SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): December 10, 1998
Aegis Realty, Inc.
(Exact Name of Registrant as Specified in Charter)
Maryland
(State or other Jurisdiction of Incorporation)
1-13239 13-3967879
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(Commission File Number) (IRS Employer Identification Number)
625 Madison Avenue, New York, NY 10022
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (212) 421-5333
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report
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Item 2. Acquisition or Disposition of Assets
Southgate Shopping Center
On December 9, 1998, Aegis Realty Operating Partnership, L.P. ("AROP")
whose sole general partner is Aegis Realty, Inc. ("Aegis"), acquired, directly
and through a wholly owned subsidiary, 100% of the partnership interests of
Southgate Partners Limited Partnership ("SPLP"), an entity which directly owns
Southgate Shopping Center ("Southgate"), for $15,100,000. Southgate is a
213,923-square-foot neighborhood shopping center located in Heath, Ohio, is
anchored by Big Bear Supermarket and Odd Lots and is currently 99% leased.
SPLP, the selling entity, is a limited partnership of which 32.7% of
the partnership interests were owned by affiliates of Related Aegis, LP, Aegis'
Advisor (the "Advisor"). As an "Affiliated Transaction", approval of the
Southgate acquisition was subject to compliance with Article X, Section 2 of
Aegis' Amended By-Laws which set forth the following conditions designed to
avoid conflicts of interest with respect to the property ("Affiliated Property")
to be acquired in the Affiliated Transactions: 1) The acquisition must be
consistent with Aegis' business plan; 2) The purchase price must be no greater
than the value of the Affiliated Property, as established by a nationally
recognized appraisal firm selected by a majority of the Independent Directors;
3) The decision to acquire the Affiliated Property must be specifically approved
by a majority of the Independent Directors; 4) Affiliates of the Advisor who
have ownership interests in the Affiliated Property must receive Units of
Limited Partnership Interest of AROP ("OP Units") rather than cash in exchange
for their interest in the Affiliated Property, and the terms of the Affiliated
Transaction must be consistent with such pricing and terms as have been
negotiated by Aegis with other unaffiliated recipients of OP Units in connection
with other reasonably contemporaneous acquisitions by Aegis; and 5) The Advisor
must waive the portion of the acquisition fee payable to the Advisor from Aegis
attributable to the "Affiliated" portion of the transaction. The Southgate
acquisition met with the above listed criteria. The partnership interests
acquired from unaffiliated partners in SPLP were not subject to the condition in
Item #4 listed above, and therefore the unaffiliated partners could elect to
receive either cash or OP Units for their partnership interest.
The financing of the Southgate acquisition consisted of the following:
I) $1,295,734 in cash, which was provided from borrowings under Aegis'
BankBoston $40 million line of credit (the "Facility");
II) $2,715,882 by issuance of 208,914 OP Units of AROP. The OP Units
are convertible to shares of common stock of Aegis on a one-to-one basis,
subject to adjustment, on the one year anniversary of the closing date. The OP
Units were issued at an agreed upon value of $13 per OP Unit. If as of the last
trading day prior to the first anniversary of the closing date (the
"Post-Closing Adjustment Date"), the Average Price Per Share (the "Average Price
Per Share", as defined below) is less than $13, Aegis is obligated to issue
additional OP Units to those contributors who received OP Units in the amount of
the difference between (i) the quotient obtained by dividing $2,715,882 by the
Average Price Per Share as of the Post-Closing Adjustment Date and (ii) 208,914.
The "Average Price Per Share" is defined as the average final closing price per
share of the common stock of Aegis, during the twenty trading day period ending
on the valuation date;
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III) $10,888,384 by the assumption of the current outstanding balance
of an existing first mortgage loan encumbering the property. The mortgage was
originated in September 1997 with Merrill Lynch Credit Corp., having an original
balance of $11,000,000, an interest rate of 7.73%, a 30 year amortization period
and monthly payments of 79,508.79. The loan matures on October 1, 2007; and
IV) $200,000 by delivery of an unsecured purchase money note to the
seller, which is non-interest bearing, has a one year term and is fully
pre-payable without penalty.
In addition, AROP made a $1,429,435 loan to Standard Investment Company
("SIC"), a limited liability company that had a 34.99% partnership interest in
SPLP. The loan is secured by the 107,974 OP Units that were issued to SIC in
exchange for their partnership interest in SPLP. The loan bears an initial
interest rate of 7.613% and matures on December 9, 2015 or earlier if Southgate
is sold. The principals of SIC executed guarantees for 25% of the total loan
amount.
In connection with the transaction, AROP agreed not to sell Southgate
for a minimum of 10 years except in a transaction that does not result in
recognition of gain to the contributors who received OP Units, or if sold to pay
the tax on the gain to the contributors there from. AROP has also agreed to
maintain for the same 10 year period a minimum of $2,300,000 of indebtedness
which will be available for such contributors to guarantee.
Southgate will be managed by RCC Property Advisors ("RCCPA"), an
affiliate of the Advisor.
Crossroads Shopping Center
On December 9, 1998, AROP acquired 100% of the members' equity of
Crossroads East Shopping Center, Ltd. ("CESC"), an entity which directly owned
Crossroads Shopping Center ("Crossroads"), for $4,800,000. Crossroads is a
71,925-square-foot neighborhood shopping center located in Columbus, Ohio, is
anchored by Lenscrafters and is currently 78% leased.
CESC, the selling entity, is a limited liability company of which 52.5%
of the member interests were owned by affiliates of the Advisor. The Crossroads
transaction met all the conditions for an Affiliated Transaction as disclosed
above. The members' equity acquired from unaffiliated members were not subject
to the condition in Item 4 listed above, and therefore the unaffiliated members
could elect to receive cash rather than OP Units for their member equity.
The financing of the acquisition of the member interest in CESC
consisted of the following:
I) $2,129,785 in cash, which was provided from borrowings under the
Facility;
II) $2,165,215 by issuance of 166,555 OP Units of AROP. The OP Units
are convertible and subject to adjustment in the same manner as described above
for Southgate;
III) $230,000 by delivery of an unsecured purchase money note to the
seller, which will be non-interest bearing, have a one year term and fully
pre-payable without penalty; and
IV) $275,000 by delivery of an unsecured purchase money note to the
seller, which will be non-interest bearing, have a one year term and fully
pre-payable without penalty.
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In addition, AROP made a $915,401 loan to SIC, who had 40% of the
members' equity in CESC. The loan is secured by the 57,055 OP Units that were
issued to SIC in exchange for their members' equity in CESC. The loan bears an
interest rate of 7.613% and matures on December 9, 2015 or earlier if Crossroads
is sold. The principals of SIC executed guarantees for 25% of the total loan
amount.
In connection with the transaction, AROP agreed not to sell Crossroads
for a minimum of 10 years except in a transaction that does not result in
recognition of gain to the contributors who received OP Units, or if sold to pay
the tax on the gain to the Contributors there from. AROP has also agreed to
maintain for the same 10 year period a minimum of $50,000 of indebtedness which
will be available for such contributors to guarantee.
Crossroads will be managed by managed by RCCPA as well.
As a result of the forgoing transactions, as of December , 1998, the
officers and directors of Aegis, as well as the employees of the affiliates of
the Advisor, have increased their ownership interest in Aegis, assuming
conversion of all OP Units to common stock, from 2.8% to 4.9%.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
A. Financial Statements
Financial Statements will be filed by amendment not later than 60
days after the date this Form 8-K must be filed.
B. Pro Forma Financial Information
Financial Statements will be filed by amendment not later than 60
days after the date this Form 8-K must be filed.
C. Exhibits
3.1 Contribution Agreement dated as of December 9, 1998 by and among
Southgate General Corporation, HPI Riverwood Management, Inc.,
Southgate Limited Associates, HPI Partners - Four, L.P., Kenneth
Lebow, Andrew Kaskel, Aegis Realty Operating Partnership, L.P. and
Aegis Realty, Inc.
3.2 First Amendment to Contribution Agreement dated as of
December 9, 1998 by and among Standard Investment Co., Ltd., RCC
Crossroads East Associates, J. Michael Fried, H. Leon
Pachter, Alan P. Hirmes, Stuart J. Boesky, Rita S. Boesky,
Andrew L. Kaskel, Allison K. Spitalny, Mark J. Schlacter, Aegis
Realty Operating Partnership, L.P. and Aegis Realty, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Aegis Realty, Inc.
(Registrant)
BY: /s/ Stuart J. Boesky
--------------------
Stuart J. Boesky
President
December 18, 1998
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Exhibit 3.1
CONTRIBUTION AGREEMENT
This SALE AND CONTRIBUTION AGREEMENT (this "Agreement") is made as of this
9th day of December, 1998 by and among SOUTHGATE GENERAL CORPORATION, a Delaware
corporation having an address at 625 Madison Avenue, New York, New York 10021,
HPI RIVERWOOD MANAGEMENT, INC., a Delaware corporation having an address c/o HPI
- - Four Corp., 227 West Trade Street, S-2320, Charlotte, NC 28202, (Southgate
General Corporation and HPI Riverwood Management, Inc. are each referred to as a
"General Partner" and sometimes collectively referred to herein as the "General
Partners"), SOUTHGATE LIMITED ASSOCIATES, a Delaware general partnership having
an address at 625 Madison Avenue, New York, New York 10021 , HPI PARTNERS -
FOUR, L.P., a Delaware limited partnership having an address c/o HPI - Four
Corp., 227 West Trade Street, S-2320, Charlotte, NC 28202 , KENNETH LEBOW, an
individual having an address at 808 San Ysidro Lane, Santa Barbara, California
93108 and ANDREW L. KASKEL, an individual having an address c/o Bear Stearns,
245 Park Avenue, New York, New York 10167 (Southgate Limited Associates, HPI
Partners - Four, L.P., Kenneth Le Bow, and Andrew L. Kaskel are each referred to
as a "Limited Partner" and sometimes collectively referred to herein as the
"Limited Partners) (Each of the General Partners and the Limited Partners are
referred to herein as "Contributor" and collectively referred to herein as the
"Contributors"), AEGIS REALTY OPERATING PARTNERSHIP, L.P., a Delaware limited
partnership having an address at 625 Madison Avenue, New York, NY 10022,
together with its successors and assigns ("AEGIS") and AEGIS REALTY, INC., a
Maryland corporation having an address at 625 Madison Avenue, New York, NY
10022, its successors and assigns (the "REIT").
RECITALS:
WHEREAS, Contributors are the owners of 100% of the Interests (as defined
below) in Southgate Partners Limited Partnership ("Southgate"), a limited
partnership that owns the Property, as defined in Section 2.1 hereof;
WHEREAS, the Contributors wish to sell or contribute all of their
Interests in Southgate to AEGIS in exchange for units of limited partnership
interests in AEGIS ("Units") and/or cash, as hereinafter set forth in this
Agreement; and
WHEREAS, the general partner of AEGIS is the REIT;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained, the legal sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
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ARTICLE 1
The Contract
1.1. Agreement to Contribute. For and in consideration of the mutual
benefits enjoyed by one another under this Agreement, upon and subject to the
terms and conditions hereof, each Contributor agrees to contribute, convey,
sell, assign or transfer its Interest to AEGIS (and/or such Permitted Designees
(as defined in Section 16.4 below) as AEGIS may designate, in such percentage
allocations as AEGIS may designate), and AEGIS agrees to accept and purchase
and/or to cause its Permitted Designee(s) to accept and purchase such Interests.
As used herein, "Interest" shall mean all of a person or entity's right, title
and interest in Southgate, set forth on Schedule 1 hereto, including his or its
right, title and interest in capital, profits and distributions. .
ARTICLE 2
The Property
2.1. Property. As used in this Agreement, the term "Property" shall mean
and refer to all of the following:
(a) The real property located at Hebron Road (a/k/a Route 79), in
the Town of Heath, County of Licking and State of Ohio, as more particularly
described on Exhibit A attached hereto (the "Land");
(b) The shopping center and all other buildings, structures,
fixtures, parking areas, and other improvements presently located upon the Land
(collectively, the "Improvements");
(c) All rights, titles, and interests of Southgate appurtenant to
the Land and Improvements, including, but not limited to, (i) all easements,
alleys, rights of way, rights of ingress and egress, tenements, covenants,
hereditaments, privileges, mineral and water rights and appurtenances in any way
abutting, adjacent, contiguous to, adjoining or otherwise belonging to the Land
or Improvements and the use thereof, (ii) any land lying in the bed of any
alley, highway, street, road or avenue, open or proposed, in front of or
abutting or adjoining the Land, (iii) any strips or gores of real estate
adjacent to the Land, and (iv) any leases of adjacent land or facilities used in
connection with the operation of the Property (collectively, the
"Appurtenances;" together with the Land and Improvements, the "Real Property");
(d) Any award made or to be made in lieu of the Real Property,
including but not limited to any and all awards for any casualty or condemnation
proceeding, any unpaid award or damages to the Real Property by reason of change
of grade of any highway, road, street or avenue and any insurance proceeds
received as the result of any casualty to the Real Property;
(e) All tangible personal property and fixtures (which are not part
of the Improvements) of any kind attached to, or located upon and used in
connection with the
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ownership, maintenance, use or operation of the Land or Improvements as of the
date hereof (or acquired by Southgate and so employed prior to Closing, as
defined below), including, but not limited to, all furniture, fixtures,
equipment, signs; all heating, lighting, plumbing, drainage, electrical, air
conditioning, and other mechanical fixtures and equipment and systems; all copy
machines, computers, software, facsimile machines and other office equipment;
all elevators, escalators, and related motors and electrical equipment and
systems; all hot water heaters, furnaces, heating controls, motors and boiler
pressure systems and equipment, all shelving and partitions, all ventilating
equipment, and all incinerating and disposal equipment and all vans, automobiles
and other motor vehicles, excluding any bank accounts (collectively, the
"Personal Property");
(f) All leases, licenses, occupancy agreements, or other agreements
providing for the use or occupancy of, or otherwise similarly affecting or
relating to the use or occupancy of, the Real Property, together with all
amendments, modifications, renewals and extensions thereof (collectively, the
"Leases" and individually, a "Lease"), and all guaranties by third parties of
the obligations of the tenants, licensees, concessionaires or other entities
thereunder (collectively, the "Guaranties");
(g) All prepaid rents and deposits, and all additional rents,
profits, income and receipts held by Southgate or its managing agent under any
lease in the nature of security for the performance of a tenant's (each, a
"Tenant") obligations under any Lease, including, but not limited to, refundable
security deposits and rental deposits, (collectively the "Deposits");
(h) To the extent assignable, any and all of the following that
relate to or affect, in any way, the design, construction, ownership, use,
occupancy, leasing, maintenance, service, or operation of the Real Property,
Personal Property, Leases or Deposits:
(i) Contracts and agreements, including, without limitation,
contracts and agreements such as labor or collective bargaining agreements,
service or maintenance contracts, employment agreements, utility contracts,
billboard contracts or leases, contracts for the purchase of supplies,
telephone service agreements, cable service agreements, and yellow pages or
other advertising agreements (collectively, the "Service Contracts") all of
which are subject to AEGIS's prior approval, exclusive of those to be
terminated by Southgate pursuant to Section 5.6 below;
(ii) Warranties, guaranties, indemnities, and claims for the
benefit of Southgate (collectively the "Warranties");
(iii) Licenses (including without limitation liquor, beer,
wine, bar and similar licenses), permits (including without limitation
health, swimming pool and elevator permits), certificates of occupancy,
and similar documents issued by any federal, state, or municipal authority
or by any private party (collectively the "Licenses");
(iv) Trade names, trade styles, trade marks, service marks,
logos, copyrights and other identifying material, and all variations
thereof, relating to the Real Property and its ownership, use, operation
and management, together with all related goodwill (collectively, the
"Tradenames");
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(v) Plans, drawings, specifications, surveys, soil reports,
engineering reports, inspection reports, environmental audits and other
technical descriptions and reports to the extent in Southgate's possession
or control (collectively, the "Plans");
(vi) Leases of any Personal Property and other contracts
permitting the use of any Personal Property at the Improvements
(collectively, the "Personal Property Leases"), and all of which are
subject to AEGIS's prior approval exclusive of those to be terminated by
Southgate pursuant to Section 5.6 below;
(i) To the extent possessed by Southgate, Southgate's interest in
the right to receive immediately on and after Closing and continuously consume
thereafter water service, sanitary and storm sewer service, electrical service,
gas service, and telephone service on and for the Land and Improvements, and the
foregoing right shall include, but not be limited to (i) the right to the
present and future use of wastewater, drainage, water and other utility
facilities to the extent such use benefits the Land or Improvements, (ii) all
reservations of or commitments covering any such use in the future, (iii) all
wastewater capacity reservations ever issued and relating to the Land or
Improvements, and (iv) all deposits held by any such utility suppliers (all of
the foregoing are referred to in this Agreement collectively as the "Utility
Reservations");
(j) All books and records, promotional material, brochures, current
rent rolls, prints and/or pictures of the Real Property or Personal Property,
tenant data, marketing and leasing material and forms, market studies, keys,
reports, tests and other materials of any kind owned by Southgate and in
Southgate's possession or control, or to which Southgate has access or may
obtain and has the right to convey and deliver which are or may be used in
Southgate's ownership or use of the Real Property or the Personal Property,
whether any of the foregoing are in hard copy form or in computerized data
storage form (collectively, the "Records"). However, Southgate and the
Contributors shall have access to such books, records, materials, etc. if
required in connection with tax audits; and
(k) all other rights, privileges and appurtenances owned by
Southgate, if any, and in any way related to the foregoing rights and interests.
ARTICLE 3
Contribution Consideration
3.1. Contribution Consideration. (a) The aggregate purchase price for the
Interests (the "Purchase Price") shall be the sum of Fifteen Million One Hundred
Thousand and 00/100 Dollars ($15,100,000) less (i) the principal amount of that
certain mortgage (the "First Mortgage") of approximately $10,904,616.60 formerly
held by Merrill Lynch Credit Corp. encumbering the Property subject to the terms
of this Agreement, and (ii) the amount of the Deferred Note, as defined in
Section 3.1(a)(iv) below. AEGIS shall pay the Purchase Price to each of the
Contributors at Closing as follows:
(i) the Purchase Price shall be allocated among the Contributors in
proportion to their respective Interests.
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(ii) the portion of the Purchase Price payable to Contributors in
cash, as set forth on Schedule 1, shall be paid on the Closing Date by the
wire transfer of immediately available Federal Funds to an account or
accounts designated by such Contributors (the "Cash Component").
(iii) the portion of the Purchase Price payable to Contributors in
Units, as set forth on Schedule 1 (the "Unit Component") shall be
calculated in the manner provided below; provided that the Unit Component
shall be distributed only to Contributors, equity owners, partners or
members thereof who meet the definition of "Qualifying Partners" set forth
in subsection (b) below.
(iv) in addition to the Purchase Price each Contributor shall be
entitled to receive a pro rata share of $200,000, which shall be payable
by delivery at Closing of a promissory note (a "Deferred Note") in that
amount, in the form attached hereto as Exhibit X, payable to such
Contributor or Qualifying Partner thereof which shall provide that (a) the
principal balance without interest shall be due and payable on the day
prior to the first anniversary of the date of the Deferred Note and shall
be payable in cash or Units in accordance with Schedule 1 annexed hereto,
and (b) a Deferred Note shall be prepayable in whole or in part without
penalty or premium.
The prorations and adjustments provided herein shall be paid in cash by
AEGIS or the Contributors, as the case may be.
(b) As used herein, the term "Qualifying Partner" shall mean
Southgate General Corp. ("SGC") and any Contributor or equity owner, partner or
member thereof or any equity owner, partner or member of any of them (i) who is
an "accredited investor", as such term is defined in Regulation D, promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), (ii) who is
receiving and who has completed and returned to AEGIS an Investor Questionnaire
in the form of Exhibit B annexed hereto, (iii) who will be receiving Units with
a value of not less than $250,000 in the aggregate (calculated as provided in
Section 3.3 below), and (iv) who agrees to execute and deliver to AEGIS, prior
to its receipt of any Units, the documents described in Section 11.2(a) below.
3.2. Allocations. The parties hereto agree that the Purchase Price shall
be allocated between the Land and the Improvements in a manner which is
consistent with the currently applicable tax statements from the governmental
entities having jurisdiction over the Property. No part of the Purchase Price is
being paid for any Personal Property, the acquisition of any copyrights,
trademark, service marks and other marks or the Logo, it being understood and
agreed by the parties hereto that any Personal Property and Tradenames are being
conveyed as a material inducement to AEGIS to acquire the Property for the
Purchase Price.
3.3. The Unit Component. (a) Effective as of and subject to the occurrence
of the Closing, each Contributor to whom the Units are to be distributed will
subscribe for and agree to accept the issuance of the Units and to be bound by
the terms and conditions of the AEGIS partnership agreement (the "Partnership
Agreement"), a copy of which has been provided to such Contributor, including
without limitation the power of attorney granted in the Partnership Agreement,
and to execute and deliver at the closing such other documents or instruments as
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may be required to effect the admission of any such Contributor as a limited
partner in and to AEGIS, including signature pages to the Partnership Agreement.
The number of Units comprising the Unit Component shall equal the portion of the
Purchase Price payable in Units divided by Thirteen ($13.00) Dollars.
(b) If as of the last trading day prior to the first anniversary of
the Closing (such date, the "Post-Closing Adjustment Date") the Average Price
Per Share (defined below) is less than $13.00 (as adjusted for any stock splits,
reverse stock splits or similar events), AEGIS shall issue to the Contributors
receiving Units on the last business day prior to the First Anniversary
additional Units as of such Post-Closing Adjustment Date equal to Units in the
amount of the difference between (i) the quotient obtained by dividing (A) the
portion of the Purchase Price payable in Units by (B) the Average Price Per
Share as of the Post-Closing Adjustment Date and (ii) the number of Units issued
to such Contributors on the Closing Date. AEGIS shall not issue fractional Units
but in the event that there is a remainder of dollars after the Average Price
Per Share of the Common Stock is divided into the amount of Units, the unit
amount shall be adjusted upward to the next whole number of Units. AEGIS and the
Contributors hereby agree that in no event shall the number of Units either
increase or decrease if the Average Price Per Share of the Common Stock as of
such date shall be greater than $13.00.
(c) The "Average Price Per Share" shall mean, with respect to any
given date, the average final closing per share price of the common stock of the
REIT, $ .01 par value per share (the "Common Stock"), as such closing price is
set forth in The Wall Street Journal, American Stock Exchange Composite
Transactions section, under the column "Close", during the twenty (20) trading
day period ending on such date. The provisions of the definition of "Value" set
forth in the Exchange Rights Agreement shall apply if the Common Stock is not
listed or admitted to trading.
3.4. Registration Rights. Each Contributor, equity owner, partner, member
or Qualifying Partner thereof to whom the Units are to be distributed shall have
the right, after a one-year "lock-up period", to exchange his, her or its Units
for cash or, at the option of the REIT, shares of the Common Stock on a
one-for-one basis (subject to customary anti-dilution and adjustment
provisions). Following the lock-up period, each such Contributor, equity owner,
partner, member or Qualifying Partner thereof may request the REIT to register
the shares with the Securities and Exchange Commission (the "SEC") pursuant to a
"shelf" registration which the REIT will file with the SEC within ninety (90)
days after the receipt of such request. Such rights will be set forth in a
lock-up agreement (the "Lock-Up Agreement"), exchange rights agreement (the
"Exchange Rights Agreement") and registration rights agreement (the
"Registration Rights Agreement") and subject to a voting trust agreement (the
"Voting Trust Agreement") whereby such Contributor, equity owner, partner,
member or Qualifying Partner thereof agrees to vote all of its OP Units or stock
into which OP Units are converted in accordance with the direction of AEGIS for
a period of not less than four (4) years, all to be executed by each such
Contributor and one or more of either AEGIS and/or the REIT, as appropriate, at
the Closing. The Lock-Up Agreement, Exchange Rights Agreement, Registration
Rights Agreement and Voting Trust Agreement shall be substantially in the forms
attached hereto as Exhibit C, Exhibit D, Exhibit E and Exhibit AA, respectively.
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3.5. Earnest Money. For the purpose of securing the performance of AEGIS's
obligations under the terms and provisions of this Agreement and as a condition
precedent to Contributors' and SGC's obligations hereunder, simultaneously with
the execution and delivery of this Agreement, AEGIS shall pay, by check subject
to collection, to Royal Abstract (the "Escrow Agent"), the amount of Fifty
Thousand Dollars ($50,000.00), which amount (the "Initial Down Payment") Escrow
Agent shall deposit in an interest-bearing account. The Initial Down Payment,
and so much of sums as may have been so deposited with Escrow Agent at any given
time, together with any interest accrued thereon, is hereinafter referred to as
the "Earnest Money." The Earnest Money, together with interest earned thereon,
shall be returned to AEGIS at Closing or, if this Agreement is terminated prior
to Closing, to the party or parties entitled to receipt of the Earnest Money as
otherwise provided hereunder.
ARTICLE 4
Title and Survey
4.1. Marketable Title. At Closing, the Property shall be free and clear of
all mortgages, debts, liens, encumbrances, management agreements, leases,
licenses, franchises, concession agreements, security interests, conditions,
restrictions, rights-of-way, easements, encroachments, claims and other matters
affecting title, other than (a) the First Mortgage; (b) those matters set forth
as Exhibit G annexed hereto; (c) those matters to which AEGIS does not object in
accordance with Section 5.5; and (d) those matters otherwise permitted by the
express terms of this Agreement or expressly approved by AEGIS in writing (such
matters described in clauses (a) through (d), collectively, the "Permitted
Exceptions").
4.2. Title Commitment. AEGIS hereby acknowledges receipt of:
(a) Commitment No. 808921 for title insurance, dated August 14, 1998
(the "Title Commitment") issued by Chicago Title Insurance Company through Royal
Abstract, its agent (the "Title Company"), for an ALTA 1992 Owner's Policy,
covering the Land and Improvements, in the full amount of the Purchase Price
allocable to the Land and the Improvements, with access, zoning, subdivision,
contiguity and survey endorsements and any other endorsements as AEGIS or its
lender may reasonably require, setting forth the current status of the title to
the Land and Improvements, showing all liens, claims, encumbrances, easements,
rights of way, encroachments, reservations, restrictions, and any other matters
affecting the Land and Improvements, and pursuant to which the Title Company
agrees to issue to AEGIS at Closing an owners policy of title insurance (the
"Title Policy") on the ALTA 1992 comprehensive coverage owner's policy as
endorsed as AEGIS or its lender may reasonably require; and
(b) A true, complete, and legible copy of all documents and
instruments (as recorded, where applicable) (the "Supporting Documents")
referred to or identified in the Title Commitment, including, but not limited
to, all deeds and other conveyance documents evidencing transfer of title into
Southgate, lien instruments, leases, plats, surveys, reservations, restrictions,
and easements. AEGIS may order "bring-downs" or "continuations" of such Title
Commitment from time to time until the Closing.
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4.3. UCC Search. AEGIS shall obtain, at AEGIS' expense, current written
reports (the "Searches") from the (a) Office of the Secretary of State of the
state where (i) the Property is located, (ii) Southgate maintains its principal
place of business, (iii) Southgate was formed, and (iv) each of the Contributors
resides/maintains its principal place of business/was formed; (b) the UCC filing
offices of (i) the counties where the Property is located, (ii) where Southgate
maintains its principal place of business and (iii) each of the Contributors
resides/maintains its principal place of business/was formed; and the deed
recording offices and circuit courts of the counties where each of the
Contributors resides/maintains its principal place of business reflecting the
results of current searches of the judgment, tax lien and bankruptcy filing
records maintained by such offices. All searches shall reflect the results of
current searches of the records maintained by such offices, said searches to be
made under the name of Southgate, its managing agent, any trade names used by
Southgate at the Property, and each Contributor.
4.4. Survey. Within ten (10) days after the execution of the Agreement,
SGC shall deliver to AEGIS the most current "as built" survey in its possession
(the "Survey") of the Land and Improvements made on the ground and certified by
a professional land surveyor licensed in the state in which the Real Property is
located.
4.5. Objections to Title, Survey and UCC Searches. (a) On the Closing
Date, title to the Property shall be free and clear of all liens, pledges,
security interests, easements, restrictions, covenants and other encumbrances,
other than the Permitted Exceptions. Within ten (10) days after its receipt of
the Title Commitment, the Survey and the Searches, AEGIS shall notify SGC and
the Contributors (or such of them as may be applicable) of its objection to any
of the matters reflected therein (other than the Permitted Exceptions). AEGIS
shall also promptly notify SGC and the Contributors(or such of them as may be
applicable) of any objections to matters revealed in any subsequent updates or
continuations of the Title Commitment, the UCC Searches or the Survey. If AEGIS
shall so notify SGC or any Contributor of any objections and, if SGC or such
Contributor, as applicable, is unable or unwilling to cure or remove such
objections, AEGIS shall have the right but not the obligation to terminate this
Agreement by giving SGC and the Contributors notice of its intention to do so.
If SGC and the Contributors fail to cure or remove such objections within five
(5) days thereafter, AEGIS may give them notice of termination.
(b) With respect to objections to matters involving the Title
Commitment or the Supporting Documents the Title Company's agreement to delete
from Schedule B, Section 2 any such matter(s) shall constitute compliance with
the obligations of Southgate or such Contributor, as applicable, under this
Section 4.5.
4.6. Violations. AEGIS shall notify SGC of all violations of law or
municipal ordinances, orders, requirements or regulations noted in or issued by
the departments of buildings, fire, labor, health or other federal, state,
county, municipal and other governmental departments, agencies and authorities
having jurisdiction against or affecting the Property ("Violations") on the
Closing Date and any outstanding work orders and requirements of any company now
or then insuring the Property against casualty loss to which AEGIS objects, and
the last two sentences of Section 4.5(a) shall apply thereto. SGC shall furnish
AEGIS with an authorization to make the necessary searches to ascertain whether
the Property is subject to any
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Violations and AEGIS and its authorized representatives shall have the right to
enter upon and inspect the Property from time to time on and before the Closing
Date.
ARTICLE 5
AEGIS's Review Period: Inspections and Objections
5.1. Inspections. SGC shall give AEGIS and AEGIS's agents and
representatives access to the Property during normal business hours prior to
Closing and the right to physically inspect the Property, to conduct soil tests,
environmental tests and inspections, and other tests and inspections and to
examine any books, records and other financial information pertaining to the
Property, provided that AEGIS shall indemnify Southgate, SGC and the
Contributors for any loss, cost, damage or liability to persons or property
arising therefrom. The costs and expenses of AEGIS's investigation shall be
borne solely by AEGIS. In the event that the transaction contemplated by this
Agreement does not close for any reason other than a default by either SGC or
any Contributor, AEGIS shall have the obligation to repair any damage caused by
AEGIS's inspections and tests to the condition prior to AEGIS's entry, which
obligation shall survive any termination of this Agreement. The terms of this
Agreement and all information furnished by Southgate to AEGIS in accordance with
the provisions of this Agreement or obtained by AEGIS in the course of its
investigations shall be treated as confidential information by AEGIS, subject to
the provisions of Article 6 below.
5.2. Property Documents. On or prior to the date hereof, SGC, at its' sole
cost and expense, has delivered to AEGIS to the extent in its possession, and to
its actual knowledge without independent inquiry, true, correct and complete
copies (or where specifically indicated, original counterparts) of the
following, together with all amendments, modifications, renewals or extensions
thereof:
(i) All Warranties relating to the Property or any part thereof
which are still in effect;
(ii) Financial statements, balance sheets, income statements,
general ledgers, budgets and Federal and State income tax returns for the
Property, for the current year to date and each of the three (3) years
prior to the year of this Agreement (the "Financial Statements"),
including the itemization of (1) annual insurance premiums for each such
year for fire, extended coverage, workers' compensation, vandalism and
malicious mischief, general liability, business interruption, rents and
other forms of insurance shown thereon; (2) expenses incurred for water,
electricity, natural gas, sewer and other utility charges; (3) total rents
and revenues collected from tenants and other sources; (4) management
fees; (5) maintenance, repairs and other expenses relating to the
management and operation of the Property; and (6) historical occupancy
statistics for the Property;
(iii) All Licenses;
(iv) All of the most recent real estate and personal property tax
statements with respect to the Property and notices of appraised value for
the Land and Improvements;
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(v) All engineering and architectural plans, drawings and
specifications relating to the Property, as well as copies of any
environmental reports, boundary surveys, engineering reports and
subsurface studies affecting the Property. If the Property is acquired by
AEGIS, all such documents and information shall thereupon be and become
the property of AEGIS without payment of any additional consideration
therefor; provided, however, in the event that the Closing does not
actually occur, AEGIS shall return such information to Southgate;
(vi) All Service Contracts and a schedule of such Service Contracts
(the "Schedule of Service Contracts");
(vii) All Leases, a schedule of such Leases (the "Schedule of
Leases") and all agreements for real estate commissions, brokerage fees,
finder's fees or other compensation payable by Southgate in connection
therewith which would be binding on AEGIS after Closing;
(viii) A rent roll, certified by Southgate to be true and correct,
including for each Lease (1) the name of the tenant; (2) the address or
location of the demised Property; (3) the base rental rate; (4) the amount
of prepaid rent; (5) the amount of each security deposit; (6) the
applicable percentage rental rate, if any, and the means of calculation
thereof; (7) the date of the Lease; and (8) the expiration date of the
Lease;
(ix) All notices received by Southgate or its managing agent from
governmental authorities in connection with the Property, and a list of
all current Violations (as defined in Section 8.2 below) known to
Southgate;
(x) A list of all current Property employees and their salaries or
wages and all employment benefits accompanied by copies of their
employment agreements and/or union contracts, if any;
(xi) An inventory of the Personal Property;
(xii) A schedule of the Deposits (the "Schedule of Deposits");
(xiii) A description of the existing insurance covering the Property;
(xiv) An audited balance sheet (the "Balance Sheet") of the Property
as of December 31, 1997 (the "Balance Sheet Date"), listing all
liabilities, accounts payable and accounts receivable of the Property and
Southgate as of such date. The Balance Sheet (i) will be in accordance
with the books and records of the Property, (ii) will fairly present the
financial condition of the Property at the Balance Sheet Date and the
financial results for the entities and periods therein specified and (iii)
will have been prepared in accordance with generally accepted accounting
principles consistently applied;
(xv) A schedule of any litigation, arbitration or administrative
proceedings pending or threatened with respect to the Property;
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(xvi) Southgate's organizational documents (the "Organizational
Documents");
(xvii) The most recent title insurance policy and survey for the
Property;
(xviii) All documents evidencing or securing any mortgage loans
encumbering the Property;
(xix) Intentionally omitted;
(xx) Any documents pertaining to any Utility Reservations;
(xxi) Any leases of adjacent land or facilities used in connection
with the operation of the Property;
(xxii) Southgate's 1998 capital and operating budgets and all
materials relating to its marketing program; and
(xxiii) Such other documents or information as may be requested by
AEGIS no later than ten (10) days after the execution hereof.
SGC shall promptly notify AEGIS in writing upon learning of any material
inaccuracy, misstatement or omission in any of the information furnished to
AEGIS and shall supply AEGIS with updated information or schedules, as required.
5.3. AEGIS's Review Period Termination Right. AEGIS shall have until 5:00
P.M. Eastern Time on that date which is fifteen (15) days after the date on
which this Agreement has been fully executed by all of the parties hereto, for
the review of title, survey and environmental matters (the "Review Period"), to
evaluate the Property and the matters listed in Articles 4 and 5.2. In the event
AEGIS shall determine, in AEGIS's sole discretion, that the results of the
inspection and review are unsatisfactory, or for any other reason whatsoever,
AEGIS shall have the right to terminate this Agreement upon written notice to
each of the Contributors and Southgate delivered at any time on or before the
expiration of the Review Period. Failure by AEGIS to notify Contributors and
Southgate of its election to terminate this Agreement within such period shall
be deemed AEGIS' election not to terminate this Agreement but to proceed to
Closing. Upon a termination of this Agreement by AEGIS as permitted herein, the
Earnest Money shall be returned to AEGIS and thereafter neither party shall have
any further obligation or liability to the other under this Agreement, except
for the obligation to pay the cost of repairs, if any, and the indemnity set
forth in Section 5.1 and the return of the materials in accordance with Section
5.2(v) hereof.
5.4. Operational Licenses. During the Review Period AEGIS shall have
obtained, or determined that it will be able to obtain all permits, licenses,
approvals and other authorizations necessary or desirable to operate the
Property. To that end, during the Review Period, SGC and AEGIS shall cooperate
with each other, and each shall execute such transfer forms, license
applications and other documents as may be necessary or desirable for AEGIS or
its designees to obtain such permits, licenses, approvals and other
authorizations.
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5.5. Procedure for AEGIS's Objections. At any time during the Review
Period AEGIS may notify SGC in writing of any objections AEGIS may have with
respect to the Property or to any matters reflected in or concerning any of the
documents or items delivered by SGC to AEGIS, or to the results of the
inspections, tests and studies of the Property made by AEGIS, or to any Service
Contracts, Leases or Licenses, or to any other matters under this Agreement. If
AEGIS shall so notify Southgate of any objections under Sections 4.5 or 5.5
hereof, and if (i) SGC is unable or unwilling to cure or remove the objections
identified in AEGIS' notice on or before the Closing Date, or shall otherwise
fail to respond, to any objection of AEGIS on or before the Closing Date, as
same may be adjourned for a maximum of ten (10) days pursuant to Section 11.1
(unless AEGIS, in its sole discretion, waives such objection in writing), or
(ii) AEGIS, in AEGIS's sole discretion, is not satisfied with the results of any
cure efforts by such party, or (iii) SGC is unable to satisfy AEGIS's objections
for any reason whatsoever, then in any such event described in clauses (i), (ii)
and (iii) above AEGIS may terminate this Agreement on written notice to SGC and
the Contributors, whereupon the Earnest Money shall be returned to AEGIS and
thereafter neither party shall have any further obligation or liability to the
other under this Agreement, except for the cost of repairs, if any, and the
indemnity set forth in Section 5.1 and the return of the materials in accordance
with Section 5.2(v) hereof.
5.6. Cancellation of Management Agreements and Service Contracts. Upon
request by AEGIS, by Closing, SGC shall, cause Southgate to cancel any and all
management agreements affecting the Property. Southgate shall also cancel any of
such Service Contracts objected to by AEGIS.
ARTICLE 6
Confidentiality
6.1. Press Releases. Neither AEGIS, Southgate, any Contributor, nor any
Affiliate of either AEGIS, Southgate or any Contributor shall issue any press
release nor otherwise make public any information with respect to this Agreement
or the transactions contemplated hereby prior to the Closing Date, without the
prior written consent of AEGIS and Southgate.
6.2. Confidentiality. (a) Except to the extent otherwise provided herein,
required by law or advised by counsel to be in accordance with law, or
contemplated by Section 6.1, until the consummation of the transaction
contemplated by this Agreement, the parties hereto shall hold, and shall cause
each of their respective Affiliates to hold, all information and documents
obtained in connection with the transactions contemplated hereby confidential
including, any oral and written information concerning Southgate, any
Contributor and the Property received from Southgate, any Contributor or from a
third party at the direction of either Southgate or any Contributor
(collectively the "Due Diligence Material"). The Due Diligence Material shall
not be disclosed, discussed or made known without the prior written consent of
the Southgate, except on a need to know basis for the purpose of evaluating the
transaction contemplated by this Agreement to the officers, employees or board
of directors of the REIT, AEGIS, or any of their affiliates; to the Related
Aegis, L.P., the advisor to the REIT and its general partner and any officer,
employee or investor thereof; to AEGIS's prospective lenders and their counsel;
to any marketing company employed to do feasibility studies; or any investment
banking, accounting, legal or other professional advisers; or to any
environmental or engineering
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consultants with whom AEGIS desires to consult in connection with the proposed
transaction. If the transaction contemplated hereby is not consummated for any
reason whatever, each party hereto shall, as soon as practicable and to the
extent possible, return all such information and documents (and any copies
thereof in such party's possession) to such other party hereto.
(b) Notwithstanding the foregoing, it is acknowledged that the REIT may
sell shares to the general public and that in connection therewith, the REIT has
the absolute and unbridled right to market such securities and prepare and file
all necessary or reasonably required registration statements and other papers,
documents and instruments necessary or reasonably required in the REIT's
reasonable judgment, and that of its attorneys and underwriters, to file a
registration statement with respect to its shares with the U.S. Securities and
Exchange Commission and/or similar state authorities and to cause same to become
effective and to disclose therein and thus to its underwriters, to the U.S.
Securities and Exchange Commission and/or to similar state authorities and to
the public all of the terms, conditions and provisions of this Agreement, as
well as various documents delivered to the REIT and/or AEGIS pursuant to this
Agreement provided that such disclosure is necessary or reasonably required.
ARTICLE 7
INTENTIONALLY OMITTED
ARTICLE 8
Covenants of SGC and Contributors; Pre-Closing Matters
8.1. Interim Operation. SGC hereby covenants and agrees that between
the date of this Agreement and the Closing, Southgate shall:
(a) Operate, manage, and maintain the Property consistent with
Southgate's prior practice and as a reasonable and prudent operator of like-kind
Properties in the same competitive market would operate, manage, and maintain
the Property, including, without limitation, (i) using reasonable efforts to
keep available the services of its present employees at the Improvements and to
preserve its relations with Tenants, suppliers and other parties doing business
with Southgate with respect to the Property, (ii) maintaining the current level
of advertising and other promotional activities for Property facilities, (iii)
maintaining its books of accounts and records in the usual, regular and ordinary
manner, in accordance with generally accepted accounting principles applied on a
basis consistent with the basis used in keeping its books in prior years, and
(iv) remaining in substantial compliance with all current Leases, Licenses and
other agreements;
(b) Not commit waste of any portion of the Property;
(c) Keep and maintain the Property in a state of repair and
condition consistent with the requirements of clause (a) above;
(d) Keep, observe, and perform all its obligations under the Leases,
the Service Contracts and the Licenses, and all other applicable contractual
arrangements relating to the Property;
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(e) Not enter into any new agreements of the nature of the Service
Contracts or Leases or, except in the ordinary course of business, any
amendments, modifications, terminations, renewals, expansions or extensions of
any existing Service Contracts or Leases, without AEGIS's prior written consent
which shall not be unreasonably withheld, delayed or conditioned. Any such new
agreement or renewal or extension of existing agreements to which AEGIS's
consent was not obtained, whether or not such consent is required under this
Section 8.1(e), shall subject the applicable agreement to AEGIS's review under
Section 5.5. The cost of any tenant improvements, tenant allowances or brokerage
fees payable in connection with any Lease to which AEGIS has consented as
aforesaid shall be borne by AEGIS;
(f) Not cause or permit the removal from the Property of any article
of Personal Property except as may be necessary for repairs, or the discarding
of worn out or useless items, provided, however, that any article removed for
repairs shall be returned to the Property promptly upon its repair and shall
remain a part of the Personal Property whether or not such article shall be
located on the Property at the time of the Closing, and any article so discarded
shall be replaced with a new article of similar quality and utility prior to the
Closing;
(g) Not make, grant or suffer any mortgage, lien, pledge,
encumbrance, charge, easement, right-of-way, covenant or restriction with
respect to the Real Property or the Personal Property or any portion thereof,
without the prior written consent of the AEGIS in each instance;
(h) Except to the extent required by any written agreement in effect
as of the date hereof, not take any steps with respect to the negotiations or
appraisal of rent under any of the Leases nor grant any bonus, free rent, rebate
or other concession to any present or future Tenant (other than pursuant to
Leases to which AEGIS has consented under Section 8.1(e) above), in each case
without AEGIS's prior written consent;
(i) Advise AEGIS promptly of any litigation, arbitration, or
administrative hearing before any court or governmental agency concerning or
affecting the Property, or to its knowledge, the Contributor which is instituted
or threatened after the date of this Agreement;
(j) Use its good faith efforts to not take, or fail to take, any
action that would have the effect of violating any of the representations,
warranties, covenants or agreements of SGC contained in this Agreement;
(k) Materially comply with all federal, state, and municipal laws,
ordinances, regulations, and orders relating to the Property except for those
compliance with which is the responsibility of tenants;
(l) Not sell or assign or enter into any agreement to sell or
assign, or to create or permit to exist any lien or encumbrance (other than a
Permitted Exception) on, the Property, any portion thereof or any interest
therein;
(m) Not allow any License or other right currently in existence with
respect to the operation, use, occupancy or maintenance of the Property to
expire, be canceled or otherwise terminated without AEGIS's prior written
consent;
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(n) Not undertake or commence any renovations or alterations at the
Property, except those necessary to comply with any of the provisions of this
Agreement, or the express provisions of any Lease, without the prior written
consent of the AEGIS in each instance;
(o) Pay or cause to be paid all taxes, assessments and other
impositions levied or assessed on the Property or any part thereof on or before
the date on which the payment thereof is due;
(p) Keep the existing insurance coverage for the Property in full
force and effect;
(q) Not amend, modify or renew, or agree to amend, modify or renew,
any ground lease or mortgage loan documents or agreements to which the Property
may be subject, if any, without in each instance AEGIS's prior written consent;
(r) Not apply any of the Deposits, whether to a default of a Tenant
or otherwise; and
(s) Not accept payments of rents, additional rents or any other sums
due and payable under the Leases which are tendered more than one (1) month in
advance of the due dates thereof.
8.2. Violations. SGC hereby covenants and agrees that all material
violations of federal, state, county or municipal laws, ordinances, orders,
regulations or requirements or those of any governmental or quasi-governmental
department, agency or authority, issued, filed, or served by any governmental or
quasi-governmental agency or authority having jurisdiction over the Property
against or affecting the Property ("Violations") on or before the Closing Date
of which Southgate has actual knowledge shall be promptly disclosed to AEGIS.
8.3. Third Party Consents. SGC shall use reasonable good faith efforts to
obtain and to deliver to AEGIS, not less than ten (10) days prior to Closing,
all third party consents and approvals required for the transactions
contemplated hereby, including but not limited to (i) the consent of the holder
of the First Mortgage (if required) to the transfer of the Interests to AEGIS,
the cost of which shall be equally divided between Southgate and AEGIS and (ii)
the consent of any party required for the assignment of any Service Contract or
Lease to AEGIS.
8.4. Estoppel Certificates. SGC shall use reasonable efforts to cause
Southgate, at its expense, to obtain and deliver to AEGIS, not less than ten
(10) days before Closing, the following estoppel certificates from any Tenant
under any Lease affecting the Property, in substantially the form of Exhibit H
hereto.
8.5. Intentionally Omitted.
8.6. Intentionally Omitted.
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8.7. Shadow Management. Southgate shall permit AEGIS to establish and
maintain a shadow management operation with respect to the Property prior to the
Closing Date. Personnel from AEGIS's or manager's shadow management operation
shall have reasonable access during normal business hours to all books, records
and other information in the possession or control of Southgate or its agents
concerning the Property and shall have the right (at AEGIS's expense) to
establish duplicate books and records in order to effect a smooth transition in
the ownership and management of the Property; provided, however, that AEGIS and
its shadow management operation and employees (a) shall not unreasonably
interfere with the normal management and operation of the Property, (b) shall
hold all information acquired from such books and records confidential in
accordance with the provisions of this Agreement, (c) shall repair any damage to
the physical condition of the Property caused by AEGIS or its agents in any such
shadow management operation, and (d) shall not be deemed to have assumed
management responsibilities prior to Closing by virtue of such shadow
management.
8.8. Access to Records and Financial Information. AEGIS and AEGIS's
authorized representatives and employees shall have the right, at AEGIS's sole
cost, risk and expense, from time to time, subject to the rights of tenants, to
enter upon and pass through the Property during normal business hours and upon
reasonable notice to Southgate or any of the Contributors, as applicable, to
examine and inspect all of the then existing books, records, surveys, plans,
specifications, permits, certificates of occupancy and other files that are
relevant to the management, ownership, operation, use, occupancy, construction
or leasing of the Property, are in the possession or control of Southgate or any
Contributors, and have not been otherwise provided to AEGIS as required
elsewhere herein. Further, and not in limitation of Section 5.2 above, AEGIS's
representatives shall have access to all financial and other information
relating to the Property and to enable them to prepare a registration statement,
report or disclosure statement for filing with the Securities and Exchange
Commission (the "SEC") on behalf of the REIT and/or its affiliates. Prior to the
end of the Review Period, Southgate shall also provide to AEGIS's
representatives a signed representation letter sufficient to enable an
independent public accountant to render an opinion on the financial statements
related to the Property, such letter to be in the form of Exhibit I hereto
subject to the further requirements of such accountant. To the extent that the
Financial Statements provided by Southgate pursuant to Subsection 5.2 hereof for
the current year do not include any period up to and including the Closing Date,
Southgate shall, within twenty-five (25) days after the Closing Date, provide
AEGIS with monthly unaudited Financial Statements, including Balance Sheets,
general ledger and income statements applicable to such period inclusive of the
Closing Date. From the date hereof until the Closing Date, Southgate shall
deliver to AEGIS each month upon receipt of a copy of the monthly financial
report for the Property.
8.9. Exclusivity. From the date hereof through the end of the Review
Period (the "Exclusivity Period"), neither SGC, Southgate, any Contributors nor
any Affiliates of either Southgate or any Contributor will solicit or entertain
discussions with any other party or furnish information related to a sale of the
Property or any part thereof.
8.10. Intentionally Omitted.
8.11. Tax Information. SGC acknowledges that (i) the computation of
taxable income of AEGIS is crucial in the determination of the taxable income of
the REIT, (ii) the REIT needs to be able to prepare accurate estimates of its
taxable income in order to monitor compliance with the requirement that it
distribute 95% of its taxable income to its shareholders, and (iii) the
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depreciation of the Property and the required depreciation allocations under
Section 704(c) of the Code will materially impact the computation of AEGIS's and
the REIT's taxable income. Accordingly, SGC agrees that (i) prior to the
expiration of the Review Period, SGC shall provide AEGIS with tax basis
computations and historical tax depreciation schedules updated through the
Closing Date for the Property; and (ii) prior to the expiration of the Review
Period, SGC shall provide AEGIS with all data reasonably available to it
required to perform depreciation allocations (as contemplated by Section 704(c)
of the Code) with respect to the Property and any recipient of the Units. Such
data shall include the tax basis allocable to the OP Unit recipients for the
Property.
ARTICLE 9
Representations, Warranties and Covenants
9.1. Representations by AEGIS and the REIT. AEGIS and the REIT hereby
represent and warrant unto Contributors that each and every one of the following
statements is true, correct and complete in every material respect as of the
date of this Agreement and will be true, correct and complete as of the Closing
Date:
(a) AEGIS is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware, and, has full
right, power and authority to issue the Units, to enter into this Agreement and
to assume and perform all of its obligations. Upon the expiration of the Review
Period (provided this Agreement has not been terminated), the execution and
delivery of this Agreement and the performance by AEGIS of its obligations under
this Agreement will require no further action or approval of AEGIS's or the
REIT's shareholders, directors, members, managers or partners (as the case may
be) or of any other individuals or entities in order to constitute this
Agreement as a binding and enforceable obligation of AEGIS. The individuals
and/or entities signing below in the indicated representative capacities are
fully authorized so to act, subject as aforesaid.
(b) AEGIS is not a foreign partnership (as such term is defined in
the Internal Revenue Code and Income Tax Regulations).
(c) The entry into, performance of, or compliance with this
Agreement by AEGIS has not resulted, and will not result, in any violation of,
default under, or acceleration of any obligation under any existing corporate
charter, certificate of incorporation, partnership agreement, bylaw, articles of
organization, mortgage indenture, lien agreement, note, contract, permit,
judgment, decree, order, restrictive covenant, statute, rule or regulation
applicable to AEGIS.
(d) The REIT is a corporation duly organized, validly existing and
in good standing under the laws of the State of Maryland which operates as a
real estate investment trust, and has full right, power and authority to enter
into this Agreement and to assume and perform all of its obligations. Upon the
expiration of the Review Period (provided this Agreement has not been
terminated), the execution and delivery of this Agreement and the performance by
AEGIS of its obligations under this Agreement will require no further action or
approval of AEGIS's or the REIT's shareholders, directors, members, managers or
partners (as the case may be) or of any other individuals or entities in order
to constitute this Agreement as a binding and enforceable obligation of AEGIS.
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(e) The individuals and/or entities signing below in the indicated
representative capacities are fully authorized so to act, subject as aforesaid.
(f) The REIT has elected to be taxed as a REIT under Internal
Revenue Code Sections 856-860 and has qualified to be taxed as a REIT for its
taxable year ending December 31, 1997, and the REIT's method of operation will
enable it to qualify to be taxed as a real estate investment trust for its
taxable year ended December 31, 1998 and subsequent taxable years.
(g) The REIT is a domestically controlled REIT (as such term is
defined in Internal Revenue Code Section 897(h).
(h) The entry into, performance of, or compliance with this
Agreement by the REIT has not resulted, and will not result, in any violation
of, default under, or acceleration of any obligation under any existing
corporate charter, certificate of incorporation, bylaw, articles of
organization, mortgage indenture, lien agreement, note, contract, permit,
judgment, decree, order, restrictive covenant, statute, rule or regulation
applicable to the REIT.
(i) No representation or warranty made by AEGIS or the REIT in this
Agreement, in any exhibit annexed hereto, or in any letter or certificate
furnished to Southgate or the Contributors pursuant to the terms hereof, each of
which is incorporated herein by reference and made a part hereof, contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading.
(j) AEGIS shall treat the portion of the Property acquired by Unit
as a contribution to a partnership pursuant to Section 721 of the code and shall
take a carry over basis in such portion of the Property pursuant to Section 723
of the Code.
(k) The Partnership Agreement is in full force and effect and has
not been further amended or modified.
(l) The Units to be issued to the Contributors, when issued, sold
and paid for pursuant to this Agreement and the Partnership Agreement, will be
duly authorized, validly issued, fully-paid and free of all liens.
(m) The shares of Common Stock to be issued upon conversion of Units
will be duly authorized and reserved for issuance and, to the extent delivered
upon exchange of the OP Units, when issued, sold and paid for pursuant to this
Agreement and the Partnership Agreement, will be validly issued, fully paid and
nonassessable, free of all liens and upon official notice of issuance will be
listed on the AMEX (or such other exchange or national quotation system as the
Common Stock is then traded on).
(n) The REIT has filed all forms, reports, schedules, proxy
materials, registration statements and related prospectuses and supplements and
other documents required to be filed by the REIT with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Act or the Securities
Exchange Act of 1934, as amended, for the year ended
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December 31, 1997 up to the date hereof (collectively, the "SEC Documents") and
will cause to be delivered to Contributor copies of such additional documents as
may be filed with the SEC by the REIT between the date hereof and the Closing
Date. The SEC Documents were, and those additional documents filed between the
date hereof and the Closing will be, prepared and filed in all material respects
in compliance with the rules and regulations promulgated by the SEC, and do not
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, not
misleading.
9.2. Representations by Contributors.
(a) Each Contributor that is not an individual hereby represents and
warrants unto AEGIS that each and every one of the following statements is true,
correct and complete in every material respect as of the date of this Agreement
and will be true, correct and complete as of the Closing Date. Such Contributor
is an entity duly organized, validly existing and in good standing under the
laws of the State of its formation as set forth on page 1 of this Agreement and
is duly qualified to do business in the States in which it is required to do so.
Such Contributor has full right, power and authority to enter into this
Agreement and to assume and perform all of its obligations under this Agreement;
and the execution and delivery of this Agreement and the performance by the
Contributor of its obligations under this Agreement require no further action or
approval of Contributor, its shareholders, directors, partners or members, as
the case may be, or of any other individuals or entities in order to constitute
this Agreement a binding and enforceable obligation of the Contributor. The
Contributor has obtained each and every consent, approval, permit or order of,
and has made each and every filing with, any individual, partnership,
corporation, trust or other entity, government agency or political subdivision
required to be obtained or made in connection with: (A) its execution, delivery
and performance of this Agreement and (B) its consummation of the transactions
contemplated hereby. This Agreement is the legal, valid and binding obligation
of the Contributor, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting the
enforcement thereof or relating to creditors' rights generally.
(b) Each Contributor hereby represents and warrants unto AEGIS that
each and every one of the following statements is true, correct and complete in
every material respect as of the date of this Agreement and will be true,
correct and complete as of the Closing Date:
(i) Such Contributor is not a foreign corporation or person
(as that term is defined in the Code and Income tax regulations).
(ii) Neither the entry into nor the performance of, or
compliance with, this Agreement by the Contributor has resulted, or will
result, in any violation of, or default under, or result in the
acceleration of, any obligation under the articles of incorporation of the
Contributor, or any existing mortgage indenture, lien agreement, note,
contract, permit, judgment, decree, order, restrictive covenant, statute,
rule or regulation applicable to the Contributor or, to its actual
knowledge without independent inquiry or analysis, Southgate.
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(iii) Based upon Contributor's actual knowledge without
independent inquiry or analysis (x) the Contributor now has or will have
at the Closing, good and valid title to its Interest, free and clear of
all liens, encumbrances, restrictions and claims of every kind and nature
whatsoever ("Liens") and (y) the Contributors are the only entities which
have any interest in or right to receive the profits and distributions of
Southgate or otherwise in Southgate. Upon consummation of the assignments
contemplated by this Agreement, AEGIS (or its designee) will acquire from
the Contributor good and valid title to its Interest, free and clear of
any Liens other than Liens created by, under or through AEGIS or its
designee(s).
(iv) Except as otherwise disclosed herein, no party has any
right or option to acquire the Contributor's Interest or any portion
thereof, other than AEGIS and the REIT under this Agreement.
(v) The Contributor (i) is not in receivership or dissolution,
(ii) has not made an assignment for the benefit of creditors or admitted
in writing its inability to pay its debts as they mature, or (iii) has not
been adjudicated a bankrupt or filed a petition in voluntary bankruptcy or
a petition or answer seeking reorganization or an arrangement with
creditors under the Federal bankruptcy law or any other similar law or
statute of the United States or any jurisdiction and, to its knowledge, no
such petition has been filed against the Contributor.
9.3. Representations by SGC. SGC hereby represents and warrants unto AEGIS
that each and every one of the following statements is true, correct and
complete in every material respect as of the date of this Agreement and will be
true, correct and complete in all material respects as of the Closing Date:
(a) The Schedule of Service Contracts, Schedule of Leases, and
Schedule of Deposits, when delivered, will be a true, correct and complete list
of all Service Contracts, all Leases, and all Deposits in effect at that time.
The copies of the Service Contracts, and Leases, when delivered to AEGIS, will
be true, complete and correct copies of such Service Contracts and Leases
(including, without limitation, all amendments, modifications, terminations,
renewals, expansions and extensions thereof). Other than the Service Contracts
approved by AEGIS and the Leases there are and will be no material written or
oral agreements which would in the aggregate amount to greater than $25,000
between the actual Service Contracts and Leases and the representation made by
SGC in the nature of Service Contracts, or Leases, including, without
limitation, any guarantees, side letters, assignments, and subleases, and
consents to such assignments and subleases, exercised renewal options, exercised
options to acquire, exercised options to lease additional space, abatements of
rent or similar arrangements, rights to set-off, rights to receive electricity
or other utilities either without charge or on a rent-inclusion basis, waivers
of Tenants' defaults, obligations to advertise or otherwise promote the
Property, or other documents relating thereto binding on the Property or on
AEGIS after the Closing. Furthermore, there are and will be no other written or
oral agreements binding on the Property or AEGIS after Closing with any Tenants,
relating to their use or occupancy of the Property other than the Leases and
those permitted under Section 8.1(e) of this Agreement. All Service Contracts
and Leases are in full force and effect and no material default exists
thereunder and no condition exists that, with the giving of notice or passage of
time, or both,
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would constitute a material default, and no Tenant has made any claim of any
right of offset. Each Tenant is in possession of its Property and is conducting
business pursuant to its respective lease.
(b) Southgate and SGC have received no written notice, and have no
actual knowledge, that either Southgate or SGC lacks any permit, license,
certificate or authorization necessary for the present use and occupancy of the
Improvements.
(c) No party has any right or option to acquire the Property or any
portion thereof, other than AEGIS.
(d) To the best of SGC's actual knowledge and belief, there are,
with respect to the Property or Southgate and SGC, no material:
(i) pending arbitration proceedings or unsatisfied
arbitration awards, or judicial proceedings or orders respecting awards;
(ii) pending unfair labor practice charges or complaints,
unsatisfied unfair labor practice orders or judicial proceedings or orders
with respect thereto;
(iii) pending charges or complaints with or by city, state or
federal civil or human rights agencies, unremedied orders by such agencies
or judicial proceedings or orders with respect to obligations under city,
state or federal civil or human rights or anti-discrimination laws or
executive orders;
(iv) condemnation proceeding pending or threatened with regard
to all or any part of the Property nor any federal, state, county,
municipal or other governmental plans to change the highway or road
systems in the vicinity of the Property or to restrict or change access
from any such highway or road to the Property or of any pending or
threatened condemnation or eminent domain proceedings relating to or
affecting the Property; or
(v) other pending, or threatened or actual litigation,
claims, actions, proceedings, charges, complaints, petitions or
unsatisfied orders by or before any governmental entity, administrative
agency or court, which affect or could affect the operation of the
Property or any part thereof or which might result in a lien on the
Property or any part thereof.
(all collectively, the "Pending Claims").
(e) SGC has no actual knowledge of any material Violations (as
defined in Section 8.2) except as set forth on Exhibit BB annexed hereto.
(f) To the best of the actual knowledge of SGC, the Property, the
Improvements and the current use, occupancy and operation of the Property are in
compliance in all material respects (i) with all terms and conditions of all
notices, permits, licenses, registrations, certificates of occupancy,
applications, consents, site plan approvals, variances, notices of intent,
and/or other authorizations which are required for the use or operation of the
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Property (all such, collectively, "Permits"), all of which Permits, to the
actual knowledge of SGC are described on Exhibit Q annexed hereto and made a
part hereof, (ii) with all applicable laws, rules, regulations, ordinances,
requirements and orders in effect as of the date hereof promulgated by any
federal, state or local executive, legislative, judicial, regulatory or
administrative agency, board or authority, or any applicable judicial or
administrative decision that relate to the Property, including, without
limitation, all zoning and/or building code restrictions, urban development
plans and all such laws, rules and regulations that relate to the environment or
the pollution, preservation, protection, cleanup or remediation thereof, or the
treatment, use, storage, disposal or other management of Hazardous Substances,
as defined below, with respect to the Property, and (iii) with all limitations,
requirements, restrictions, covenants, conditions, standards, prohibitions,
schedules and timetables contained in any of the foregoing or in any document or
instrument encumbering or affecting the Property.
(g) The use by AEGIS of any of the Tradenames will not infringe any
United States or state trademark, service mark, or tradename laws existing at
the Closing, or constitute actionable appropriation of rights with respect to
any other person, business or entity.
(h) All of the Personal Property has been fully paid for and is
owned by Southgate free and clear of all liens and encumbrances, except for the
Permitted Exceptions.
(i) To the best of the actual knowledge and belief of SGC there are
no pending or threatened improvement liens or special assessments to be made
against the Property by any governmental authority or any contemplated
improvements affecting the Property that may result in special assessments
against the Property.
(j) SGC represents, based solely upon that which is disclosed in the
environmental reports which are listed on the Addendum hereto (the
"Environmental Reports"), that (i) no Hazardous Substances are located on or
have been released or disposed of in, on, under or from the Property so as to
impose liability or require remediation under any Environmental Law and (ii) no
liability under or violation of any Environmental Laws or condition that could
give rise to such liability or violation exists with respect to the Property,
including without limitation liabilities relating to offsite disposal of waste
in connection with the Property. There are no pending or threatened claims by
any person arising out of any alleged violation of Environmental Laws or any
release or threatened release of Hazardous Substances arising out of the
ownership or operation of the Property. For the purpose of this Section 9.3(j),
the term "Hazardous Substance" shall mean any substance defined as a "hazardous
waste," "hazardous substance," "toxic substance," "hazardous material,"
pollutant, contaminant or any word of similar import under any Environmental
Laws, including, without limitation, oil, petroleum, or any petroleum-derived
substance or waste, asbestos or asbestos-containing materials, PCBs, explosives,
radioactive materials, dioxins, or urea formaldehyde insulation. As used herein,
"Environmental Laws" shall include, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq.,
the Clean Air Act, 42 U.S.C. ss. 7401, et seq., the Clean Water Act, 33 U.S.C.
ss. 1251, et seq., the Toxic Substances Control Act, 15 U.S.C. ss. 2601, et
seq., and the Occupational Safety and Health Act, 29 U.S.C. ss. 651, et seq., as
any of the preceding have been amended prior to the date hereof, and any other
federal, state, or local law, ordinance, regulation, rule, order, decision or
permit relating to the protection of the environment or of human health from
environmental
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effects of Hazardous Substances and which are applicable to the Property or any
portion thereof.
(k) Southgate is not an "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or an entity whose assets include plan assets within the
meaning of Department of Labor Regulation Section 2510.3-101. The consummation
of the transactions contemplated by this Agreement will not result in a
"prohibited transaction" within the meaning of Section 4975(c) of the Internal
Revenue Code or Section 406 of ERISA.
(l) There are no leases or licenses for the use of adjacent land or
facilities in connection with the operation of the Property.
(m) Intentionally omitted;
(n) The information contained in the rent roll annexed hereto as
Exhibit J and made a part hereof is true and complete in all material respects,
all rents are being paid and are current, except as any such arrearages are
otherwise set forth in Exhibit K, no Tenant has paid any rent, fees, or other
charges, including common area maintenance charges for additional Improvements
or operating expenses, for more than one month in advance, except as entitled to
any free rent, abatement of rent or similar concession;
(o) Except as may be set forth on Exhibit J, no Tenant is contesting
any tax, operating cost or other escalation payments or occupancy charges, or
any other amounts payable under its Lease, and no steps have been taken by
Southgate or any Contributor with respect to any negotiation or appraisal of
rent under any of the Leases, and no such negotiations or appraisals are
pending;
(p) No brokerage commission or other compensation is payable (or
will, with the passage of time or occurrence of any event or both, be payable)
with respect to any Lease demising space equal to or in excess of 5,000 square
feet, other than those, if any, which are disclosed on Exhibit K, annexed
hereto;
(q) Except as may be set forth on Exhibit J, all work required to be
performed by any party to any of the Leases has been completed and amounts owed
in connection therewith have been fully paid or shall be fully paid by
Southgate;
(r) Southgate has not assigned, mortgaged, pledged, sublet,
hypothecated or otherwise encumbered any of its rights or interests under any of
the Leases except for the Permitted Exceptions other than that which is
disclosed on Exhibit M, annexed hereto;
(s) As of the date hereof, (i) the outstanding principal balance of
the First Mortgage is $10,904,616.60, (ii) accrued interest thereon is
$_______________, (iii) neither Southgate nor SGC have received any written
notice of any material default, and (iv) there are no prepayment penalties
incurred pursuant to the First Mortgage as a result of this transaction provided
that the holder of the First Mortgage consents thereto.
(t) Intentionally Omitted;
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(u) Intentionally Omitted;
(v) Intentionally Omitted;
(w) The sales figures for all Tenants set forth in Exhibit L annexed
hereto and made a part hereof are, to the best of SGC's knowledge, true and
correct in all material respects;
(x) Intentionally omitted;
(y) Copies of all real and personal property tax bills for the
Property for the current and immediately preceding tax years have been furnished
by the Southgate to AEGIS and are true, correct and complete;
(z) To the best of SGC's knowledge, all water, storm and sanitary
sewer, gas, electricity, telephone and other utilities serving the Property are
supplied directly to the Property by facilities of public or municipal
utilities, all such utilities required for the operation of the Property enter
the Property through lands as to which valid public or private easements exist
that will inure to the benefit of AEGIS, all such utilities are installed and
operating, and the cost of installation of such utilities has been fully paid;
(aa) Intentionally omitted;
(bb) There are no employees of Southgate, at the Property or
otherwise, who, by reason of any federal, state, county, municipal or other law,
ordinance, order, requirement or regulation, or by reason of any union or other
employment contract, written or otherwise, or any other reason whatsoever, would
become employees of AEGIS as a result of the acquisition of the Interests by
AEGIS;
(cc) All of the Personal Property is owned by Southgate free and
clear of any liens or encumbrances except for the Permitted Exceptions, there
are no written or oral agreements with respect to the Personal Property other
than as set forth in Exhibit N annexed hereto and made a part hereof (such
agreements being hereinafter collectively referred to as the "Equipment
Leases"); true and complete copies of all Equipment Leases, including all
agreements, amendments, guarantees, side letters and other documents relating
thereto have been delivered to AEGIS, and there are no other such agreements or
other documents, written or oral;
(dd) To the best of SGC's knowledge, each of the Equipment Leases is
in full force and effect, none of the parties thereto is in default of any of
its material obligations thereunder, and no event has occurred that, with the
giving of notice or passage of time, or both, would constitute a default
thereunder;
(ee) All insurance policies held by Southgate relating to or
affecting the Property are described in Exhibit O annexed hereto and hereby made
a part hereof; all of such policies are in full force and effect and no notices
or requests have been received by Southgate from any insurance company issuing
any of such policies with which the Southgate has not complied, and there are no
outstanding requirements or recommendations by (i) any insurance
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company that issued a policy with respect to the Property, (ii) any board of
fire underwriters or other body exercising similar functions, or (iii) the
holder of any mortgage encumbering the Property, requiring or recommending any
repairs or work to be done at the Property;
(ff) To the best of SGC's actual knowledge, the water, sewer, gas,
electrical and other utilities now serving the Property are adequate to service
the current operations of the Improvements, and attached hereto as Exhibit P,
are true and accurate lists of water, sewer, gas and electrical utility bills
relating to the Property for the most recent twelve (12) month period for which
they are available, and all of the right and interest of Southgate or the
Contributors in any utility deposits, if transferable, shall be assigned to
AEGIS at the Closing;
(gg) All fixtures, machinery, equipment, lighting fixtures and
appliances comprising a portion of the Personal Property and all heating,
air-conditioning, sprinkler, ventilating, electrical and plumbing systems on the
Property and shall be delivered in "AS IS" condition;
(hh) To the best knowledge of SGC, no additional Permits are
required for the current or contemplated use of operation of the Property; all
of the Permits are in full force and effect. SGC shall promptly after receipt of
any additional Permits deliver to AEGIS copies of such Permits required to
permit the lawful construction, completion, operation and occupancy of the
Improvements;
(ii) Intentionally omitted;
(jj) Intentionally omitted;
(kk) Intentionally omitted;
(ll) Intentionally omitted;
(mm) The operating statements relating to the Property for the
period commencing August 1, 1995 and ending August 30, 1998, copies of which
have been delivered to AEGIS and are annexed hereto as Exhibit R and made a part
hereof, and any operating statements to be delivered by SG C after the Closing,
are, or will be, as the case may be, true and correct in all material respects;
(nn) Intentionally omitted;
(oo) There are no Tradenames affecting the Property other than the
name "Southgate Shopping Center" and the use of such name, as well as the use of
any logo used in connection with the Property, is freely transferable to AEGIS;
(pp) As of the date hereof, the Deposits under the Leases are as set
forth in Exhibit S annexed hereto and made a part hereof and none of the
Deposits are required to be invested with interest;
(qq) True and complete copies of all Warranties relating to the
Improvements or the Personal Property, including, but not limited to, any
Warranty covering all roofs, and all
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<PAGE>
agreements, amendments, guarantees, side letters and other documents relating
thereto which are in the possession of Southgate, are annexed hereto as Exhibit
T and made a part hereof, and there are no other such documents or agreements,
written or oral;
(rr) No person, firm, corporation or other entity other than AEGIS
by reason of this Agreement has any right or option to acquire the Property or
any portion thereof;
(ss) To the actual knowledge of SGC, neither the air rights over the
Property nor any other "development rights" with respect to the Property have
been assigned, transferred, leased or encumbered;
(tt) Intentionally omitted;
(uu) Intentionally omitted;
(vv) Intentionally omitted;
(ww) Intentionally omitted;
(xx) Intentionally omitted;
(yy) Intentionally omitted;
(zz) No representation or warranty made by Southgate or SGC in this
Agreement, in any exhibit annexed hereto, or in any letter or certificate
furnished to AEGIS pursuant to the terms hereof, each of which is incorporated
herein by reference and made a part hereof, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading; other than the documents
specifically set forth in exhibits to this Agreement, there are no material
agreements, guarantees, indemnities or offers, either written or oral, made by
Southgate or SGC and affecting the Property which would bind AEGIS in an amount
that would exceed $25,000 in the aggregate;
(aaa) Except as otherwise provided in Section 8.1(e), other than in
the ordinary course of business, no services, material or work have been
supplied to the Property prior to Closing for which payment has not been made in
full. Except as otherwise provided in Section 8.1(e), if, subsequent to the
Closing Date, any mechanic's or other lien, charge or order for the payment of
money shall be filed against the Property or any portion thereof or against
AEGIS or AEGIS's assigns, based upon any act or omission, or alleged act or
omission before or after the Closing Date, of Southgate, its agents, servants or
employees, or any contractor, subcontractor or materialman connected with the
construction of Improvements at the Property prior to closing, or repairs made
to the Property prior to closing (whether or not such lien, charge or order
shall be valid or enforceable as such), within ten (10) days after notice to
Southgate of the filing thereof, Southgate and SGC, jointly and severally, shall
take such action, by bonding, deposit, payment or otherwise, as will remove or
satisfy such lien of record against the Property;
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(bbb) The only proceedings for the correction of the assessed
valuation of the Property (the "Proceedings") that have been filed on
Southgate's behalf and are pending are the Proceedings set forth in Exhibit W
annexed hereto and made a part hereof. No party hereto shall agree to any
settlement or termination of the Proceedings without the prior written consent
of the other parties, which consent shall not be unreasonably withheld or
delayed.
(ccc) Southgate is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(ddd) Southgate is not a foreign entity, foreign corporation,
foreign partnership, foreign trust or foreign estate (as those terms are defined
in the Internal Revenue Code and Income Tax Regulations).
(eee) None among the entry into, the performance of, or compliance
with this Agreement has resulted, or will result, in any violation of, default
under, or acceleration of any obligation under any existing corporate charter,
certificate of incorporation, bylaw, articles of organization, limited liability
company agreement or regulations, partnership agreement, mortgage indenture,
lien agreement, note, contract, lease, permit, judgment, decree, order,
restrictive covenant, statute, rule or regulation applicable to Southgate or the
Property or any part thereof; nor will any of the foregoing require the consent
of any party not otherwise provided for in this Agreement.
(fff) Southgate has full power and authority to own and operate the
Property. True and complete copies of Southgate's Organizational Documents have
been delivered to AEGIS and such documents are in full force and effect as of
the date hereof.
(ggg) Southgate (i) is not in receivership or dissolution, (ii) has
not made an assignment for the benefit of creditors or admitted in writing its
inability to pay its debts as they mature, or (iii) has not been adjudicated a
bankrupt or filed a petition in voluntary bankruptcy or a petition or answer
seeking reorganization or an arrangement with creditors under the Federal
bankruptcy law or any other similar law or statute of the United States or any
jurisdiction and, to the actual knowledge of Southgate, no such petition has
been filed against Southgate.
(hhh) Based upon actual knowledge without independent inquiry, or
analysis Southgate has and will have at the Closing, good and valid title to the
Property free and clear of all liens, encumbrances, restrictions and claims of
every kind and nature whatsoever ("Liens") except for the Permitted Exceptions.
No one other than Southgate or the Contributors has any interest in or right to
receive the profits and distributions from the Property.
9.4. Securities Law Representations and Covenants by Contributor. Each
Contributor receiving a Unit Distribution hereby represents and warrants unto
AEGIS that each and every one of the following statements is true, correct and
complete in every material respect as to it as of the date of this Agreement and
will be true, correct and complete as of the Closing Date:
(a) Contributor understands that an investment in the Units involves
risks. Contributor, by reason of its business and
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financial experience, together with the business and financial experience of
those persons, if any, retained by it to represent or advise it with respect to
its investment in Units, (i) has such knowledge, sophistication and experience
in financial and business matters and in making investment decisions of this
type that it is capable of evaluating the merits and risks of and of making an
informed investment decision with respect to an investment in Units, (ii) is
capable of protecting its own interests or has engaged representatives or
advisors to assist it in protecting its interests and (iii) is capable of
bearing the economic risk of such investment including the loss of its entire
investment. Contributor, is an "accredited investor" as such term is defined in
Regulation D, promulgated under the Securities Act of 1933. If Contributor has
retained or retains a person to represent or advise it with respect to its
investment in Units, Contributor will advise AEGIS of such retention and, at
AEGIS's request, Contributor shall, prior to or at the Closing, (i) acknowledge
in writing such representation and (ii) cause such representative or advisor to
deliver a certificate to AEGIS and the REIT containing such representations as
may be reasonably requested by AEGIS and the REIT.
(b) Contributor understands that an investment in AEGIS involves
substantial risks. It has been given the opportunity to make a thorough
investigation of AEGIS and has been furnished with materials relating to AEGIS
and its activities. It has been afforded the opportunity to obtain any
additional information requested by it. It has had an opportunity to ask
questions of and receive answers from representatives of AEGIS concerning AEGIS
and the REIT and its activities and the terms and conditions of an investment in
Units.
(c) Contributor further understands the following:
(i) In making an investment decision investors must rely on
their own examination of the REIT and AEGIS and the terms of this
offering, including the merits and risks involved. The Units offered
hereby have not been recommended by any federal or state securities
commission or regulatory authority. Furthermore, the foregoing authorities
have not confirmed the accuracy or determined the adequacy of this
Agreement. Any representation to the contrary is a criminal offense.
(ii) The Units offered hereby are subject to restrictions on
transferability and resale and may not be transferred or resold except as
permitted hereby and under the Securities Act, and the applicable state
securities laws, pursuant to registration or exemption therefrom.
Contributor and its equity owners, partners and members should be aware
that it will be required to bear the financial risks of this investment
for an indefinite period of time.
(d) The Units to be issued to Contributor at the Closing will be
acquired by Contributor for its own account, for investment only and not with a
view to, or with any intention of, a distribution or resale thereof, in whole or
in part, or the grant of any participation therein, except for the distribution
of the Units to such Contributor. Notwithstanding the foregoing, Contributor may
assign and transfer the Units to the equity owners, partners or members in
Contributor or any other Qualifying Partners. Contributor was not formed for the
specific purpose of acquiring the Units.
(e) Contributor acknowledges that (i) the Units to be issued to it
and/or Qualifying Partner at the Closing have not been registered under the
Securities Act or state securities laws by reason of a specific exemption or
exemptions from registration under the
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<PAGE>
Securities Act and applicable state securities laws and, if such Units are
represented by certificates, such certificates will bear a legend to such
effect, (ii) the REIT's and AEGIS's reliance on such exemptions is predicated in
part on the accuracy and completeness of the representations and warranties of
Contributor contained in this section, (iii) the Units to be issued to it at the
Closing may not be resold or otherwise distributed to any one other than
Qualified Partners unless registered under the Securities Act and applicable
state securities laws, or unless an exemption from registration is available,
(iv) there is no public market for such Units, (v) neither AEGIS nor any person
acting on its behalf offered or sold Units to such Contributor by any form of
general solicitation or advertising including, but not limited to,
communications via newspaper, magazines, television, radio, or any seminar or
meeting organized through general solicitation or general advertising, or to
such Contributor's knowledge, by any form of general solicitation, and (vi) it
has no obligation or intention to register such Units under the Securities Act
or any state securities laws or to take any action that would make available any
exemption from the registration requirements of such laws, except as provided in
the Exchange Rights Agreement and the Registration Rights Agreement. Such
Contributor hereby acknowledges that it will have to bear the economic risk of
the investment commitment evidenced by this Agreement and any Units issued
hereunder for an indefinite period of time, although (x) subject to the Lock-Up
Agreement and under the terms of the Partnership Agreement and Exchange Rights
Agreement, Units will be exchangeable at the request of the holder thereof at
any time after the first anniversary of their issuance for Common Stock or, at
the option of the REIT, cash, and (y) subject to the Lock-Up Agreement, the
holder of any such Common Stock issued upon exchange of Units will be afforded
certain rights to have such Common Stock registered under the Securities Act and
applicable state securities laws pursuant to the Registration Rights Agreement.
(f) Each such Contributor's principal place of business is as set
forth on Schedule 1 and it has no present intention of becoming a resident of
any country, state or jurisdiction other than the country and state in which
such principal place of business is located.
(g) Each such Contributor acknowledges that it has received or will
be provided, upon request, with all Forms 10K, 10Q and other reports filed by
the REIT with the Securities and Exchange Commission.
(h) Each such Contributor agrees that it will not sell or otherwise
transfer the Units except as otherwise provided in this Agreement, unless they
are registered under the Securities Act (pursuant to the Registration Rights
Agreement or otherwise) or unless an exemption from such registration is
available. Contributor represents that it has adequate means of providing for
its current needs and possible contingencies, and that it has no need for
liquidity of the investment.
Each such Contributor further agrees that it will not distribute its
Units or any portion thereof to anyone other than a Qualifying Partner.
(i) It is understood that all documents, records and books
pertaining to the investment have been made available for inspection by each
such Contributor's attorney or accountant or offeree representative and each
such Contributor, and that the material books and records of AEGIS and the REIT
will be available upon reasonable notice, for inspection by each such
Contributor at reasonable hours at its principal place of business.
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(j) The foregoing representations and warranties shall be true and
accurate in all material respects as of the Closing Date.
9.5. Intentionally omitted.
9.6. Subsequent Developments. After the date of this Agreement and until
the Closing Date, SGC and each Contributor shall keep AEGIS fully informed of
all subsequent developments of which it has actual knowledge without independent
inquiry or analysis ("Subsequent Developments") which would cause any of SGC's
or Contributors' representations contained in this Agreement to be no longer
accurate in any material respect.
9.7. Intentionally omitted.
9.8. As Is Sale. Except as may be expressly set forth in this Agreement or
in any other document executed and delivered by any Contributor in connection
with the transaction described herein, AEGIS acknowledges that the Contributors
are not making any representations or warranties concerning the Property or the
physical condition thereof, and AEGIS agrees to accept the Property in its "as
is, where is" condition, subject to the other terms and conditions of this
Agreement (including but not limited to Articles 5, 10 and 12).
9.9. Survival. All covenents, agreements and indemnities contained in the
Agreement which contemplate performance after the Closing Date shall survive the
Closing. Notwithstanding the foregoing, only the representations, warranties and
agreements of the Contributors and SGC set forth in Sections 9.2, 9.3(d)(v) and
9.4 of this Agreement shall survive the Closing hereunder for, and such survival
shall be limited to, a period of one (1) year. All representations made by AEGIS
or the REIT herein shall survive the Closing.
ARTICLE 10
Conditions Precedent to the Closing
10.1. AEGIS's Conditions. In addition to any other conditions set forth in
this Agreement, AEGIS's obligations to consummate the Closing are subject to the
timely satisfaction of each and every one of the conditions and requirements set
forth in this Section 10.1, all of which shall be conditions precedent to
AEGIS's obligations under this Agreement, unless AEGIS, in its sole discretion,
shall waive any such condition by notice to Contributors:
(a) Contributor's Obligations. SGC and each Contributor shall have
performed all obligations of SGC and each Contributor respectively hereunder
which are to be performed prior to Closing;
(b) Contributor's Representations, Warranties and Covenants. Each
Contributor's representations, warranties, and covenants set forth in this
Agreement shall be true and correct in all material respects as if made again on
the Closing Date;
(c) Transfer Subject Only to Permitted Exceptions. On the Closing
Date, title to the Property shall be insurable by an extended coverage policy
issued by the Title
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Company at its regular rates, without exceptions or reservations of any type or
kind except the Permitted Exceptions.
(d) Consents and Estoppels of Third Parties. SGC shall have obtained
and delivered to AEGIS all third party consents required under Section 8.3 and
shall have obtained and delivered to AEGIS the estoppels referred to in Section
8.4 hereof from Big Bear, Odd Lots, Dunham's Sporting Goods and tenants
occupying not less than 75% of the remaining leaseable area of the Improvements.
10.2. Contributor's Conditions. In addition to any other conditions set
forth in this Agreement, each Contributor's obligations to consummate the
closing are subject to the timely satisfaction of each and every one of the
following conditions and requirements set forth in this Section 10.2, all of
which shall be conditions precedent to each Contributor's obligations under this
Agreement, unless any such Contributor, in its sole discretion and with respect
to its contribution, shall waive any such condition by notice to AEGIS:
(a) AEGIS's and the REIT's Obligations. AEGIS and the REIT shall
have performed all obligations of AEGIS and the REIT hereunder which are to be
performed prior to Closing; and
(b) AEGIS's and the REIT's Representations, Warranties and
Covenants. AEGIS's and the REIT's representations, warranties and covenants set
forth in this Agreement shall be true and correct in all material respects as if
made again on the Closing Date.
ARTICLE 11
Closing and Closing Documents
11.1. Closing. The consummation and closing (the "Closing") of the
transaction contemplated under this Agreement shall take place at the offices of
Battle Fowler, LLP located at 75 East 55th Street, New York, New York, or such
other place as is mutually agreeable to the parties, on the earlier to occur of
the tenth (10th) day following (i) the expiration of the Review Period or (ii)
each Contributor's receipt of notice from AEGIS of its readiness to close (the
"Closing Date"), subject to adjournment for up to one ten (10) day period which
may be requested by either party upon not less than two (2) business days'
notice to the other party.
11.2. Deliveries
(a) Contributor's Deliveries. At the Closing and at each
Contributor's sole cost and expense, each Contributor shall execute and/or
deliver the following to AEGIS, in addition to all other items required to be
delivered to AEGIS by Contributor:
(i) Assignment of Partnership Interests. Contributor's
Assignment of Partnership Interests, a form of which is annexed hereto as
Exhibit Z, conveying good and indefeasible title to Contributor's
Interests, free and clear of all liens, encumbrances and claims.
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(ii) FIRPTA Affidavit. An affidavit from Contributor, a form
of which is annexed hereto as Exhibit CC, as required by Section 1445 of
the Internal Revenue Code, specifying (i) that Contributor is not a
foreign entity, foreign corporation, foreign partnership, foreign trust or
foreign estate (as those terms are defined in the Internal Revenue Code
and Income tax regulations), (ii) Contributor's taxpayer identification
number or U.S. employer identification number, (iii) Contributor's office
address, and (iv) such other matters as AEGIS may reasonably require in
order to satisfy itself that no withholding is required under Section 1445
of the Internal Revenue Code including an indemnity against any claim for
taxes which should have been withheld;
(iii) Authority Documents. Evidence satisfactory to AEGIS that
the person or persons executing the closing documents on behalf of
Contributor has full right, power and authority to do so, and the
following documentation where applicable: (i) a Certificate of an officer,
general partner or managing member ("Authorized Party") on behalf of
Contributor certifying that the attached copies of Contributor's
Organizational Documents are true and correct, unamended, and continuing,
and of the incumbency of its officers, (ii) Certificates of Existence and
Good Standing from the Secretary of State of the state(s) of formation of
Contributor, and (iii) from the Secretary of State of the state where the
Property is located, a Certificate of Existence and Qualification to Do
Business in such state for Contributor;
(iv) Opinion of Counsel. An opinion of Contributor's counsel,
in form and substance satisfactory to AEGIS in its reasonable discretion,
to the effect that Contributor has the power to execute and deliver this
Agreement and all of the documents listed in this Section 11.2 to which
Contributor is a party (collectively, the "Contributor Documents") and to
perform all of the obligations of Contributor under the Contributor
Documents; that Contributor's or Contributor's Authorized Party's
execution and delivery of the Contributor Documents has been duly
authorized by all requisite limited partnership action, and that such
Contributor Documents have been duly executed and delivered by Contributor
or Contributor's Authorized Party; and that the execution and delivery of
the Contributor Documents by Contributor or Contributor's Authorized Party
and the performance by Contributor or Contributor's Authorized Party of
its obligations thereunder does not contravene the Organizational
Documents of Contributor, its Authorized Party or any law, regulation,
rule, order, decree, covenant, indenture, agreement or other document to
which Contributor or its general partner is a party or by which it is
bound or to which the Property may be subject (other than those for which
Contributor has obtained the other party's consent).
(v) Units and Common Stock Documents. The documents required
in connection with the issuance of the Units, including signature pages to
the Partnership Agreement, the Exchange Rights Agreement, the Lock-up
Agreement, the Registration Rights Agreement, and the Voting Trust
Agreement executed by each Contributor receiving Units. Each such
Contributor shall execute and deliver any other documents as may be
required under applicable federal or state securities laws, including a
reiteration of the representations and covenants set forth in Section 9.4
hereof;
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(vi) Miscellaneous. Such other instruments as are customarily
executed to effectuate the conveyance of partnership interests similar to
the Interests, with the effect that, after the Closing AEGIS will have
succeeded to all of the rights, titles, and interests of each Contributor
related to Southgate and each of the Contributors will no longer have any
rights, titles, or interests in and to Southgate;
(b) Southgate's Deliveries. At the Closing, SGC shall cause
Southgate to execute and/or deliver the following to AEGIS, in addition to all
other items required to be delivered to AEGIS by Southgate or SGC:
(i) Title Affidavits. Affidavits or indemnities in form and
substance reasonably acceptable to the Title Company, in order that the
Title Policy may be issued free and clear of the standard exceptions which
the Title Company is permitted under applicable law to remove or modify
upon delivery of such affidavits or indemnities;
(ii) Intentionally Deleted;
(iii) Third Party Consents. All consents of third parties
required under Section 10.1(d) hereof, in form reasonably acceptable to
AEGIS;
(iv) Estoppel Certificates. The estoppel certificates
required under Section 10.1(d) hereof substantially in the required
form;
(v) Plans, Keys and Records. To the extent not previously
delivered to and in the possession of AEGIS, all Plans, all keys, access
cards, and combinations for the Property (which shall be properly tagged
for identification), all Records, and all Licenses; and
(vi) Original Documents. Originals of all of the documents and
agreements covered by the foregoing that have not already been delivered
to AEGIS.
On the Closing Date, the Property shall be free and clear of all tenancies
of every kind and parties in possession, except for the Tenants under the
Leases set forth on the Lease Schedule annexed hereto, and with all parts
of the Property (including, without limitation, the Improvements and
Personal Property) in substantially the same condition as the same were on
the date of this Agreement, normal wear and tear only excepted.
(c) AEGIS's Deliveries. At the Closing and at AEGIS's sole cost and
expense, AEGIS shall execute and/or deliver the following to each Contributor:
(i) Purchase Price. The Cash Component of the Purchase
Price and the Unit Component of the Purchase Price;
(ii) Assignments. The Assignments;
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(iii) Authority Documents. Evidence reasonably
satisfactory to Contributor that the person or persons executing the
closing documents on behalf of AEGIS and the REIT has full right, power
and authority to do so;
(iv) Units and Common Stock Documents. Such of the
documents listed in Section 11.2(a)(v) as may be required to be
executed by AEGIS or the REIT;
(v) Legal Opinion. An opinion of AEGIS' and the REIT's
counsel, in form and substance satisfactory to Contributor in its
reasonable discretion, to the effect that AEGIS and the REIT, individually
and as AEGIS' general partner, have the power to execute and deliver this
Agreement and all of the documents listed in this Section 11.3 to which
AEGIS and the REIT are a party (collectively, the "AEGIS Documents") and
to perform all of the obligations of AEGIS and the REIT under the AEGIS
documents; that the execution and delivery of the AEGIS Documents by AEGIS
or the REIT, individually and as AEGIS' general partner has been
authorized by all requisite limited partnership or corporate actions, and
that such AEGIS Documents have been fully executed and delivered by AEGIS
or the REIT, individually and as AEGIS' general partner; and that the
execution and delivery of AEGIS and the REIT and the performance by AEGIS
and the REIT of their respective obligations under the AEGIS Documents
does not contravene the Organizational Documents of AEGIS and the REIT or
any law, regulation, rule, order, decree, covenant, indenture, agreement
or other document to which AEGIS or the REIT is a party or by which it is
bound.
(vi) Leasing Agreement. A non-exclusive leasing agreement
pursuant to which AEGIS retains Columbus Pacific Properties, Inc. ("CPP")
as leasing agent, in the form annexed hereto as Exhibit U;
(vii) Deferred Notes. The Deferred Notes.
(viii) Release of Guaranties. A release by the current holder
of the First Mortgage of SGC and any of the Contributors, their affiliates
or principals from its or their respective obligations under any
guaranties given in connection with the First Mortgage; and
(ix) Miscellaneous. Such other instruments as are customarily
executed by AEGIS to effectuate the acquisition of interests similar to
the Interests, or as may be required under any applicable federal or state
securities laws.
11.3. Prorations. At Closing, the following items of revenue and
expense shall be prorated and adjusted as of 11:59 P.M. (except as otherwise
provided) on the day prior to the Closing Date:
(a) Property Taxes. Real estate taxes, payment of which is not the
obligation of tenants, personal property or use taxes, assessments, and sewer
rents, if any, for the tax period in which the Closing occurs shall be
apportioned between Contributors and AEGIS on a per diem basis through and
including 11:59 P.M. of the day preceding the Closing Date.
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(b) Operating Costs. All costs and expenses of operating the
Property, including without limitation amounts paid or payable under the Service
Contracts and the Equipment Leases; but Southgate shall be responsible for the
payment of all accounts payable with respect to the Property relating to
services rendered or goods provided prior to the Closing Date;
(c) Lease Rents. Rents under Leases and other revenues as and when
collected. If AEGIS receives any rents from Tenants after the Closing Date then
such collections shall first be applied to rents accruing on or after the
Closing Date, and AEGIS shall promptly remit the balance, if any, pro-rata to
Contributors, to the extent any pre-Closing Date rental obligation under such
Tenant's Lease remains unpaid to Contributors;
(d) Utility Deposits. AEGIS shall remit to the Contributors the
amount of any transferable security deposits posted with utility companies.
(e) Miscellaneous. Fees and expenses for coin or vending machine
income;
(f) Tax and Insurance Escrows. AEGIS shall pay Contributors the
amount of any real estate tax or insurance escrows held by the holder of the
First Mortgage.
(g) Intentionally Omitted;
11.4. Closing Costs. SGC and the Contributors agree that Southgate shall
pay (i) the cost of preparing or obtaining documents, consents, estoppels and
terminations to be delivered by such Contributor to AEGIS pursuant to this
Agreement, (ii) any transfer taxes, conveyance taxes, documentary stamps, sales
taxes and other taxes, fees or charges which are customarily paid by a seller
and payable to any governmental authority as a result of the transfer of the
Interests allocable to its respective Interest, (iii) its pro-rata share of
one-half (1/2) of any escrow fee imposed by the Escrow Agent. AEGIS shall pay
(i) all search fees, title premiums and other costs associated with the Title
Policy, the UCC searches and the Survey, (ii) any mortgage recording taxes, deed
taxes, documentary stamps, intangibles tax and other taxes, fees or charges
payable to any governmental authority which are customarily paid by a buyer as a
result of (x) the transfer of the Interests, or (y) any mortgage financing
obtained by AEGIS for the acquisition of the Interests, (iii) one-half (1/2) of
any escrow fee imposed by the Escrow Agent, and (iv) the fees and disbursements
of its counsel.
11.5. Reconciliation and Final Payment. Contributors and AEGIS shall
reasonably cooperate at Closing to make a final determination of the prorations
required hereunder as soon as reasonably practicable, but in no event later than
ninety (90) days after the Closing Date (except with respect to any item which
is not determinable within such time frame, as to which the time period shall be
extended until such item is determinable). Upon the final reconciliation of the
prorations and adjustments under Section 11.3, the party which owes the other
party any sums hereunder shall pay such party such sums within ten (10) days
after the reconciliation of such sums. It is the intent of the parties that all
items herein which are subject to the prorations pursuant to Article 11 shall
result in Contributors receiving all of the economic benefits and burdens of the
Property with respect to the period prior to the Closing, and AEGIS receiving
all of the economic benefits and burdens of the Property with respect to the
period from and after
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the Closing Date. The obligations to calculate such prorations, make such
reconciliations and pay any such sums shall survive the Closing.
11.6. Accounts Payable. The Purchase Price shall be reduced by an amount
equal to all accounts payable and other debts and liabilities relating to the
Property which have accrued prior to the Closing and are payable after the
Closing, to the extent the Purchase Price is not adjusted in favor of AEGIS
under the proration provisions of this Agreement for such accounts payable and
other debts and liabilities. AEGIS shall be responsible for the particular
accounts payable relating to the Property arising or accruing after the Closing
Date to the extent the Purchase Price is not adjusted in favor of Contributor
under the same provisions.
11.7. Contributor's Indemnity. SGC and the Contributors agree that SGC and
Contributors, jointly and severally, shall indemnify and hold AEGIS harmless
from and against all liabilities, losses, damages, costs, expenses (including
reasonable attorneys' fees) which AEGIS may suffer or incur by reason of any
liability, debt, act or cause of action occurring or accruing prior to the
Closing Date and arising from the ownership or operation of the Property prior
to the Closing Date, including but not limited to any claims by employees of
Southgate or third parties covered by insurance carried by Southgate.
11.8. AEGIS's Indemnity. AEGIS agrees to indemnify and hold each
Contributor harmless from and against all liabilities, losses, damages, costs,
expenses (including reasonable attorneys' fees) which the Contributor may suffer
or incur by reason of any liability, debt, act or cause of action occurring and
accruing subsequent to the Closing Date and arising from the ownership or
operation of the Property by AEGIS subsequent to the Closing Date, including but
not limited to any claims by employees of AEGIS or third parties covered by
insurance carried by AEGIS.
ARTICLE 12
Casualty and Condemnation
12.1. Risk of Loss; Notice. Prior to Closing and the delivery of
possession of the Property to AEGIS in accordance with this Agreement, all risk
of loss to the Property (whether by casualty, condemnation or otherwise) shall
be borne by Southgate and the Contributors. In the event that (a) any loss or
damage to the Property shall occur prior to the Closing Date as a result of fire
or other casualty, or (b) Southgate receives notice that a governmental
authority has initiated or threatened to initiate a condemnation proceeding
affecting the Property, Southgate shall give AEGIS immediate written notice of
such loss, damage or condemnation proceeding.
12.2. AEGIS's Termination Right. If, prior to Closing and the delivery of
possession of the Property to AEGIS in accordance with this Agreement, (a) any
condemnation proceeding shall be pending against a substantial portion of the
Property or (b) there is any substantial casualty loss or damage to the
Property, AEGIS shall have the option to terminate this Agreement provided it
delivers written notice to Southgate and each Contributor of its election so to
terminate this Agreement within ten (10) days after (but prior to Closing) the
date Southgate has delivered AEGIS written notice of any such loss, damage or
condemnation (which notice shall include a certification of (i) the amounts of
insurance coverages in effect
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with respect to the loss or damage and (ii) if known, the amount of the award to
be received in such condemnation), and in such event all Earnest Money shall be
delivered to AEGIS and thereafter no party shall have any further obligation or
liability to the other under this Agreement, except for those obligations herein
expressly stated to survive the termination of this Agreement. In the context of
condemnation, "substantial" shall mean condemnation of such portion of the
Property as would, in AEGIS's sole judgment, render use of the remainder
impractical or unfeasible for the uses herein contemplated, and, in the context
of casualty loss or damage, "substantial" shall mean a loss or damage in excess
of ten (10%) percent in value.
12.3. Procedure for Closing. If AEGIS shall not timely elect to terminate
this Agreement under Section 12.2 above, or if the loss, damage or condemnation
is not substantial, the parties agree that AEGIS shall receive all insurance
proceeds or condemnation awards which Southgate has received as a result of the
same plus an amount equal to the insurance deductible, if any in which event the
Closing shall occur without Contributor replacing or repairing such damage.
ARTICLE 13
Default and Remedies
13.1. AEGIS's Default. If, at or prior to Closing, for any reason other
than termination hereof pursuant to a right granted to AEGIS hereunder to do so
or because of an uncured default by SGC or any Contributor (i) AEGIS refuses or
fails to consummate the acquisition of the Interests pursuant to this Agreement,
or (ii) AEGIS or the REIT shall otherwise fail in any material respect to
perform any of its material obligations or agreements as and when required
hereunder, or if any representation or warranty made by AEGIS or the REIT herein
shall have been materially incorrect when made or when ratified at Closing, then
SGC, as its sole and exclusive remedy, shall have the right to terminate this
Agreement by giving AEGIS and the Escrow Agent written notice thereof and to
receive its pro-rata share of the Earnest Money. In the event of such
termination, neither party shall have any further rights, duties or obligations
hereunder (except to the extent this Agreement may specifically provide for the
survival of certain obligations). Contributors and AEGIS and the REIT hereby
acknowledge that the amount of damages resulting from breach of this Agreement
by AEGIS or the REIT would be difficult or impossible to accurately ascertain,
and that the Earnest Money shall serve as liquidated damages. Notwithstanding
the foregoing, in the event of any default by AEGIS or the REIT under this
Agreement due to a breach after Closing or any termination hereof of any
covenant, indemnity or other obligation which survives the Closing or any
termination hereof, or if any Contributor shall discover after Closing that any
warranty or representation made by AEGIS or the REIT herein was materially
incorrect or breached when made or when ratified at Closing, such Contributor
shall have the right to seek damages in a court of law provided that any claim
for damages shall be limited to direct, compensatory damages only.
13.2. Contributor's Default. If, for any reason other than termination
hereof pursuant to a right granted to a Contributor hereunder or because of an
uncured default by AEGIS (i) SGC refuses or fails to consummate the transaction
contemplated by this Agreement, or (ii) otherwise fails in any material respect
to perform any of its material obligations or agreements as and when required
hereunder, or if any representation or warranty made by SGC herein shall
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have been materially incorrect when made or when ratified at Closing, then
AEGIS, as its sole remedies, shall have the right to do any one or more of the
following:
(a) Terminate this Agreement by written notice given to SGC, the
Contributors and the Escrow Agent, in which event the Earnest Money shall be
returned to AEGIS by the Escrow Agent promptly upon receipt of such notice; or
(b) Enforce specific performance of this Agreement, provided,
however, AEGIS waives its right to seek monetary damages.
ARTICLE 14
Brokers
14.1. Identity of Brokers. The parties hereto represent to each other that
they dealt with no finder, broker or consultant in connection with this
Agreement or the transactions contemplated hereby.
14.2. Indemnification by Southgate. SGC and the Contributors agree that
Southgate shall, and hereby does defend, indemnify and save harmless AEGIS and
its affiliates and their respective successors and assigns from and against and
from any loss, liability or expense, including reasonable attorneys' fees,
arising out of any claim or claims for commissions, fees or other compensation
for bringing about this Agreement or the transactions contemplated hereby made
by any broker, finder, consultant or like agent if such claim or claims made by
any such broker, finder, consultant or like agent are based in whole or in part
on any agreements entered into by Southgate, SGC, any Contributor or its
representatives for a commission, fee or other compensation.
14.3. Indemnification by AEGIS. AEGIS agrees to, and hereby does, defend,
indemnify and save harmless Southgate, SGC, the Contributors and their
affiliates and their respective successors and assigns from and against any
loss, liability or expense, including reasonable attorneys' fees, arising out of
any claim or claims for commissions, fees or other compensation for bringing
about this Agreement or the transactions contemplated hereby made by any broker,
finder, consultant or like agent if such claim or claims made by any such
broker, finder, consultant or like agent are based in whole or in part on any
agreements entered into by AEGIS or its representatives for a commission, fee or
other compensation.
ARTICLE 15
Tax Considerations
15.1. Debt Maintenance and Guaranty Requirements.
Guaranty or Indemnity. (a) AEGIS agrees to maintain, during the
Restricted Period, as hereinafter defined, not less than _____________ of
indebtedness (the "Debt Amount"), which indebtedness shall be made available to
any Contributor receiving a Unit (the "Unit Recipient") for guarantee (or,
alternatively, with respect to which AEGIS shall permit
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such Unit Recipient to indemnify AEGIS, as provided in this Section 15.1). AEGIS
will permit the Unit Recipient to guarantee, or indemnify AEGIS or the REIT, for
the "bottom" portion (i.e, the least risky portion) of the Debt Amount pari
passu with other contributors, if any, with whom AEGIS has previously exchanged
Units or will exchange Units in the future.
(b) In the event that any Unit Recipient (i) obtains a tax-free
step-up in the basis of their Units for federal income tax purposes (e.g., upon
the death of a partner or other equity holder); (ii) sells, transfers or
otherwise disposes of its Units in a taxable transaction; or (iii) receives the
Tax Payment from AEGIS in reimbursement of taxes triggered to such Unit
Recipient as the result of the sale, transfer or other disposition of the Real
Property during the Restricted Period, as defined below then the Debt Amount
shall be commensurately reduced.
(c) For purposes of Section 7.04(c) of the Code, AEGIS agrees to use
the "traditional method" without curative allocations.
15.2. No Property Disposition. AEGIS covenants that no voluntary or
involuntary sale, transfer or other disposition (including, without limitation,
foreclosure and condemnation) of the Real Property (or any property which
replaces the Real Property in an exchange or other transaction which does not
cause the Contributor to recognize gain for Federal income tax purposes), shall
occur prior to the [tenth (10th)] anniversary of the Closing (the "Restricted
Period") other than an exchange or other transaction which does not cause a
Contributor to recognize income or gain for federal income tax purposes. During
the Restricted Period AEGIS shall have the right to dispose of or distribute the
Real Property, and AEGIS shall pay to the Unit Recipient the Tax Payment when
due. After [ten (10)] years AEGIS shall use commercially reasonable efforts to
dispose of the Real Property in a tax-free exchange pursuant to Section 1031 of
the Code.
15.3. Right of Redemption. (a)(i) If, prior to the date of death of the
last remaining individual Unit Recipient, AEGIS desires to sell or otherwise
desires to dispose of the Property (other than through foreclosure or
condemnation), and receives a bona fide offer to purchase the Real Property
after the Restricted Period from an unrelated third party, which offer AEGIS
wishes to accept, AEGIS shall give notice (the "Offering Notice") thereof to the
Unit Recipients. The Unit Recipients shall have thirty (30) days from delivery
of the Offering Notice to notify AEGIS in writing of whether they elect to
purchase the Real Property. The Offering Notice shall specify the nature of the
sale and the consideration and other terms upon which it intends to undertake
such sale and shall specify that the failure of the Unit Recipients to respond
within such thirty (30) day period shall be deemed the election by the Unit
Recipients not to purchase the Real Property. If they elect to so purchase, then
such purchase shall be consummated within ninety (90) days of delivery of the
Offering Notice on the terms and conditions set forth in the Offering Notice.
(ii) If, upon receipt of the Offering Notice, some or all of
the Unit Recipients wish to purchase the Real Property, those so wishing
shall participate in such purchase in proportion to their respective
Interests or as they may otherwise agree. If those Unit Recipients wishing
to purchase the Real Property fail to agree to pay the entire purchase
price, such failure shall be deemed an election by the Unit Recipients not
to purchase the Real Property.
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<PAGE>
(iii) The Unit Recipients may use their Units as currency, in
whole or in part, in connection with the purchase of the Real Property
from AEGIS pursuant to this Section 15.3.
(iv) If the Unit Recipients elect not to purchase the Real
Property or fail to respond to the Offering Notice within the thirty (30)
days of delivery of the Offering Notice , AEGIS may undertake to sell the
Real Property on the terms and conditions contained in the Offering
Notice; provided, however, that the sale of the Real Property to which
this Section 15.3 applies shall not be consummated at less than
ninety-five percent (95%) of the price specified in the Offering Notice.
If AEGIS does not sell the Real Property within the one-year period
following delivery of the Offering Notice, or should AEGIS at any time
wish to decrease the price for which it would sell the Property, AEGIS
shall again offer the Real Property to the Unit Recipients upon such terms
and conditions and the provisions of this Section 15.3 shall apply again.
In the event that the Unit Recipients shall decline to purchase the Real
Property pursuant to this Section 15.3, the Unit Recipients shall have no
further right of redemption as against the party to whom AEGIS has
transferred title to the Real Property. In the event Unit Recipients elect
to purchase the Real Property and default in the consummation of the
closing due to no fault of AEGIS, the Unit Recipients shall no longer be
entitled to any right of redemption hereunder and AEGIS shall be entitled
to all of its remedies at law or in equity.
(b) In the event that the Unit Recipients elect to purchase the Real
Property pursuant to this Section 15.3, AEGIS agrees to cooperate with the Unit
Recipients at no additional cost, expense or liability to AEGIS to cause debt to
be placed on the Real Property immediately prior to the closing of the
conveyance of the Real Property provided that (i) the Unit Recipients arrange
for such debt at their sole cost and expense; (ii) the Unit Recipients are
unconditionally prepared to close such conveyance immediately after said closing
of the loan; and (iii) the Unit Recipients agree to assume the debt and
thereafter assume same at the closing and AEGIS is released of all liability
thereunder immediately following the closing of the conveyance of the Real
Property.
15.4. Definitions.
(a) "Tax Payment" means an amount equal to the Taxes payable by the
Unit Recipient resulting from the event giving rise to such Tax Payment,
including the amount of taxes resulting from receipt of such Tax Payment.
(b) "Tax or Taxes" means any and all taxes, together with any
interest, penalties or additions to tax imposed with respect thereto.
(c) "Tax Return" means returns, reports and forms required to be
filed with any governmental authority.
15.5. Relationship to Partnership Agreement. Notwithstanding the
provisions of Section 7.7(b) of the Partnership Agreement, the provisions of
this Article, including but not limited to all covenants and agreements of
AEGIS, shall control.
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<PAGE>
ARTICLE 16
Miscellaneous
16.1. Notices. Any notice provided for by this Agreement and any other
notice, demand or communication which any party may wish to send to another
shall be in writing, addressed to the party for which such notice, demand or
communication is intended at such party's address as set forth in this Section,
and sent either (i) by registered or certified mail, return receipt requested,
in a sealed envelope, postage prepaid, (ii) by any national overnight receipted
courier service, or (iii) by facsimile transmission with confirmation of
receipt, as follows:
If to AEGIS or the REIT:
To: AEGIS REALTY OPERATING PARTNERSHIP, L.P.
625 Madison Avenue
New York, New York 10022
Fax #: 212-593-5794
Attention: Mr. Mark Schlacter
and RCC PROPERTY ADVISORS
15127 Jog Road, Suite 210
Delray Beach, Florida 33446-1251
Fax #: 561-496-1782
Attention: Mr. Paul R. Rutledge
with a simultaneous copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Michael A. Mishaan, Esq.
Fax #: (212) 856-7803
If to the Partnership at its address set forth on the first page hereof, with
simultaneous copies to:
Kephart & Fisher
41 S. High Street
Columbus, OH 43215
Attention: David W. Fisher, Esq.
Fax #: 614-469-1887
and O'Melveny & Myers
400 South Hope Street, 15th Floor
Los Angeles, California 90071
Attention Frederick B. McLane, Esq.
Fax #: 213-430-6407
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<PAGE>
If to a Contributor, at such Contributor's address for all purposes under this
Agreement shall as set forth on Schedule 1, annexed hereto, with simultaneous
copies to:
Akin, Gump, Strauss, Hauer & Feld LLP
590 Madison Avenue
New York, New York 10022
Attention: Robert G. Koen, Esq.
Fax #: 212-872-1002
and Michael Orbison, Esq.
625 Madison Avenue
New York, New York 10021
Fax #: 212-593-5766
and Columbus Pacific Properties, Inc.
6151 W. Century Boulevard, Suite 301
Los Angeles, California 90045
Fax #: 310-649-6494
Any address or name or facsimile number specified above may be changed by a
notice given by the addressee to the other party. Any notice, demand or other
communication shall be deemed given and effective as of the date of delivery in
person or receipt set forth on the return receipt or the facsimile confirmation.
The inability to deliver because of changed address or facsimile number of which
no notice was given, or rejection or other refusal to accept any notice, demand
or other communication, shall be deemed to be receipt of the notice, demand or
other communication as of the date of such attempt to deliver or rejection or
refusal to accept. Notices, demands and other communications may be given by the
parties' counsel which shall have the same force and effect as if given by the
parties themselves.
16.2. Entire Agreement, Modifications and Waivers; Cumulative Remedies.
This Agreement constitutes the entire agreement between the parties hereto and
may not be modified or amended except by an instrument in writing signed by the
parties hereto, and no provisions or conditions may be waived other than by a
writing signed by the party waiving such provisions or conditions. No delay or
omission in the exercise of any right or remedy accruing to Southgate, any
Contributor or AEGIS upon any breach under this Agreement shall impair such
right or remedy or be construed as a waiver of any such breach theretofore or
thereafter occurring. The waiver by Southgate, any Contributor or AEGIS of any
breach of any term, covenant or condition herein stated shall not be deemed to
be a waiver of any other breach, or of a subsequent breach of the same or any
other term, covenant or condition herein contained. All rights, powers, options
or remedies afforded to Southgate, any Contributor or AEGIS either hereunder or
by law shall be cumulative and not alternative, and the exercise of one right,
power, option or remedy shall not bar other rights, powers, options or remedies
allowed herein or by law, unless expressly provided to the contrary herein.
16.3. Exhibits. All exhibits referred to in this Agreement and
attached hereto are hereby incorporated in this Agreement by reference.
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<PAGE>
16.4. Successors and Assigns. No assignment of this Agreement by any party
hereto shall be permitted, except that AEGIS may assign its rights but not its
obligations under this Agreement solely to a directly or indirectly wholly-owned
subsidiary or subsidiaries of the REIT or AEGIS, to a partnership, limited
liability company in which any such wholly-owned subsidiary or subsidiaries
owns, either directly or indirectly, at least seventy-five (75%) percent of the
Profits, losses and cash flow thereof and controls the management of the affairs
of such partnership or limited liability company (any such entity, a "Permitted
Designee"), so long as AEGIS provides notice thereof to each Contributor. This
Agreement shall be binding upon, and inure to the benefit of, each Contributor
and AEGIS and their respective legal representatives, successors, and assigns.
Whenever a reference is made in this Agreement to AEGIS, it shall include
AEGIS's successors and assigns under this Agreement.
16.5. Article Headings. Article and Section headings and Article and
Section numbers are inserted herein only as a matter of convenience and in no
way define, limit or prescribe the scope or intent of this Agreement or any part
thereof and shall not be considered in interpreting or construing this
Agreement.
16.6. Governing Law. This Agreement shall be construed and interpreted
in accordance with the laws of the State of New York.
16.7. Time Periods. If the final day of any time period or limitation set
out in any provision of this Agreement falls on a Saturday, Sunday or legal
holiday under the laws of the State where the Property is located or of the
federal government, then and in such event the time of such period shall be
extended to the next day which is not a Saturday, Sunday or legal holiday.
16.8. Counterparts. This Agreement may be executed in any number of
counterparts and by either party hereto on a separate counterpart, each of which
when so executed and delivered shall be deemed an original and all of which
taken together shall constitute but one and the same instrument.
16.9. Intentionally Omitted.
16.10. Further Acts. In addition to the acts, deeds, instruments and
agreements recited herein and contemplated to be performed, executed and
delivered by AEGIS, Southgate, and any Contributor, AEGIS, Southgate, and any
and Contributor shall perform, execute and deliver or cause to be performed,
executed and delivered at the Closing or after the Closing, any and all further
acts, deeds, instruments and agreements and provide such further assurances as
the other party or the Title Company may reasonably require to consummate the
transactions contemplated hereunder.
16.11. Severability. In case any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
16.12. Attorneys' Fees. Should either party employ an attorney or
attorneys to enforce any of the provisions hereof or to protect its interest in
any manner arising under this
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<PAGE>
Agreement, the nonprevailing party in any action pursued in a court of competent
jurisdiction (the finality of which is not legally contested) agrees to pay to
the prevailing party all reasonable costs, damages, and expenses, including
reasonable attorneys' fees, expended or incurred in connection therewith.
16.13. REIT Audits. SGC and the Contributors acknowledge and agree that
the REIT, through its independent accountants, at the REIT's sole cost and
expense, may conduct an audit of the REIT's financial statements for purposes of
the REIT complying with its public reporting obligations under the Securities
and Exchange Act of 1934, as amended. In connection therewith, SGC and each
Contributor agree that for a period of twelve (12) months after the Closing
Date, SGC and such Contributor, at the REIT's sole cost and expense, shall
cooperate and assist, and to cause each of its Affiliates, its employees and
representatives to cooperate and assist, in such audit in all respects
reasonably requested by the REIT and its independent accountants, including
without limitation making employees of SGC and such Contributor, the Property
and their respective Affiliates available to provide any information necessary
or appropriate for such audits and signing standard management representation
letters to the REIT's independent accountants and to the REIT. Notwithstanding
the foregoing, any such audit shall not postpone the Closing Date.
IN WITNESS WHEREOF, this Agreement has been entered into effective as of
the date first written above.
CONTRIBUTORS:
SOUTHGATE GENERAL CORPORATION, a Delaware general
partnership
By: /s/ Stuart J. Boesky
Name: Stuart J. Boesky
Title:
-------------------------------------------------
HPI RIVERWOOD MANAGEMENT, INC., a Delaware corporation
By: /s/ Michael Verutto
Name: Michael Verutto
Title:
-------------------------------------------------
SOUTHGATE LIMITED ASSOCIATES, a Delaware general partnership
By: /s/ Stuart J. Boesky
Name: Stuart J. Boesky
Title:
-------------------------------------------------
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<PAGE>
HPI PARTNERS - FOUR, L.P., a Delaware limited partnership
By: /s/ Michael Verutto
Name: Michael Verutto
Title:
-------------------------------------------------
/s/ Kenneth Lebow
------------------------------------------
KENNETH LEBOW
/s/ Andrew L. Kaskel
----------------------------------------
ANDREW L. KASKEL
AEGIS REALTY OPERATING PARTNERSHIP, L.P.
By: Related Aegis, Inc., general partner
By: /s/ Mark J. Schlacter
Name: Mark J. Schlacter
Title: Senior Vice President
AEGIS REALTY, INC.
By: /s/ Mark J. Schlacter
Name: Mark J. Schlacter
Title: Senior Vice President
The undersigned hereby executed the foregoing agreement to evidence
its agreement to (i) enter into the non-exclusive leasing agreement at Closing
pursuant to Section 11.2(c)(vi), and (ii) at AEGIS's option to act as
construction manager at the Property for a fee not to exceed five percent (5%)
of the hard cost of construction, pursuant to an agreement in form reasonably
satisfactory to AEGIS and the undersigned.
COLUMBUS PACIFIC PROPERTIES, INC.
By: /s/ Brian Shirkin
Name: Brian Shirkin
Title:
-------------------------------------
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<PAGE>
SCHEDULE 1
Contributors
- -------------------------------------------------------------------------------
Name and Address Interest Cash (C) or Unit (U) Component
- -------------------------------------------------------------------------------
Southgate General Corporation 1% U
c/o Related Capital Co.
625 Madison Avenue, 5th Floor
New York, New York 10022
- -------------------------------------------------------------------------------
HPI Riverwood Management, Inc. 1% C
c/o HPI - Four Corp.
227 West Trade Street, S-2320
Charlotte, NC 28202
- -------------------------------------------------------------------------------
HPI Partners-Four LP 24.71% C
c/o HPI - Four Corp.
227 West Trade Street, S-2320
Charlotte, NC 28202
- -------------------------------------------------------------------------------
Andrew L. Kaskel 0.615% C
c/o Bear Stearms
245 Park Avenue, 9th Floor
New York, NY 10167
- -------------------------------------------------------------------------------
Kenneth Lebow 3.675% C
808 San Ysidro Lane
Santa Barbara, CA 93108
- -------------------------------------------------------------------------------
Southgate Limited Associates 69% U
c/o Related Capital Co.
625 Madison Avenue, 5th Floor
New York, NY 10022
- -------------------------------------------------------------------------------
100%
- -------------------------------------------------------------------------------
List of Exhibits
Exhibit A - Legal Description of Land
Exhibit B - Investor Questionnaire
Exhibit C - Lock-Up Agreement
Exhibit D - Exchange Rights Agreement
Exhibit E - Registration Rights Agreement
Exhibit F - Intentionally Omitted
Exhibit G - Permitted Exceptions
Exhibit H - Tenant Estoppel
Exhibit I - Accountant Representation Letter
Exhibit J - Rent Roll
Exhibit K - Tenant Arrearages and Brokerage Commissions Owing
Exhibit L - Tenant Sales Figures
<PAGE>
Exhibit M - Lease Assignments
Exhibit N - Equipment Leases
Exhibit O - Insurance Policies
Exhibit P - Utility Bills
Exhibit Q - Permits
Exhibit R - Operating Statements
Exhibit S - Security Deposits
Exhibit T - Warranty
Exhibit U - Non-Exclusive Leasing Agreement
Exhibit V - Pro Forma Statements of Operations
Exhibit W - Certain Proceedings
Exhibit X - Deferred Note
Exhibit Y - Intentionally Omitted
Exhibit Z - Form of Assignments
Exhibit AA - Voting Trust Agreement
Exhibit BB - Violations
Exhibit CC - FIRPTA Affidavit
Exhibit 3.2
FIRST AMENDMENT TO
CONTRIBUTION AGREEMENT
This FIRST AMENDMENT TO SALE AND CONTRIBUTION AGREEMENT (this "Agreement")
is made as of this 9th day of December, 1998 by and among STANDARD INVESTMENT
CO., LTD., an Ohio limited liability company, having an address at 6151 W.
Century Blvd., S-301, Los Angeles, CA 90045-5314 ("SIC"), RCC CROSSROADS EAST
ASSOCIATES, a New York general partnership, having an address at c/o Related
Capital Co., 625 Madison Avenue, New York, NY 10022 ("RCC", SIC and RCC are
referred to herein collectively, as "Managing Members"), J. MICHAEL FRIED, H.
LEON PACHTER and ALAN P. HIRMES, each having an address c/o Related Capital Co.,
625 Madison Avenue, New York, NY 10022 (each a "Crossroads East Sublimited
Partner," and collectively, "Crossroads East Sublimited Partners"), STUART J.
BOESKY, RITA S. BOESKY, ANDREW L. KASKEL, ALLISON K. SPITALNY AND MARK J.
SCHLACTER (each an "SJB Sublimited Partner," and collectively, "SJB Sublimited
Partners"), each having an address c/o Related Capital Co., 625 Madison Avenue,
New York, NY 10022; (Crossroads East Sublimited Partners and SJB Sublimited
Partners are referred to herein collectively as "Sublimited Partners", the
Managing Members and the Sublimited Partners are each referred to herein as
"Contributor" and collectively referred to herein as the "Contributors"), AEGIS
REALTY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership, having an
address at 625 Madison Avenue, New York, NY 10022, together with its successors
and assigns ("AEGIS") and AEGIS REALTY, INC., a Maryland corporation, having an
address at 625 Madison Avenue, New York, NY 10022, its successors and assigns
(the "REIT").
RECITALS:
WHEREAS, Managing Members and Limited Partner (as defined below) are in
the aggregate the owners of 100% of the Interests (as defined below) in
Crossroads East Shopping Center, Ltd., an Ohio limited liability company
("Crossroads"), which limited liability company owns the Property, as defined in
Section 2.1 hereof;
WHEREAS, the Crossroads East Sublimited Partners are in the aggregate the
owners of 100% of the Interests in Crossroads East Limited Associates, a New
York general partnership ("Limited Partner"), which partnership owns 30% of the
Interests in Crossroads;
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WHEREAS, the SJB Sublimited Partners are in the aggregate the owners of
100% of the Interests in SJB Crossroads East Ltd. Associates, a New York limited
partnership ("SJB"), which entity owns 41.667% of the Interests in Limited
Partner;
WHEREAS (i) the Managing Members wish to sell or contribute all of their
Interests in Crossroads, (ii) the Crossroads East Sublimited Partners wish to
sell or contribute all of their Interests in Limited Partner and (iii) the SJB
Sublimited Partners wish to sell or contribute all of their Interests in SJB,
respectively, to AEGIS in exchange for units of limited partnership interests in
AEGIS ("Units") and/or cash, as hereinafter set forth in this Agreement; and
WHEREAS, the general partner of AEGIS is the REIT;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained, the legal sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
The Contract
1.1. Agreement to Contribute. For and in consideration of the mutual
benefits enjoyed by one another under this Agreement, upon and subject to the
terms and conditions hereof, each Contributor agrees to contribute, convey,
sell, assign or transfer its Interest to AEGIS (and/or such Permitted Designees
(as defined in Section 16.4 below) as AEGIS may designate, in such percentage
allocations as AEGIS may designate), and AEGIS agrees to accept and purchase
and/or to cause its Permitted Designee(s) to accept and purchase such Interests.
As used herein, "Interest" shall mean all of a person or entity's right, title
and interest in Crossroads Limited Partner and/or SJB, as applicable, set forth
on Schedule 1 hereto, including his or its right, title and interest in capital,
profits and distributions. .
ARTICLE 2
The Property
2.1. Property. As used in this Agreement, the term "Property" shall mean
and refer to all of the following:
(a) The real property located at 2820 South Hamilton Road in the
City of Columbus, County of Franklin, and State of Ohio, as more particularly
described on Exhibit A attached hereto (the "Land");
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(b) The shopping center and all other buildings, structures,
fixtures, parking areas, and other improvements presently located upon the Land
(collectively, the "Improvements");
(c) All rights, titles, and interests of Crossroads appurtenant to
the Land and Improvements, including, but not limited to, (i) all easements,
alleys, rights of way, rights of ingress and egress, tenements, covenants,
hereditaments, privileges, mineral and water rights and appurtenances in any way
abutting, adjacent, contiguous to, adjoining or otherwise belonging to the Land
or Improvements and the use thereof, (ii) any land lying in the bed of any
alley, highway, street, road or avenue, open or proposed, in front of or
abutting or adjoining the Land, (iii) any strips or gores of real estate
adjacent to the Land, and (iv) any leases of adjacent land or facilities used in
connection with the operation of the Property (collectively, the
"Appurtenances;" together with the Land and Improvements, the "Real Property");
(d) Any award made or to be made in lieu of the Real Property,
including but not limited to any and all awards for any casualty or condemnation
proceeding, any unpaid award or damages to the Real Property by reason of change
of grade of any highway, road, street or avenue and any insurance proceeds
received as the result of any casualty to the Real Property;
(e) All tangible personal property and fixtures (which are not part
of the Improvements) of any kind attached to, or located upon and used in
connection with the ownership, maintenance, use or operation of the Land or
Improvements as of the date hereof (or acquired by Crossroads and so employed
prior to Closing, as defined below), including, but not limited to, all
furniture, fixtures, equipment, signs; all heating, lighting, plumbing,
drainage, electrical, air conditioning, and other mechanical fixtures and
equipment and systems; all copy machines, computers, software, facsimile
machines and other office equipment; all elevators, escalators, and related
motors and electrical equipment and systems; all hot water heaters, furnaces,
heating controls, motors and boiler pressure systems and equipment, all shelving
and partitions, all ventilating equipment, and all incinerating and disposal
equipment and all vans, automobiles and other motor vehicles, excluding any bank
accounts (collectively, the "Personal Property");
(f) All leases, licenses, occupancy agreements, or other agreements
providing for the use or occupancy of, or otherwise similarly affecting or
relating to the use or occupancy of, the Real Property, together with all
amendments, modifications, renewals and extensions thereof (collectively, the
"Leases" and individually, a "Lease"), and all guaranties by third parties of
the obligations of the tenants, licensees, concessionaires or other entities
thereunder (collectively, the "Guaranties");
(g) All prepaid rents and deposits, and all additional rents,
profits, income and receipts held by Crossroads or its managing agent under any
lease in the nature of security
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<PAGE>
for the performance of a tenant's (each, a "Tenant") obligations under any
Lease, including, but not limited to, refundable security deposits and rental
deposits, (collectively the "Deposits");
(h) To the extent assignable, any and all of the following that
relate to or affect, in any way, the design, construction, ownership, use,
occupancy, leasing, maintenance, service, or operation of the Real Property,
Personal Property, Leases or Deposits:
(i) Contracts and agreements, including, without limitation,
contracts and agreements such as labor or collective bargaining agreements,
service or maintenance contracts, employment agreements, utility contracts,
billboard contracts or leases, contracts for the purchase of supplies,
telephone service agreements, cable service agreements, and yellow pages or
other advertising agreements (collectively, the "Service Contracts") all of
which are subject to AEGIS's prior approval, exclusive of those to be
terminated by Crossroads pursuant to Section 5.6 below;
(ii) Warranties, guaranties, indemnities, and claims for the
benefit of Crossroads (collectively the "Warranties");
(iii) Licenses (including without limitation liquor, beer,
wine, bar and similar licenses), permits (including without limitation
health, swimming pool and elevator permits), certificates of occupancy,
and similar documents issued by any federal, state, or municipal authority
or by any private party (collectively the "Licenses");
(iv) Trade names, trade styles, trade marks, service marks,
logos, copyrights and other identifying material, and all variations
thereof, relating to the Real Property and its ownership, use, operation
and management, together with all related goodwill (collectively, the
"Tradenames");
(v) Plans, drawings, specifications, surveys, soil reports,
engineering reports, inspection reports, environmental audits and other
technical descriptions and reports to the extent in Crossroads' possession
or control (collectively, the "Plans");
(vi) Leases of any Personal Property and other contracts
permitting the use of any Personal Property at the Improvements
(collectively, the "Personal Property Leases"), and all of which are
subject to AEGIS's prior approval exclusive of those to be terminated by
Crossroads pursuant to Section 5.6 below;
(i) To the extent possessed by Crossroads, Crossroads' interest in
the right to receive immediately on and after Closing and continuously consume
thereafter water service, sanitary and storm sewer service, electrical service,
gas service, and telephone service on and for the Land and Improvements, and the
foregoing right shall include, but not be
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<PAGE>
limited to (i) the right to the present and future use of wastewater, drainage,
water and other utility facilities to the extent such use benefits the Land or
Improvements, (ii) all reservations of or commitments covering any such use in
the future, (iii) all wastewater capacity reservations ever issued and relating
to the Land or Improvements, and (iv) all deposits held by any such utility
suppliers (all of the foregoing are referred to in this Agreement collectively
as the "Utility Reservations");
(j) All books and records, promotional material, brochures, current
rent rolls, prints and/or pictures of the Real Property or Personal Property,
tenant data, marketing and leasing material and forms, market studies, keys,
reports, tests and other materials of any kind owned by Crossroads and in
Crossroads' possession or control, or to which Crossroads has access or may
obtain and has the right to convey and deliver which are or may be used in
Crossroads' ownership or use of the Real Property or the Personal Property,
whether any of the foregoing are in hard copy form or in computerized data
storage form (collectively, the "Records"). However, Crossroads and the
Contributors shall have access to such books, records, materials, etc. if
required in connection with tax audits; and
(k) all other rights, privileges and appurtenances owned by
Crossroads, if any, and in any way related to the foregoing rights and
interests.
ARTICLE 3
Contribution Consideration
3.1. Contribution Consideration. (a) The aggregate purchase price for the
Interests (the "Purchase Price") shall be the sum of Four Million Eight Hundred
Thousand and 00/100 Dollars ($4,800,000) less (i) the principal amount of that
certain mortgage (the "First Mortgage") of approximately $1,852,051.00 held by
National City Bank of Columbus encumbering the Property subject to the terms of
this Agreement (which shall be satisfied at closing by AEGIS), and (ii) the
amount of the Deferred Note, as defined in Section 3.1(a)(iv) below. AEGIS shall
pay the Purchase Price to each of the Contributors at Closing as follows:
(i) the Purchase Price shall be allocated among the Contributors in
proportion to their respective Interests.
(ii) the portion of the Purchase Price payable to Contributors in
cash, as set forth on Schedule 1, shall be paid on the Closing Date by the
wire transfer of immediately available Federal Funds to an account or
accounts designated by such Contributors (the "Cash Component").
(iii) the portion of the Purchase Price payable to Contributors in
Units, as set forth on Schedule 1 (the "Unit Component") shall be
calculated in the manner provided below; provided that the Unit Component
shall be distributed only to Contributors,
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equity owners, partners or members thereof who meet the definition of
"Qualifying Partners" set forth in subsection (b) below.
(iv) in addition to the Purchase Price each Contributor shall be
entitled to receive a pro rata share of $230,000, which shall be payable
by delivery at Closing of a promissory note (a "Deferred Note") in that
amount, in the form attached hereto as Exhibit X, payable to such
Contributors or Qualifying Partner thereof, which shall provide that (a)
the principal balance without interest shall be due and payable on the day
prior to the first anniversary of the date of a Deferred Note and shall be
payable in cash or Units in accordance with Schedule 1 annexed hereto, and
(b) a Deferred Note shall be prepayable in whole or in part without
penalty or premium.
The prorations and adjustments provided herein shall be paid in cash by
AEGIS or the Contributors, as the case may be.
(b) As used herein, the term "Qualifying Partner" shall mean any
Contributor or equity owner, partner or member thereof or any equity owner,
partner or member of any of them (i) who is an "accredited investor", as such
term is defined in Regulation D, promulgated under the Securities Act of 1933,
as amended (the "Securities Act"), (ii) who is receiving and who has completed
and returned to AEGIS an Investor Questionnaire in the form of Exhibit B annexed
hereto, (iii) who will be receiving Units with a value of not less than $250,000
in the aggregate (calculated as provided in Section 3.3 below), and (iv) who
agrees to execute and deliver to AEGIS, prior to its receipt of any Units, the
documents described in Section 11.2(a) below.
3.2. Allocations. The parties hereto agree that the Purchase Price shall
be allocated between the Land and the Improvements in a manner which is
consistent with the currently applicable tax statements from the governmental
entities having jurisdiction over the Property. No part of the Purchase Price is
being paid for any Personal Property, the acquisition of any copyrights,
trademark, service marks and other marks or the Logo, it being understood and
agreed by the parties hereto that any Personal Property and Tradenames are being
conveyed as a material inducement to AEGIS to acquire the Property for the
Purchase Price.
3.3. The Unit Component. (a) Effective as of and subject to the occurrence
of the Closing, each Contributor to whom the Units are to be distributed will
subscribe for and agree to accept the issuance of the Units and to be bound by
the terms and conditions of the AEGIS partnership agreement (the "Partnership
Agreement"), a copy of which has been provided to such Contributor, including
without limitation the power of attorney granted in the Partnership Agreement,
and to execute and deliver at the closing such other documents or instruments as
may be required to effect the admission of any such Contributor as a limited
partner in and to AEGIS, including signature pages to the Partnership Agreement.
The number of Units comprising the Unit Component shall equal the portion of the
Purchase Price payable in Units divided by Thirteen ($13.00) Dollars.
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(b) If as of the last trading day prior to the first anniversary of
the Closing (such date, the "Post-Closing Adjustment Date") the Average Price
Per Share (defined below) is less than $13.00 (as adjusted for any stock splits,
reverse stock splits or similar events), AEGIS shall issue to the Contributors
receiving Units on the last business day prior to the First Anniversary
additional Units as of such Post-Closing Adjustment Date equal to Units in the
amount of the difference between (i) the quotient obtained by dividing (A) the
portion of the Purchase Price payable in Units by (B) the Average Price Per
Share as of the Post-Closing Adjustment Date and (ii) the number of Units issued
to such Contributors on the Closing Date. AEGIS shall not issue fractional Units
but in the event that there is a remainder of dollars after the Average Price
Per Share of the Common Stock is divided into the amount of Units, the unit
amount shall be adjusted upward to the next whole number of Units. AEGIS and the
Contributors hereby agree that in no event shall the number of Units either
increase or decrease if the Average Price Per Share of the Common Stock as of
such date shall be greater than $13.00.
(c) The "Average Price Per Share" shall mean, with respect to any
given date, the average final closing per share price of the common stock of the
REIT, $ .01 par value per share (the "Common Stock"), as such closing price is
set forth in The Wall Street Journal, American Stock Exchange Composite
Transactions section, under the column "Close", during the twenty (20) trading
day period ending on such date. The provisions of the definition of "Value" set
forth in the Exchange Rights Agreement shall apply if the Common Stock is not
listed or admitted to trading.
3.4. Registration Rights. Each Contributor, equity owner, partner, member
or Qualifying Partner thereof to whom the Units are to be distributed shall have
the right, after a one-year "lock-up period", to exchange his, her or its Units
for cash or, at the option of the REIT, shares of the Common Stock on a
one-for-one basis (subject to customary anti-dilution and adjustment
provisions). Following the lock-up period, each such Contributor, equity owner,
partner or member thereof may request the REIT to register the shares with the
Securities and Exchange Commission (the "SEC") pursuant to a "shelf"
registration which the REIT will file with the SEC within ninety (90) days after
the receipt of such request. Such rights will be set forth in a lock-up
agreement (the "Lock-Up Agreement"), exchange rights agreement (the "Exchange
Rights Agreement") and registration rights agreement (the "Registration Rights
Agreement") and subject to a voting trust agreement (the "Voting Trust
Agreement") whereby such Contributor, equity owner, partner or member thereof
agrees to vote all of its OP Units or stock into which OP Units are converted in
accordance with the direction of AEGIS for a period of not less than four (4)
years, all to be executed by each such Contributor and one or more of either
AEGIS and/or the REIT, as appropriate, at the Closing. The Lock-Up Agreement,
Exchange Rights Agreement, Registration Rights Agreement and Voting Trust
Agreement shall be substantially in the forms attached hereto as Exhibit C,
Exhibit D, Exhibit E and Exhibit AA, respectively.
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3.5. Earnest Money. For the purpose of securing the performance of AEGIS's
obligations under the terms and provisions of this Agreement and as a condition
precedent to Contributors' obligations hereunder, simultaneously with the
execution and delivery of this Agreement, AEGIS shall pay, by check subject to
collection, to Royal Abstract (the "Escrow Agent"), the amount of Fifty Thousand
Dollars ($50,000.00), which amount (the "Initial Down Payment") Escrow Agent
shall deposit in an interest-bearing account. The Initial Down Payment, and so
much of sums as may have been so deposited with Escrow Agent at any given time,
together with any interest accrued thereon, is hereinafter referred to as the
"Earnest Money." The Earnest Money, together with interest earned thereon, shall
be returned to AEGIS at Closing or, if this Agreement is terminated prior to
Closing, to the party or parties entitled to receipt of the Earnest Money as
otherwise provided hereunder.
ARTICLE 4
Title and Survey
4.1. Marketable Title. At Closing, the Property shall be free and clear of
all mortgages, debts, liens, encumbrances, management agreements, leases,
licenses, franchises, concession agreements, security interests, conditions,
restrictions, rights-of-way, easements, encroachments, claims and other matters
affecting title, other than (a) those matters set forth as Exhibit G annexed
hereto; (b) those matters to which AEGIS does not object in accordance with
Section 5.5; and (c) those matters otherwise permitted by the express terms of
this Agreement or expressly approved by AEGIS in writing (such matters described
in clauses (a) through (c), collectively, the "Permitted Exceptions").
4.2. Title Commitment. AEGIS hereby acknowledges receipt of:
(a) Commitment No. 808919 for title insurance, dated August 3, 1998
(the "Title Commitment") issued by Chicago Title Insurance Company through Royal
Abstract, its agent (the "Title Company"), for an ALTA 1992 Owner's Policy,
covering the Land and Improvements, in the full amount of the Purchase Price
allocable to the Land and the Improvements, with access, zoning, subdivision,
contiguity and survey endorsements and any other endorsements as AEGIS or its
lender may reasonably require, setting forth the current status of the title to
the Land and Improvements, showing all liens, claims, encumbrances, easements,
rights of way, encroachments, reservations, restrictions, and any other matters
affecting the Land and Improvements, and pursuant to which the Title Company
agrees to issue to AEGIS at Closing an owners policy of title insurance (the
"Title Policy") on the ALTA 1992 comprehensive coverage owner's policy as
endorsed as AEGIS or its lender may reasonably require; and
(b) A true, complete, and legible copy of all documents and
instruments (as recorded, where applicable) (the "Supporting Documents")
referred to or identified in the Title Commitment, including, but not limited
to, all deeds and other conveyance documents evidencing transfer of title into
Crossroads, lien instruments, leases, plats, surveys,
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reservations, restrictions, and easements. AEGIS may order "bring-downs" or
"continuations" of such Title Commitment from time to time until the Closing.
4.3. UCC Search. AEGIS shall obtain, at AEGIS' expense, current written
reports (the "Searches") from the (a) Office of the Secretary of State of the
state where (i) the Property is located, (ii) Crossroads maintains its principal
place of business, (iii) Crossroads was formed, and (iv) each of the
Contributors resides/maintains its principal place of business/was formed; (b)
the UCC filing offices of (i) the counties where the Property is located, (ii)
where Crossroads maintains its principal place of business and (iii) each of the
Contributors resides/maintains its principal place of business/was formed; and
the deed recording offices and circuit courts of the counties where each of the
Contributors resides/maintains its principal place of business reflecting the
results of current searches of the judgment, tax lien and bankruptcy filing
records maintained by such offices. All searches shall reflect the results of
current searches of the records maintained by such offices, said searches to be
made under the name of Crossroads, its managing agent, any trade names used by
Crossroads at the Property, and each Contributor.
4.4. Survey. Within ten (10) days after the execution of the Agreement,
the Managing Members shall deliver to AEGIS the most current "as built" survey
in its possession (the "Survey") of the Land and Improvements made on the ground
and certified by a professional land surveyor licensed in the state in which the
Real Property is located.
4.5. Objections to Title, Survey and UCC Searches. (a) On the Closing
Date, title to the Property shall be free and clear of all liens, pledges,
security interests, easements, restrictions, covenants and other encumbrances,
other than the Permitted Exceptions. Within ten (10) days after its receipt of
the Title Commitment, the Survey and the Searches, AEGIS shall notify the
Contributors (or such of them as may be applicable) of its objection to any of
the matters reflected therein (other than the Permitted Exceptions). AEGIS shall
also promptly notify the Contributors(or such of them as may be applicable) of
any objections to matters revealed in any subsequent updates or continuations of
the Title Commitment, the UCC Searches or the Survey. If AEGIS shall so notify
any Contributor of any objections and, if such Contributor, as applicable, is
unable or unwilling to cure or remove such objections, AEGIS shall have the
right but not the obligation to terminate this Agreement by giving the
Contributors notice of its intention to do so. If the Contributors fail to cure
or remove such objections within five (5) days thereafter, AEGIS may give them
notice of termination.
(b) With respect to objections to matters involving the Title
Commitment or the Supporting Documents the Title Company's agreement to delete
from Schedule B, Section 2 any such matter(s) shall constitute compliance with
the obligations of Crossroads or such Contributor, as applicable, under this
Section 4.5.
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4.6. Violations. AEGIS shall notify the Managing Members of all violations
of law or municipal ordinances, orders, requirements or regulations noted in or
issued by the departments of buildings, fire, labor, health or other federal,
state, county, municipal and other governmental departments, agencies and
authorities having jurisdiction against or affecting the Property ("Violations")
on the Closing Date and any outstanding work orders and requirements of any
company now or then insuring the Property against casualty loss to which AEGIS
objects, and the last two sentences of Section 4.5(a) shall apply thereto. The
Managing Members shall furnish AEGIS with an authorization to make the necessary
searches to ascertain whether the Property is subject to any Violations and
AEGIS and its authorized representatives shall have the right to enter upon and
inspect the Property from time to time on and before the Closing Date.
ARTICLE 5
AEGIS's Review Period: Inspections and Objections
5.1. Inspections. The Managing Members shall give AEGIS and AEGIS's agents
and representatives access to the Property during normal business hours prior to
Closing and the right to physically inspect the Property, to conduct soil tests,
environmental tests and inspections, and other tests and inspections and to
examine any books, records and other financial information pertaining to the
Property, provided that AEGIS shall indemnify Crossroads, the Managing Members
and the Contributors for any loss, cost, damage or liability to persons or
property arising therefrom. The costs and expenses of AEGIS's investigation
shall be borne solely by AEGIS. In the event that the transaction contemplated
by this Agreement does not close for any reason other than a default by either
the Managing Members or any Contributor, AEGIS shall have the obligation to
repair any damage caused by AEGIS's inspections and tests to the condition prior
to AEGIS's entry, which obligation shall survive any termination of this
Agreement. The terms of this Agreement and all information furnished by
Crossroads to AEGIS in accordance with the provisions of this Agreement or
obtained by AEGIS in the course of its investigations shall be treated as
confidential information by AEGIS, subject to the provisions of Article 6 below.
5.2. Property Documents. On or prior to the date hereof, the Managing
Members, at their sole cost and expense, have delivered to AEGIS to the extent
in its possession, and to its actual knowledge without independent inquiry,
true, correct and complete copies (or where specifically indicated, original
counterparts) of the following, together with all amendments, modifications,
renewals or extensions thereof:
(i) All Warranties relating to the Property or any part
thereof which are still in effect;
(ii) Financial statements, balance sheets, income statements,
general ledgers, budgets and Federal and State income tax returns for the
Property, for the current year to date and each of the three (3) years
prior to the year of this Agreement (the
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"Financial Statements"), including the itemization of (1) annual insurance
premiums for each such year for fire, extended coverage, workers'
compensation, vandalism and malicious mischief, general liability,
business interruption, rents and other forms of insurance shown thereon;
(2) expenses incurred for water, electricity, natural gas, sewer and other
utility charges; (3) total rents and revenues collected from tenants and
other sources; (4) management fees; (5) maintenance, repairs and other
expenses relating to the management and operation of the Property; and (6)
historical occupancy statistics for the Property;
(iii) All Licenses;
(iv) All of the most recent real estate and personal property tax
statements with respect to the Property and notices of appraised value for
the Land and Improvements;
(v) All engineering and architectural plans, drawings and
specifications relating to the Property, as well as copies of any
environmental reports, boundary surveys, engineering reports and
subsurface studies affecting the Property. If the Property is acquired by
AEGIS, all such documents and information shall thereupon be and become
the property of AEGIS without payment of any additional consideration
therefor; provided, however, in the event that the Closing does not
actually occur, AEGIS shall return such information to Crossroads;
(vi) All Service Contracts and a schedule of such Service Contracts
(the "Schedule of Service Contracts");
(vii) All Leases, a schedule of such Leases (the "Schedule of
Leases") and all agreements for real estate commissions, brokerage fees,
finder's fees or other compensation payable by Crossroads in connection
therewith which would be binding on AEGIS after Closing;
(viii) A rent roll, certified by Crossroads to be true and correct,
including for each Lease (1) the name of the tenant; (2) the address or
location of the demised Property; (3) the base rental rate; (4) the amount
of prepaid rent; (5) the amount of each security deposit; (6) the
applicable percentage rental rate, if any, and the means of calculation
thereof; (7) the date of the Lease; and (8) the expiration date of the
Lease;
(ix) All notices received by Crossroads or its managing agent from
governmental authorities in connection with the Property, and a list of
all current Violations (as defined in Section 8.2 below) known to
Crossroads;
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(x) A list of all current Property employees and their salaries or
wages and all employment benefits accompanied by copies of their
employment agreements and/or union contracts, if any;
(xi) An inventory of the Personal Property;
(xii) A schedule of the Deposits (the "Schedule of Deposits");
(xiii) A description of the existing insurance covering the Property;
(xiv) An audited balance sheet (the "Balance Sheet") of the Property
as of December 31, 1997 (the "Balance Sheet Date"), listing all
liabilities, accounts payable and accounts receivable of the Property and
Crossroads as of such date. The Balance Sheet (i) will be in accordance
with the books and records of the Property, (ii) will fairly present the
financial condition of the Property at the Balance Sheet Date and the
financial results for the entities and periods therein specified and (iii)
will have been prepared in accordance with generally accepted accounting
principles consistently applied;
(xv) A schedule of any litigation, arbitration or administrative
proceedings pending or threatened with respect to the Property;
(xvi) Crossroads' organizational documents (the "Organizational
Documents");
(xvii) The most recent title insurance policy and survey for the
Property;
(xviii) All documents evidencing or securing any mortgage loans
encumbering the Property;
(xix) Intentionally omitted;
(xx) Any documents pertaining to any Utility Reservations;
(xxi) Any leases of adjacent land or facilities used in connection
with the operation of the Property;
(xxii) Crossroads' 1998 capital and operating budgets and all
materials relating to its marketing program; and
(xxiii) Such other documents or information as may be requested by
AEGIS no later than ten (10) days after the execution hereof.
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The Managing Members shall promptly notify AEGIS in writing upon learning of any
material inaccuracy, misstatement or omission in any of the information
furnished to AEGIS and shall supply AEGIS with updated information or schedules,
as required.
5.3. AEGIS's Review Period Termination Right. AEGIS shall have until 5:00
P.M. Eastern Time on that date which is fifteen (15) days after the date on
which this Agreement has been fully executed by all of the parties hereto, for
the review of title, survey and environmental matters (the "Review Period"), to
evaluate the Property and the matters listed in Articles 4 and 5.2. In the event
AEGIS shall determine, in AEGIS's sole discretion, that the results of the
inspection and review are unsatisfactory, or for any other reason whatsoever,
AEGIS shall have the right to terminate this Agreement upon written notice to
each of the Contributors and Crossroads delivered at any time on or before the
expiration of the Review Period. Failure by AEGIS to notify Contributors and
Crossroads of its election to terminate this Agreement within such period shall
be deemed AEGIS' election not to terminate this Agreement but to proceed to
Closing. Upon a termination of this Agreement by AEGIS as permitted herein, the
Earnest Money shall be returned to AEGIS and thereafter neither party shall have
any further obligation or liability to the other under this Agreement, except
for the obligation to pay the cost of repairs, if any, and the indemnity set
forth in Section 5.1 and the return of the materials in accordance with Section
5.2(v) hereof.
5.4. Operational Licenses. During the Review Period AEGIS shall have
obtained, or determined that it will be able to obtain all permits, licenses,
approvals and other authorizations necessary or desirable to operate the
Property. To that end, during the Review Period, the Managing Members and AEGIS
shall cooperate with each other, and each shall execute such transfer forms,
license applications and other documents as may be necessary or desirable for
AEGIS or its designees to obtain such permits, licenses, approvals and other
authorizations.
5.5. Procedure for AEGIS's Objections. At any time during the Review
Period AEGIS may notify the Managing Members in writing of any objections AEGIS
may have with respect to the Property or to any matters reflected in or
concerning any of the documents or items delivered by the Managing Members to
AEGIS, or to the results of the inspections, tests and studies of the Property
made by AEGIS, or to any Service Contracts, Leases or Licenses, or to any other
matters under this Agreement. If AEGIS shall so notify Crossroads of any
objections under Sections 4.5 or 5.5 hereof, and if the Managing Members is
unable or unwilling to cure or remove the objections identified in AEGIS' notice
on or before the Closing Date, or shall otherwise fail to respond, to any
objection of AEGIS on or before the Closing Date, as same may be adjourned for a
maximum of ten (10) days pursuant to Section 11.1 (unless AEGIS, in its sole
discretion, waives such objection in writing), or (ii) AEGIS, in AEGIS's sole
discretion, is not satisfied with the results of any cure efforts by such party,
or (iii) the Managing Members is unable to satisfy AEGIS's objections for any
reason whatsoever, then in any such event described in clauses (i), (ii) and
(iii) above AEGIS may terminate this Agreement on written notice to the Managing
Members and the Contributors,
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whereupon the Earnest Money shall be returned to AEGIS and thereafter neither
party shall have any further obligation or liability to the other under this
Agreement, except for the cost of repairs, if any, and the indemnity set forth
in Section 5.1 and the return of the materials in accordance with Section 5.2(v)
hereof.
5.6. Cancellation of Management Agreements and Service Contracts. Upon
request by AEGIS, by Closing, the Managing Members shall, cause Crossroads to
cancel any and all management agreements affecting the Property. Crossroads
shall also cancel any of such Service Contracts objected to by AEGIS.
ARTICLE 6
Confidentiality
6.1. Press Releases. Neither AEGIS, Crossroads, any Contributor, nor any
Affiliate of either AEGIS, Crossroads or any Contributor shall issue any press
release nor otherwise make public any information with respect to this Agreement
or the transactions contemplated hereby prior to the Closing Date, without the
prior written consent of AEGIS and Crossroads.
6.2. Confidentiality. (a) Except to the extent otherwise provided herein,
required by law or advised by counsel to be in accordance with law, or
contemplated by Section 6.1, until the consummation of the transaction
contemplated by this Agreement, the parties hereto shall hold, and shall cause
each of their respective Affiliates to hold, all information and documents
obtained in connection with the transactions contemplated hereby confidential
including, any oral and written information concerning Crossroads, any
Contributor and the Property received from Crossroads, any Contributor or from a
third party at the direction of either Crossroads or any Contributor
(collectively the "Due Diligence Material"). The Due Diligence Material shall
not be disclosed, discussed or made known without the prior written consent of
the Crossroads, except on a need to know basis for the purpose of evaluating the
transaction contemplated by this Agreement to the officers, employees or board
of directors of the REIT, AEGIS, or any of their affiliates; to the Related
Aegis, L.P., the advisor to the REIT and its general partner and any officer,
employee or investor thereof; to AEGIS's prospective lenders and their counsel;
to any marketing company employed to do feasibility studies; or any investment
banking, accounting, legal or other professional advisers; or to any
environmental or engineering consultants with whom AEGIS desires to consult in
connection with the proposed transaction. If the transaction contemplated hereby
is not consummated for any reason whatever, each party hereto shall, as soon as
practicable and to the extent possible, return all such information and
documents (and any copies thereof in such party's possession) to such other
party hereto.
(b) Notwithstanding the foregoing, it is acknowledged that the REIT may
sell shares to the general public and that in connection therewith, the REIT has
the absolute and unbridled right to market such securities and prepare and file
all necessary or reasonably required
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registration statements and other papers, documents and instruments necessary or
reasonably required in the REIT's reasonable judgment, and that of its attorneys
and underwriters, to file a registration statement with respect to its shares
with the U.S. Securities and Exchange Commission and/or similar state
authorities and to cause same to become effective and to disclose therein and
thus to its underwriters, to the U.S. Securities and Exchange Commission and/or
to similar state authorities and to the public all of the terms, conditions and
provisions of this Agreement, as well as various documents delivered to the REIT
and/or AEGIS pursuant to this Agreement provided that such disclosure is
necessary or reasonably required.
ARTICLE 7
INTENTIONALLY OMITTED
ARTICLE 8
Covenants of the Managing Members and Contributors; Pre-Closing Matters
8.1. Interim Operation. The Managing Members hereby covenant and agree
that between the date of this Agreement and the Closing, Crossroads shall:
(a) Operate, manage, and maintain the Property consistent with
Crossroads' prior practice and as a reasonable and prudent operator of like-kind
Properties in the same competitive market would operate, manage, and maintain
the Property, including, without limitation, (i) using reasonable efforts to
preserve its relations with Tenants, suppliers and other parties doing business
with Crossroads with respect to the Property, (ii) maintaining the current level
of advertising and other promotional activities for Property facilities, (iii)
maintaining its books of accounts and records in the usual, regular and ordinary
manner, in accordance with generally accepted accounting principles applied on a
basis consistent with the basis used in keeping its books in prior years, and
(iv) remaining in substantial compliance with all current Leases, Licenses and
other agreements;
(b) Not commit waste of any portion of the Property;
(c) Keep and maintain the Property in a state of repair and
condition consistent with the requirements of clause (a) above;
(d) Keep, observe, and perform all its obligations under the Leases,
the Service Contracts and the Licenses, and all other applicable contractual
arrangements relating to the Property;
(e) Not enter into any new agreements of the nature of the Service
Contracts or Leases or, except in the ordinary course of business, any
amendments, modifications, terminations, renewals, expansions or extensions of
any existing Service Contracts or Leases,
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without AEGIS's prior written consent which shall not be unreasonably withheld,
delayed or conditioned. Any such new agreement or renewal or extension of
existing agreements to which AEGIS's consent was not obtained, whether or not
such consent is required under this Section 8.1(e), shall subject the applicable
agreement to AEGIS's review under Section 5.5. The cost of any tenant
improvements, tenant allowances or brokerage fees payable in connection with any
Lease to which AEGIS has consented as aforesaid shall be borne by AEGIS;
(f) Not cause or permit the removal from the Property of any article
of Personal Property except as may be necessary for repairs, or the discarding
of worn out or useless items, provided, however, that any article removed for
repairs shall be returned to the Property promptly upon its repair and shall
remain a part of the Personal Property whether or not such article shall be
located on the Property at the time of the Closing, and any article so discarded
shall be replaced with a new article of similar quality and utility prior to the
Closing;
(g) Not make, grant or suffer any mortgage, lien, pledge,
encumbrance, charge, easement, right-of-way, covenant or restriction with
respect to the Real Property or the Personal Property or any portion thereof,
without the prior written consent of the AEGIS in each instance;
(h) Except to the extent required by any written agreement in effect
as of the date hereof, not take any steps with respect to the negotiations or
appraisal of rent under any of the Leases nor grant any bonus, free rent, rebate
or other concession to any present or future Tenant (other than pursuant to
Leases to which AEGIS has consented under Section 8.1(e) above), in each case
without AEGIS's prior written consent;
(i) Advise AEGIS promptly of any litigation, arbitration, or
administrative hearing before any court or governmental agency concerning or
affecting the Property, or to its knowledge, the Contributor which is instituted
or threatened after the date of this Agreement;
(j) Use its good faith efforts to not take, or fail to take, any
action that would have the effect of violating any of the representations,
warranties, covenants or agreements of the Managing Members contained in this
Agreement;
(k) Materially comply with all federal, state, and municipal laws,
ordinances, regulations, and orders relating to the Property except for those
compliance with which is the responsibility of tenants;
(l) Not sell or assign or enter into any agreement to sell or
assign, or to create or permit to exist any lien or encumbrance (other than a
Permitted Exception) on, the Property, any portion thereof or any interest
therein;
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(m) Not allow any License or other right currently in existence with
respect to the operation, use, occupancy or maintenance of the Property to
expire, be canceled or otherwise terminated without AEGIS's prior written
consent;
(n) Not undertake or commence any renovations or alterations at the
Property, except those necessary to comply with any of the provisions of this
Agreement, or the express provisions of any Lease, without the prior written
consent of the AEGIS in each instance;
(o) Pay or cause to be paid all taxes, assessments and other
impositions levied or assessed on the Property or any part thereof on or before
the date on which the payment thereof is due;
(p) Keep the existing insurance coverage for the Property in full
force and effect;
(q) Not amend, modify or renew, or agree to amend, modify or renew,
any ground lease or mortgage loan documents or agreements to which the Property
may be subject, if any, without in each instance AEGIS's prior written consent;
(r) Not apply any of the Deposits, whether to a default of a Tenant
or otherwise; and
(s) Not accept payments of rents, additional rents or any other sums
due and payable under the Leases which are tendered more than one (1) month in
advance of the due dates thereof.
8.2. Violations. The Managing Members hereby covenant and agree that all
material violations of federal, state, county or municipal laws, ordinances,
orders, regulations or requirements or those of any governmental or
quasi-governmental department, agency or authority, issued, filed, or served by
any governmental or quasi-governmental agency or authority having jurisdiction
over the Property against or affecting the Property ("Violations") on or before
the Closing Date of which Crossroads has actual knowledge shall be promptly
disclosed to AEGIS.
8.3. Third Party Consents. The Managing Members shall use reasonable good
faith efforts to obtain and to deliver to AEGIS, not less than ten (10) days
prior to Closing, all third party consents and approvals required for the
transactions contemplated hereby, including but not limited to the consent of
any party required for the assignment of any Service Contract or Lease to AEGIS.
8.4. Estoppel Certificates. The Managing Members shall use reasonable
efforts to cause Crossroads, at its expense, to obtain and deliver to AEGIS, not
less than ten (10) days
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before Closing, estoppel certificates from each Tenant under any Lease affecting
the Property, in substantially the form of Exhibit H hereto.
8.5. Intentionally Omitted.
8.6. Intentionally Omitted.
8.7. Shadow Management. Crossroads shall permit AEGIS to establish and
maintain a shadow management operation with respect to the Property prior to the
Closing Date. Personnel from AEGIS's or manager's shadow management operation
shall have reasonable access during normal business hours to all books, records
and other information in the possession or control of Crossroads or its agents
concerning the Property and shall have the right (at AEGIS's expense) to
establish duplicate books and records in order to effect a smooth transition in
the ownership and management of the Property; provided, however, that AEGIS and
its shadow management operation and employees (a) shall not unreasonably
interfere with the normal management and operation of the Property, (b) shall
hold all information acquired from such books and records confidential in
accordance with the provisions of this Agreement, (c) shall repair any damage to
the physical condition of the Property caused by AEGIS or its agents in any such
shadow management operation, and (d) shall not be deemed to have assumed
management responsibilities prior to Closing by virtue of such shadow
management.
8.8. Access to Records and Financial Information. AEGIS and AEGIS's
authorized representatives and employees shall have the right, at AEGIS's sole
cost, risk and expense, from time to time, subject to the rights of tenants, to
enter upon and pass through the Property during normal business hours and upon
reasonable notice to Crossroads or any of the Contributors, as applicable, to
examine and inspect all of the then existing books, records, surveys, plans,
specifications, permits, certificates of occupancy and other files that are
relevant to the management, ownership, operation, use, occupancy, construction
or leasing of the Property, are in the possession or control of Crossroads or
any Contributors, and have not been otherwise provided to AEGIS as required
elsewhere herein. Further, and not in limitation of Section 5.2 above, AEGIS's
representatives shall have access to all financial and other information
relating to the Property and to enable them to prepare a registration statement,
report or disclosure statement for filing with the Securities and Exchange
Commission (the "SEC") on behalf of the REIT and/or its affiliates. Prior to the
end of the Review Period, Crossroads shall also provide to AEGIS's
representatives a signed representation letter sufficient to enable an
independent public accountant to render an opinion on the financial statements
related to the Property, such letter to be in the form of Exhibit I hereto
subject to the further requirements of such accountant. To the extent that the
Financial Statements provided by Crossroads pursuant to Subsection 5.2 hereof
for the current year do not include any period up to and including the Closing
Date, Crossroads shall, within twenty-five (25) days after the Closing Date,
provide AEGIS with monthly unaudited Financial Statements, including Balance
Sheets, general ledger and income statements applicable to such
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period inclusive of the Closing Date. From the date hereof until the Closing
Date, Crossroads shall deliver to AEGIS each month upon receipt of a copy of the
monthly financial report for the Property.
8.9. Exclusivity. From the date hereof through the end of the Review
Period (the "Exclusivity Period"), neither Crossroads, any Contributors nor any
Affiliates of either Crossroads or any Contributor will solicit or entertain
discussions with any other party or furnish information related to a sale of the
Property or any part
thereof.
8.10. Intentionally Omitted.
8.11. Tax Information. The Managing Members acknowledge that (i) the
computation of taxable income of AEGIS is crucial in the determination of the
taxable income of the REIT, (ii) the REIT needs to be able to prepare accurate
estimates of its taxable income in order to monitor compliance with the
requirement that it distribute 95% of its taxable income to its shareholders,
and (iii) the depreciation of the Property and the required depreciation
allocations under Section 704(c) of the Code will materially impact the
computation of AEGIS's and the REIT's taxable income. Accordingly, the Managing
Members agree that (i) prior to the expiration of the Review Period, the
Managing Members shall provide AEGIS with tax basis computations and historical
tax depreciation schedules updated through the Closing Date for the Property;
and (ii) prior to the expiration of the Review Period, the Managing Members
shall provide AEGIS with all data reasonably available to it required to perform
depreciation allocations (as contemplated by Section 704(c) of the Code) with
respect to the Property and any recipient of the Units. Such data shall include
the tax basis allocable to the OP Unit recipients for the Property.
ARTICLE 9
Representations, Warranties and Covenants
9.1. Representations by AEGIS and the REIT. AEGIS and the REIT hereby
represent and warrant unto Contributors that each and every one of the following
statements is true, correct and complete in every material respect as of the
date of this Agreement and will be true, correct and complete as of the Closing
Date:
(a) AEGIS is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware, and, has full
right, power and authority to issue the Units, to enter into this Agreement and
to assume and perform all of its obligations. Upon the expiration of the Review
Period (provided this Agreement has not been terminated), the execution and
delivery of this Agreement and the performance by AEGIS of its obligations under
this Agreement will require no further action or approval of AEGIS's or the
REIT's shareholders, directors, members, managers or partners (as the case may
be) or of any other individuals or entities in order to constitute this
Agreement as a binding and
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enforceable obligation of AEGIS. The individuals and/or entities signing below
in the indicated representative capacities are fully authorized so to act,
subject as aforesaid.
(b) AEGIS is not a foreign partnership (as such term is defined in
the Internal Revenue Code and Income Tax Regulations).
(c) The entry into, performance of, or compliance with this
Agreement by AEGIS has not resulted, and will not result, in any violation of,
default under, or acceleration of any obligation under any existing corporate
charter, certificate of incorporation, partnership agreement, bylaw, articles of
organization, mortgage indenture, lien agreement, note, contract, permit,
judgment, decree, order, restrictive covenant, statute, rule or regulation
applicable to AEGIS.
(d) The REIT is a corporation duly organized, validly existing and
in good standing under the laws of the State of Maryland which operates as a
real estate investment trust, and has full right, power and authority to enter
into this Agreement and to assume and perform all of its obligations. Upon the
expiration of the Review Period (provided this Agreement has not been
terminated), the execution and delivery of this Agreement and the performance by
AEGIS of its obligations under this Agreement will require no further action or
approval of AEGIS's or the REIT's shareholders, directors, members, managers or
partners (as the case may be) or of any other individuals or entities in order
to constitute this Agreement as a binding and enforceable obligation of AEGIS.
(e) The individuals and/or entities signing below in the indicated
representative capacities are fully authorized so to act, subject as aforesaid.
(f)The REIT has elected to be taxed as a REIT under Internal Revenue
Code Sections 856-860 and has qualified to be taxed as a REIT for its taxable
year ending December 31, 1997, and the REIT's method of operation will enable it
to qualify to be taxed as a real estate investment trust for its taxable year
ended December 31, 1998 and subsequent taxable years.
(g) The REIT is a domestically controlled REIT (as such term is
defined in Internal Revenue Code Section 897(h).
(h) The entry into, performance of, or compliance with this
Agreement by the REIT has not resulted, and will not result, in any violation
of, default under, or acceleration of any obligation under any existing
corporate charter, certificate of incorporation, bylaw, articles of
organization, mortgage indenture, lien agreement, note, contract, permit,
judgment, decree, order, restrictive covenant, statute, rule or regulation
applicable to the REIT.
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(i) No representation or warranty made by AEGIS or the REIT in this
Agreement, in any exhibit annexed hereto, or in any letter or certificate
furnished to Crossroads or the Contributors pursuant to the terms hereof, each
of which is incorporated herein by reference and made a part hereof, contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading.
(j) AEGIS shall treat the portion of the Property acquired by Unit
as a contribution to a partnership pursuant to Section 721 of the code and shall
take a carry over basis in such portion of the Property pursuant to Section 723
of the Code.
(k) The Partnership Agreement is in full force and effect and has
not been further amended or modified.
(l) The Units to be issued to the Contributors, when issued, sold
and paid for pursuant to this Agreement and the Partnership Agreement, will be
duly authorized, validly issued, fully-paid and free of all liens.
(m) The shares of Common Stock to be issued upon conversion of Units
will be duly authorized and reserved for issuance and, to the extent delivered
upon exchange of the OP Units, when issued, sold and paid for pursuant to this
Agreement and the Partnership Agreement, will be validly issued, fully paid and
nonassessable, free of all liens and upon official notice of issuance will be
listed on the AMEX (or such other exchange or national quotation system as the
Common Stock is then traded on).
(n) The REIT has filed all forms, reports, schedules, proxy
materials, registration statements and related prospectuses and supplements and
other documents required to be filed by the REIT with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Act or the Securities
Exchange Act of 1934, as amended, for the year ended December 31, 1997 up to the
date hereof (collectively, the "SEC Documents") and will cause to be delivered
to Contributor copies of such additional documents as may be filed with the SEC
by the REIT between the date hereof and the Closing Date. The SEC Documents
were, and those additional documents filed between the date hereof and the
Closing will be, prepared and filed in all material respects in compliance with
the rules and regulations promulgated by the SEC, and do not 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, not misleading.
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9.2. Representations by Contributors.
(a) Each Contributor that is not an individual hereby represents and
warrants unto AEGIS that each and every one of the following statements is true,
correct and complete in every material respect as of the date of this Agreement
and will be true, correct and complete as of the Closing Date. Such Contributor
is an entity duly organized, validly existing and in good standing under the
laws of the State of its formation as set forth on page 1 of this Agreement and
is duly qualified to do business in the States in which it is required to do so.
Such Contributor has full right, power and authority to enter into this
Agreement and to assume and perform all of its obligations under this Agreement;
and the execution and delivery of this Agreement and the performance by the
Contributor of its obligations under this Agreement require no further action or
approval of Contributor, its shareholders, directors, partners or members, as
the case may be, or of any other individuals or entities in order to constitute
this Agreement a binding and enforceable obligation of the Contributor. The
Contributor has obtained each and every consent, approval, permit or order of,
and has made each and every filing with, any individual, partnership,
corporation, trust or other entity, government agency or political subdivision
required to be obtained or made in connection with: (A) its execution, delivery
and performance of this Agreement and (B) its consummation of the transactions
contemplated hereby. This Agreement is the legal, valid and binding obligation
of the Contributor, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting the
enforcement thereof or relating to creditors' rights generally.
(b) Each Contributor hereby represents and warrants unto AEGIS that
each and every one of the following statements is true, correct and complete in
every material respect as of the date of this Agreement and will be true,
correct and complete as of the Closing Date:
(i) Such Contributor is not a foreign corporation or person
(as that term is defined in the Code and Income tax regulations).
(ii) Neither the entry into nor the performance of, or
compliance with, this Agreement by the Contributor has resulted, or will
result, in any violation of, or default under, or result in the
acceleration of, any obligation under the articles of incorporation of the
Contributor, or any existing mortgage indenture, lien agreement, note,
contract, permit, judgment, decree, order, restrictive covenant, statute,
rule or regulation applicable to the Contributor or, to its actual
knowledge without independent inquiry or analysis, Crossroads.
(iii) Based upon Contributor's actual knowledge without
independent inquiry or analysis (x) the Contributor now has or will have
at the Closing, good and valid title to its Interest, free and clear of
all liens, encumbrances, restrictions and
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claims of every kind and nature whatsoever ("Liens") (except as stated in
Exhibit G annexed hereto) and (y) the Contributors and Limited Partner are
the only entities which have any interest in or right to receive the
profits and distributions of Crossroads, Limited Partner and SJB, as
applicable, or otherwise in Crossroads Limited Partner and SJB, as
applicable. Upon consummation of the assignments contemplated by this
Agreement, AEGIS (or its designee) will acquire from the Contributor good
and valid title to its Interest, free and clear of any Liens other than
Liens created by, under or through AEGIS or its designee(s).
(iv) Except as otherwise disclosed herein, no party has any
right or option to acquire the Contributor's Interest or any portion
thereof, other than AEGIS and the REIT under this Agreement.
(v) The Contributor (i) is not in receivership or dissolution,
(ii) has not made an assignment for the benefit of creditors or admitted
in writing its inability to pay its debts as they mature, or (iii) has not
been adjudicated a bankrupt or filed a petition in voluntary bankruptcy or
a petition or answer seeking reorganization or an arrangement with
creditors under the Federal bankruptcy law or any other similar law or
statute of the United States or any jurisdiction and, to its knowledge, no
such petition has been filed against the Contributor.
9.3. Representations by the Managing Members. The Managing Members hereby
represent and warrant unto AEGIS that each and every one of the following
statements is true, correct and complete in every material respect as of the
date of this Agreement and will be true, correct and complete in all material
respects as of the Closing Date:
(a) The Schedule of Service Contracts, Schedule of Leases, and
Schedule of Deposits, when delivered, will be a true, correct and complete list
of all Service Contracts, all Leases, and all Deposits in effect at that time.
The copies of the Service Contracts, and Leases, when delivered to AEGIS, will
be true, complete and correct copies of such Service Contracts and Leases
(including, without limitation, all amendments, modifications, terminations,
renewals, expansions and extensions thereof). Other than the Service Contracts
approved by AEGIS and the Leases there are and will be no material written or
oral agreements which would in the aggregate amount to greater than $25,000
between the actual Service Contracts and Leases and the representation made by
the Managing Members in the nature of Service Contracts, or Leases, including,
without limitation, any guarantees, side letters, assignments, and subleases,
and consents to such assignments and subleases, exercised renewal options,
exercised options to acquire, exercised options to lease additional space,
abatements of rent or similar arrangements, rights to set-off, rights to receive
electricity or other utilities either without charge or on a rent-inclusion
basis, waivers of Tenants' defaults, obligations to advertise or otherwise
promote the Property, or other documents relating thereto binding on the
Property or on AEGIS after the Closing. Furthermore, there are and will be no
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other written or oral agreements binding on the Property or AEGIS after Closing
with any Tenants, relating to their use or occupancy of the Property other than
the Leases and those permitted under Section 8.1(e) of this Agreement. All
Service Contracts and Leases are in full force and effect and no material
default exists thereunder and no condition exists that, with the giving of
notice or passage of time, or both, would constitute a material default, and no
Tenant has made any claim of any right of offset. Each Tenant is in possession
of its Property and is conducting business pursuant to its respective lease.
(b) Crossroads and the Managing Members have received no written
notice, and have no actual knowledge, that either Crossroads or the Managing
Members lacks any permit, license, certificate or authorization necessary for
the present use and occupancy of the Improvements.
(c) No party has any right or option to acquire the Property or any
portion thereof, other than AEGIS.
(d) To the best of the Managing Members' actual knowledge and belief
without independent inquiry or analysis, there are, with respect to the
Property, Crossroads and the Managing Members, no material:
(i) pending arbitration proceedings or unsatisfied
arbitration awards, or judicial proceedings or orders respecting
awards;
(ii) pending unfair labor practice charges or complaints,
unsatisfied unfair labor practice orders or judicial proceedings or orders
with respect thereto;
(iii) pending charges or complaints with or by city, state or
federal civil or human rights agencies, unremedied orders by such agencies
or judicial proceedings or orders with respect to obligations under city,
state or federal civil or human rights or anti-discrimination laws or
executive orders;
(iv) condemnation proceeding pending or threatened with regard
to all or any part of the Property nor any federal, state, county,
municipal or other governmental plans to change the highway or road
systems in the vicinity of the Property or to restrict or change access
from any such highway or road to the Property or of any pending or
threatened condemnation or eminent domain proceedings relating to or
affecting the Property; or
(v) other pending, or threatened or actual litigation,
claims, actions, proceedings, charges, complaints, petitions or
unsatisfied orders by or before any governmental entity, administrative
agency or court, which affect or could affect the operation of the
Property or any part thereof or which might result in a lien on the
Property or any part thereof.
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(all collectively, the "Pending Claims").
(e) The Managing Members have no actual knowledge without
independent inquiry or analysis of any material Violations (as defined in
Section 8.2) except as set forth on Exhibit BB annexed hereto.
(f) To the best of the actual knowledge of the Managing Members
without independent inquiry or analysis, Crossroads, the Property, the
Improvements and the current use, occupancy and operation of the Property are in
compliance in all material respects (i) with all terms and conditions of all
notices, permits, licenses, registrations, certificates of occupancy,
applications, consents, site plan approvals, variances, notices of intent,
and/or other authorizations which are required for the use or operation of the
Property (all such, collectively, "Permits"), all of which Permits, to the
actual knowledge of the Managing Members are described on Exhibit Q annexed
hereto and made a part hereof, (ii) with all applicable laws, rules,
regulations, ordinances, requirements and orders in effect as of the date hereof
promulgated by any federal, state or local executive, legislative, judicial,
regulatory or administrative agency, board or authority, or any applicable
judicial or administrative decision that relate to the Property, including,
without limitation, all zoning and/or building code restrictions, urban
development plans and all such laws, rules and regulations that relate to the
environment or the pollution, preservation, protection, cleanup or remediation
thereof, or the treatment, use, storage, disposal or other management of
Hazardous Substances, as defined below, with respect to the Property, and (iii)
with all limitations, requirements, restrictions, covenants, conditions,
standards, prohibitions, schedules and timetables contained in any of the
foregoing or in any document or instrument encumbering or affecting the
Property.
(g) The use by AEGIS of any of the Tradenames will not infringe any
United States or state trademark, service mark, or tradename laws existing at
the Closing, or constitute actionable appropriation of rights with respect to
any other person, business or entity.
(h) All of the Personal Property has been fully paid for and is
owned by Crossroads free and clear of all liens and encumbrances, except for the
Permitted Exceptions.
(i) To the best of the actual knowledge and belief of the Managing
Members without independent inquiry or analysis there are no pending or
threatened improvement liens or special assessments to be made against the
Property by any governmental authority or any contemplated improvements
affecting the Property that may result in special assessments against the
Property.
(j) The Managing Members represent to the best of their knowledge
based solely upon that which is disclosed in the environmental reports which are
listed on the Addendum hereto (the "Environmental Reports"), that (i) no
Hazardous Substances are located
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on or have been released or disposed of in, on, under or from the Property so as
to impose liability or require remediation under any Environmental Law and (ii)
no liability under or violation of any Environmental Laws or condition that
could give rise to such liability or violation exists with respect to the
Property, including without limitation liabilities relating to offsite disposal
of waste in connection with the Property. There are no pending or threatened
claims by any person arising out of any alleged violation of Environmental Laws
or any release or threatened release of Hazardous Substances arising out of the
ownership or operation of the Property. For the purpose of this Section 9.3(j),
the term "Hazardous Substance" shall mean any substance defined as a "hazardous
waste," "hazardous substance," "toxic substance," "hazardous material,"
pollutant, contaminant or any word of similar import under any Environmental
Laws, including, without limitation, oil, petroleum, or any petroleum-derived
substance or waste, asbestos or asbestos-containing materials, PCBs, explosives,
radioactive materials, dioxins, or urea formaldehyde insulation. As used herein,
"Environmental Laws" shall include, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq.,
the Clean Air Act, 42 U.S.C. ss. 7401, et seq., the Clean Water Act, 33 U.S.C.
ss. 1251, et seq., the Toxic Substances Control Act, 15 U.S.C. ss. 2601, et
seq., and the Occupational Safety and Health Act, 29 U.S.C. ss. 651, et seq., as
any of the preceding have been amended prior to the date hereof, and any other
federal, state, or local law, ordinance, regulation, rule, order, decision or
permit relating to the protection of the environment or of human health from
environmental effects of Hazardous Substances and which are applicable to the
Property or any portion thereof.
(k) Crossroads is not an "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or an entity whose assets include plan assets within the
meaning of Department of Labor Regulation Section 2510.3-101. The consummation
of the transactions contemplated by this Agreement will not result in a
"prohibited transaction" within the meaning of Section 4975(c) of the Internal
Revenue Code or Section 406 of ERISA.
(l) There are no leases or licenses for the use of adjacent land or
facilities in connection with the operation of the Property.
(m) Intentionally omitted;
(n) The information contained in the rent roll annexed hereto as
Exhibit J and made a part hereof is true and complete in all material respects,
all rents are being paid and are current, except as any such arrearages are
otherwise set forth in Exhibit K, no Tenant has paid any rent, fees, or other
charges, including common area maintenance charges for additional Improvements
or operating expenses, for more than one month in advance, except as entitled to
any free rent, abatement of rent or similar concession;
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(o) Except as may be set forth on Exhibit J, no Tenant is contesting
any tax, operating cost or other escalation payments or occupancy charges, or
any other amounts payable under its Lease, and no steps have been taken by
Crossroads or any Contributor with respect to any negotiation or appraisal of
rent under any of the Leases, and no such negotiations or appraisals are
pending;
(p) No brokerage commission or other compensation is payable (or
will, with the passage of time or occurrence of any event or both, be payable)
with respect to any Lease demising space equal to or in excess of 5,000 square
feet, other than those, if any, which are disclosed on Exhibit K, annexed
hereto;
(q) Except as may be set forth on Exhibit J, all work required to be
performed by any party to any of the Leases has been completed and amounts owed
in connection therewith have been fully paid or shall be fully paid by
Crossroads;
(r) Crossroads has not assigned, mortgaged, pledged, sublet,
hypothecated or otherwise encumbered any of its rights or interests under any of
the Leases except for the Permitted Exceptions other than that which is
disclosed on Exhibit M, annexed hereto;
(s) As of the date hereof, (i) the outstanding principal balance of
the First Mortgage is $1,840,720, (ii) accrued interest thereon is
$_______________, (iii) neither Crossroads or the Managing Members have received
any written notice of any material default, and (iv) no prepayment penalties
shall be incurred pursuant to the First Mortgage as a result of this transaction
including satisfaction of the First Mortgage.
(t) Intentionally Omitted;
(u) Intentionally Omitted;
(v) Intentionally Omitted;
(w) The sales figures for all Tenants set forth in Exhibit L annexed
hereto and made a part hereof are, to the best of the Managing Members'
knowledge, without independent inquiry or analysis, true and correct in all
material respects;
(x) Intentionally omitted;
(y) Copies of all real and personal property tax bills for the
Property for the current and immediately preceding tax years have been furnished
by Crossroads to AEGIS and are true, correct and complete;
(z) To the best of the Managing Members' knowledge, without
independent inquiry or analysis, all water, storm and sanitary sewer, gas,
electricity, telephone and other
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utilities serving the Property are supplied directly to the Property by
facilities of public or municipal utilities, all such utilities required for the
operation of the Property enter the Property through lands as to which valid
public or private easements exist that will inure to the benefit of AEGIS, all
such utilities are installed and operating, and the cost of installation of such
utilities has been fully paid;
(aa) Intentionally omitted;
(bb) There are no employees of Crossroads, at the Property or
otherwise, who, by reason of any federal, state, county, municipal or other law,
ordinance, order, requirement or regulation, or by reason of any union or other
employment contract, written or otherwise, or any other reason whatsoever, would
become employees of AEGIS as a result of the acquisition of the Interests by
AEGIS;
(cc) All of the Personal Property is owned by Crossroads free and
clear of any liens or encumbrances except for the Permitted Exceptions, there
are no written or oral agreements with respect to the Personal Property other
than as set forth in Exhibit N annexed hereto and made a part hereof (such
agreements being hereinafter collectively referred to as the "Equipment
Leases"); true and complete copies of all Equipment Leases, including all
agreements, amendments, guarantees, side letters and other documents relating
thereto have been delivered to AEGIS, and there are no other such agreements or
other documents, written or oral;
(dd) To the best of the Managing Members' knowledge, without
independent inquiry or analysis, each of the Equipment Leases is in full force
and effect, none of the parties thereto is in default of any of its material
obligations thereunder, and no event has occurred that, with the giving of
notice or passage of time, or both, would constitute a default thereunder;
(ee) All insurance policies held by Crossroads relating to or
affecting the Property are described in Exhibit O annexed hereto and hereby made
a part hereof; all of such policies are in full force and effect and no notices
or requests have been received by Crossroads from any insurance company issuing
any of such policies with which the Crossroads has not complied, and there are
no outstanding requirements or recommendations by (i) any insurance company that
issued a policy with respect to the Property, (ii) any board of fire
underwriters or other body exercising similar functions, or (iii) the holder of
any mortgage encumbering the Property, requiring or recommending any repairs or
work to be done at the Property;
(ff) To the best of the Managing Members' actual knowledge without
independent inquiry or analysis, the water, sewer, gas, electrical and other
utilities now serving the Property are adequate to service the current
operations of the Improvements, and attached hereto as Exhibit P, are true and
accurate lists of water, sewer, gas and electrical
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utility bills relating to the Property for the most recent twelve (12) month
period for which they are available, and all of the right and interest of
Crossroads or the Contributors in any utility deposits, if transferable, shall
be assigned to AEGIS at the Closing;
(gg) All fixtures, machinery, equipment, lighting fixtures and
appliances comprising a portion of the Personal Property and all heating,
air-conditioning, sprinkler, ventilating, electrical and plumbing systems on the
Property and shall be delivered in "AS IS" condition;
(hh) To the best knowledge of the Managing Members, without
independent inquiry or analysis, no additional Permits are required for the
current or contemplated use of operation of the Property; all of the Permits are
in full force and effect. The Managing Members shall promptly after receipt of
any additional Permits deliver to AEGIS copies of such Permits required to
permit the lawful construction, completion, operation and occupancy of the
Improvements;
(ii) Intentionally omitted;
(jj) Intentionally omitted;
(kk) Intentionally omitted;
(ll) Intentionally omitted;
(mm) The operating statements relating to the Property for the period
commencing January 1, 1996 and ending August 30, 1998, copies of which have been
delivered to AEGIS and are annexed hereto as Exhibit R and made a part hereof,
and any operating statements to be delivered by the Managing Members after the
Closing, or will be, as the case may be, true and correct in all material
respects;
(nn) Intentionally omitted;
(oo) There are no Tradenames affecting the Property other than the
name "Crossroads Shopping Center" and the use of such name, as well as the use
of any logo used in connection with the Property, is freely transferable to
AEGIS;
(pp) As of the date hereof, the Deposits under the Leases are as set
forth in Exhibit S annexed hereto and made a part hereof and none of the
Deposits are required to be invested with interest;
(qq) True and complete copies of all Warranties relating to the
Improvements or the Personal Property, including, but not limited to, any
Warranty covering all roofs, and all agreements, amendments, guarantees, side
letters and other documents relating thereto
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which are in the possession of Crossroads, are annexed hereto as Exhibit T and
made a part hereof, and there are no other such documents or agreements, written
or oral;
(rr) No person, firm, corporation or other entity other than AEGIS by
reason of this Agreement has any right or option to acquire the Property or any
portion thereof;
(ss) To the actual knowledge of the Managing Members without
independent inquiry or analysis, neither the air rights over the Property nor
any other "development rights" with respect to the Property have been assigned,
transferred, leased or encumbered;
(tt) Intentionally omitted;
(uu) Intentionally omitted;
(vv) Intentionally omitted;
(ww) Intentionally omitted;
(xx) Intentionally omitted;
(yy) Intentionally omitted;
(zz) No representation or warranty made by Crossroads or the Managing
Members in this Agreement, in any exhibit annexed hereto, or in any letter or
certificate furnished to AEGIS pursuant to the terms hereof, each of which is
incorporated herein by reference and made a part hereof, contains any untrue
statement of a material fact or to the knowledge of the Managing Members omits
to state a material fact necessary to make the statements contained herein or
therein not misleading; other than the documents specifically set forth in
exhibits to this Agreement, there are no material agreements, guarantees,
indemnities or offers, either written or oral, made by Crossroads or the
Managing Members and affecting the Property which would bind AEGIS in an amount
that would exceed $25,000 in the aggregate;
(aaa) Except as otherwise provided in Section 8.1(e), other than in
the ordinary course of business, no services, material or work have been
supplied to the Property prior to Closing for which payment has not been made in
full. Except as otherwise provided in Section 8.1(e), if, subsequent to the
Closing Date, any mechanic's or other lien, charge or order for the payment of
money shall be filed against the Property or any portion thereof or against
AEGIS or AEGIS's assigns, based upon any act or omission, or alleged act or
omission before or after the Closing Date, of Crossroads, its agents, servants
or employees, or any contractor, subcontractor or materialman connected with the
construction of Improvements at the Property prior to closing, or repairs made
to the Property prior to closing (whether or not such lien, charge or order
shall be valid or enforceable as such), within ten (10) days after notice to
Crossroads of the filing thereof, Crossroads and the Managing Members, jointly
and
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severally, shall take such action, by bonding, deposit, payment or otherwise, as
will remove or satisfy such lien of record against the Property;
(bbb) The only proceedings for the correction of the assessed
valuation of the Property (the "Proceedings") that have been filed on
Crossroads' behalf and are pending are the Proceedings set forth in Exhibit W
annexed hereto and made a part hereof. No party hereto shall agree to any
settlement or termination of the Proceedings without the prior written consent
of the other parties, which consent shall not be unreasonably withheld or
delayed.
(ccc) Crossroads is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Ohio.
(ddd) Crossroads is not a foreign entity, foreign corporation,
foreign partnership, foreign trust or foreign estate (as those terms are defined
in the Internal Revenue Code and Income Tax Regulations).
(eee) None among the entry into, the performance of, or compliance
with this Agreement has resulted, or will result, in any violation of, default
under, or acceleration of any obligation under any existing corporate charter,
certificate of incorporation, bylaw, articles of organization, limited liability
company agreement or regulations, partnership agreement, mortgage indenture,
lien agreement, note, contract, lease, permit, judgment, decree, order,
restrictive covenant, statute, rule or regulation applicable to Crossroads or
the Property or any part thereof; nor will any of the foregoing require the
consent of any party not otherwise provided for in this Agreement.
(fff) Crossroads has full power and authority to own and operate the
Property. True and complete copies of Crossroads' Organizational Documents have
been delivered to AEGIS and such documents are in full force and effect as of
the date hereof.
(ggg) Crossroads (i) is not in receivership or dissolution, (ii) has
not made an assignment for the benefit of creditors or admitted in writing its
inability to pay its debts as they mature, or (iii) has not been adjudicated a
bankrupt or filed a petition in voluntary bankruptcy or a petition or answer
seeking reorganization or an arrangement with creditors under the Federal
bankruptcy law or any other similar law or statute of the United States or any
jurisdiction and, to the actual knowledge of Crossroads, no such petition has
been filed against Crossroads.
(hhh) Based upon actual knowledge without independent inquiry, or
analysis Crossroads has and will have at the Closing, good and valid title to
the Property free and clear of all liens, encumbrances, restrictions and claims
of every kind and nature whatsoever ("Liens") except for the Permitted
Exceptions. No one other than Crossroads or the Contributors has any interest in
or right to receive the profits and distributions from the Property.
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9.4. Securities Law Representations and Covenants by Contributor. Each
Contributor receiving a Unit Distribution hereby represents and warrants unto
AEGIS that each and every one of the following statements is true, correct and
complete in every material respect as to it as of the date of this Agreement and
will be true, correct and complete as of the Closing Date:
(a) Contributor understands that an investment in the Units involves
risks. Contributor, by reason of its business and financial experience, together
with the business and financial experience of those persons, if any, retained by
it to represent or advise it with respect to its investment in Units, (i) has
such knowledge, sophistication and experience in financial and business matters
and in making investment decisions of this type that it is capable of evaluating
the merits and risks of and of making an informed investment decision with
respect to an investment in Units, (ii) is capable of protecting its own
interests or has engaged representatives or advisors to assist it in protecting
its interests and (iii) is capable of bearing the economic risk of such
investment including the loss of its entire investment. Contributor, is an
"accredited investor" as such term is defined in Regulation D, promulgated under
the Securities Act of 1933. If Contributor has retained or retains a person to
represent or advise it with respect to its investment in Units, Contributor will
advise AEGIS of such retention and, at AEGIS's request, Contributor shall, prior
to or at the Closing, (i) acknowledge in writing such representation and (ii)
cause such representative or advisor to deliver a certificate to AEGIS and the
REIT containing such representations as may be reasonably requested by AEGIS and
the REIT.
(b) Contributor understands that an investment in AEGIS involves
substantial risks. It has been given the opportunity to make a thorough
investigation of AEGIS and has been furnished with materials relating to AEGIS
and its activities. It has been afforded the opportunity to obtain any
additional information requested by it. It has had an opportunity to ask
questions of and receive answers from representatives of AEGIS concerning AEGIS
and the REIT and its activities and the terms and conditions of an investment in
Units.
(c) Contributor further understands the following:
(i) In making an investment decision investors must rely on
their own examination of the REIT and AEGIS and the terms of this
offering, including the merits and risks involved. The Units offered
hereby have not been recommended by any federal or state securities
commission or regulatory authority. Furthermore, the foregoing authorities
have not confirmed the accuracy or determined the adequacy of this
Agreement. Any representation to the contrary is a criminal offense.
(ii) The Units offered hereby are subject to restrictions on
transferability and resale and may not be transferred or resold except as
permitted hereby and under the Securities Act, and the applicable state
securities laws, pursuant
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to registration or exemption therefrom. Contributor and its equity owners,
partners and members should be aware that it will be required to bear the
financial risks of this investment for an indefinite period of time.
(d) The Units to be issued to Contributor at the Closing will be
acquired by Contributor for its own account, for investment only and not with a
view to, or with any intention of, a distribution or resale thereof, in whole or
in part, or the grant of any participation therein, except for the distribution
of the Units to such Contributor. Notwithstanding the foregoing, Contributor may
assign and transfer the Units to the equity owners, partners or members in
Contributor or any other Qualifying Partners. Contributor was not formed for the
specific purpose of acquiring the Units.
(e) Contributor acknowledges that (i) the Units to be issued to it
and/or Qualifying Partner at the Closing have not been registered under the
Securities Act or state securities laws by reason of a specific exemption or
exemptions from registration under the Securities Act and applicable state
securities laws and, if such Units are represented by certificates, such
certificates will bear a legend to such effect, (ii) the REIT's and AEGIS's
reliance on such exemptions is predicated in part on the accuracy and
completeness of the representations and warranties of Contributor contained in
this section, (iii) the Units to be issued to it at the Closing may not be
resold or otherwise distributed to any one other than Qualified Partners unless
registered under the Securities Act and applicable state securities laws, or
unless an exemption from registration is available, (iv) there is no public
market for such Units, (v) neither AEGIS nor any person acting on its behalf
offered or sold Units to such Contributor by any form of general solicitation or
advertising including, but not limited to, communications via newspaper,
magazines, television, radio, or any seminar or meeting organized through
general solicitation or general advertising, or to such Contributor's knowledge,
by any form of general solicitation, and (vi) it has no obligation or intention
to register such Units under the Securities Act or any state securities laws or
to take any action that would make available any exemption from the registration
requirements of such laws, except as provided in the Exchange Rights Agreement
and the Registration Rights Agreement. Such Contributor hereby acknowledges that
it will have to bear the economic risk of the investment commitment evidenced by
this Agreement and any Units issued hereunder for an indefinite period of time,
although (x) subject to the Lock-Up Agreement and under the terms of the
Partnership Agreement and Exchange Rights Agreement, Units will be exchangeable
at the request of the holder thereof at any time after the first anniversary of
their issuance for Common Stock or, at the option of the REIT, cash, and (y)
subject to the Lock-Up Agreement, the holder of any such Common Stock issued
upon exchange of Units will be afforded certain rights to have such Common Stock
registered under the Securities Act and applicable state securities laws
pursuant to the Registration Rights Agreement.
(f) Each such Contributor's principal place of business is as set
forth on Schedule 1 and it has no present intention of becoming a resident of
any country, state or
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jurisdiction other than the country and state in which such principal place of
business is located.
(g) Each such Contributor acknowledges that it has received or will
be provided, upon request, with all Forms 10K, 10Q and other reports filed by
the REIT with the Securities and Exchange Commission.
(h) Each such Contributor agrees that it will not sell or otherwise
transfer the Units, except as otherwise provided in this Agreement, unless they
are registered under the Securities Act (pursuant to the Registration Rights
Agreement or otherwise) or unless an exemption from such registration is
available. Contributor represents that it has adequate means of providing for
its current needs and possible contingencies, and that it has no need for
liquidity of the investment.
Each such Contributor further agrees that it will not distribute its
Units or any portion thereof to anyone other than a Qualifying Partner.
(i) It is understood that all documents, records and books
pertaining to the investment have been made available for inspection by each
such Contributor's attorney or accountant or offeree representative and each
such Contributor, and that the material books and records of AEGIS and the REIT
will be available upon reasonable notice, for inspection by each such
Contributor at reasonable hours at its principal place of business.
(j) The foregoing representations and warranties shall be true and
accurate in all material respects as of the Closing Date.
9.5. Representations by Crossroads East Sublimited Partners.
(a) Limited Partner is a general partnership duly organized, validly
existing and in good standing under the laws of the State of New York.
(b) Limited Partner is not a foreign entity, foreign corporation,
foreign partnership, foreign trust or foreign estate (as those terms are defined
in the Internal Revenue Code and Income Tax Regulations).
(c) None among the entry into, the performance of, or compliance
with this Agreement has resulted, or will result, in any violation of, default
under, or acceleration of any obligation under any existing corporate charter,
certificate of incorporation, bylaw, articles of organization, limited liability
company agreement or regulations, partnership agreement, mortgage indenture,
lien agreement, note, contract, lease, permit, judgment, decree, order,
restrictive covenant, statute, rule or regulation applicable to Limited Partner;
nor will any of the foregoing require the consent of any party not otherwise
provided for in this Agreement.
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(d) Limited Partner has full power and authority to own and operate
its property. True and complete copies of Limited Partner' Organizational
Documents have been delivered to AEGIS and such documents are in full force and
effect as of the date hereof.
(e) Limited Partner (i) is not in receivership or dissolution, (ii)
has not made an assignment for the benefit of creditors or admitted in writing
its inability to pay its debts as they mature, or (iii) has not been adjudicated
a bankrupt or filed a petition in voluntary bankruptcy or a petition or answer
seeking reorganization or an arrangement with creditors under the Federal
bankruptcy law or any other similar law or statute of the United States or any
jurisdiction and, to the actual knowledge of the Crossroads East Sublimited
Partners, no such petition has been filed against Limited Partner.
(f) Based upon actual knowledge without independent inquiry, or
analysis Limited Partner has and will have at the Closing, good and valid title
to its 30% Interest in Crossroads free and clear of all liens, encumbrances,
restrictions and claims of every kind and nature whatsoever ("Liens") except for
the Permitted Exceptions. No one other than Limited Partner or Sublimited
Partner has any interest in or right to receive the profits and distributions
from such Interests.
(g) Limited Partner is not an "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or an entity whose assets include plan assets within the
meaning of Department of Labor Regulation Section 2510.3-101. The consummation
of the transactions contemplated by this Agreement will not result in a
"prohibited transaction" within the meaning of Section 4975(c) of the Internal
Revenue Code or Section 406 of ERISA.
9.6. Representations by SJB Sublimited Partners.
(a) SJB is a general partnership duly organized, validly existing and
in good standing under the laws of the State of New York.
(b) SJB is not a foreign entity, foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations).
(c) None among the entry into, the performance of, or compliance with
this Agreement has resulted, or will result, in any violation of, default under,
or acceleration of any obligation under any existing corporate charter,
certificate of incorporation, bylaw, articles of organization, limited liability
company agreement or regulations, partnership agreement, mortgage indenture,
lien agreement, note, contract, lease, permit, judgment, decree, order,
restrictive covenant, statute, rule or regulation applicable to SJB; nor will
any of the foregoing require the consent of any party not otherwise provided for
in this Agreement.
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(d) SJB has full power and authority to own and operate its property.
True and complete copies of SJB's Organizational Documents have been delivered
to AEGIS and such documents are in full force and effect as of the date hereof.
(e) SJB (i) is not in receivership or dissolution, (ii) has not made
an assignment for the benefit of creditors or admitted in writing its inability
to pay its debts as they mature, or (iii) has not been adjudicated a bankrupt or
filed a petition in voluntary bankruptcy or a petition or answer seeking
reorganization or an arrangement with creditors under the Federal bankruptcy law
or any other similar law or statute of the United States or any jurisdiction
and, to the actual knowledge of the SJB Sublimited Partners, no such petition
has been filed against SJB.
(f) Based upon actual knowledge without independent inquiry, or
analysis SJB has and will have at the Closing, good and valid title to its
41.667% Interest in Limited Partner free and clear of all liens, encumbrances,
restrictions and claims of every kind and nature whatsoever ("Liens") except for
the Permitted Exceptions. No one other than SJB or SJB Sublimited Partner has
any interest in or right to receive the profits and distributions from such
Interests.
(g) SJB is not an "employee benefit plan" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or an entity whose assets include plan assets within the meaning of
Department of Labor Regulation Section 2510.3-101. The consummation of the
transactions contemplated by this Agreement will not result in a "prohibited
transaction" within the meaning of Section 4975(c) of the Internal Revenue Code
or Section 406 of ERISA.
9.7. Subsequent Developments. After the date of this Agreement and until
the Closing Date, each Contributor shall keep AEGIS fully informed of all
subsequent developments of which it has actual knowledge without independent
inquiry or analysis ("Subsequent Developments") which would cause any of the
Managing Members' or Contributors' representations contained in this Agreement
to be no longer accurate in any material respect.
9.8. As Is Sale. Except as may be expressly set forth in this Agreement or
in any other document executed and delivered by any Contributor in connection
with the transaction described herein, AEGIS acknowledges that the Contributors
are not making any representations or warranties concerning the Property or the
physical condition thereof, and AEGIS agrees to accept the Property in its "as
is, where is" condition, subject to the other terms and conditions of this
Agreement (including but not limited to Articles 5, 10 and 12).
9.9. Survival. All covenants, agreements and indemnities contained in the
Agreement which contemplate performance after the Closing Date shall survive the
Closing. Notwithstanding the foregoing, only the representations, warranties and
agreements of the
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Contributors and the Managing Members set forth in Sections 9.2, 9.3(d)(v) and
9.4 of this Agreement shall survive the Closing hereunder for, and such survival
shall be limited to, a period of one (1) year. All representations made by AEGIS
or the REIT herein shall survive the Closing.
ARTICLE 10
Conditions Precedent to the Closing
10.1. AEGIS's Conditions. In addition to any other conditions set forth in
this Agreement, AEGIS's obligations to consummate the Closing are subject to the
timely satisfaction of each and every one of the conditions and requirements set
forth in this Section 10.1, all of which shall be conditions precedent to
AEGIS's obligations under this Agreement, unless AEGIS, in its sole discretion,
shall waive any such condition by notice to Contributors:
(a) Contributor's Obligations. Each Contributor (in its
capacity as Contributor or Managing Member, as applicable) shall have
performed all obligations of the Managing Members and each Contributor,
respectively hereunder which are to be performed prior to Closing;
(b) Contributor's Representations, Warranties and Covenants. Each
Contributor's representations, warranties, and covenants set forth in this
Agreement shall be true and correct in all material respects as if made again on
the Closing Date;
(c) Transfer Subject Only to Permitted Exceptions. On the Closing
Date, title to the Property shall be insurable by an extended coverage policy
issued by the Title Company at its regular rates, without exceptions or
reservations of any type or kind except the Permitted Exceptions.
(d) Consents and Estoppels of Third Parties. The Managing Members
shall have obtained and delivered to AEGIS all third party consents required
under Section 8.3 and shall have obtained and delivered to AEGIS the estoppels
referred to in Section 8.4 hereof from LensCrafters, BW-3 and Keepsake Art and
Craft and tenants occupying not less than 75% of the remaining leaseable area of
the Improvements.
10.2. Contributor's Conditions. In addition to any other conditions set
forth in this Agreement, each Contributor's obligations to consummate the
closing are subject to the timely satisfaction of each and every one of the
following conditions and requirements set forth in this Section 10.2, all of
which shall be conditions precedent to each Contributor's obligations under this
Agreement, unless any such Contributor, in its sole discretion and with respect
to its contribution, shall waive any such condition by notice to AEGIS:
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(a) AEGIS's and the REIT's Obligations. AEGIS and the REIT shall
have performed all obligations of AEGIS and the REIT hereunder which are to be
performed prior to Closing; and
(b) AEGIS's and the REIT's Representations, Warranties and
Covenants. AEGIS's and the REIT's representations, warranties and covenants set
forth in this Agreement shall be true and correct in all material respects as if
made again on the Closing Date.
ARTICLE 11
Closing and Closing Documents
11.1. Closing. The consummation and closing (the "Closing") of the
transaction contemplated under this Agreement shall take place at the offices of
Battle Fowler, LLP located at 75 East 55th Street, New York, New York, or such
other place as is mutually agreeable to the parties, on the earlier to occur of
the tenth (10th) day following (i) the expiration of the Review Period or (ii)
each Contributor's receipt of notice from AEGIS of its readiness to close (the
"Closing Date"), subject to adjournment for up to one ten (10) day period which
may be requested by either party upon not less than two (2) business days'
notice to the other party.
11.2. Deliveries
(a) Contributor's Deliveries. At the Closing and at each
Contributor's sole cost and expense, each Contributor shall execute and/or
deliver the following to AEGIS, in addition to all other items required to be
delivered to AEGIS by Contributor:
(i) Assignment of Partnership Interests. Contributor's
Assignment of Partnership Interests, a form of which is annexed hereto as
Exhibit Z, conveying good and indefeasible title to Contributor's
Interests, free and clear of all liens, encumbrances and claims.
(ii) FIRPTA Affidavit. An affidavit from Contributor, a form
of which is annexed hereto as Exhibit CC, as required by Section 1445 of
the Internal Revenue Code, specifying (i) that Contributor is not a
foreign entity, foreign corporation, foreign partnership, foreign trust or
foreign estate (as those terms are defined in the Internal Revenue Code
and Income tax regulations), (ii) Contributor's taxpayer identification
number or U.S. employer identification number, (iii) Contributor's office
address, and (iv) such other matters as AEGIS may reasonably require in
order to satisfy itself that no withholding is required under Section 1445
of the Internal Revenue Code including an indemnity against any claim for
taxes which should have been withheld;
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(iii) Authority Documents. Evidence satisfactory to AEGIS that
the person or persons executing the closing documents on behalf of
Contributor has full right, power and authority to do so, and the
following documentation where applicable: (i) a Certificate of an officer,
general partner or managing member ("Authorized Party") on behalf of
Contributor certifying that the attached copies of Contributor's
Organizational Documents are true and correct, unamended, and continuing,
and of the incumbency of its officers, (ii) Certificates of Existence and
Good Standing from the Secretary of State of the state(s) of formation of
Contributor, and (iii) from the Secretary of State of the state where the
Property is located, a Certificate of Existence and Qualification to Do
Business in such state for Contributor;
(iv) Opinion of Counsel. An opinion of Contributor's counsel,
in form and substance satisfactory to AEGIS in its reasonable discretion,
to the effect that Contributor has the power to execute and deliver this
Agreement and all of the documents listed in this Section 11.2 to which
Contributor is a party (collectively, the "Contributor Documents") and to
perform all of the obligations of Contributor under the Contributor
Documents; that Contributor's or Contributor's Authorized Party's
execution and delivery of the Contributor Documents has been duly
authorized by all requisite limited partnership action, and that such
Contributor Documents have been duly executed and delivered by Contributor
or Contributor's Authorized Party; and that the execution and delivery of
the Contributor Documents by Contributor or Contributor's Authorized Party
and the performance by Contributor or Contributor's Authorized Party of
its obligations thereunder does not contravene the Organizational
Documents of Contributor, its Authorized Party or any law, regulation,
rule, order, decree, covenant, indenture, agreement or other document to
which Contributor or its general partner is a party or by which it is
bound or to which the Property may be subject (other than those for which
Contributor has obtained the other party's consent).
(v) Units and Common Stock Documents. The documents required
in connection with the issuance of the Units, including signature pages to
the Partnership Agreement, the Exchange Rights Agreement, the Lock-up
Agreement, the Registration Rights Agreement, and the Voting Trust
Agreement executed by each Contributor receiving Units. Each such
Contributor shall execute and deliver any other documents as may be
required under applicable federal or state securities laws, including a
reiteration of the representations and covenants set forth in Section 9.4
hereof;
(vi) Miscellaneous. Such other instruments as are customarily
executed to effectuate the conveyance of partnership interests similar to
the Interests, with the effect that, after the Closing AEGIS will have
succeeded to all of the rights, titles, and interests of each Contributor
related to Crossroads and each of the Contributors will no longer have any
rights, titles, or interests in and to Crossroads;
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(b) Crossroads' Deliveries. At the Closing, the Managing Members
shall cause Crossroads to execute and/or deliver the following to AEGIS, in
addition to all other items required to be delivered to AEGIS by Crossroads or
the Managing Members:
(i) Title Affidavits. Affidavits or indemnities in form and
substance reasonably acceptable to the Title Company, in order that the
Title Policy may be issued free and clear of the standard exceptions which
the Title Company is permitted under applicable law to remove or modify
upon delivery of such affidavits or indemnities;
(ii) Intentionally Deleted;
(iii) Third Party Consents. All consents of third parties
required under Section 10.1(d) hereof, in form reasonably acceptable to
AEGIS;
(iv) Estoppel Certificates. The estoppel certificates required
under Section 10.1(d) hereof substantially in the required form;
(v) Plans, Keys and Records. To the extent not previously
delivered to and in the possession of AEGIS, all Plans, all keys, access
cards, and combinations for the Property (which shall be properly tagged
for identification), all Records, and all Licenses; and
(vi) Original Documents. Originals of all of the documents and
agreements covered by the foregoing that have not already been delivered
to AEGIS.
On the Closing Date, the Property shall be free and clear of all tenancies
of every kind and parties in possession, except for the Tenants under the
Leases set forth on the Lease Schedule annexed hereto, and with all parts
of the Property (including, without limitation, the Improvements and
Personal Property) in substantially the same condition as the same were on
the date of this Agreement, normal wear and tear only excepted.
(c) AEGIS's Deliveries. At the Closing and at AEGIS's sole cost and
expense, AEGIS shall execute and/or deliver the following to each Contributor:
(i) Purchase Price. The Cash Component of the
Purchase Price and the Unit Component of the Purchase Price;
(ii) Assignments. The Assignments;
(iii) Authority Documents. Evidence reasonably
satisfactory to Contributor that the person or persons executing
the closing documents on behalf of AEGIS and the REIT has full
right, power and authority to do so;
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(iv) Units and Common Stock Documents. Such of the
documents listed in Section 11.2(a)(v) as may be required to be
executed by AEGIS or the REIT;
(v) Legal Opinion. An opinion of AEGIS' and the REIT's
counsel, in form and substance satisfactory to Contributor in its
reasonable discretion, to the effect that AEGIS and the REIT, individually
and as AEGIS' general partner, have the power to execute and deliver this
Agreement and all of the documents listed in this Section 11.3 to which
AEGIS and the REIT are a party (collectively, the "AEGIS Documents") and
to perform all of the obligations of AEGIS and the REIT under the AEGIS
documents; that the execution and delivery of the AEGIS Documents by AEGIS
or the REIT, individually and as AEGIS' general partner has been
authorized by all requisite limited partnership or corporate actions, and
that such AEGIS Documents have been fully executed and delivered by AEGIS
or the REIT, individually and as AEGIS' general partner; and that the
execution and delivery of AEGIS and the REIT and the performance by AEGIS
and the REIT of their respective obligations under the AEGIS Documents
does not contravene the Organizational Documents of AEGIS and the REIT or
any law, regulation, rule, order, decree, covenant, indenture, agreement
or other document to which AEGIS or the REIT is a party or by which it is
bound.
(vi) Leasing Agreement. A non-exclusive leasing agreement
pursuant to which AEGIS retains Columbus Pacific Properties, Inc. ("CPP")
as leasing agent, in the form annexed hereto as Exhibit U;
(vii) Deferred Notes. The Deferred Notes.
(viii) Release of First Mortgage and Guaranties. A
satisfaction of the First Mortgage and a release by the current holder of
the First Mortgage of the Contributors, their affiliates or principals
from its or their respective obligations under any guaranties given in
connection with the First Mortgage; and
(ix) Miscellaneous. Such other instruments as are customarily
executed by AEGIS to effectuate the acquisition of interests similar to
the Interests, or as may be required under any applicable federal or state
securities laws.
11.3. Prorations. At Closing, the following items of revenue and
expense shall be prorated and adjusted as of 11:59 P.M. (except as
otherwise provided) on the day prior to the Closing Date:
(a) Property Taxes. Real estate taxes, payment of which is not the
obligation of tenants personal property or use taxes, assessments, and sewer
rents, if any, for the tax period in which the Closing occurs shall be
apportioned between Contributors and
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AEGIS on a per diem basis through and including 11:59 P.M. of the day preceding
the Closing Date.
(b) Operating Costs. All costs and expenses of operating the
Property, including without limitation amounts paid or payable under the Service
Contracts and the Equipment Leases; but Crossroads shall be responsible for the
payment of all accounts payable with respect to the Property relating to
services rendered or goods provided prior to the Closing Date;
(c) Lease Rents. Rents under Leases and other revenues as and when
collected. If AEGIS receives any rents from Tenants after the Closing Date then
such collections shall first be applied to rents accruing on or after the
Closing Date, and AEGIS shall promptly remit the balance, if any, pro-rata to
Contributors, to the extent any pre-Closing Date rental obligation under such
Tenant's Lease remains unpaid to Contributors;
(d) Utility Deposits. AEGIS shall remit to the Contributors the
amount of any transferable deposits posted with any utility company.
(e) Miscellaneous. Fees and expenses for coin or vending machine
income;
(f) Intentionally Omitted.
11.4. Closing Costs. The Contributors agree that Crossroads shall pay (i)
the cost of preparing or obtaining documents, consents, estoppels and
terminations to be delivered by such Contributor to AEGIS pursuant to this
Agreement, (ii) any transfer taxes, conveyance taxes, documentary stamps, sales
taxes and other taxes, fees or charges which are customarily paid by a seller
and payable to any governmental authority as a result of the transfer of the
Interests allocable to its respective Interest, (iii) its pro-rata share of
one-half (1/2) of any escrow fee imposed by the Escrow Agent. AEGIS shall pay
(i) all search fees, title premiums and other costs associated with the Title
Policy, the UCC searches and the Survey, (ii) any mortgage recording taxes, deed
taxes, documentary stamps, intangibles tax and other taxes, fees or charges
payable to any governmental authority which are customarily paid by a buyer as a
result of (x) the transfer of the Interests, or (y) any mortgage financing
obtained by AEGIS for the acquisition of the Interests, (iii) one-half (1/2) of
any escrow fee imposed by the Escrow Agent, and (iv) the fees and disbursements
of its counsel.
11.5. Reconciliation and Final Payment. Contributors and AEGIS shall
reasonably cooperate at Closing to make a final determination of the prorations
required hereunder as soon as reasonably practicable, but in no event later than
ninety (90) days after the Closing Date (except with respect to any item which
is not determinable within such time frame, as to which the time period shall be
extended until such item is determinable). Upon the final reconciliation of the
prorations and adjustments under Section 11.3, the party which owes the other
party any sums hereunder shall pay such party such sums within ten (10) days
after the
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reconciliation of such sums. It is the intent of the parties that all items
herein which are subject to the prorations pursuant to Article 11 shall result
in Contributors receiving all of the economic benefits and burdens of the
Property with respect to the period prior to the Closing, and AEGIS receiving
all of the economic benefits and burdens of the Property with respect to the
period from and after the Closing Date. The obligations to calculate such
prorations, make such reconciliations and pay any such sums shall survive the
Closing.
11.6. Accounts Payable. The Purchase Price shall be reduced by an amount
equal to all accounts payable and other debts and liabilities relating to the
Property which have accrued prior to the Closing and are payable after the
Closing, to the extent the Purchase Price is not adjusted in favor of AEGIS
under the proration provisions of this Agreement for such accounts payable and
other debts and liabilities. AEGIS shall be responsible for the particular
accounts payable relating to the Property arising or accruing after the Closing
Date to the extent the Purchase Price is not adjusted in favor of Contributor
under the same provisions.
11.7. Contributor's Indemnity. The Contributors agree that for a period of
one (1) year after the Closing, the Contributors, jointly and severally, shall
indemnify and hold AEGIS harmless from and against all liabilities, losses,
damages, costs, expenses (including reasonable attorneys' fees) which AEGIS may
suffer or incur by reason of any liability, debt or cause of action occurring or
accruing prior to the Closing Date and arising from the ownership or operation
of the Property prior to the Closing Date, including but not limited to any
claims by employees of Crossroads or third parties covered by insurance carried
by Crossroads.
11.8. AEGIS's Indemnity. AEGIS agrees to indemnify and hold each
Contributor harmless from and against all liabilities, losses, damages, costs,
expenses (including reasonable attorneys' fees) which the Contributor may suffer
or incur by reason of any liability, debt, act or cause of action occurring and
accruing subsequent to the Closing Date and arising from the ownership or
operation of the Property by AEGIS subsequent to the Closing Date, including but
not limited to any claims by employees of AEGIS or third parties covered by
insurance carried by AEGIS.
ARTICLE 12
Casualty and Condemnation
12.1. Risk of Loss; Notice. Prior to Closing and the delivery of
possession of the Property to AEGIS in accordance with this Agreement, all risk
of loss to the Property (whether by casualty, condemnation or otherwise) shall
be borne by Crossroads and the Contributors. In the event that (a) any loss or
damage to the Property shall occur prior to the Closing Date as a result of fire
or other casualty, or (b) Crossroads receives notice that a governmental
authority has initiated or threatened to initiate a condemnation proceeding
affecting the Property, Crossroads shall give AEGIS immediate written notice of
such loss, damage or condemnation proceeding.
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12.2. AEGIS's Termination Right. If, prior to Closing and the delivery of
possession of the Property to AEGIS in accordance with this Agreement, (a) any
condemnation proceeding shall be pending against a substantial portion of the
Property or (b) there is any substantial casualty loss or damage to the
Property, AEGIS shall have the option to terminate this Agreement provided it
delivers written notice to Crossroads and each Contributor of its election so to
terminate this Agreement within ten (10) days after (but prior to Closing) the
date Crossroads has delivered AEGIS written notice of any such loss, damage or
condemnation (which notice shall include a certification of (i) the amounts of
insurance coverages in effect with respect to the loss or damage and (ii) if
known, the amount of the award to be received in such condemnation), and in such
event all Earnest Money shall be delivered to AEGIS and thereafter no party
shall have any further obligation or liability to the other under this
Agreement, except for those obligations herein expressly stated to survive the
termination of this Agreement. In the context of condemnation, "substantial"
shall mean condemnation of such portion of the Property as would, in AEGIS's
sole judgment, render use of the remainder impractical or unfeasible for the
uses herein contemplated, and, in the context of casualty loss or damage,
"substantial" shall mean a loss or damage in excess of ten (10%) percent in
value.
12.3. Procedure for Closing. If AEGIS shall not timely elect to terminate
this Agreement under Section 12.2 above, or if the loss, damage or condemnation
is not substantial, the parties agree that AEGIS shall receive all insurance
proceeds or condemnation awards which Crossroads has received as a result of the
same plus an amount equal to the insurance deductible, if any in which event the
Closing shall occur without Contributor replacing or repairing such damage.
ARTICLE 13
Default and Remedies
13.1. AEGIS's Default. If, at or prior to Closing, for any reason other
than termination hereof pursuant to a right granted to AEGIS hereunder to do so
or because of an uncured default by the Managing Members or any Contributor in
its capacity as Contributor or Managing Member, as applicable (i) AEGIS refuses
or fails to consummate the acquisition of the Interests pursuant to this
Agreement, or (ii) AEGIS or the REIT shall otherwise fail in any material
respect to perform any of its material obligations or agreements as and when
required hereunder, or if any representation or warranty made by AEGIS or the
REIT herein shall have been materially incorrect when made or when ratified at
Closing, then the Managing Members, as their sole and exclusive remedy, shall
have the right to terminate this Agreement by giving AEGIS and the Escrow Agent
written notice thereof and to receive its pro-rata share of the Earnest Money.
In the event of such termination, neither party shall have any further rights,
duties or obligations hereunder (except to the extent this Agreement may
specifically provide for the survival of certain obligations). Contributors and
AEGIS and the REIT hereby acknowledge that the amount of damages resulting from
breach of this Agreement by AEGIS
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or the REIT would be difficult or impossible to accurately ascertain, and that
the Earnest Money shall serve as liquidated damages. Notwithstanding the
foregoing, in the event of any default by AEGIS or the REIT under this Agreement
due to a breach after Closing or any termination hereof of any covenant,
indemnity or other obligation which survives the Closing or any termination
hereof, or if any Contributor shall discover after Closing that any warranty or
representation made by AEGIS or the REIT herein was materially incorrect or
breached when made or when ratified at Closing, such Contributor shall have the
right to seek damages in a court of law provided that any claim for damages
shall be limited to direct, compensatory damages only.
13.2. Contributor's Default. If, for any reason other than termination
hereof pursuant to a right granted to a Contributor hereunder or because of an
uncured default by AEGIS (i) the Managing Members refuse or fail to consummate
the transaction contemplated by this Agreement, or (ii) otherwise fail in any
material respect to perform any of its material obligations or agreements as and
when required hereunder, or if any representation or warranty made by the
Managing Members herein shall have been materially incorrect when made or when
ratified at Closing, then AEGIS, as its sole remedies, shall have the right to
do any one or more of the following:
(a) Terminate this Agreement by written notice given to the
Contributors and the Escrow Agent, in which event the Earnest Money shall be
returned to AEGIS by the Escrow Agent promptly upon receipt of such notice; or
(b) Enforce specific performance of this Agreement, provided,
however, AEGIS waives its right to seek monetary damages.
ARTICLE 14
Brokers
14.1. Identity of Brokers. The parties hereto represent to each other that
they dealt with no finder, broker or consultant in connection with this
Agreement or the transactions contemplated hereby.
14.2. Indemnification by Crossroads. The Contributors agree that
Crossroads shall, and hereby does defend, indemnify and save harmless AEGIS and
its affiliates and their respective successors and assigns from and against and
from any loss, liability or expense, including reasonable attorneys' fees,
arising out of any claim or claims for commissions, fees or other compensation
for bringing about this Agreement or the transactions contemplated hereby made
by any broker, finder, consultant or like agent if such claim or claims made by
any such broker, finder, consultant or like agent are based in whole or in part
on any agreements entered into by Crossroads or any Contributor (in its capacity
as Contributor or
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<PAGE>
Managing Member, as applicable) or its representatives for a commission, fee or
other compensation.
14.3. Indemnification by AEGIS. AEGIS agrees to, and hereby does, defend,
indemnify and save harmless Crossroads, the Contributors and their affiliates
and their respective successors and assigns from and against any loss, liability
or expense, including reasonable attorneys' fees, arising out of any claim or
claims for commissions, fees or other compensation for bringing about this
Agreement or the transactions contemplated hereby made by any broker, finder,
consultant or like agent if such claim or claims made by any such broker,
finder, consultant or like agent are based in whole or in part on any agreements
entered into by AEGIS or its representatives for a commission, fee or other
compensation.
ARTICLE 15
Tax Considerations
15.1. Debt Maintenance and Guaranty Requirements.
Guaranty or Indemnity. (a) AEGIS agrees to maintain, during the
Restricted Period, as hereinafter defined, not less than _____________ of
indebtedness (the "Debt Amount"), which indebtedness shall be made available to
any Contributor receiving a Unit (the "Unit Recipient") for guarantee (or,
alternatively, with respect to which AEGIS shall permit such Unit Recipient to
indemnify AEGIS, as provided in this Section 15.1). AEGIS will permit the Unit
Recipient to guarantee, or indemnify AEGIS or the REIT, for the "bottom" portion
(i.e, the least risky portion) of the Debt Amount pari passu with other
contributors, if any, with whom AEGIS has previously exchanged Units or will
exchange Units in the future.
(b) In the event that any Unit Recipient (i) obtains a tax-free
step-up in the basis of their Units for federal income tax purposes (e.g., upon
the death of a partner or other equity holder); (ii) sells, transfers or
otherwise disposes of its Units in a taxable transaction; or (iii) receives the
Tax Payment from AEGIS in reimbursement of taxes triggered to such Unit
Recipient as the result of the sale, transfer or other disposition of the Real
Property during the Restricted Period, as defined below then the Debt Amount
shall be commensurately reduced.
(c) For purposes of Section 7.04(c) of the Code, AEGIS agrees to use
the "traditional method" without curative allocations.
15.2. No Property Disposition. AEGIS covenants that no voluntary or
involuntary sale, transfer or other disposition (including, without limitation,
foreclosure and condemnation) of the Real Property (or any property which
replaces the Real Property in an exchange or other transaction which does not
cause the Contributor to recognize gain for Federal income tax purposes), shall
occur prior to the [tenth (10th)] anniversary of the Closing (the "Restricted
Period") other than an exchange or other transaction which does not cause a
Contributor to
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<PAGE>
recognize income or gain for federal income tax purposes. During the Restricted
Period AEGIS shall have the right to dispose of or distribute the Real Property,
and AEGIS shall pay to the Unit Recipient the Tax Payment when due. After [ten
(10)] years AEGIS shall use commercially reasonable efforts to dispose of the
Real Property in a tax-free exchange pursuant to Section 1031 of the Code.
15.3. Right of Redemption. (a)(i) If, prior to the date of death of the
last remaining individual Unit Recipient, AEGIS desires to sell or otherwise
desires to dispose of the Property (other than through foreclosure or
condemnation), and receives a bona fide offer to purchase the Real Property
after the Restricted Period from an unrelated third party, which offer AEGIS
wishes to accept, AEGIS shall give notice (the "Offering Notice") thereof to the
Unit Recipients. The Unit Recipients shall have thirty (30) days from delivery
of the Offering Notice to notify AEGIS in writing of whether they elect to
purchase the Real Property. The Offering Notice shall specify the nature of the
sale and the consideration and other terms upon which it intends to undertake
such sale and shall specify that the failure of the Unit Recipients to respond
within such thirty (30) day period shall be deemed the election by the Unit
Recipients not to purchase the Real Property. If they elect to so purchase, then
such purchase shall be consummated within ninety (90) days of delivery of the
Offering Notice on the terms and conditions set forth in the Offering Notice.
(ii) If, upon receipt of the Offering Notice, some or all of
the Unit Recipients wish to purchase the Real Property, those so wishing
shall participate in such purchase in proportion to their respective
Interests or as they may otherwise agree. If those Unit Recipients wishing
to purchase the Real Property fail to agree to pay the entire purchase
price, such failure shall be deemed an election by the Unit Recipients not
to purchase the Real Property.
(iii) The Unit Recipients may use their Units as currency, in
whole or in part, in connection with the purchase of the Real Property
from AEGIS pursuant to this Section 15.3.
(iv) If the Unit Recipients elect not to purchase the Real
Property or fail to respond to the Offering Notice within the thirty (30)
days of delivery of the Offering Notice , AEGIS may undertake to sell the
Real Property on the terms and conditions contained in the Offering
Notice; provided, however, that the sale of the Real Property to which
this Section 15.3 applies shall not be consummated at less than
ninety-five percent (95%) of the price specified in the Offering Notice.
If AEGIS does not sell the Real Property within the one-year period
following delivery of the Offering Notice, or should AEGIS at any time
wish to decrease the price for which it would sell the Property, AEGIS
shall again offer the Real Property to the Unit Recipients upon such terms
and conditions and the provisions of this Section 15.3 shall apply again.
In the event that the Unit Recipients shall decline to purchase the Real
Property pursuant to this Section 15.3, the Unit Recipients shall have no
further right of redemption as
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<PAGE>
against the party to whom AEGIS has transferred title to the Real Property.
In the event Unit Recipients elect to purchase the Real Property and
default in the consummation of the closing due to no fault of AEGIS, the
Unit Recipients shall no longer be entitled to any right of redemption
hereunder and AEGIS shall be entitled to all of its remedies at law or in
equity.
(b) In the event that the Unit Recipients elect to purchase the Real
Property pursuant to this Section 15.3, AEGIS agrees to cooperate with the Unit
Recipients at no additional cost, expense or liability to AEGIS to cause debt to
be placed on the Real Property immediately prior to the closing of the
conveyance of the Real Property provided that (i) the Unit Recipients arrange
for such debt at their sole cost and expense; (ii) the Unit Recipients are
unconditionally prepared to close such conveyance immediately after said closing
of the loan; and (iii) the Unit Recipients agree to assume the debt and
thereafter assume same at the closing and AEGIS is released of all liability
thereunder immediately following the closing of the conveyance of the Real
Property.
15.4. Definitions.
(a) "Tax Payment" means an amount equal to the Taxes payable by the
Unit Recipient resulting from the event giving rise to such Tax Payment,
including the amount of taxes resulting from receipt of such Tax Payment.
(b) "Tax or Taxes" means any and all taxes, together with any
interest, penalties or additions to tax imposed with respect thereto.
(c) "Tax Return" means returns, reports and forms required to be
filed with any governmental authority.
15.5. Relationship to Partnership Agreement. Notwithstanding the
provisions of Section 7.7(b) of the Partnership Agreement, the provisions of
this Article, including but not limited to all covenants and agreements of
AEGIS, shall control.
ARTICLE 16
Miscellaneous
16.1. Notices. Any notice provided for by this Agreement and any other
notice, demand or communication which any party may wish to send to another
shall be in writing, addressed to the party for which such notice, demand or
communication is intended at such party's address as set forth in this Section,
and sent either (i) by registered or certified mail, return receipt requested,
in a sealed envelope, postage prepaid, (ii) by any national overnight receipted
courier service, or (iii) by facsimile transmission with confirmation of
receipt, as follows:
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If to AEGIS or the REIT:
To: AEGIS REALTY OPERATING PARTNERSHIP, L.P.
625 Madison Avenue
New York, New York 10022
Fax #: 212-593-5794
Attention: Mr. Mark Schlacter
and RCC PROPERTY ADVISORS
15127 Jog Road, Suite 210
Delray Beach, Florida 33446-1251
Fax #: 561-496-1782
Attention: Mr. Paul R. Rutledge
with a simultaneous copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Michael A. Mishaan, Esq.
Fax #: (212) 856-7803
If to Crossroads at its address set forth on the first page hereof, with
simultaneous copies to:
Kephart & Fisher
41 S. High Street
Columbus, OH 43215
Attention: David W. Fisher, Esq.
Fax #: 614-469-1887
and O'Melveny & Myers
400 South Hope Street, 15th Floor
Los Angeles, California 90071
Attention Frederick B. McLane, Esq.
Fax #: 213-430-6407
If to a Contributor (in its capacity as Managing Member or Contributor, as
applicable), at such Contributor's address for all purposes under this Agreement
shall as set forth on Schedule 1, annexed hereto, with simultaneous copies to:
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Michael Orbison, Esq.
625 Madison Avenue
New York, New York 10021
Fax #: 212-593-5766
and Columbus Pacific Properties, Inc.
6151 W. Century Boulevard, Suite 301
Los Angeles, California 90045
Fax #: 310-649-6494
Any address or name or facsimile number specified above may be changed by a
notice given by the addressee to the other party. Any notice, demand or other
communication shall be deemed given and effective as of the date of delivery in
person or receipt set forth on the return receipt or the facsimile confirmation.
The inability to deliver because of changed address or facsimile number of which
no notice was given, or rejection or other refusal to accept any notice, demand
or other communication, shall be deemed to be receipt of the notice, demand or
other communication as of the date of such attempt to deliver or rejection or
refusal to accept. Notices, demands and other communications may be given by the
parties' counsel which shall have the same force and effect as if given by the
parties themselves.
16.2. Entire Agreement, Modifications and Waivers; Cumulative Remedies.
This Agreement constitutes the entire agreement between the parties hereto and
may not be modified or amended except by an instrument in writing signed by the
parties hereto, and no provisions or conditions may be waived other than by a
writing signed by the party waiving such provisions or conditions. No delay or
omission in the exercise of any right or remedy accruing to Crossroads, any
Contributor or AEGIS upon any breach under this Agreement shall impair such
right or remedy or be construed as a waiver of any such breach theretofore or
thereafter occurring. The waiver by Crossroads, any Contributor or AEGIS of any
breach of any term, covenant or condition herein stated shall not be deemed to
be a waiver of any other breach, or of a subsequent breach of the same or any
other term, covenant or condition herein contained. All rights, powers, options
or remedies afforded to Crossroads, any Contributor or AEGIS either hereunder or
by law shall be cumulative and not alternative, and the exercise of one right,
power, option or remedy shall not bar other rights, powers, options or remedies
allowed herein or by law, unless expressly provided to the contrary herein.
16.3. Exhibits. All exhibits referred to in this Agreement and
attached hereto are hereby incorporated in this Agreement by reference.
16.4. Successors and Assigns. No assignment of this Agreement by any party
hereto shall be permitted, except that AEGIS may assign its rights but not its
obligations under this Agreement solely to a directly or indirectly wholly-owned
subsidiary or subsidiaries of the REIT or AEGIS, to a partnership, limited
liability company in which any such wholly-owned subsidiary or subsidiaries
owns, either directly or indirectly, at least seventy-five (75%)
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percent of the Profits, losses and cash flow thereof and controls the management
of the affairs of such partnership or limited liability company (any such
entity, a "Permitted Designee"), so long as AEGIS provides notice thereof to
each Contributor. This Agreement shall be binding upon, and inure to the benefit
of, each Contributor and AEGIS and their respective legal representatives,
successors, and assigns. Whenever a reference is made in this Agreement to
AEGIS, it shall include AEGIS's successors and assigns under this Agreement.
16.5. Article Headings. Article and Section headings and Article and
Section numbers are inserted herein only as a matter of convenience and in no
way define, limit or prescribe the scope or intent of this Agreement or any part
thereof and shall not be considered in interpreting or construing this
Agreement.
16.6. Governing Law. This Agreement shall be construed and
interpreted in accordance with the laws of the State of New York.
16.7. Time Periods. If the final day of any time period or limitation set
out in any provision of this Agreement falls on a Saturday, Sunday or legal
holiday under the laws of the State where the Property is located or of the
federal government, then and in such event the time of such period shall be
extended to the next day which is not a Saturday, Sunday or legal holiday.
16.8. Counterparts. This Agreement may be executed in any number of
counterparts and by either party hereto on a separate counterpart, each of which
when so executed and delivered shall be deemed an original and all of which
taken together shall constitute but one and the same instrument.
16.9. Intentionally Omitted.
16.10. Further Acts. In addition to the acts, deeds, instruments and
agreements recited herein and contemplated to be performed, executed and
delivered by AEGIS, Crossroads, and any Contributor, AEGIS, Crossroads, the
Limited Partner and any and Contributor shall perform, execute and deliver or
cause to be performed, executed and delivered at the Closing or after the
Closing, any and all further acts, deeds, instruments and agreements and provide
such further assurances as the other party or the Title Company may reasonably
require to consummate the transactions contemplated hereunder.
16.11. Severability. In case any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
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<PAGE>
16.12. Attorneys' Fees. Should either party employ an attorney or
attorneys to enforce any of the provisions hereof or to protect its interest in
any manner arising under this Agreement, the nonprevailing party in any action
pursued in a court of competent jurisdiction (the finality of which is not
legally contested) agrees to pay to the prevailing party all reasonable costs,
damages, and expenses, including reasonable attorneys' fees, expended or
incurred in connection therewith.
16.13. REIT Audits. The Contributors acknowledge and agree that the REIT,
through its independent accountants, at the REIT's sole cost and expense, may
conduct an audit of the REIT's financial statements for purposes of the REIT
complying with its public reporting obligations under the Securities and
Exchange Act of 1934, as amended. In connection therewith, each Contributor
agree that for a period of twelve (12) months after the Closing Date, such
Contributor, at the REIT's sole cost and expense, shall cooperate and assist,
and to cause each of its Affiliates, its employees and representatives to
cooperate and assist, in such audit in all respects reasonably requested by the
REIT and its independent accountants, including without limitation making
employees of such Contributor, the Property and their respective Affiliates
available to provide any information necessary or appropriate for such audits
and signing standard management representation letters to the REIT's independent
accountants and to the REIT. Notwithstanding the foregoing, any such audit shall
not postpone the Closing Date.
IN WITNESS WHEREOF, this Agreement has been entered into effective as of
the date first written above.
CONTRIBUTORS:
STANDARD INVESTMENT CO. LTD., an Ohio limited
liability company
By: /s/ Brian Shirkin_______________________________
Name: Brian Shirkin_____________________________
Title:__________________________________________
RCC CROSSROADS EAST ASSOCIATES, a New York
partnership
By: /s/ Stuart J. Boesky____________________
Name: Stuart J. Boesky__________________
Title:__________________________________
/s/ J. Michael Fried____________
J. MICHAEL FRIED
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/s/ H. Leon Pachter_____________________
H. LEON PACHTER
/s/ Alan P. Hirmes______________________________
ALAN P. HIRMES
/s/ Stuart J. Boesky_____________________________
STUART J. BOESKY
/s/ Rita S. Boesky____________________________
RITA S. BOESKY
/s/ Andrew L. Kaskel_______________________
ANDREW L. KASKEL
/s/ Allison K. Spitalny________________________
ALLISON K. SPITALNY
/s/ Mark J. Schlacter___________________________
MARK J. SCHLACTER
AEGIS REALTY, INC.
By: /s/ Mark J. Schlacter
Name: Mark J. Schlacter
Title: Senior Vice President
AEGIS REALTY OPERATING PARTNERSHIP, L.P.
BY: AEGIS Realty, Inc., its general partner
By: /s/ Mark J. Schlacter
Name: Mark J. Schlacter_____________________
Title: Senior Vice President
<PAGE>
The undersigned hereby executed the foregoing agreement to evidence its
agreement to (i) enter into the non-exclusive leasing agreement at Closing
pursuant to Section 11.2(c)(vi), and (ii) at AEGIS's option to act as
construction manager at the Property for a fee not to exceed five percent (5%)
of the hard cost of construction, pursuant to an agreement in form reasonably
satisfactory to AEGIS and the undersigned.
COLUMBUS PACIFIC PROPERTIES, INC.
By: /s/ Brian Shirkin
Name: Brian Shirkin
Title:_______________________________
<PAGE>
SCHEDULE 1
Contributors
- -------------------------------------------------------------------------------
Interest Interest Interest Cash (C)
in in in or Unit
Name and Address Crossroads Limited SJB** (U)
Partner Component
- -------------------------------------------------------------------------------
Managing Members:
- -------------------------------------------------------------------------------
Standard Investment Co., 40% N/A N/A U
Ltd.
6151 W. Century Blvd.,
S-301,
Los Angeles, CA 90045-5314
- -------------------------------------------------------------------------------
RCC Crossroads East 30% N/A N/A U
Associates
c/o Related Capital Co.
625 Madison Avenue, 5th
Floor
New York, New York 10022
- -------------------------------------------------------------------------------
Crossroads East
Sub-limited Partners:*
- -------------------------------------------------------------------------------
J. Michael Fried 7.5% 25% U
- -------------------------------------------------------------------------------
H. Leon Pachter 5% 16.667% C
- -------------------------------------------------------------------------------
Alan P. Hirmes 5% 16.667% U
- -------------------------------------------------------------------------------
SJB Sub-limited Partners:**
- -------------------------------------------------------------------------------
Stuart Boesky 7.5% 25% 60% U
- -------------------------------------------------------------------------------
Rita Boesky 1.8% 6% 14.4% U
- -------------------------------------------------------------------------------
Andrew L. Kaskel 1.25% 4.167% 10% C
- -------------------------------------------------------------------------------
Allison K. Spitalny 1.25% 4.167% 10% C
- -------------------------------------------------------------------------------
Mark J. Schlacter .7% 2.333% 5.6% U
- -------------------------------------------------------------------------------
100% 100% 100%
- -------------------------------------------------------------------------------
- -------------------
* The Crossroads East Sublimited Partners are each contributing
their Interest in Limited Partner. They have only an indirect
interest in Crossroads. Ownership percentages in Crossroads are
given for allocation purposes only.
** The SJB Sublimited Partners are each contributing their Interests in SJB.
They have only indirect interests in Crossroads and Limited Partner.
Ownership percentages in Crossroads and Limited Partner are given for
allocation purposes only.
<PAGE>
List of Exhibits
Exhibit A - Legal Description of Land
Exhibit B - Investor Questionnaire
Exhibit C - Lock-Up Agreement
Exhibit D - Exchange Rights Agreement
Exhibit E - Registration Rights Agreement
Exhibit F - Intentionally Omitted
Exhibit G - Permitted Exceptions
Exhibit H - Tenant Estoppel
Exhibit I - Accountant Representation Letter
Exhibit J - Rent Roll
Exhibit K - Tenant Arrearages and Brokerage Commissions Owing
Exhibit L - Tenant Sales Figures
Exhibit M - Lease Assignments
Exhibit N - Equipment Leases
Exhibit O - Insurance Policies
Exhibit P - Utility Bills
Exhibit Q - Permits
Exhibit R - Operating Statements
Exhibit S - Security Deposits
Exhibit T - Warranty
Exhibit U - Non-Exclusive Leasing Agreement
Exhibit V - Pro Forma Statements of Operations
Exhibit W - Certain Proceedings
Exhibit X - Deferred Note
Exhibit Y - Intentionally Omitted
Exhibit Z - Form of Assignments
Exhibit AA - Voting Trust Agreement
Exhibit BB - Violations
Exhibit CC - FIRPTA Affidavit
