Exhibit 10.12
Salem Ridge
EXCHANGE AGREEMENT
by and among
BNP Residential Properties, Inc.,
BNP Residential Properties Limited Partnership,
and
the Contributing Parties
listed herein
Dated as of
December 7, 2004
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EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (the "Agreement") is made as of the 7th day
of
December, 2004, by and among BNP
Residential Properties, Inc., a Maryland
corporation (the "REIT"), BNP Residential
Properties Limited Partnership, a
Delaware limited partnership ("BNP"), Salem
Ridge/Shugart, LLC (the "Company"),
and Shugart Management, Inc.
("Contributor").
WHEREAS, BNP is a Delaware limited partnership having the REIT as
its
sole general partner, and the REIT has
elected to be qualified as a real estate
investment trust under the Internal Revenue
Code of 1986, as amended (the
"Code"); and
WHEREAS, the Company owns certain real property located in
Winston-Salem, North Carolina; and
WHEREAS, BNP desires to acquire from Contributor, and
Contributor
desires to transfer to BNP, on the terms
and conditions set forth herein, all
interests in the Company owned by
Contributor as set forth in Schedule A and any
other direct or indirect equity interests
Contributor may have, whether now
owned or hereinafter acquired, in the
Company or the Property (as defined below
and described on Schedule B attached
hereto) (a "Company Interest"); and
WHEREAS, pursuant to the terms hereof, BNP and the Company desire
to
combine their respective businesses subject
to the terms, conditions, provisions
and limitations of this Agreement.
NOW, THEREFORE, in consideration of the premises herein contained,
and
other good and valuable consideration, the
receipt and sufficiency of which is
hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
The following capitalized terms shall have the following meanings
for
all purposes of this Agreement and such
meanings are equally applicable to the
singular and plural forms of the terms
defined. The terms "hereof," "herein,"
"hereunder," and comparable terms refer to
the entire agreement with respect to
which terms are used and not to any
particular section, subsection, paragraph or
other subdivision thereof.
"Actual Knowledge" for the purposes of this
Agreement shall mean information
which is known to an individual or, as to
any entity, to the officers, general
partners or managers of such entity without
the requirement of additional
inquiry unless such persons are aware of
facts or circumstances which would lead
reasonable persons to make or conduct
additional inquiry.
"Affiliate" means, as to any Person (as
defined below), each of the Persons (i)
which directly or indirectly through one or
more intermediaries controls, or is
controlled by, or is under common control
with such Person; or (ii) which
beneficially owns or holds 10% or more of
any class of the outstanding voting
stock (or in the case of a Person which is
not a corporation, 10% or more of the
equity interest) of such Person; or (iii)
10% or more of any class of the
outstanding voting stock (or
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in the case of a Person which is not a
corporation, 10% or more of the equity
interest) of which is beneficially owned or
held by such Person. The term
"control" means the possession, directly or
indirectly, of the power to direct
or cause the direction of the management
and policies of a Person, whether by
ownership of voting stock, by contract, by
close family relationships (i.e.,
parent, spouse, child or sibling) or
otherwise.
"BNP Partnership Agreement" means the
Second Amended and Restated Agreement of
Limited Partnership of BNP Residential
Properties Limited Partnership dated
December 1, 1997, as amended through the
date hereof, including the amendment to
issue additional Units to the Contributor,
as well as other amendments from the
date hereof until the Closing made by BNP
in the ordinary course of business.
"Company Financial Statements" means the
periodic income statement and balance
sheets provided to BNP (including the
schedules attached thereto) for the
Contributing Parties, and specifically
excludes any forecasts and projections.
"Contributing Parties" means collectively
Contributor and the Company, without
duplication.
"Environmental Law" means any and all
federal, state and local laws,
regulations, ordinances and other
requirements relating to pollution or
protection of the environment, including,
without limitation, laws, regulations
and requirements relating to the ownership,
possession, storage and control of
the Property and to emissions, discharges,
releases or threatened releases of
storm water, pollutants, contaminants,
toxic or hazardous substances, or solid
or hazardous wastes into the environment
(including without limitation ambient
air, surface water, groundwater or land),
or otherwise relating to the
manufacture, processing, distribution, use,
treatment, storage, disposal,
transport or handling of pollutants,
contaminants, toxic or hazardous
substances, or solid or hazardous wastes.
The Environmental Laws include,
without limitation, the Comprehensive
Environmental Response, Compensation and
Liability Act of 1980, as amended.
"Improvements" means all buildings,
structures, streets, furnishings, parking
lots, landscaping, walls, ponds, culverts,
fixtures, utilities, fences,
driveways, loading docks, security systems
and other physical features
constructed or assembled on, at, upon or
beneath the Property (whether finished
or unfinished).
"Indebtedness" means, without duplication,
any obligations for borrowed money
and all obligations to trade creditors,
whether heretofore, now or hereafter
owing, arising, due or payable to any
Person and howsoever evidenced, created,
incurred, acquired or owing, whether
primary, secondary, direct, contingent,
fixed or otherwise and whether matured or
unmatured. Without in any way limiting
the generality of the foregoing,
Indebtedness specifically includes the
following: (a) all obligations or
liabilities of any Person that are secured by
any Lien, claim, encumbrance or security
interest upon property; (b) all
obligations or liabilities created or
arising under any capital lease of real or
personal property, or conditional sale or
other title retention agreement with
respect to property, even though the rights
and remedies of the lessor, seller
or lender thereunder are limited to
repossession of such property; (c) all
unfunded pension fund, employee medical or
welfare obligations and liabilities;
(d) deferred taxes; and (e) all obligations
under any
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indemnification agreements, guaranty
agreements, letters of credit or other
documents creating such contingent
liabilities.
"Lien" means any interest in property
securing an obligation owed to, or a claim
by, a person other than the owner of the
property, whether such interest is
based on the common law, statute or
contract, and including but not limited to
the lien or security interest arising from
a mortgage, encumbrance, pledge,
security agreement, conditional sale or
trust receipt or a lease consignment or
bailment for security purposes. The term
Lien shall include reservations,
exceptions, defects of any kind or nature,
encroachments, easements,
rights-of-way, covenants, conditions,
restrictions, leases and other title
exceptions and encumbrances affecting
property.
"Outstanding Company Debt Financing" means
the Indebtedness of the Company as
described on Schedule 3.1(a)(i) attached
hereto including any indemnifications
and guarantees related thereto, which
maximum principal amount outstanding as of
the Closing Date shall not exceed Two
Million Six Hundred Ten Thousand Dollars
($2,610,000). This stated maximum debt
amount shall be comprised of principal
only, and shall not include assumption
fees, if any, accrued but unpaid
interest, or any other charges or fees that
may accrue in connection with the
assumption of the Outstanding Company Debt
Financing, which amounts shall be
satisfied by the Company and/or the
Contributor at or prior to Closing.
"Permitted Lien" means (i) liens for 2004
ad valorem taxes not yet due and
payable; (ii) restrictions, easements,
covenants, reservations and rights of way
of record as do not detract from the value
or interfere with the present use of
a parcel of property; (iii) zoning
ordinances, restrictions and other
requirements imposed by governmental
authority as do not detract from the value
or interfere with the present use of a
parcel of property; and (iv) such
imperfections of title, liens and
encumbrances, if any, as do not detract from
the value or interfere with the present use
of a parcel of property and which do
not secure obligations for borrowed money
or the deferred purchase price of
property.
"Person" means any individual, joint
venture, corporation, company, voluntary
association, partnership, trust, joint
stock company, unincorporated
organization, association, government, or
any agency, instrumentality, or
political subdivision thereof, or any other
form of entity.
"Property" shall mean the real property
together with any Improvements thereon
and all tangible personal property
(including, without limitation, books and
records, furniture, equipment and
machinery), intangible assets (including,
without limitation, all guaranties,
warranties, plans, specifications,
engineering drawings, non-proprietary
software and databases, tenant lists,
marketing materials, signage (on-site and
off-site), goodwill, transferable
licenses, permits, certificates of
occupancy and other approvals, all
copyrights, logos, designs, trademarks and
tradenames and all other intellectual
property), and rights, privileges and
interests appurtenant thereto owned by the
Company as more particularly described on
the Descriptive Property Exhibit
attached hereto at Schedule B.
"Unit" means a Common Partnership Unit as
such term is defined in the BNP
Partnership Agreement.
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In addition, the terms set forth below
shall have the meanings ascribed thereto
on the referenced pages.
Term
Page
Act..................................................20
Authorizations.......................................24
Blue Sky
Laws........................................20
BNP
Reports..........................................23
Claim................................................28
Closing...............................................6
Closing
Date..........................................5
Closing
Documents.....................................6
Code..................................................2
Contracts............................................16
Contribution
Price....................................8
Contributor's
Representative..........................9
Development
Property.................................11
Environmental
Assessments............................17
Existing Operating
Agreements........................19
Indemnified
Party....................................29
Indemnifying
Party...................................29
Investigation
Period.................................25
Leases...............................................15
Management and Leasing
Agreements....................19
Other
Properties.....................................24
Post-Closing Adjustment
Period........................9
Records..............................................26
Registration Rights
Agreement.........................6
Schedule of
Leases...................................15
SEC..................................................12
Tax
Claim............................................28
ARTICLE II
THE TRANSACTIONS AND CLOSING
2.1 General;
Consideration. Subject to the terms, conditions,
provisions and limitations in this
Agreement, on the date of the Closing (the
"Closing Date") the parties shall cause the
transactions contemplated hereby to
be consummated, including, but not limited
to:
(a) The contribution of the Contributor's Interests to BNP,
free and clear of Liens other than
Permitted Liens, in exchange for that
aggregate number of Units determined by
dividing the Contribution Price (as
determined under Article III herein) by
13.50 (each Unit having a value of
$13.50), with such Units being payable to
Contributor on the Closing Date; and
(b) The termination of the operating agreement of the Company
so that the Company will be governed by the
default provisions of the North
Carolina Limited Liability Company Act.
2.2
Distribution on Units. For the first fiscal quarter of BNP
ending after the date of Closing,
partnership distributions attributable to such
quarter payable by BNP to Contributor with
respect to the Units issued hereby at
the Closing pursuant to Section 5.1 of the
BNP Partnership Agreement shall be
prorated to take into account the period of
time during such quarter that such
Units were outstanding. The distributions
with respect to such Units for such
quarter shall equal that portion of a full
quarterly distribution otherwise
attributable to Units outstanding for the
entire quarter determined by
multiplying the amount of such full
distribution by a fraction the numerator of
which is the number of days during such
quarter that the Units issued hereby are
outstanding and the denominator of which is
the number of days in such quarter.
In the event that the Contributor receives
a full cash distribution for such
period, it shall reimburse BNP the prorated
portion of such distribution within
five (5) days of receipt.
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2.3 Market
Price Fluctuation. EACH OF THE CONTRIBUTOR AND BNP
ACKNOWLEDGES AND AGREES THAT AFTER THE
EXECUTION OF THIS AGREEMENT, THE MARKET
VALUE OF THE REIT COMMON STOCK WHICH IS
CURRENTLY OUTSTANDING MAY INCREASE OR
DECREASE IN VALUE AS THE RESULT OF MARKET
FLUCTUATIONS, AND THAT ANY SUCH
FLUCTUATIONS MAY AFFECT THE VALUE OF THE
UNITS. NOTWITHSTANDING THESE
FLUCTUATIONS, BNP WILL NOT BE REQUIRED TO
INCREASE THE NUMBER OF UNITS TO BE
ISSUED TO CONTRIBUTOR IN THE EVENT OF A
DECREASE IN THE MARKET VALUE OF THE REIT
COMMON STOCK PRIOR TO THE CLOSING.
LIKEWISE, CONTRIBUTOR WHOSE PURCHASE PRICE IS
BEING PAID IN UNITS WILL BE ENTITLED TO
THAT NUMBER OF UNITS SET FORTH IN THIS
AGREEMENT NOTWITHSTANDING ANY INCREASE IN
VALUE OF THE REIT COMMON STOCK PRIOR
TO THE CLOSING.
2.4 Closing.
The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place
at the offices of Alston & Bird LLP,
Raleigh, North Carolina or such other place
as the parties may agree on or
before March 31, 2005.
2.5 Documents
to be Delivered at Closing by the Contributing
Parties.
(a) At the Closing, Contributor shall deliver to BNP in addition to
any
other documents mentioned elsewhere herein,
the following (collectively, the
"Closing Documents"):
(i) A duly executed Assignment of Interest, which
Assignment shall be in a form as attached at Schedule C and
shall
contain a warranty of title that Contributor owns Contributor's
Interests free and clear of all encumbrances;
(ii) Any other documents reasonably necessary to
assign, transfer and convey Contributor's Interests and effectuate
the
transactions contemplated hereby, including quit claim or
limited
warranty deeds for the Property;
(iii) A certified copy of all appropriate corporate,
limited liability company or partnership actions authorizing
the
execution, delivery and performance by Contributor of this
Agreement,
the Closing Documents, and the Ancillary Documents;
(iv) The Registration Rights Agreement being entered
into in connection with the transactions contemplated by this
Agreement
(the "Registration Rights Agreement") duly executed by Contributor;
and
(v) An opinion from counsel for the Company and
Contributor in form and content reasonably acceptable to BNP
substantially to the effect that each of the Company and
Contributor is
duly organized, validly existing and in good standing under the
laws of
the state of its organization, has all applicable power and
authority
to enter into, deliver and perform this Agreement, the Closing
Documents and the Ancillary Documents, the execution, delivery
and
performance of which Agreement, Closing Documents and Ancillary
Documents, and the transactions contemplated hereby and thereby, do
not
and will not constitute a breach or a violation of the
operating
agreement or charter of the
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Company or Contributor, as applicable; and that all applicable
action
necessary for the Company and Contributor to execute and deliver
this
Agreement, the Closing Documents and the Ancillary Documents has
been
taken and that the same have been validly executed and delivered
and
are the valid and binding obligations of the Company and
Contributor
enforceable against it, subject to creditors rights and other
normal
and customary exceptions, in accordance with their terms.
(b) At Closing, the Company shall deliver to BNP, in addition
to any other documents mentioned elsewhere
herein, the following:
(i) Any affidavit required by the title company to
remove the standard printed exceptions from the title policy and
the
loan policy other than exceptions relating to the Outstanding
Company
Debt Financing.
(ii) A certified copy of all appropriate limited
liability company actions authorizing the execution, delivery
and
performance by the Company of this Agreement, the Closing
Documents,
and the Ancillary Documents.
(ii) Such other documents as may be reasonably
required to close the transactions contemplated by this
Agreement.
2.6 Documents
Required to be
Delivered at Closing
by BNP and the
REIT. BNP and the REIT shall deliver to
the Contributor at the Closing, the
following:
(i) A copy of the BNP Partnership Agreement duly certified by
the REIT as true, complete and correct.
(ii) An amendment to the BNP Partnership Agreement, duly
executed by the REIT and all other necessary parties, to evidence
the
issuance of the Units to the Contributor at the Closing pursuant
to
Section 2.1.
(iii) A settlement statement with respect to the Closing, duly
executed by BNP.
(iv) The Registration Rights Agreement duly executed by the
REIT.
(v) Such other documents and instruments as may be reasonably
necessary to consummate the transactions with the Contributing
Parties
under this Agreement.
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ARTICLE III
CONTRIBUTION PRICE AND ADJUSTMENTS
3.1
Contribution Price. The contribution price ("Contribution
Price") for the Property shall be as
follows:
(a)
Closing Consideration. At the Closing, BNP shall issue the
number of Units determined pursuant to
Section 2.1(a) herein having an aggregate
value of Four Million Three Hundred Sixty
Thousand Dollars ($4,360,000), subject
to increase or decrease by the adjustments
in Section 3.2 below, but less the
following amounts:
(i) the amount of the Outstanding Company Debt
Financing as of the Closing Date;
(ii) all accrued but unpaid interest under the
Outstanding Company Debt Financing as of the Closing Date; and
(iii) any charges or fees associated with property
transfer and documentary taxes and all other costs related to
the transfer of the Property (including fees, charges and
expenses associated with the assumption of the Outstanding
Company Debt Financing, all of which shall be paid by the
Contributing Parties and shall be a reduction in the
Contribution Price.
3.2 Additional
Closing Adjustments.
(a) Generally. All real estate taxes, charges and assessments
affecting the Property, all charges for
water, sewer, electricity, gas and all
other utilities and operating expenses with
respect to the Property, to the
extent not paid or payable by tenants under
the Leases (as defined in Section
5.6 below), shall be apportioned on a per
diem basis as of midnight on the date
immediately preceding the Closing. All such
expenses for the period preceding
the Closing shall be deemed expenses of the
Contributor and all such expenses
commencing as of the Closing with respect
to the Property shall be deemed to be
expenses of BNP. Amounts owed under this
paragraph shall be paid to the party to
whom they are owed in cash at the Closing
or in the Post-Closing Adjustment
Period (as defined below) in the same
manner as if the underlying real property
were being sold. If any real estate taxes,
charges or assessments have not been
finally assessed as of the Closing Date for
the then current calendar tax year,
they shall be adjusted at the Closing based
upon the greater of (i) the most
recently issued bills therefor or (ii) the
best reasonable estimate therefor
after consultations with the appropriate
taxing officials.
(b) Rent. Except for delinquent rent, all rent under the
Company's Leases and other income
attributable to the Property shall be
apportioned on a per diem basis as of
midnight on the date immediately preceding
the Closing. All such rent and other
income, including commissions earned, for
the period preceding the Closing shall be
deemed to be property of the
Contributor, and all rent and other income
for any period commencing as of the
Closing and thereafter shall be the
property of BNP for the purpose of making
the adjustments set forth herein. Amounts
owed under this paragraph shall be
paid to the party to whom they are owed in
cash at the
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Closing or during the Post-Closing
Adjustment Period. Delinquent rent shall not
be prorated, but shall be deemed the
property of the Contributor. Payments
received by BNP from tenants of the
Property from and after the Closing with
respect to the Property shall be applied
first to rents and other amounts then
due BNP from such tenant and then to such
tenant's delinquent rent as of the
time of apportionment. BNP shall use
reasonable efforts to collect delinquent
rents for the benefit of the Contributor
but in no event shall be obligated to
evict or sue any tenants in order to
collect such rents and shall cooperate with
the Contributor in the collection of any
delinquent amounts; provided, however,
that the Contributor shall not have any
rights to evict such tenants for such
delinquent amounts. Any amounts received by
Contributor on account of rent or
other income for the period after the
Closing with respect to the Property and
the related personal property shall be
turned over to BNP for application in
accordance with the terms of this
paragraph. All accounts receivable, notes,
cash and bank accounts of the Company
existing as of the Closing Date shall be
transferred at Closing to the Contributor,
other than the remaining balance of
any escrow accounts for tenant improvements
and lease commissions held by the
Company, the amount necessary to pay
prorations of taxes, security deposits and
amounts which belong to BNP after making
the closing adjustments for rent and
operating expenses.
(c) Preclosing Expenses and Liabilities. The parties
acknowledge that not all invoices for
expenses incurred with respect to the
Property prior to the Closing will be
received by the Closing and that a
mechanism needs to be in place so that such
invoices can be paid as received.
All of the prorations referred to above
will be done on an interim basis at the
Closing and will be subject to final
adjustment in accordance with the
provisions hereof within 60 days or such
other agreed upon period of time
following Closing (the "Post-Closing
Adjustment Period"). Upon receipt by BNP
after Closing of an invoice for the
Property's operating expenses which are
attributable in whole or in part to a
period prior to the Closing and which were
not apportioned at Closing, BNP shall
submit to Grover F. Shugart, Jr., as agent
for the Contributor ("Contributor's
Representative"), a copy of such invoice
with such additional supporting information
as Contributor's Representative
shall reasonably request. Within 10 days of
receipt of such copy, the
Contributor shall pay to BNP an amount
equal to the portion of such invoice
attributable to the period ending as of
midnight on the date immediately
preceding the Closing apportioned on a per
diem basis.
(d) Security Deposits/Tenant Inducements. With respect to the
Property to be acquired at Closing, the
Company shall pay to BNP in cash at
Closing an amount equal to the sum of (i)
the security and other deposits, if
any, which the Company is holding pursuant
to the Leases, and (ii) any other
deposits or advances received by the
Company relating to services yet to be
provided by the Company, including, without
limitation, any prepaid laundry
contract fees, redecoration costs and pet
fees.
ARTICLE IV
COVENANTS AND AGREEMENTS
4.1 Operation
of Business. After making adequate provisions for
all prorations contemplated herein, the
Company may make cash distributions of
all cash on hand immediately prior to the
Closing and may otherwise only
distribute all claims or other evidences of
money owed to them, it being
understood that, except as otherwise
provided herein, no claims, accounts
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receivable, notes receivable or other
rights to payment of the Company shall
remain assets of the Company, as the case
may be, as of the Closing Date. BNP
and the Contributor agree to use their
reasonable efforts to reconcile
prorations and other closing adjustments
within the Post-Closing Adjustment
Period.
4.2 No
Brokers. Each of the Contributing Parties covenants,
represents and warrants to BNP that, no
broker or finder or agent has been
involved or engaged by it in connection
with the transactions contemplated
hereby and, each hereby agrees to indemnify
and hold harmless BNP from and
against any and all broker's or finder's
fees, commissions or similar charges
incurred or alleged to have been incurred
by such Contributing Party in
connection with the transactions
contemplated hereby and any and all loss,
liability, cost or expense (including
without limitation reasonable fees of
counsel satisfactory to BNP) arising out of
any claim that the indemnifying
party incurred any such fees, commissions
or charges.
4.3 Lock-Up.
The Units received hereby may not be disposed of
during the applicable Lock-up Period (as
defined in the Registration Rights
Agreement), except that a Contributor:
(i) who is a natural person may dispose of Units to his
spouse, siblings, parents or any natural or adopted children or
other
descendants or to any personal trust or family partnership in
which
such family members or Contributor retain the entire beneficial
interest;
(ii) that is a limited liability company may dispose of Units
to one or more other entities that are wholly owned and
controlled,
legally and beneficially, by Contributor or by a Person or Persons
that
directly or indirectly wholly owns and controls Contributor;
(iii) may dispose of Units on his death to Contributor's
estate, executor, administrator or personal representative or
to
Contributor's beneficiaries pursuant to a devise or bequest or by
the
laws of descent and distribution;
(iv) may dispose of Units as a bona fide gift; and
(v) may dispose of Units pursuant to a pledge, grant of
security interest or other encumbrance effected in a bona fide
transaction with an unrelated and unaffiliated pledgee;
provided, however, that in the case of any
transfer of Units pursuant to clauses
(i), (ii), (iv) and (v), the transferee or
transferees shall each be an
"accredited investor" within the meaning of
Rule 501(a) of Regulation D under
the Securities Act. In the event
Contributor disposes of Units as described in
this paragraph, such Units shall remain
subject to this lock-up provision and,
as a condition of the validity of such
disposition, the transferee (and any
transferee who acquires Units from a
pledgee upon foreclosure) shall be required
to agree in writing to similar lock-up
provisions as set forth herein.
4.4 Section
754 Elections. The Contributor and the Company agree
(i) to cause an election under Section 754
of the Code to be included in the
closing federal partnership tax returns of
the Company indicating BNP as a
partner; (ii) to prepare, at their expense,
and timely file
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closing partnership tax returns for the
period ending on the Closing Date for
the Company; and (iii) to present such tax
returns to BNP for its approval,
which shall not be unreasonably withheld,
sufficiently in advance of the filing
of such returns.
4.5 Agent of
Contributing Parties. Each of the Contributing
Parties hereby irrevocably appoints Grover
F. Shugart, Jr. as agent of the
Company for the purposes of consummating
the transactions contemplated hereby
and otherwise carrying out the terms of
this Agreement, and taking for such
entity all steps deemed necessary or
advisable by Grover F. Shugart, Jr., in
such capacity, for carrying out the terms
of this Agreement. The Company
acknowledges and agrees that BNP and the
REIT, respectively, and their
respective partners, officers, directors,
employees, agents, advisors,
accountants, and attorneys, may rely and
act upon the action or omission to act
of this appointed agent in carrying out the
terms of this Agreement or in
binding the Company to the terms of this
Agreement in any way.
4.6
Contributions of Assets. All personal property used by the
Contributing Parties in the operation and
management of the Property including
but not limited to that listed on Schedule
4.6 will be transferred to BNP in
conjunction with the Closing and as partial
consideration for the transactions
otherwise contemplated by this
Agreement.
4.7
Non-Compete Agreements. Each Contributing Party agrees not to,
and warrants that no Affiliate will,
directly or indirectly, build, purchase,
acquire, own or manage any property
competing with any business or property
owned or managed by BNP (or any of its
Affiliates) within a three-mile radius,
without BNP's consent, for such period of
time that the Contributor (assuming
the redemption of the Contributor's Units
for shares of the REIT's common stock)
owns (directly or indirectly), in the
aggregate, more than 5% of the REIT's
outstanding common stock.
4.8 Future
Development Rights. For so long as the Contributor
beneficially owns (directly or indirectly),
in the aggregate, more than 5% of
the REIT's outstanding securities (assuming
the redemption of the Contributor's
Units for shares of the REIT's common
stock), BNP shall have a right of first
refusal to acquire all future multi-family
properties developed directly or
indirectly by Contributor, or any Affiliate
thereof (a "Development Property")
within a three-mile radius of the Property
(such development being subject to
the prior approval of BNP under Section 4.7
above). The Contributor shall not
sell any Development Property without first
offering BNP the option to purchase
such Development Property on the same terms
as offered to a third party. BNP
shall have 30 days to decide whether or not
to purchase such Development
Property on such terms. If BNP declines to
exercise this option, the Development
Property may be sold within the next 180
days on terms no more favorable than
those presented to BNP. If the Development
Property is not sold within such
180-day period, BNP will again have a right
of first refusal prior to any sale
of the Development Property. The decision
whether to exercise such option with
respect to any Development Property shall
be made by the REIT's board of
directors on a case-by-case basis with any
director that is a Contributor or
Affiliated with a Contributor abstaining
from such decision.
4.9 Excess
Shares. If Contributor is ever deemed to hold "Excess
Shares" as defined in the Articles of
Incorporation, the REIT will use
reasonable efforts to try to enable
Contributor to
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keep such shares; provided that the REIT
need not take any steps that would
jeopardize its status as a REIT or that
would require the REIT to issue
additional securities.
4.10 Assignment
of Warranties. The Contributing Parties will use
their best efforts to cause the maker of
any warranties benefiting the Property
to consent to the transfer of the Interests
if necessary to preserve the
validity and enforceability of said
warranties.
4.11
Completion of Construction and Repairs. Schedule 4.11 lists
all construction, repairs, renovations and
similar work in progress at the
Property as of the execution date of this
Agreement. The Contributing Parties
agree to complete or have completed on or
before the Closing Date all work
listed on Schedule 4.11, as well as any
additional repairs jointly agreed upon
by BNP and the Contributing Parties during
BNP's Investigation Period, at the
Contributing Parties' sole cost and
expense. Such work shall be completed to the
reasonable satisfaction of BNP.
4.12
Public Announcement. Except as otherwise required by law or
regulatory agencies (including, without
limitation, the Securities and Exchange
Commission (the "SEC") and the American
Stock Exchange), none of the parties
hereto may make public announcements with
respect to the transactions
contemplated by this Agreement without the
approval of the other parties, which
approval may be withheld for any
reason.
4.13
Confidentiality. Each party hereto shall ensure that all
confidential information which such party
or any of its respective officers,
directors, employees, counsel, agents or
accountants may now possess or may
hereafter create or obtain relating to the
financial condition, results of
operations, business, properties, assets,
liabilities or future prospects of the
other party, any Affiliate or subsidiary of
the other party or any tenant,
customer or supplier of such other party,
or any such Affiliate or subsidiary,
shall not be published, disclosed or made
accessible by any of them to any other
Person at any time or used by any of them,
in each case without the prior
written consent of the other party;
provided, however, that the restrictions of
this sentence shall not apply: (i) to the
extent that disclosure may otherwise
be required by law; (ii) to the extent such
information shall have otherwise
become publicly available; or (iii) to
disclosure by or on its behalf to its
lender(s) for the purpose of obtaining
financing in connection with the
acquisition of the Property. In the event
this Agreement is terminated, each
party promptly will deliver or certify
destruction to the other party all
documents, work papers and other material
(and any reproductions thereof)
obtained by each party or on its behalf
from such other party or its Affiliates
or subsidiaries in connection with the
subject transaction, whether so obtained
before or after the execution hereof, and
will itself not use any information so
obtained and will use its good faith and
diligent efforts to have any
information so obtained kept confidential
and not used in any way detrimental to
such other party, subject to the
limitations set forth above.
4.14
Relationship of Parties. The parties agree that nothing
contained herein shall constitute any party
the agent or legal representative of
the other (except as provided at Section
4.5 hereto) for any purpose whatsoever,
nor shall this Agreement be deemed to
create any form of business organization
between the parties hereto, nor is either
party granted any right or authority
to assume or create any obligations or
responsibility on behalf of the other
party, nor shall either party be in any way
liable for any debt of the other.
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4.15
Further Acts. Each party agrees to perform any further acts
and to execute, acknowledge and deliver any
documents which may be reasonably
necessary to carry out the provisions of
this Agreement.
4.16
Consent to Transfer of Interests and Termination of the
Operating Agreement of the Company.
Contributor agrees to and hereby does amend
the operating agreement for the Company to
allow for the transactions
contemplated hereby. Contributor hereby
irrevocably agrees to the termination
of the operating agreement of the Company
effective as of the Closing.
4.17
Certain Expenses.
(a) If the Closing occurs, BNP shall pay for the costs of any
owners title insurance policy or
endorsements thereto and the costs of recording
any deed or similar instrument in
connection with the transaction contemplated
by this Agreement. If BNP determines in its
sole discretion that a new ALTA
survey is necessary, then BNP shall be
responsible for ordering the ALTA survey
(at BNP's costs and in a form required by
BNP); provided, however, that if a new
ALTA survey is required by the existing
lender under the Outstanding Company
Debt Financing, such costs shall be borne
by the Company.
(b) Whether or not the Closing occurs, BNP and the
Contributing Parties are each responsible
for their respective legal fees and
Contributor shall be responsible for
payment of his pro rata portion of legal
fees associated with this transaction.
(c) Notwithstanding anything to the contrary herein, the
Contributing Parties are responsible for
the payment of any and all fees,
charges and expenses that arise in
connection with the assumption of the
Outstanding Company Debt Financing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
CONTRIBUTING PARTIES
To induce BNP and the REIT to enter into this Agreement and the
transactions contemplated hereby, unless
otherwise indicated, each of the
Contributing Parties jointly and severally
represents and warrants that the
statements contained in Article V are true,
correct and complete on the date
hereof and will be true, correct and
complete on the Closing Date. It is the
express intention and agreement of each of
the Contributing Parties that the
representations and warranties set forth in
Article V shall survive the
consummation of the transactions
contemplated in this Agreement, but only to the
extent expressly provided in Article X
hereof.
5.1 Consents.
Except as disclosed on Schedule 5.1 attached hereto,
to the Actual Knowledge of each
Contributing Party, (i) no consents, approvals,
waivers, notifications, acknowledgments or
permissions which have not been
obtained are required in order for any of
the Contributing Parties to fully
perform its, his or her respective
obligations under this Agreement or which, if
left unobtained at Closing and thereafter,
would have a material adverse affect
on the value, operation, occupation, use or
development of the Property, and
(ii) the execution and
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delivery of this Agreement by the
Contributing Parties and the consummation of
the transactions contemplated hereby,
including without limitation the execution
of any related agreements, will not require
the consent of, or any prior filing
with or notice to or payment to, any
governmental authority or other Person.
5.2
Disclosure. To the Actual Knowledge of each of the
Contributing Parties, the representations
and warranties contained in this
Agreement (including Schedules and Exhibits
and documents or instruments
delivered in connection herewith) or in any
information, statement, certificate
or agreement furnished or to be furnished
to BNP by any of the Contributing
Parties in connection with the Closing
pursuant to this Agreement, do not
contain any untrue statement of a material
fact or omit to state any material
fact necessary to make the statements and
information contained herein or
therein, in light of the circumstances in
which they are made, not misleading.
5.3 Absence of
Conflicts. Except as set forth on Schedule 5.1 and
Schedule 5.3 attached hereto, to the Actual
Knowledge of each Contributing
Party, the execution, delivery and
performance of this Agreement by the
Contributing Parties and the consummation
of the transactions contemplated
hereby, including without limitation, the
execution and delivery of any
documents, instruments or agreements
contemplated hereby, will not (after a
lapse of time, due notice or otherwise) (a)
conflict with, violate or resul
