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EXHIBIT 10.4
STOCK PURCHASE AGREEMENT
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This STOCK PURCHASE AGREEMENT (this "Agreement") is entered into
effective as of the 1st day of April, 1998, by and among Brentwood-Lexford
Partners, LLC, a Texas limited liability company ("Buyer"), and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇., the ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. Irrevocable Trust dated March 15, 1996
and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (collectively, the "Common Stock Sellers"), Lexford
Properties, Inc., a Texas corporation (the "Preferred Stock Seller," and
together with the Common Stock Sellers, "Sellers"), Lexford Residential Trust, a
Maryland real estate investment trust ("Lexford"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
("Fimberg"), FSC Realty, LLC, a California limited liability company ("FSC
Realty"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇").
RECITALS
WHEREAS, the Common Stock Sellers are the beneficial and record owners
of 50 issued and outstanding shares of common stock, no par value (the "Common
Stock"), of Lexford Property Management, Inc., an Ohio corporation (the
"Company"), and the Preferred Stock Seller is the beneficial and record owner of
950 issued and outstanding shares of preferred stock, no par value (the
"Preferred Stock," and together with the Common Stock, the "Shares"), of the
Company.
WHEREAS, Sellers wish to sell and Buyer wishes to purchase all the
Shares upon the terms and subject to the conditions of this Agreement.
NOW, THEREFORE, the parties, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, agree as follows:
1. SALE AND PURCHASE OF SHARES.
1.1 SALE OF SHARES. At the Closing (as defined in Section 2),
Sellers will sell the Shares to Buyer and Buyer will purchase the Shares from
Sellers.
1.2 PURCHASE PRICE FOR SHARES.
1.2.1 PURCHASE PRICE FOR COMMON STOCK. The
aggregate purchase price for the Common
Stock will be Five Hundred Dollars ($500)
(the "Common Stock Purchase Price"). At the
Closing, Buyer will pay the Common Stock
Purchase Price by delivering the aggregate
amount of Five Hundred Dollars ($500) to the
Common Stock Sellers, pro rata, in
accordance with their Common Stock
ownership, by certified check, official bank
check or wire transfer to an account
designated in writing by each of the Common
Stock Sellers.
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1.2.2 PURCHASE PRICE FOR PREFERRED STOCK. The aggregate
purchase price for the Preferred Stock will be One Million Eight Hundred Thirty
Three Thousand Three Hundred Thirty Three Dollars ($1,833,333) (the "Preferred
Stock Purchase Price"). At the Closing, Buyer will pay the Preferred Stock
Purchase Price by executing and delivering a promissory note payable to the
Preferred Stock Seller in the original principal amount of One Million Eight
Hundred Thirty Three Thousand Three Hundred Thirty Three Dollars ($1,833,333)
substantially in the form attached hereto as EXHIBIT A.
1.3 DELIVERY OF SHARES. At the Closing, Sellers will deliver
to Buyer the stock certificates representing the Shares purchased by Buyer, duly
endorsed in blank or accompanied by stock powers duly executed in blank, in a
form proper for transfer and reasonably acceptable to Buyer.
2. CLOSING; CLOSING DATE. The closing of the sale and purchase of the
Shares contemplated hereby (the "Closing") will take place at such time, date
and place as Buyer and Sellers agree. Irrespective of the date of the Closing,
the transactions contemplated by this Agreement will be effective as of April 1,
1998 (the "Effective Time").
3. REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers represent and
warrant to Buyer as follows:
3.1 OWNERSHIP OF SHARES. As of the Closing, Sellers will own
the Shares beneficially and of record, and will have full power and authority to
convey the Shares free and clear of any security interest, pledge, option or
other lien or encumbrance.
3.2 CAPITAL STOCK OF THE COMPANY. The Shares represent all the
issued and outstanding shares of capital stock of the Company and there are no
other securities convertible into or exchangeable for, or other rights or
options to acquire, shares of capital stock of the Company currently
outstanding.
3.3 ASSETS AND LIABILITIES OF THE COMPANY. The Company has the
assets and liabilities as generally described in that certain ▇▇▇▇ of Sale,
Assignment and Assumption Agreement dated February 20, 1998 and any additional
liabilities incurred in the ordinary course of business since such date.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Sellers as follows:
4.1 ORGANIZATION OR STANDING. Buyer is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Texas. Buyer is a newly-formed limited liability company and is not
currently conducting business.
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4.2 AUTHORITY OF BUYER. The execution, delivery and
consummation of this Agreement by Buyer has been duly authorized and approved as
required by law. Buyer has the full power and authority to carry out the
transactions contemplated by this Agreement and, at the Closing, no further
action will be necessary on the part of Buyer or its members to make this
Agreement valid and legally binding on Buyer.
4.3 INVESTMENT INTENT OF BUYER; ACCESS TO INFORMATION. Buyer
is purchasing the Shares for its own account for investment and not with a view
to the public resale or distribution thereof. Buyer has had an opportunity to
ask questions of and receive answers from duly designated representatives of the
Company and Sellers concerning the Company and the Shares and has been afforded
an opportunity to examine such documents and other information which Buyer has
requested for the purpose of evaluating Buyer's acquisition of the Shares.
5. ADDITIONAL AGREEMENTS. The parties further agree as follows:
5.1 EMPLOYEE BENEFITS MATTERS. To the extent practicable,
Lexford and the Preferred Stock Seller will cooperate with the Buyer to
negotiate with benefit providers in an attempt to obtain advantageous pricing by
taking into account the combined employee population of Lexford and the Company,
without creating multiple employer liability or the sharing or shifting of risk
among Lexford and the Preferred Stock Seller.
5.2 VENDOR COOPERATIVE DISCOUNTS BUYING PROGRAM. Lexford and
the Preferred Stock Seller agree to use their commercially reasonable efforts to
afford the Buyer (for the benefit of its properties under management) the
opportunity to participate directly in the Preferred Vendor Cooperative
Discounts Buying Program of which Lexford and the Preferred Stock Seller are
participants (the "Buying Program") to the extent permissible under the Buying
Program and contracts entered into with third party vendors (such as Maintenance
Warehouse, General Electric Company and ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company); provided,
however, that neither Lexford nor the Preferred Stock Seller shall in any way be
obligated to provide such benefits to Buyer directly or to incur additional
costs in order to provide Buyer the opportunity to participate in the Buying
Program. Buyer shall be entitled to direct any rebates or benefits under such
program to which the properties are entitled to the party it determines should
receive such rebates and Lexford will reasonably cooperate with such directions.
5.3 HUMAN RESOURCES TRAINING PROGRAMS AND PERSONNEL. For a
period of time from the Effective Time to November 30, 1999, the Preferred Stock
Seller agrees to afford Buyer reasonable access to and use of its human
resources department and property management training program and personnel
located in the Preferred Stock Seller's Dallas, Texas office; provided, however,
that (a) Buyer's use of such services shall not unreasonably interfere with the
Preferred Stock Seller's training program and, in no event, shall Buyer's use of
such program and personnel exceed 260 "man hours" per month without the
Preferred Stock Seller's prior written consent and (b) such access and use shall
terminate during any period that Buyer is in breach of Section 5.4 below. "Man
hour," as used herein, shall mean one hour of time expended by one of Lexford's
or
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the Preferred Stock Seller's employees in the performance of the provision of
human resources and property management training services for the benefit of
Buyer.
5.4 OFFICE SPACE. For a period of time from the Effective Time
to November 30, 1999, the Preferred Stock Seller shall permit Buyer to use the
office space described on Schedule 5.4 located in the Preferred Stock Seller's
Dallas, Texas office. In consideration for such use and for Buyer's access to
the Preferred Stock Seller's employees and training program pursuant to Section
5.3 hereof, Buyer shall timely pay the full amount of all the Preferred Stock
Seller's payment obligations under its lease for such office space (for rent,
taxes, insurance, common area maintenance charges, utilities or otherwise)
directly to the landlord or pursuant to other instructions that the Preferred
Stock Seller may give to Buyer and shall use such office space in a manner that
complies fully with the covenants and other obligations of the Preferred Stock
Seller pursuant to the lease.
5.5 USE OF NAME, LOGOS, ETC. From and after the Closing,
neither the Company or Buyer shall have the right to use the name "Lexford
Residential Trust," or any ▇▇▇▇ or logo associated therewith or any derivative
thereof; provided, however, that the Company or Buyer may continue to use the
name "Lexford Property Management" so long as it is used in full and it is made
clear from such use that the Company or Buyer is not affiliated with Lexford in
any manner. Buyer agrees to change its name, within thirty (30) days after the
Closing, to a name that does not include the name "Lexford" (other than "Lexford
Property Management"). In addition, it is understood and agreed that the Company
has all right, title and interest in and to the "pyramid" logo (a specimen of
which is attached hereto as Schedule 5.5A) formerly owned by the Preferred Stock
Seller. Buyer will have no right to use, and will refrain from using Lexford's
"leaf" trademark (a specimen of which is attached hereto as Schedule 5.5B) and
any other ▇▇▇▇ or logo now or hereafter used by Lexford or Preferred Stock
Seller.
5.6 PROPERTY OWNERS AGREEMENT. FSC Realty, Fimberg, ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ (collectively, the "Property Owners") hereby agree that for so long
as amounts remain unpaid on the Promissory Note, the Property Owners will use
their best efforts to cause all entities owning residential rental property that
the Property Owners, individually or jointly with others with whom they are
acting in concert, own or control (the "Properties") to enter into management
contracts with Buyer to the exclusion of other property management companies,
subject to the Property Owners' exercise of their fiduciary duties, if any, owed
to other interest holders in such entities by virtue of the Property Owners'
direct or indirect position or relationship with such entity.
5.7 SUPPORT SERVICES. From and after the Effective Time
through July 31, 1998, Buyer will continue to provide to the Preferred Stock
Seller, the financial and administrative support services incident to the
Preferred Stock Seller's obligations under the respective management agreements
between the Preferred Stock Seller and those 14 limited partnerships owning
apartment communities in which GC Southeast Partners L.P. holds an economic
interest as of the Effective Time in a like manner as currently being provided
by the Company (the "Administrative Services").
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Preferred Stock Seller will pay Buyer Thirty Seven Thousand Five Hundred Dollars
($37,500) for such services each month in arrears.
5.8 REASONABLE MANAGEMENT FEES. After the Closing, Buyer will
not enter into any residential rental property management agreements whereby it
will be paid less than the relevant market's prevailing industry rate for
similar property management agreements. For purposes of this Section 5.8, it is
agreed that, with respect to properties in which FSC Realty has an equity
interest and/or is the referral source of the management contract, a property
management fee of three percent (3%) of the gross receipts of the property under
management (net of any amounts paid to FSC Realty for actual asset management or
financial or bookkeeping services provided to or for the benefit of the Company
or the property under management) payable to the Company is deemed to be not
less than the market's prevailing industry rate for similar property management
agreements.
6. FURTHER ASSURANCES. Buyer and Sellers will execute such documents
and other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby. Buyer and Sellers will use their best efforts to fulfill or obtain the
fulfillment of the conditions to the Closing.
7. CONDITIONS TO BUYER'S OBLIGATION. The obligation of Buyer to enter
into and complete the Closing is subject, at its option, to the fulfillment of
the following conditions:
7.1 LITIGATION. No action, suit or proceeding will have been
instituted before any court or governmental or regulatory body, or instituted or
threatened by any governmental or regulatory body, to restrain, modify or
prevent the carrying out of the transactions contemplated hereby.
7.2 REPRESENTATIONS TRUE. The representations and
warranties of Sellers contained herein will be true as of the Closing.
7.3 DELIVERY. Sellers will have delivered the Shares to
Buyer as required by Section 1.3 of this Agreement.
7.4 FUNDING OF CASH PAYMENTS. The Preferred Stock Seller shall
have funded the Company with cash equal to the sum of (i) accrued but unpaid
expenses of the Company as of ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) payroll and benefit expenses
for the month of April 1998 relating to the employees listed on Schedule 7.4A,
and (iii) the severance and retention payments set forth on Schedule 7.4B, less,
in each case, any amounts paid directly by the Preferred Stock Seller.
8. CONDITIONS TO SELLERS' OBLIGATIONS. The obligations of Sellers to
enter into and complete the Closing is subject, at their option, to the
fulfillment of the following conditions:
8.1 LITIGATION. No action, suit or proceeding will have been
instituted before any court or governmental or regulatory body, or instituted or
threatened by any governmental or regulatory body, to restrain, modify or
prevent the carrying out of the transactions contemplated hereby.
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8.2 REPRESENTATIONS TRUE. The representations and warranties
of Buyer contained herein will be true as of the Closing.
8.3 PAYMENT. Buyer will have paid the Common Stock Purchase
Price and the Preferred Stock Purchase Price to each of the Sellers as required
by Section 1.2 of this Agreement.
8.4 TERMINATION OF CONSULTING AGREEMENTS. Fimberg and
▇▇▇▇▇▇▇▇, respectively, and the Preferred Stock Seller shall have executed and
delivered a Termination and Release Agreement with respect to their individual
consulting agreements with Lexford substantially in the form attached hereto as
EXHIBIT B.
8.5 TERMINATION OF EMPLOYMENT AGREEMENT. ▇▇▇▇▇▇▇▇ and the
Preferred Stock Seller shall have executed and delivered a Termination and
Release Agreement with respect to his employment agreement with the Preferred
Stock Seller substantially in the form attached hereto as EXHIBIT C.
9. TERMINATION.
9.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated and the sale of the Shares from the Sellers to Buyer may be abandoned
at any time prior to the Closing (a) by the mutual consent of the Sellers and
Buyer, or (b) by either Buyer or Sellers if the conditions precedent to their
respective obligations to consummate the sale of the Shares from the Sellers to
Buyer, as set forth in Sections 7 and 8, respectively, are not satisfied on the
date scheduled for Closing pursuant to Section 2.
9.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and abandonment of the Closing pursuant to this
Section 9, no party hereto (or any of its directors or officers) shall have any
liability or further obligation to any other party to this Agreement.
10. PROFESSIONAL FEES. Sellers and Buyer acknowledge and agree that
they shall be responsible for the payment of their respective professional and
other fees and costs incurred in connection with this Agreement; provided,
however, that the Preferred Stock Seller shall reimburse Buyer for its
reasonable attorney's fees and costs in connection herewith upon presentment of
receipts in an amount not to exceed Five Thousand Dollars ($5,000).
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Agreement will survive the Closing and remain in
full force and effect.
12. ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire
agreement among the parties with respect to the purchase of the Shares, and
supersedes all prior agreements,
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written or oral, with respect thereto. This Agreement may not be amended or
modified except by an instrument in writing signed by all of the parties.
13. WAIVER OF CONDITIONS. The conditions to each of the parties'
obligations under this Agreement are for the sole benefit of such party and may
be waived by such party in whole or in part to the extent permitted by law.
14. ASSIGNMENT. The rights and obligations of the parties under this
Agreement are not assignable by any party without the prior written consent of
the other parties. The respective rights and obligations of Buyer and Sellers
under this Agreement will inure to the benefit of, and will be binding upon,
them and their respective successors, permitted assigns, heirs, estates, and
personal representatives.
15. GOVERNING LAW. This agreement will be governed by and construed in
accordance with the laws of the State of Ohio without regard to any principles
of conflict of laws.
16. HEADINGS. The headings in this Agreement are for reference only and
will not affect the interpretation of this Agreement.
17. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement which shall nevertheless remain in full force and
effect.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Agreement.
[The remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first above written.
"BUYER"
Brentwood-Lexford Partners, LLC
By: FSC Realty, LLC, Its Managing Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its: Managing Member
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"SELLERS"
Lexford Properties, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
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Its: Vice President
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. Irrevocable Trust
dated March 15, 1996
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
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Its: Trustee
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"LEXFORD"
Lexford Residential Trust
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
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Its: Senior Vice President
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Fsc Realty LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its: Managing Member
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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