as applicable; (iv) the breach by the Company or the Operating Partnership of any of its
fiduciary duties (including duties of disclosure) to any other person or entity arising in
connection with the
transactions contemplated by this Agreement; (v) any document filed or to be filed by or on
behalf of the Company or the Operating Partnership with any Governmental Authority,
provided, however, that the foregoing shall not apply to information supplied by
the Contributors or any Covered Contributor Party in writing to the Contributee specifically for
inclusion or incorporation by reference in any such document or to any document prepared or filed
by the Contributors or any Covered Contributor Party; or (vi) the inaccuracy in any material
respect of any information supplied by the Company or the Operating Partnership in writing to any
Covered Contributor Party specifically for inclusion or incorporation by reference in any document
described in clause (v) of Section 19.1.
Section 19.3 Cooperation. Each indemnified party shall cooperate in all reasonable
respects with each indemnifying party and its representatives (including without limitation its
attorneys) in the investigation, trial and defense of any lawsuit or action and any appeal arising
therefrom; provided, however, that the indemnified party may, at its own cost,
participate in negotiations, arbitrations and the investigation, trial and defense of such lawsuit
or action and any appeal arising therefrom. The parties shall cooperate with each other in any
notifications to insurers.
Section 19.4 Insurance. In the event any indemnified party is insured pursuant to an
unexpired insurance policy against any occurrence giving rise to any Damages as to which such
indemnified party seeks indemnification pursuant to this Article 19, the indemnified party
shall promptly give notice of such insurance coverage to the indemnifying party and the
indemnifying party shall, in its reasonable discretion, elect either (i) to require the indemnified
party to make a claim pursuant to such insurance policy for such Damages and the indemnifying
party’s obligation to indemnify the indemnified party shall thereafter be reduced by the amount of
insurance proceeds received by the indemnified party as a result of such claim or (ii) to indemnify
the indemnified party without requiring a claim to be made by the indemnified party on such
insurance policy. In the event the indemnifying party elects to require the indemnified party to
make a claim on such insurance policy pursuant to clause (i) above, the indemnifying party shall
pay any increase in insurance premiums resulting directly and proximately from such claim by the
indemnified party on such insurance policy; provided that if any such increase in such insurance
premium is caused by one or more claims on such insurance policy as a result of Damages which are
not subject to indemnification pursuant to this Article 19, then the indemnifying party
shall be obligated to pay such increase in insurance premiums only to the extent such increase is
attributable to claims made by the indemnified party pursuant to clause (i) above. The
determination of the amount of such increase in insurance premiums attributable to any claim made
pursuant to clause (i) above shall be made by the mutual agreement of the parties acting in good
faith. The indemnified party shall provide to the indemnifying party such documentation relating
to such increase in insurance premium as shall be reasonably necessary to establish the amount of
such increase and shall otherwise cooperate with the indemnifying
54
party in establishing the amount
of such increase attributable to the claim made pursuant to clause (i) above.
Section 19.5 Claims for Indemnification. If a claim for Damages (a “Claim”) is to be
made by a party entitled to indemnification hereunder against the indemnifying party, the party
claiming such indemnification shall give written notice (a “Claim Notice”) to the indemnifying
party as soon as practicable after the party entitled to indemnification becomes aware of any fact,
condition or event which may give rise to Damages for which indemnification may be sought
under this Article 19. Such Claim Notice shall specify the nature and amount of the Claim
asserted, if actually known to the party entitled to indemnification hereunder. If any lawsuit or
enforcement action is filed against any party entitled to the benefit or indemnity hereunder,
written notice thereof shall be given to the indemnifying party as promptly as practicable (and in
any event with 15 calendar days after the service of the citation or summons). The failure of any
indemnified party to give timely notice hereunder shall not affect rights to indemnification
hereunder, except to the extent that the indemnifying party demonstrates actual damage caused by
such failure. After such notice, if the indemnifying party shall acknowledge in writing to the
indemnified party that the indemnifying party shall be obligated under the terms of its indemnity
hereunder in connection with such lawsuit or action and it is not reasonably foreseeable that the
limitations set forth in this Article 19 as to the amount or scope of indemnification will
result in the indemnified party being exposed to the risk of any significant unindemnified
liability arising from the matters covered by such lawsuit or action, then the indemnifying party
shall be entitled, if its so elects at its own cost, risk and expense, (i) to take control of the
defense and investigation of such lawsuit or action, (ii) to employ and engage attorneys of its own
choice to handle and defend the same unless the named parties to such action or proceeding
(including any impleaded parties) include both the indemnifying party and the indemnified party and
the indemnified party has been advised in writing by counsel that there may be one or more legal
defenses available to such indemnified party that are different from or additional to those
available to the indemnifying party, in which event the indemnifying party shall be entitled, at
the indemnifying party’s cost, risk and expense, to separate counsel of its own choosing, and (iii)
to compromise or settle such Claim, which compromise or settlement shall be made only with the
written consent of the indemnified party, such consent not to be unreasonably withheld or delayed.
If the indemnifying party fails to assume the defense of such Claim within 15 calendar days after
receipt of the Claim Notice, the indemnified party against such Claim has been asserted will (upon
delivering notice to such effect to the indemnifying party) have the right to undertake, at the
indemnifying party’s cost and expense, the defense, compromise or settlement of such claim on
behalf of and for the account and risk of the indemnifying party; provided,
however, that such Claim shall not be compromised or settled without the written consent of
the indemnifying party, which consent shall not be unreasonably withheld or delayed. In the event
the indemnified party assumes the defense of the Claim, the indemnified party will keep the
indemnifying party reasonably informed of the progress of any such defense, compromise or
settlement. The indemnifying party shall be liable for any settlement of any action effected
pursuant to and in accordance with this Article 19 and for any final judgment (subject to
any right of appeal), and the indemnifying party agrees to indemnify and hold harmless an
indemnified party from and against any Damages by reason of such settlement or judgment.
55
Section 19.6 Right of Offset. Notwithstanding any other provision of this Agreement
to the contrary, the Contributee Indemnified Parties shall have the right to offset the amount of
any Damages with respect to which the Contributee Indemnified Parties shall be entitled to
indemnification hereunder against the Retained Amount applicable to the Contributor or its Property
or related Equity Interests that has any indemnification obligations with respect to such Damages,
but to no other portion of the Retained Amount. Also notwithstanding any other provision of this
Agreement to the contrary, if one or more Claim Notice(s) shall have been filed by or on behalf of
a Contributee Indemnified Party and the Claim or Claims described in the
Claim Notices have not been resolved, neither the Company nor the Operating Partnership shall
be obligated, until all such Claims have been resolved, to distribute any portion of the Retained
Amount to the extent that following such distribution the remaining portion of the Retained Amount
would be less than the amount of the outstanding Claims.
Section 19.7 Limitations on Indemnification Obligations.
(a) Notwithstanding anything to the contrary contained herein, (i) in no event shall any
Contributor be liable for any indemnity obligations pursuant to Section 19.1 as to any
Contributor until the aggregate amount of the Contributee’s Damages giving rise to such obligations
exceeds $25,000 as to such Contributor or its Property or related Equity Interests and (ii) once
the aggregate amount of the Contributee’s Damages exceeds $25,000 as to such Contributor or its
Property or related Equity Interests, such Contributor’s liability for the indemnity obligations
set forth in this Section 19.1 with respect to such Contributor or its Property or related
Equity Interests (inclusive of the initial $25,000 in Damages) shall in no event exceed, and the
Contributee’s recourse for the indemnity obligations set forth herein as to such Contributor shall
be limited to, the Retained Amount relating to such Contributor.
(b) Notwithstanding anything to the contrary contained herein, (i) in no event shall the
Contributee be liable for any indemnity obligations pursuant to Section 19.1 as to any
Contributor until the aggregate amount of the Contributor’s Damages giving rise to such obligations
exceeds $25,000 as to such Contributor and (ii) once the aggregate amount of the Contributor’s
Damages exceeds $25,000, the Contributee’s liability for the indemnity obligations set forth in
this Section 19.1 (inclusive of the initial $25,000 in Damages) shall in no event exceed,
and the Contributor’s recourse for the indemnity obligations set forth herein shall be limited to,
the Retained Amount relating to such Contributor.
Section 19.8 Survival. It shall be a condition precedent to any indemnified party’s
right to indemnification under Sections 19.1 or 19.2 that (a) the event giving rise
to such claim for indemnification shall have occurred on or before the expiration of the Survival
Period and (b) the indemnified party shall have delivered notice to the indemnifying party
specifying the details of such claim in accordance with Section 19.5 on or before the
expiration of the Survival Period.
Section 19.9 Payment of Indemnification Obligations. In the event that any
indemnified party is entitled to indemnification hereunder from an indemnifying party, the amount
of such indemnification pursuant to the terms of this Article 19 (the “Indemnification
Amount”) shall be immediately due and payable. Notwithstanding anything to the contrary in the
prior sentence, the Contributee agrees that it shall have recourse to and shall seek payment as set
forth in Section 19.6. To any extent any indemnifying party fails to pay the
Indemnification
56
Amount within five days of a final determination, the Indemnification Amount shall
accrue interest for the benefit of the indemnified party at a rate per annum equal to the prime
rate announced from time to time by Citibank N.A. plus 2.0%, compounded quarterly, until paid.
ARTICLE 20
NOTICE
NOTICE
All notices, demands, requests, or other writings in this Agreement provided to be given, made
or sent, or which may be given, made or sent, by any party hereto to another, shall be in writing
and shall be delivered by depositing the same with any nationally recognized overnight delivery
service, or by telecopy or fax machine, in either event with all transmittal fees prepaid, properly
addressed, and sent to the following addresses:
If to the Contributee: | ||
American Campus Communities, Inc. | ||
000 Xxx Xxxxx Xxxxxxx, Xxxxx 000 | ||
Xxxxxx, Xxxxx 00000 | ||
Attention: Xx. Xxxxxxx X. Xxxxxxx, Xx. | ||
Phone: (000) 000-0000 | ||
Fax: (000) 000-0000 | ||
with a copy to: | ||
Xxxxx Liddell & Xxxx LLP | ||
0000 Xxxx Xxxxxx, Xxxxx 0000 | ||
Xxxxxx, Xxxxx 00000 | ||
Attention: Xxxxx X. Xxxxxxx, Esq. | ||
Phone: (000) 000-0000 | ||
Facsimile: (000) 000-0000 | ||
If to the Contributors: | ||
Royal Properties | ||
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000 | ||
Xxxxxxxxx, Xxxxxxxx 00000 | ||
Attention: Xx. Xxxxxxx Xxxxxxxx | ||
Phone: (000) 000-0000 | ||
Fax: (000) 000-0000 |
57
with a copy to: | ||
Xxxxxx Xxxxxxx PLLC | ||
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000 | ||
Xxxxxxx, Xxxxxxxx 00000 | ||
Attention: Xxxxx Xxxxxx, Esq. | ||
Phone: (000) 000-0000 | ||
Fax: (000) 000-0000 |
or to such other address as either party may from time to time designate by written notice to the
other. Notices given by (i) overnight delivery service as aforesaid shall be deemed received and
effective on the first Business Day following such dispatch and (ii) telecopy or fax machine shall
be deemed given at the time and on the date of machine transmittal provided same is sent prior to
5:00 p.m., Central time, on a Business Day (if sent later, then notice shall be deemed given on the
next Business Day) and if the sending party receives a written send confirmation on its machine and
forwards a copy thereof by regular mail accompanied by such notice or communication. Notices may
be given by counsel for the parties described above, and such notices shall be deemed given by said
party, for all purposes hereunder.
ARTICLE 21
MISCELLANEOUS
MISCELLANEOUS
Section 21.1 Survival of Representations and Warranties. The representations and
warranties in this Agreement shall survive the Closing for the Survival Period; provided,
however, that the representations and warranties set forth in Sections 7.1(u) and
(v) shall survive the Closing indefinitely.
Section 21.2 Entire Agreement; Third-Party Rights. This Agreement, together with the
Confidentiality Agreement, constitutes the entire agreement between the parties and incorporates
and supersedes all prior negotiations and discussions between the parties. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and their successors and assigns,
and nothing in this Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this Agreement.
Section 21.3 Amendment. This Agreement cannot be amended, waived or terminated
orally, but only by an agreement in writing signed by each party hereto.
Section 21.4 Assignment. Except as expressly provided or contemplated herein, no
party may assign this Agreement or any interest therein to any other person without the prior
written consent of the other parties hereto; provided, however, that, at the
request of the Operating Partnership, the Property and/or the Equity Interests shall be contributed
to a subsidiary of the Operating Partnership.
Section 21.5 Governing Law. In any Action brought under this Agreement, or in which
this Agreement is construed, the law to be applied (the “Governing Law”) shall be as follows: (i)
if the Action relates specifically to one or more Property which is or are located entirely in one
state, the Governing Law shall be the law of such state; and (ii) in Actions other than those
described in clause (i), Governing Law shall be the laws of the State of Maryland.
58
Section 21.6 Jurisdiction. ANY LITIGATION BASED ON THIS AGREEMENT, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH THIS AGREEMENT, OR ANY CLAIMS, CONTROVERSIES OR DISPUTES ARISING OUT
OF THIS AGREEMENT OR RELATED HERETO OR THE SUBJECT MATTER HEREOF, WILL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE FEDERAL OR STATE COURTS LOCATED IN THE STATE OF THE GOVERNING LAW. EACH PARTY
HERETO EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF THE
GOVERNING LAW AS SET FORTH ABOVE. EACH PARTY HERETO EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT A
PARTY HERETO HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID
OR EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH PARTY IRREVOCABLY WAIVES
SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.
Section 21.7 Section Headings. The caption headings in this Agreement are for
convenience only and are not intended to be part of this Agreement and shall not be construed to
modify, explain or alter any of the terms, covenants or conditions herein contained.
Section 21.8 Severability. If any term, covenant or condition of this Agreement is
held to be invalid, illegal or unenforceable in any respect, this Agreement shall be construed
without such provision.
Section 21.9 No Other Rights or Obligations. Nothing contained in this Agreement
shall be deemed to create any rights or obligations of partnership, joint venture or similar
association between any of the Contributors and the Contributee.
Section 21.10 Counterparts. This Agreement may be executed by the parties hereto in
counterparts, all of which together shall constitute a single Agreement.
Section 21.11 Construction. All references herein to any Article, Section, Schedule
or Exhibit shall be to the Articles and Sections of this Agreement and to the Schedules and
Exhibits annexed hereto unless the context clearly dictates otherwise. All of the Schedules and
Exhibits annexed hereto are, by this reference, incorporated herein.
Section 21.12 Contributors Representatives. Any approval, consent, mutual
satisfaction or similar determination required to be made hereunder by the Contributors or any
person included within such the Contributors shall be granted exclusively by anyone of the
Contributors Representatives.
Section 21.13 Attorneys’ Fees. In the event of any litigation, bankruptcy proceeding
or alternative dispute resolution between the Contributee and any of the Contributors, in
connection
59
with this Agreement or the transactions contemplated herein, the party that fails to
substantially prevail in such litigation, bankruptcy proceeding or alternative dispute resolution
shall be responsible for payment of all expenses and reasonable attorneys’ fees incurred by the
substantially prevailing party both at the trial level and on appeal. The provisions of this
Section 21.13 shall survive the Closing.
Section 21.14 Interpretation. Whenever used herein, the singular number shall include
the plural, the plural shall include the singular, and the use of any gender shall be applicable to
all genders.
Section 21.15 Radon. In accordance with the requirements of Florida Statutes Section
404.056(8), the following notice is hereby given to the Contributee.
RADON GAS: Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to persons who are
exposed to it over time. Levels of radon that exceed federal and state guidelines have been found
in buildings in Florida. Additional information regarding radon and radon testing may be obtained
from your County Public Health Unit.
Section 21.16 1031 Exchange. The Contributee agrees to accommodate and cooperate with
the Contributing Parties in structuring the transfer of the portion of the Property or the Equity
Interests attributable to the cash portion of the Contribution Value (the “Exchange Portion”) as an
exchange of property held for productive use in a trade or business or for investment within the
meaning of the Code (a “Like-Kind Exchange”). In connection with such tax deferred exchange, (a)
the Contributing Parties may assign the Purchase and Sale Agreement and the right to acquire the
Exchange Portion to a qualified intermediary (provided such assignment shall have no effect upon
the obligations or liability of the Contributee hereunder), (b) the Contributing Parties may share
information regarding the transactions hereunder on an “as needed” basis with one or more sellers
of potential replacement real estate with regard to such Like-Kind Exchange, and (c) the parties
agree to execute such documents as may be reasonably required to effect such exchange. In no event
shall the Operating Partnership be required to take title to any property other than the Property
and the Equity Interests, and no party shall be required to incur any additional expense or
liability. The Contributing Parties shall indemnify, defend, protect and hold harmless the
Operating Partnership, the Contributors and the Owners from and against any and all claims arising
from or in connection with (i) structuring any portion of the transactions contemplated by this
Agreement as a Like-Kind Exchange or (ii) the execution of any documents in connection with the
Like-Kind Exchange. Under no circumstances shall structuring the transaction contemplated by this
Agreement as a Like-Kind Exchange delay the Closing. The failure of the contemplated transaction
to qualify as a Like-Kind Exchange shall in no way defeat or otherwise compromise the contribution
of the Property and the Equity Interests from the Contributors to the Operating Partnership or its
designees.
Section 21.17 Waiver of Jury Trial. The parties hereto hereby knowingly, voluntarily
and intentionally waive any right they may have to a trial by jury with respect to any litigation
based hereon, or arising out of, under, or in connection with this Agreement, or any document
contemplated to be executed in conjunction herewith, or actions of the parties.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.
AMERICAN CAMPUS COMMUNITIES, INC. | ||||||
By: | ||||||
President and Chief Executive Officer | ||||||
AMERICAN CAMPUS COMMUNITIES OPERATING PARTNERSHIP LP | ||||||
By: | American Campus Communities Holdings LLC, its general partner |
By: | ||||||
President |
S-1
ROYAL TALLAHASSEE PARTNERSHIP | ||||||
By: | ||||||
General Partner | ||||||
By: | Keeling Family Irrevocable Trust u/t/a dated 12/31/92 | |||||
General Partner | ||||||
By: | Xxxxxxx X. Xxxxxxx | |||||
General Partner | ||||||
By: | Xxxxx X. Xxxxxxx | |||||
General Partner | ||||||
By: | Xxxxxx X. Xxxxx | |||||
General Partner | ||||||
Xxxxxxx X. Xxxxxxxx, attorney in fact |
S-2
ROYAL TALLAHASSEE PARTNERSHIP II LIMITED PARTNERSHIP | ||||||
By: | ||||||
General Partner | ||||||
By: | Xxxxxxx X. Xxxxxxx | |||||
General Partner | ||||||
By: | Xxxx X. Xxxxxx | |||||
General Partner | ||||||
By: | Xxxxx X. Xxxxxxx | |||||
General Partner | ||||||
S-3
ROYAL TALLAHASSEE III PARTNERSHIP | ||||||
By: | ||||||
General Partner |
||||||
By: | Keeling Family Irrevocable Trust u/t/a dated 12/31/92 | |||||
General Partner | ||||||
By: | Xxxxxxx X. Xxxxxxx | |||||
General Partner | ||||||
By: | Xxxxx X. Xxxxxxx | |||||
General Partner | ||||||
By: | Xxxx X. Xxxxxx | |||||
General Partner | ||||||
S-4
ROYAL LEXINGTON LIMITED PARTNERSHIP | ||||||
By: | Royal Lexington General Partnership, an Illinois general partnership, its general partner |
By: | Xxxxx X. Xxxxxxx | |||||
General Partner | ||||||
By: | ||||||
General Partner | ||||||
By: | Xxxxxxx X. Xxxxxxx | |||||
General Partner | ||||||
Xxxxxxx X. Xxxxxxxx, attorney in fact | ||||||
By: | Xxxx X. Xxxxxx | |||||
General Partner | ||||||
S-5
ROYAL GAINESVILLE LIMITED PARTNERSHIP | ||||
By: | Gainesville Partners, an Illinois general partnership, its general partner |
By: | ||||||
General Partner | ||||||
By: | Xxxxxxx X. Xxxxxxx | |||||
General Partner | ||||||
By: | Xxxx X. Xxxxxx | |||||
General Partner | ||||||
By: | Xxxxx X. Xxxxxxx | |||||
General Partner | ||||||
S-6
ROYAL ORLANDO LIMITED PARTNERSHIP | ||||
By: | Royal Orlando
Northgate L.L.C., an Illinois limited liability company |
By: | ||||||
Manager | ||||||
By: | ||||||
Manager | ||||||
By: | ||||||
Manager |
S-7
Royal Tucson Entrada
Real Limited Partnership (f/k/a Royal Tuscon Limited Partnership) |
||||
By: | Royal Tucson, L.L.C., an Illinois limited liability
company, its general partner |
By: | ||||||
Manager | ||||||
By: | ||||||
Manager |
S-8
Royal Texas – Tennessee Limited Partnership | ||||
By: | Royal Texas-Tennessee LLC, an Illinois limited liability company, its general partner |
By: | RSMH Texas-Tennessee LLC, an Illinois limited liability company, its manager |
By: | ||||||
Manager and Member | ||||||
By: | ||||||
Manager and Member |
S-9
RAIDERS PASS PHASE II LIMITED PARTNERSHIP | ||||
By: | Raiders Pass Phase II LLC, an Illinois limited liability company, its general partner |
By: | RSMH Raiders Pass Phase II LLC, an Illinois limited liability company, its manager |
By: | ||||||
Manager | ||||||
By: | ||||||
Manager |
S-10
ROYAL TEXAS – TENNESSEE II LP | ||||
By: | Royal Texas-Tennessee II LLC, an Illinois limited liability company, its general partner |
By: | ||||
RSMH Texas-Tennessee II LLC, an Illinois limited liability company, its manager |
By: | ||||||
Manager and Member | ||||||
By: | ||||||
Manager and Member |
S-11
ROYAL SAN MARCOS L.P. | ||||
By: | Royal San Marcos LLC, an Illinois limited liability company |
By: | RSMH San Marcos LLC, an Illinois limited liability company, its manager |
By: | ||||||
Member and Manager | ||||||
By: | ||||||
Member and Manager |
S-12
ROYAL SAN ANTONIO L.P. | ||||
By: | Royal San Antonio LLC, an Illinois limited liability company, its general partner |
By: | ||||
RSMH San Antonio LLC, an Illinois limited liability company, its manager |
By: | Xxxxxxx Family Trust, its manager |
By: | ||||||
Trustee |
By: | Xxxxxxxx Family Trust, its manager |
By: | ||||
Xxxxxxx X. Xxxxxxxx | ||||
Trustee |
S-13
As to Sections 3.6 and 9.1 and Article 18 only: ROYAL APARTMENTS USA, INC. |
||||||
By: | ||||||
Title: |
S-14
JOINDER BY ESCROWEE
The Escrowee has executed this Agreement in order to confirm that the Escrowee has received a
copy fully executed by Contributors and Contributee and to evidence the Escrowee’s agreement that
it will hold the Initial Deposit and the Xxxxxxx Money the interest earned thereon, in escrow, and
shall disburse the Initial Deposit and the Xxxxxxx Money, and the interest earned thereon, pursuant
to the provisions of this Agreement.
HERITAGE TITLE COMPANY | ||||||
By: | ||||||
Name: | ||||||
Title: |
December ____, 2005
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