Exhibit 2.1
CONTRIBUTION AGREEMENT
Among
CONTRIBUTORS SHOWN ON EXHIBIT A,
AEGIS REALTY, INC., and
AEGIS REALTY OPERATING PARTNERSHIP, L.P.
DECEMBER 20, 2000
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TABLE OF CONTENTS
Page
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ARTICLE 1 AGREEMENT TO CONTRIBUTE.............................................1
ARTICLE 2 PROPERTY............................................................1
SECTION 2.1 Tangible Property........................................1
SECTION 2.2 Intangible Property......................................4
SECTION 2.3 Excluded Property........................................4
ARTICLE 3 CONSIDERATION.......................................................4
SECTION 3.1 Consideration............................................4
SECTION 3.2 Reimbursement of Capital Expenditures....................5
SECTION 3.3 Number of Units; Adjustments to the Components
of the Consideration...................................5
SECTION 3.4 Exchange Rights for Units................................6
SECTION 3.5 Registration Rights......................................7
SECTION 3.6 Representations and Warranties With Respect to
Units and Common Stock.................................7
SECTION 3.7 Investment Representations and
Warranties of Contributors.............................8
SECTION 3.8 Adjustment to Exchange Ratio.............................9
SECTION 3.9 Transfer of Units to Contributors' Partners..............9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES......................................9
SECTION 4.1 Representations and Warranties of the Company and OP.....9
SECTION 4.2 Representations and Warranties of Contributors..........19
ARTICLE 5 COVENANTS RELATING TO CONDUCT OF BUSINESS..........................27
SECTION 5.1 Covenants of the Company, OP and Contributors...........27
ARTICLE 6 ADDITIONAL AGREEMENTS.............................................35
SECTION 6.1 Preparation of the Company Proxy Statement..............35
SECTION 6.2 Access to Information...................................35
SECTION 6.3 Company Stockholders' Meeting...........................36
SECTION 6.4 Consents and Approvals..................................36
SECTION 6.5 Reservation of Shares; Validity of Shares...............37
SECTION 6.6 Employee Benefit Plans..................................37
SECTION 6.7 Expenses; Liquidated Damages............................37
SECTION 6.8 Brokers or Finders......................................38
SECTION 6.9 Board of Directors......................................39
SECTION 6.10 Additional Agreements...................................40
SECTION 6.11 Conveyance Taxes........................................40
SECTION 6.12 Public Announcements....................................40
SECTION 6.13 Notification of Certain Matters.........................40
SECTION 6.14 Tax Provisions..........................................41
SECTION 6.15 Assumption of Debt......................................41
SECTION 6.16 Maintenance of Debt.....................................42
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SECTION 6.17 Restrictions on Subsequent Sale of Properties...........43
SECTION 6.18 Permitted Sales of Properties...........................43
SECTION 6.19 Pre-Closing Distributions from Contributed
Partnerships..........................................43
SECTION 6.20 Employment and Non-Competition Agreements...............43
SECTION 6.21 Purchase Restrictions...................................44
SECTION 6.22 Development Partnerships................................44
SECTION 6.23 Advisory Fees...........................................45
SECTION 6.24 Grant of Company's Existing Stock Options...............45
SECTION 6.25 Voting Rights...........................................45
SECTION 6.26 Confidentiality.........................................45
SECTION 6.27 Due Diligence, Title and Closing Costs..................45
SECTION 6.28 Title Policies..........................................46
SECTION 6.29 Surveys.................................................46
SECTION 6.30 Environmental Reports...................................47
SECTION 6.31 Properties..............................................47
ARTICLE 7 CONDITIONS PRECEDENT...............................................47
SECTION 7.1 Conditions to Each Party's Obligation to Effect
the Contribution......................................47
SECTION 7.2 Conditions of Obligations of Contributors...............48
SECTION 7.3 Conditions of Obligations of the Company and OP.........50
ARTICLE 8 CLOSING AND CLOSING DOCUMENTS......................................51
SECTION 8.1 Closing.................................................51
SECTION 8.2 Contributor's Deliveries................................51
SECTION 8.3 The Company's and OP's Deliveries.......................53
SECTION 8.4 Prorations..............................................55
SECTION 8.5 Reconciliation and Final Payment........................56
SECTION 8.6 Accounts Payable........................................56
SECTION 8.7 Accounts Receivable.....................................56
SECTION 8.8 Employees...............................................56
SECTION 8.8 Proration of POB's Operating Costs......................56
ARTICLE 9 TERMINATION AND AMENDMENT..........................................57
SECTION 9.1 Termination.............................................57
SECTION 9.2 Effect of Termination...................................58
SECTION 9.3 Remedies for Breach of this Agreement...................58
SECTION 9.4 Amendment...............................................59
SECTION 9.5 Extension; Waiver.......................................59
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ARTICLE 10 GENERAL PROVISIONS................................................59
SECTION 10.1 Survival of Representations, Warranties and
Agreements; Indemnification...........................59
SECTION 10.2 Notices.................................................63
SECTION 10.3 Interpretation..........................................65
SECTION 10.4 Counterparts............................................65
SECTION 10.5 Entire Agreement; No Third Party Beneficiaries..........65
SECTION 10.6 Governing Law...........................................65
SECTION 10.7 No Remedy in Certain Circumstances......................65
SECTION 10.8 Assignment..............................................66
SECTION 10.9 Gender and Number Classification........................66
SECTION 10.10 Knowledge...............................................66
SECTION 10.11 Time Periods............................................66
SECTION 10.12 Condemnation and Destruction............................66
SECTION 10.13 Exhibits and Schedules..................................67
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EXHIBITS
Exhibit A List of Contributors and their Contributed Properties
Exhibit B Inventory of Excluded Property
Exhibit C Form of Lock-up Agreement
Exhibit D Form of Exchange Rights Agreement
Exhibit E Form of Qualifying Partner Questionnaire
Exhibit F Form of Registration Rights Agreement
Exhibit G Form of Joint Press Release
Exhibit H Form of BankBoston Estoppel Letter
Exhibit I Form of Charter Amendments
Exhibit J Contributors' Expenses
Exhibit K Company Expenses
Exhibit L Form of Non-Competition Agreement
Exhibit M Form of Tax Opinion
Exhibit N Management Internalization Agreement
Exhibit O Form of Assignment of Partnership Interests
Exhibit P Form of Assignment and Bill of Sale
Exhibit Q Form of Partnership Amendment
Exhibit R Form of Non-foreign Affidavit
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SCHEDULES
Schedule 4.1(b) Exceptions to Representations Regarding Capital Structure
Schedule 4.1(c) Exceptions to Representations Regarding Authority
Schedule 4.1(g) Litigation
Schedule 4.1(h) Delinquent Tax Returns; Taxes Being Contested; Tax Sharing
Agreements
Schedule 4.1(i) Certain Employment, Consulting, Stock or Benefit Agreement
or Plans
Schedule 4.1(j) Benefit Plans
Schedule 4.1(k) Title Policies
Schedule 4.1(l) Material Changes or Events Since October 1, 2000
Schedule 4.1(n) Debt
Schedule 4.1(p) Environmental Matters
Schedule 4.1(q) Insurance Policies
Schedule 4.1(x) Rent Roll; Pending Actions, Claims and Proceedings
Schedule 4.2(c) Liens Encumbering Contributed Partnership Interests
Schedule 4.2(g) Litigation
Schedule 4.2(h) Tax Sharing Agreements
Schedule 4.2(i) Certain Agreements
Schedule 4.2(j) Title Policies
Schedule 4.2(k) Material Changes or Events Since January 1, 2000
Schedule 4.2(l) Environmental Matters
Schedule 4.2(n) Insurance Policies
Schedule 4.2(s) Contributed Partnerships' Debt
Schedule 4.2(t) Rent Roll; Pending Actions, Claims and Proceedings
Schedule 5.1(f) Pending Acquisitions
Schedule 5.1(g) Permitted Dispositions
Schedule 5.1(h)-1 Permitted Changes to OP Contracts
Schedule 5.1(h)-2 Permitted Early Terminations of Contributors' Leases
Schedule 5.1(i)-1 Terms of Ernst Lease Buy Out
Schedule 5.1(i)-2 Pro Forma Development Loan
Schedule 6.8-1 Agreement with Bear, Stearns & Co., Inc.
Schedule 6.8-2 Agreement with Prudential Securities Incorporated
Schedule 6.18 Permitted Sales of Properties
Schedule 6.28 Title Companies
Schedule 10.1(g) Assets Excepted from Recourse Liability
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GLOSSARY OF TERMS
Term Section
---- -------
Agreement.................................... Introductory Paragraph
Alternative Transaction...................... 5.1(e)(i)
Amendment.................................... 8.2(e)
Assignee..................................... 3.9
Assignments and Bills of Sale................ 8.2(d)
Assignments of Partnership Interests......... 8.2(b)
BankBoston Agreement......................... 5.1(i)
Charter Amendments........................... 6.3
Closing...................................... 8.1
Closing Date................................. 8.1
Code......................................... 4.1(h)(i)
Common Stock................................. 3.4
Company...................................... Introductory Paragraph
Company Benefit Plans........................ 4.1(j)(i)
Company Board................................ 4.1(c)
Company Controlled Group..................... 4.1(j)(i)
Company Expenses............................. 6.7(c)
Company Permits.............................. 4.1(f)
Company Proxy Statement...................... 4.1(c)
Company Stockholder Approval Condition....... 4.1(c)
Company Stockholders' Meeting................ 4.1(c)
Confidentiality Agreement.................... 5.1(e)(i)
Consideration................................ 3.1
Contributed Partnership...................... Recital A
Contributed Partnership Controlled Group..... 4.2(m)
Contributed Partnership's Debt............... 4.2(s)
Contributor(s)............................... Introductory Paragraph
Contributor Closing Documents................ 7.3(e)
Contributor Material Adverse Effect.......... 4.2(a)
Contributor Permits.......................... 4.2(f)
Contributors' Expenses....................... 6.7(b)(i)
Debt......................................... 4.2(s)
Delaware Act................................. 3.6(b)
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Deposits..................................... 2.1(f)
Development Partnerships..................... 6.22
DOJ.......................................... 4.1(c)
Employment Agreements........................ 6.20
Environmental Laws........................... 4.1(p)
ERISA........................................ 4.1(j)(i)
Exchange Act................................. 4.1(c)
Exchange Rights Agreements................... 3.4
FCPA......................................... 4.1(r)
FF&E......................................... 2.1(c)
FF&E Leases.................................. 2.1(h)(v)
FTC.......................................... 4.1(c)
GAAP......................................... 4.1(d)
Governmental Entity.......................... 4.1(c)
Gross Up Amount ............................. 10.1(f)
Hazardous Substances......................... 4.1(p)
HSR Act...................................... 4.1(c)
Improvements................................. 2.1(b)
Income-Producing Property.................... 5.1(f)(ii)
Indemnitee................................... 10.1(d)
Indemnitor................................... 10.1(d)
Indemnity Collateral......................... 10.1(g)
Information.................................. 6.26
Intangible Property.......................... Recital A
Investment Company Act....................... 4.1(u)
Joint Notification Letters................... 8.2(l)
Knowledge.................................... 10.10
Land......................................... 2.1(a)
Lease(s)..................................... 2.1(e)
Lender....................................... 5.1(i)
Licenses..................................... 2.1(h)(iii)
Lien......................................... 4.1(c)
Lock-up Agreements........................... 3.4
Losses....................................... 10.1(f)
Management Internalization Agreement......... 7.2(f)
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Material Adverse Effect...................... 4.1(a)
Notice of Breach............................. 10.1(a)
Offer Price.................................. 6.15(d)
OP........................................... Introductory Paragraph
OP Closing Documents......................... 7.2(q)
OP Debt...................................... 4.1(n)
OP Permitted Exceptions...................... 4.1(k)
Partnership Agreement........................ 3.3
Partnership Record Date...................... 3.6(e)
PCBs......................................... 4.1(p)
Permitted Exceptions......................... 4.2(j)
Plans and Specs.............................. 2.1(h)(iv)
POB.......................................... 2.3
Preferred Stock.............................. 4.1(b)
Property/Properties.......................... Recital A
Qualifying Partner Questionnaires............ 3.4
Records...................................... 2.1(j)
Registration Rights Agreement................ 3.5
REIT......................................... 4.1(h)(ii)
Release Date................................. 10.1(h)
Representatives.............................. 5.1(e)(i)
Restricted Persons........................... 5.1(f)(ii)
SEC.......................................... 3.5
SEC Documents................................ 4.1(d)
Securities Act............................... 3.7(c)
Service Contracts............................ 2.1(h)(i)
State Takeover Laws.......................... 4.1(m)
Statutory Duties............................. 5.1(e)(i)
Subsidiary/Subsidiaries...................... 4.1(a)
Supplies..................................... 2.1(d)
Survival Period.............................. 10.1(a)
Tangible Property............................ Recital A
Target....................................... 5.1(e)(iv)
Tax Partnership.............................. 4.1(h)(i)
tax/taxes/taxable............................ 4.1(h)(i)
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Tenant Security Deposits..................... 8.4(e)
Title Company................................ 6.28
Title Policies............................... 6.28
Tradenames................................... 2.1(g)
Unit Price................................... 3.3
USTs......................................... 4.1(p)
Utility Reservations......................... 2.1(i)
Violation.................................... 4.1(c)
Warranties................................... 2.1(h)(ii)
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT dated as of December 20, 2000 (this
"Agreement"), by and among the contributors shown on Exhibit A (individually
"Contributor" and collectively "Contributors"), AEGIS REALTY OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership ("OP"), and AEGIS REALTY,
INC., a Maryland corporation (the "Company").
W I T N E S S E T H :
A. Each Contributor owns the property listed opposite its name on Exhibit
A attached hereto (individually, a "Property" and collectively, the
"Properties"). The Properties collectively consist of either (i) tangible real
and personal property and related contractual and other intangible rights
("Tangible Property"), or (ii) shares, membership interests or partnership
interests ("Intangible Property") in an underlying corporation, limited
liability company or limited partnership (a "Contributed Partnership").
B. Each Contributor desires to contribute its Property or Properties to
OP, and OP desires to accept the Properties from Contributors, on the terms and
conditions hereinafter set forth.
C. The Company, in order to induce Contributors to enter into this
Agreement, has agreed to make certain representations, warranties and covenants
in this Agreement, all upon the terms and subject to the conditions of this
Agreement.
AGREEMENT:
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE 1
AGREEMENT TO CONTRIBUTE
For and in consideration of the mutual benefits enjoyed by one another
under this Agreement, each Contributor agrees to contribute and convey its
Property or Properties to OP and OP agrees to accept conveyance of the
Properties pursuant to the terms and conditions set forth in this Agreement.
ARTICLE 2
PROPERTY
SECTION 2.1 Tangible Property. As used in this Agreement, any particular
Contributor's rights, titles and interests in, to and under the following items,
subject in each case to Permitted Exceptions (as hereinafter
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defined) shall be included within the definition of a particular "Property"
consisting of Tangible Property to the extent that such item(s) relate to such
Tangible Property:
(a) All rights, titles, and interests of the Contributor in the land
comprising such Property (the "Land") as well as rights appurtenant to the Land
including, but not limited to, (i) all easements, rights of way, rights of
ingress and egress, tenements, hereditaments, privileges, and appurtenances in
any way belonging to the Land, (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, (iv) the use of all alleys, easements and rightsofway, if any, abutting,
adjacent, contiguous to or adjoining the Land, and (v) any oil, gas, water, or
mineral rights;
(b) All other buildings, structures, parking areas, and other
improvements owned by Contributors and presently located upon such Land
(collectively, the "Improvements");
(c) All tangible personal property and fixtures, together with all
parts and supplies pertaining thereto, of the Contributor (collectively, the
"FF&E") of any kind attached to or located upon, and used in connection with,
the ownership, maintenance, use or operation of a Property as of the date hereof
(or acquired by a Contributor and so employed prior to Closing, as defined
below), including, but not limited to, all furniture, fixtures, equipment,
signs, personal property; all heating, lighting, plumbing, drainage, electrical,
air conditioning, fire prevention, and other mechanical fixtures and equipment
and systems; environmental monitoring and/or remediation equipment or systems;
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 carpet, drapes,
and other furnishings;
(d) All merchandise, supplies, inventory and other items of the
Contributor used for the operation and maintenance of the Property including,
without limitation, all office supplies and stationery, advertising and
promotional materials, cleaning, paper and other supplies, engineers' supplies,
paint and painters' supplies, and other cleaning and maintenance supplies
(collectively, the "Supplies");
(e) All leases, franchises, licenses, occupancy agreements,
"trade-out" agreements, or other agreements of the Contributor demising space
in, providing for the use or occupancy of, or otherwise similarly affecting or
relating to the use or occupancy of, the Improvements or Land, together with all
amendments, modifications, renewals and extensions thereof, and all guaranties
by third parties of the obligations of the tenants, licensees, franchisees,
concessionaires or other entities thereunder (collectively, the "Leases" and
individually, a "Lease");
(f) All prepaid rents, tenant security deposits and, to the extent
assignable, other deposits of the Contributor, including, but not limited to,
utility deposits, non-tenant security deposits and rental deposits, and all
other deposits for future services (collectively the "Deposits"), made in
connection with the use or occupancy of the Improvements. All tenant security
deposits are listed in Schedule 4.2(t) attached hereto;
(g) Any and all telephone exchanges, trade names, trade styles,
trade marks, and other identifying material, and all variations thereof,
together with all related goodwill, in which the Contributor has rights that
relate to or affect in any way, the design, construction, ownership, use,
occupancy, leasing, maintenance, service, or operation of the Land,
Improvements, Leases, Deposits, Supplies, or FF&E (collectively, the
"Tradenames");
(h) To the extent assignable, any and all of the following in which
the Contributor has rights that relate to or affect in any way, the design,
construction, ownership, use, occupancy, leasing, maintenance, service, or
operation of the Land, Improvements, Leases, Deposits, Supplies, or FF&E:
(i) Contracts or agreements, such as maintenance, supply,
service or utility contracts (collectively, the "Service Contracts");
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(ii) Warranties, guaranties, indemnities, and claims for the
benefit of a Contributor (collectively the "Warranties");
(iii) Licenses, permits, franchises, utility reservations,
certificates of occupancy, and similar documents issued by any federal,
state, or municipal authority or by any private party without material
cost to a Contributor (collectively the "Licenses");
(iv) Plans, drawings, specifications, surveys, soil reports,
engineering reports, inspection reports, and other technical descriptions
and reports to the extent in the Contributor's possession or control
(collectively, the "Plans and Specs"); and
(v) Leases of any FF&E and other contracts permitting the use
of any FF&E at the Improvements (collectively, the "FF&E Leases").
(i) To the extent assignable, the Contributor's interest in the
right to receive water service, sanitary and storm sewer service, electrical
service, gas service, and telephone service on and for the Land and
Improvements, free and clear of all qualifications and encumbrances other than
the obligation to pay the applicable utility company the published rate for
utility consumption after Closing, 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, and (iii) all wastewater capacity reservations relating to
the Land or Improvements (all of the foregoing are referred to in this Agreement
collectively as the "Utility Reservations"); and
(j) All books, records, promotional material, tenant data, marketing
and leasing material and forms (including but not limited to any such records,
data, information, material and forms in the form of computerized files), market
studies, keys, and other materials of any kind owned by the Contributor and in
the Contributor's possession or control, or which the Contributor has access to
or may obtain and has the right to convey and deliver which are or may be used
in the Contributor's ownership or use of the Land, the Improvements or the FF&E
(collectively, the "Records"); provided, however, that a copy of any such
material which constitutes a part of the Contributor's continuing business or
financial records may be retained by such Contributor.
SECTION 2.2 Intangible Property. As used in this Agreement, any particular
Contributor's rights, titles and interests in, to and under the following items
shall be included within the definition of a particular "Property" consisting of
Intangible Property, to the extent that such item(s) relate to such Intangible
Property: the shares, membership interests, and partnership interests of the
Contributor shown on Exhibit A relating to the Contributed Partnerships,
together with all of the Contributor's other rights, titles and interests of
whatsoever nature in and to the Contributed Partnerships, including, without
limitation, (i) all of the Contributor's rights or claims to share in dividends,
cash flow distributions, profits, surplus, or liquidation distributions from the
Contributed Partnerships, (ii) subject to Section 6.19 hereof, all of the
Contributor's rights or claims to all sums now due or owing as distributions,
profits, surplus, or liquidation distributions regardless of whether such
distributions are in the form of cash or property or are in the nature of
dividends, profits, reimbursements, repayments, return of capital, return on
capital, or fees, (iii) all of the Contributor's interest in, or claims to, the
assets of the Contributed Partnerships or any proceeds from the sale, lease, or
other disposition of any assets of the Contributed Partnerships, and (iv) any
and all of the Contributor's claims against the Contributed Partnerships and/or
their assets.
SECTION 2.3 Excluded Property. Notwithstanding anything herein to the
contrary, the contribution of P. O'B. Montgomery & Company, a Texas corporation
("POB"), shall not include any right, title or interest in or to name the name
"P. O'B. Montgomery" or variations thereof or any of the pictures, paintings,
artwork or other decorations that adorn POB's home office on the Closing Date or
other personal property identified as being excluded on Exhibit B attached
hereto. No Contributor or any of their affiliates shall use the name "P. O'B.
Montgomery" or variations thereof in the real estate or related business from
and after Closing to the extent and for so long as Philip O'B. Montgomery III is
prohibited from doing so under any agreement with the Company, OP or their
respective successors or assigns. All Contributed Partnerships which contain the
name "P. O'B. Montgomery" shall be changed as soon as reasonably practical after
Closing to a name that does not contain the name "P. O'B. Montgomery".
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ARTICLE 3
CONSIDERATION
SECTION 3.1 Consideration. Subject to the terms of this Agreement, in
return for Contributors contributing and conveying the Properties to OP, OP
agrees to pay or deliver to Contributors the total consideration of Two Hundred
Three Million, Five Hundred Thousand and No/100 Dollars ($203,500,000.00) (the
"Consideration"), as may be adjusted as provided herein. The Consideration is
preliminarily estimated to consist of (i) Three Million, One Thousand, Seven
Hundred Fifty Eight and 77/100 Dollars ($3,001,758.77) in immediately available
funds payable to Contributor at the Closing (the "Cash Portion"), (ii) Fifty
Eight Million, Three Hundred Eighty Six Thousand, Five Hundred Seventy One and
12/100 Dollars ($58,386,571.12) worth of units of limited partner interest in OP
("Units") to be issued in accordance with the terms of this Article 3, and (iii)
the assumption of the Debt (defined in Section 4.2(s) below) having a current
outstanding balance of approximately One Hundred Forty-Two Million, One Hundred
Eleven Thousand, Six Hundred Seventy and 11/100 Dollars ($142,111,670.11) as of
September 30, 2000. The Consideration, the Cash Portion, the number of Units,
and the Debt preliminarily allocated to each Contributor and to each of the
Properties held by each Contributor is set forth on Exhibit A attached hereto.
The aggregate number of Units issuable to Contributors at Closing shall be
adjusted (in accordance with Section 3.3(b)) to reflect changes in the amount of
the Debt from the preliminary estimated Debt listed in clause (iii) above to the
actual outstanding principal of the Debt on the Closing Date.
SECTION 3.2 Reimbursement of Capital Expenditures. The OP shall reimburse
each Contributor of a Property hereunder in an amount equal to capital
expenditures incurred by the Contributor with respect to the Property within two
(2) years preceding the Closing Date. The amount of any reimbursement pursuant
to this Section 3.2 to a Contributor is a component of, and not in addition to,
the Cash Portion allocated to a Property. The parties agree to report payments
made pursuant to this Section 3.2 under Treasury Regulation Section 1.707-4(d).
SECTION 3.3 Number of Units; Adjustments to the Components of the
Consideration.
(a) At the Closing, OP will issue and deliver to Contributors, in
the aggregate, a total number of Units, subject to the terms of this Agreement,
equal to the quotient obtained by dividing (i) the Consideration less the Cash
Portion and the amount of the Debt outstanding at Closing, as adjusted by the
terms of this Agreement, by (ii) $11.00 (the "Unit Price"). Each Contributor
hereby subscribes for and agrees to accept the issuance of the Units and the
terms and conditions of the Amended and Restated Agreement of Limited
Partnership for OP dated as of October 1, 1997 (as amended, the "Partnership
Agreement") as may be further amended as provided herein, and to execute and
deliver at the Closing such other documents or instruments as may be required by
the Company under Section 12.2 of the Partnership Agreement to effect such
Contributor's admission as a limited partner in OP. At least five (5) business
days prior to the Closing, Contributors shall provide to the Company all
information reasonably required by the Company to properly register the Units in
the names of each Contributor or Assignee (defined below).
(b) Adjustments to the components of the Consideration shall be made
as follows: (i) with respect to prorations (Section 8.4), adjustments shall be
made in cash separate from and without change to the Consideration or any
component thereof; (ii) changes in the Debt allocated to a Property to reflect
amortization or other changes in the normal course of business shall result in
an adjustment to the number of Units and/or the Cash Portion, at the Company's
discretion, allocated to such Property on Exhibit A so that the total
Consideration allocated to such Property does not change; (iii) the elimination
of a Property (e.g., pursuant to Sections 5.1(g), 6.15 and 6.18) shall result in
a reduction in the number of Units, Cash Portion and Debt components of the
aggregate Consideration allocated to such Property on Exhibit A or as otherwise
set forth in Section 6.18; and (iv) capital distributions made to Contributors
which result in a reduction of the Consideration pursuant to Section 6.22 shall
result in a proportionate reduction in the number of Units and Cash Portion
components of the aggregate Consideration allocated to the Development
Partnerships (defined below).
(c) Sections 5.1(g) and (h) and the related Schedules to this
Agreement contemplate, among other things, that the movie theater lease at
Sonora Plaza may be bought out by the lessee and terminated and a portion of the
parking lot at Sonora Plaza sold to a third party. In the event that such
buy-out and/or sale occurs
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before the later of (I) Closing or (II) the earlier of (A) ten months from the
date of this Agreement or (B) the termination of the lease buy-out agreement
(with regard to the lease buy-out transaction) or the purchase and sale
agreement (with regard to the sale transaction), the Contributors, on the one
hand, and OP, on the other hand, agree to apply the proceeds of such lease
buy-out and/or sale in accordance with this Section 3.3(c). If any lender
requires the lease buy-out or sale proceeds to be applied against the Debt on
Sonora Plaza, the number of Units otherwise issuable to the Contributor of
Sonora Plaza under this Agreement shall be reduced by one half (1/2) of the
amount of the proceeds so applied divided by the Unit Price. All proceeds which
are received by Contributors in cash and are not required to be applied against
the Debt on Sonora Plaza, shall be split as follows:
(i) If received by Contributors prior to Closing, one half
(1/2) of such proceeds shall be payable by Contributors to OP in cash at
Closing and:
(A) One half (1/2) of such proceeds shall be retained by
Contributors and applied prior to Closing against the Debt
encumbering Sonora Plaza or owed by P O'B. Apollo Florida, L.P. to
the extent permissible under the loan documents encumbering Sonora
Plaza or P O'B. Apollo Florida, L.P.'s property, ;
(B) To the extent that the amount referred to in Section
3.3(c)(i)(A) above is not permitted to be applied prior to Closing
against the Debt encumbering Sonora Plaza or owed by P O'B. Apollo
Florida, L.P., such amount shall be paid by Contributors to OP in
cash and OP shall issue to the Contributors of the Sonora Plaza
additional Units at the Unit Price having a value equal to such
amount;
(ii) If received after Closing, all of such proceeds shall be
paid to, and retained by, OP and OP shall issue to the Contributors of the
Sonora Plaza additional Units at the Unit Price having a value equal to
one half (1/2) of such proceeds.
(d) Notwithstanding anything herein to the contrary, Contributors
shall be permitted (i) to reallocate up to $250,000 worth of Units (valued at
the Unit Price) for cash at Closing for the purpose of cashing out certain
non-management unaccredited investors that would otherwise be entitled to
receive Units, and (ii) to reallocate $3,000,000 worth of Units (valued at the
Unit Price) for cash at Closing in the event that the FHA mortgage loan and
related equity loan on Woodgate Manor Apartments is repaid at or prior to
Closing. Such reallocations shall not affect the total Consideration hereunder.
SECTION 3.4 Exchange Rights for Units. Each Unit shall be exchangeable, at
the option of the Contributor holding such Unit, for one share of Common Stock,
par value $0.01 per share, of the Company (the "Common Stock"), in accordance
with, but subject to the restrictions contained in, Section 8.6 of the
Partnership Agreement and the Exchange Rights Agreement referenced therein;
provided, however, that no Contributor's exchange option may be exercised until
after one year from the Closing Date. Each Contributor or Assignee shall enter
into a Lock-up Agreement (collectively, "Lock-up Agreements") and Exchange
Rights Agreement (collectively, "Exchange Rights Agreements") in substantially
the same forms as attached hereto as Exhibits C and D, respectively. In
addition, each Contributor or Assignee shall complete a Qualifying Partner
Questionnaire (collectively, "Qualifying Partner Questionnaires") in
substantially the same form as attached hereto as Exhibit E.
SECTION 3.5 Registration Rights. Each Contributor and Assignee shall have
the right to obtain registration with the Securities and Exchange Commission
(the "SEC") of the shares of Common Stock issuable in exchange for such
Contributor's Units on the terms set forth in the Registration Rights Agreement,
in substantially the same form as attached hereto as Exhibit F, to be executed
by Contributors, the Assignees and the Company at the Closing (the "Registration
Rights Agreement").
SECTION 3.6 Representations and Warranties With Respect to Units and
Common Stock. Subject to the Company Stockholder Approval Condition (defined
below), the Company and OP hereby jointly and severally represent and warrant to
Contributors and the Assignees as follows:
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(a) The Company has the full legal right, power and authority to
enter into the Amendment (as defined in Section 8.2(e) below) and to consummate
the transactions contemplated therein. As of the Closing Date, the Exchange
Rights Agreement and the Registration Rights Agreement will be duly authorized
by all necessary corporate action and will constitute the valid and binding
obligation of the Company, enforceable in accordance with its terms. The
Partnership Agreement constitutes a valid and binding obligation of the Company,
enforceable in accordance with its terms.
(b) The Units, when issued, will be duly and validly authorized and
issued, will be fully paid and nonassessable, without any obligation to restore
capital except as required by the Delaware Revised Uniform Limited Partnership
Act (the "Delaware Act"), and the issuance of the Units will not trigger any
preemptive or similar rights. As a holder thereof, as of the Closing Date each
Contributor shall be admitted as a limited partner of OP entitled to all of the
rights and protections of limited partners under the Delaware Act and the
provisions of the Partnership Agreement as amended by the Amendment with the
same rights, preferences and privileges as all existing limited partners on a
pari passu basis. The shares of Common Stock for which the Units may be
exchanged (i) will be duly authorized and, when issued, (ii) will be validly
issued, fully paid and nonassessable, and (iii) will not trigger any preemptive
or similar rights. Authorized and unissued shares of Common Stock sufficient to
permit such exchange shall at all times be reserved by the Company.
(c) Each consent, approval, authorization, order, license,
certificate, permit, registration, designation or filing by or with any
governmental agency or body necessary for the (i) valid authorization, issuance,
sale and delivery of the Units, (ii) the valid authorization, issuance, sale and
delivery of shares of Common Stock upon exchange of the Units, and (iii) the
execution, delivery and performance of the Exchange Rights Agreement and the
Registration Rights Agreement by the Company, will be made or obtained and will
be in full force and effect.
(d) Neither the issuance, sale and delivery by OP of the Units, nor
the issuance, sale and delivery by the Company of the shares of Common Stock
upon exchange of the Units, nor the execution, delivery and performance of the
Exchange Rights Agreement or the Registration Rights Agreement, will conflict
with or result in a breach or violation of any of the terms and provisions of,
or (with or without the giving of notice or passage of time or both) constitute
a default under the charter or bylaws of the Company or the certificate of
limited partnership or the Partnership Agreement of OP; any indenture, mortgage,
deed of trust, loan agreement, note, lease or other agreement or instrument to
which the Company or OP is a party or to which any of them, any of their
respective properties or other assets is subject; or any applicable statute,
judgment, decree, rule or regulation of any court or governmental agency or body
applicable to any of the foregoing or any of their respective properties; or
result in the creation or imposition of any lien, charge, claim or encumbrance
upon any property or asset of the Company or OP.
(e) The holder of each Unit shall be entitled to receive, and shall
receive, the distributions described in the Partnership Agreement. With respect
to the first Partnership Record Date (defined below) on or after the Closing for
distributions by the OP, the Contributors receiving Units shall receive
distributions payable with respect to the Units on a pro rata basis based upon
the number of days from and after the Closing Date in the calendar quarter
preceding such Partnership Record Date. "Partnership Record Date" shall mean the
record date established by the Company for any particular distribution of the
Available Cash (as defined in and pursuant to the Partnership Agreement) which
record date shall be the same as the record date established by the Company for
distribution to its stockholders of some or all of their portion of such
distribution.
(f) The representations and warranties contained in this Section 3.6
do not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements and information contained in this
Section 3.6 not misleading.
SECTION 3.7 Investment Representations and Warranties of Contributors.
Each Contributor, as to itself only, hereby represents and warrants to the
Company and OP as follows:
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(a) It is familiar with the business and financial condition of the
Company and OP, and is not relying upon any representations made to it by the
Company, OP or any of the officers, employees or agents of either of them that
are not contained or referred to herein.
(b) It is aware of the risks involved in making an investment in the
Units and in the Common Stock for which such Units are exchangeable. It has had
an opportunity to ask questions of, and to receive answers from, OP and the
Company, or a person or persons authorized to act on their behalf, concerning
the terms and conditions of this investment and the financial condition, affairs
and business of OP and the Company. Contributor confirms that all documents,
records and information pertaining to its investment in OP that have been
requested by it have been made available or delivered to it prior to the date
hereof.
(c) It understands that neither the Units nor the shares of Common
Stock for which the Units may be exchanged have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any state
securities acts and are instead being offered and sold in reliance on an
exemption from such registration requirements. The Units for which each
Contributor hereby subscribes are being acquired solely for its own account, for
investment, and are not being acquired with a view to, or for resale in
connection with, any distribution, subdivision or fractionalization thereof, in
violation of such laws, and (except as expressly set forth herein) Contributor
has no present intention to enter into any contract, undertaking, agreement or
arrangement with respect to any such resale. Each Contributor understands that
the Units will contain appropriate legends reflecting the requirement that the
Units not be resold by the Contributor without registration under such laws or
the availability of an exemption from such registration.
(d) It is an "accredited investor", as such term is defined in
Regulation D, promulgated under the Securities Act.
SECTION 3.8 Adjustment to Exchange Ratio. If prior to the Closing Date the
Company, by stock dividend, split, reverse split, reclassification or otherwise,
changes as a whole its outstanding Common Stock into a different number or class
of shares and the Units are not adjusted in a similar manner, then each
Contributor's exchange right shall be revised, as appropriate, so that (i) the
new class of shares shall replace the old class of shares as those subject to
each Contributor's exchange right, and (ii) the number of shares which will be
issued upon exchange of each Contributor's Units shall be proportionately
adjusted. If prior to the Closing Date the Company consolidates with or merges
into another corporation or entity, each Contributor shall be entitled to
receive, upon an exchange of its Units immediately following such a merger or
consolidation, the same securities or other consideration which a holder of the
Common Stock of the Company received in the merger or consolidation, as though
each Contributor had exercised its right to exchange immediately prior to the
merger or consolidation.
SECTION 3.9 Transfer of Units to Contributors' Partners. Upon submission
to OP of (i) evidence that such transfer and assignment is made in a transaction
exempt from registration, (ii) a certificate of representations and warranties
as to the investment sophistication of the transferee(s), containing
substantially the same representations and warranties as set forth in Section
3.7 above, and (iii) such transferee's written agreement to be subject to the
terms of this Agreement as if such transferee were a Contributor, each
Contributor shall be permitted at, and contemporaneously with, Closing to
transfer and assign its Units to its partners (both general and limited) in such
proportion as such Contributor deems appropriate (such assignees being referred
to herein as the "Assignees"), and OP and the Company agree (i) to enter on OP's
records the names of such Assignees as the owner of the Units, (ii) to treat
such Assignees as the owner of the Units for all purposes thereafter, and (iii)
to treat each Assignee as the permitted successor and assignee of such
Assignee's assigning Contributor for all purposes under this Agreement and under
any of the documents delivered by or to such Contributor in connection with the
Closing. The identity of the Assignees (and any other information required by
Section 3.3(a)) shall be provided by the Contributors at least five (5) business
days prior to the Closing.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Representations and Warranties of the Company and OP. The
Company and OP hereby jointly and severally represent and warrant to
Contributors as follows:
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(a) Organization, Standing and Power. Each of the Company, OP and
their respective subsidiaries (individually, a "Subsidiary" and collectively,
the "Subsidiaries") is a corporation, limited liability company, or limited
partnership duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation or organization, has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified and in good
standing to transact business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary, except where the failure to be in good standing or so to qualify
would not have a material adverse effect on the properties, assets, financial
condition (exclusive of changes in general industry or market conditions) or
operations of the Company, OP and the Subsidiaries taken as a whole (a "Material
Adverse Effect").
(b) Capital Structure. The authorized stock of the Company consists
of 50,000,000 shares of the Common Stock and 5,000,000 shares of Preferred
Stock, par value $0.01 per share, of the Company ("Preferred Stock"). At the
close of business on the date immediately preceding the date hereof, 8,049,179
shares of the Common Stock and no shares of the Preferred Stock of the Company
were issued and outstanding. At the close of business on the date hereof, the
total issued and outstanding units of partnership interest of OP consists of
8,049,179 units of general partner interest owned by the Company and 765,780
units of limited partner interest. Except as provided in this Agreement and the
exhibits and schedules hereto, there are no shares of stock of the Company
outstanding and there are no options, warrants, calls, rights or agreements to
which the Company, OP or any Subsidiary is a party or by which it is bound
obligating the Company, OP or any Subsidiary to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of stock, units, partnership
interests, or any voting debt securities of the Company, OP or any Subsidiary,
or obligating the Company, OP or any Subsidiary to grant, extend or enter into
any such option, warrant, call, right or agreement, except as set forth on
Schedule 4.1(b). All outstanding shares of the Common Stock have been duly
authorized and are validly issued, fully paid and nonassessable.
(c) Authority. The Company and OP have all requisite power and
authority to enter into this Agreement and, subject to the approval of this
Agreement and the Charter Amendments (as hereinafter defined) by the affirmative
vote of the holders of shares of Common Stock entitled to cast a majority of all
of the votes entitled to be cast on the matter (the "Company Stockholder
Approval Condition"), to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement has been duly authorized by all
necessary action on the part of the Company and OP, and the consummation by the
Company and OP of the transactions contemplated hereby has been duly authorized
by all necessary action on the part of the Company and OP, subject to the
Company Stockholder Approval Condition. This Agreement has been duly executed
and delivered by the Company and OP and, subject to the Company Stockholder
Approval Condition, constitutes a valid and binding obligation of the Company
and OP enforceable against each of such parties in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally. The execution and delivery of this Agreement does not and,
subject to the Company Stockholder Approval Condition and except as set forth on
Schedule 4.1(c), the consummation by the Company and/or OP of the transactions
contemplated hereby will not, conflict with or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or the
loss of a material right or benefit under, or the creation or imposition of any
lien, pledge, adverse claim, security interest, charge or other encumbrance
("Lien") on or against any assets or properties of the Company, OP or any
Subsidiary (any such conflict, violation, default, right of termination,
cancellation, acceleration, loss, creation or imposition, hereafter a
"Violation"), pursuant to (i) any provision of the charter, articles or
certificate of incorporation, bylaws, articles or certificate of formation or
organization, regulations, limited liability company agreement; agreement of
organization, articles or certificate of limited partnership, limited
partnership agreement or analogous instruments of governance or formation of the
Company, OP or any Subsidiary presently in effect, and in the case of the
charter of the Company, assuming that the Charter Amendment is approved as set
forth herein, or (ii) subject to obtaining consent from Lender (defined below),
any loan or credit agreement, note, mortgage, indenture, lease, Company Benefit
Plans (as defined in Section 4.1(j)(i)) or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, writ, order,
decree, statute, law, ordinance, rule or regulation applicable to the Company,
OP or any Subsidiary, or their respective properties or assets, except in the
case of this clause (ii), for any such Violation which would not have a Material
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Adverse Effect. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other public or governmental authority (a "Governmental Entity")
is required by or with respect to the Company, OP or any Subsidiary in
connection with the execution and delivery by the Company or OP of this
Agreement or the consummation by the Company or OP of the transactions
contemplated hereby, except for (i) the filing with the SEC of a proxy statement
in definitive form relating to the meeting (the "Company Stockholders' Meeting")
of holders of the Common Stock to vote upon this Agreement and the Charter
Amendments and the transactions contemplated hereby and thereby (the "Company
Proxy Statement") and such reports under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection with this
Agreement, the Charter Amendments and the transactions contemplated hereby and
thereby, (ii) the filing of the Articles of Amendment regarding the Charter
Amendments and such other appropriate documents with the State Department of
Assessments and Taxation of Maryland and relevant authorities of other
jurisdictions in which the Company, OP or any Subsidiary is qualified to do
business, (iii) all applicable filings, if any, with, and submissions of
information to, the United States Federal Trade Commission ("FTC") and the
United States Department of Justice, Antitrust Division ("DOJ"), pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and (iv) such other filings, authorizations, orders and approvals as may
be required and which heretofore have been made or obtained. The Board of
Directors of the Company (the "Company Board") has unanimously approved this
Agreement, and all of the transactions contemplated hereby and thereby and has
resolved to unanimously recommend that holders of the Common Stock approve and
adopt this Agreement; provided that the Company Board may withdraw, modify or
change such recommendation (including in a manner adverse to Contributors) under
the circumstances set forth in the second sentence of Section 5.1(e)(ii).
(d) SEC Documents. The Company and OP have made available to
Contributors a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by the Company and/or OP with the
SEC since January 1, 1998 (as such documents have been amended to date, the "SEC
Documents") which constitute all the documents (other than preliminary material)
that the Company and/or OP was required to file with the SEC since such date. As
of their respective dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as the case
may be, and the rules and regulations of the SEC thereunder applicable thereto
(other than with respect to the timely filing thereof), and none of the SEC
Documents contained, at the time they were filed, any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the Company,
OP and/or the Subsidiaries included in the SEC Documents comply in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with U.S. generally accepted accounting principles ("GAAP") applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited or interim statements, as
permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of
the unaudited or interim statements, to normal and recurring audit adjustments)
the consolidated financial position of the Company, OP and/or the Subsidiaries
at the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended. Since September 30, 2000, there has not been
any change in the financial condition, operations, or results of operations of
the Company, OP and/or the Subsidiaries which would have a Material Adverse
Effect, nor has any of the Company, OP or the Subsidiaries incurred any
liabilities except for (i) liabilities or obligations incurred in the ordinary
course of business consistent with past practice, (ii) liabilities incurred in
connection with or as a result of this Agreement and the transactions
contemplated hereby, and (iii) such other liabilities and obligations which,
individually or in the aggregate, are de minimus.
(e) Information Supplied. None of the information to be included or
(to the extent permitted by applicable rules of the SEC) incorporated by
reference in the Company Proxy Statement shall, at the date first mailed to
holders of the Common Stock and on the date of the Company Stockholders'
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, neither OP nor the Company is making
any representation or warranty to Contributors with respect to any information
provided by Contributors for inclusion in the Company Proxy Statement solely by
including such information within the Company Proxy Statement. The Company Proxy
Statement shall, on each date mailed to
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holders of Common Stock in connection with the Company Stockholders' Meeting and
at all times thereafter to the Closing Date, comply in all material respects
with the provisions of Regulation 14A under the Exchange Act.
(f) Compliance with Applicable Laws. The Company, OP and the
Subsidiaries hold all permits, licenses, variances, exemptions, orders,
authorizations and approvals of all Governmental Entities which are material to
the operation of their respective businesses (the "Company Permits"). The
Company, OP and the Subsidiaries are in compliance with the terms of the Company
Permits, except where the failure so to comply would not have a Material Adverse
Effect. Except as disclosed in the SEC Documents, the respective businesses of
the Company, OP and the Subsidiaries are not being conducted in violation of any
law, ordinance or regulation of any Governmental Entity, except for violations
which do not have a Material Adverse Effect. No investigation or review by any
Governmental Entity with respect to the Company, OP or the Subsidiaries is
pending or, to the knowledge of the Company, threatened, nor has any
Governmental Entity indicated to the Company or its counsel, agents or
representatives an intention to conduct the same other than those the outcome of
which would not have a Material Adverse Effect.
(g) Litigation. Except as disclosed in the SEC Documents or in
Schedule 4.1(g), there is no suit, action or proceeding pending in which process
has been served or, to the knowledge of the Company, threatened, against or
affecting the Company, OP or the Subsidiaries which, if determined adversely to
the Company, OP or the Subsidiaries, would have a Material Adverse Effect, nor
is there any judgment, decree, writ, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company, OP or the
Subsidiaries which has, or would have, a Material Adverse Effect. To the
Company's knowledge, any pending or threatened "slip and fall" claims are or
would be covered by insurance.
(h) Taxes.
(i) The Company, OP and each Subsidiary has timely filed or
caused to be timely filed all material tax or informational returns
required to be filed by any of them and for any partnerships for which any
of them is a general partner or with respect to its properties (except for
those tax returns listed on Schedule 4.1(h) whose filing dates have been
extended to the date listed opposite of each such return) and has paid (or
the Company has paid on its behalf) or properly accrued all taxes required
to be paid as shown on such returns, and all such tax returns are complete
and accurate in all material respects. The most recent financial
statements contained in the SEC Documents reflect an adequate accrual for
taxes (including all deferred taxes) payable by the Company, OP or the
Subsidiaries for a taxable periods and portion thereof through the date of
such financial statements. Since January 1, 2000, none of the Company, OP
or the Subsidiaries has incurred any liability for taxes under Sections
857(b), 860(c) or 4981 of the Internal Revenue Code of 1986, as amended
(the "Code"), and none of the Company, OP or the Subsidiaries has incurred
any liability for taxes other than in the ordinary course of business.
Except as set forth on Schedule 4.1(h), no event has occurred and, to
OP's, and the Company's and each Subsidiary's knowledge, no condition
exists which presents a material risk that any material tax liability
described in the preceding sentence will be imposed upon the Company, OP
or the Subsidiaries. No material deficiencies for any taxes have been
proposed, asserted or assessed by any Governmental Entity against the
Company, OP or the Subsidiaries or with respect to their respective
properties. No requests for waivers of the time to assess taxes are
pending and no tax returns of the Company, OP or the Subsidiaries have
been or are currently being audited by any applicable taxing authority.
There are no tax liens on any asset of the Company, OP or the Subsidiaries
other than liens for current taxes not past due and payable, except for
those liens for taxes being contested in good faith listed on Schedule
4.1(h). Each of the Company, OP and each Subsidiary has had since its
inception and will continue to have through the Closing Date the federal
tax status (i.e., partnership, C corporation or S corporation) such entity
reported on its 1999 federal tax returns. The Company, OP and each
Subsidiary has withheld or collected and paid over to the appropriate
governmental authorities or are properly holding for such payment all
material taxes required by law to be withheld or collected. None of the
Company, OP or any of the Subsidiaries has been at any time a member of
any partnership, joint venture or other arrangement or contract which is
treated as a partnership for federal, state, local or foreign tax purposes
(a "Tax Partnership") or the holder of a beneficial interest in any trust
for any period for which the statute of limitations for any tax has not
expired, except for a Tax
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Partnership which is OP or a Subsidiary. There are no tax sharing
agreements or similar arrangements with respect to or involving any of the
Company, OP or Subsidiaries except as set forth on Schedule 4.1(h).
For purposes of this Agreement, the term "tax" (including, with
correlative meaning, the terms "taxes" and "taxable") includes all
Federal, state, local and foreign income, profits, franchise, gross
receipts, payroll, sales, windfall profits, ad valorem, stamp, severance,
occupation, premium, customs duties, commercial rent, stock, paid-up
capital, value added, unemployment, disability, alternative or add-on
minimum, single business, social security, registration, estimated,
environmental, employment, use, real or personal property, withholding,
excise and other taxes, imposts, duties or assessments of any nature
whatsoever, together with all interest, penalties, charges and additions
to tax imposed with respect to such amounts.
(ii) The Company (A) for all taxable years commencing with its
organization through its most recent taxable year end has been subject to
taxation as a real estate investment trust (a "REIT") within the meaning
of Section 856 of the Code and has satisfied all requirements to qualify
as a REIT for such periods, (B) has operated since its most recent tax
year end in such a manner so as to qualify as a REIT for the taxable year
ending through the Closing Date, and (C) has not taken (or omitted to
take) any action which reasonably would be expected to result in a
challenge to its status as a REIT, and no such challenge is pending or, to
the Company's knowledge, threatened, by or before any Governmental Entity.
(i) Certain Agreements. Except as set forth on Schedule 4.1(i), none
of the Company, OP or the Subsidiaries is a party to any oral or written (i)
consulting agreement not terminable on sixty (60) days' or less notice involving
the payment of more than $30,000 per annum, or any union, guild or collective
bargaining agreement, (ii) agreement with any executive officer or key employee
of the Company, OP or the Subsidiaries the benefits of which are contingent or
the terms of which would be materially altered upon the occurrence of a
transaction involving the Company or OP of the nature contemplated by this
Agreement, or agreement with respect to any executive officer of the Company or
OP providing any term of employment or compensation guarantee or (iii) agreement
or plan, including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan, any of the benefits of which would
be increased or the vesting of the benefits of which would be accelerated upon
consummation of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which would be calculated by reference to any of
the transactions contemplated by this Agreement.
(j) Benefit Plans.
(i) Except as disclosed on Schedule 4.1(j), neither the
Company nor any other member of a "Company Controlled Group" (as hereafter
defined) maintains, contributes to or participates in, or has any
obligation to maintain, contribute to or participate in, any employee
benefit plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), retirement
or deferred compensation plan, incentive compensation plan, consulting
agreement, unemployment compensation plan, vacation pay plan, severance
plan, retiree medical plan, bonus plan, stock compensation plan or any
other type of employee-related arrangement, program, policy, plan or
agreement (all of such plans being hereinafter referred to as "Company
Benefit Plans"). The term "Company Controlled Group" means the Company,
OP, the Subsidiaries and each other corporation or other entity which has
at any other time been under common control with the Company or OP
pursuant to Sections 414(b), (c), (m) or (o) of the Code.
(ii) With respect to each Company Benefit Plan, (A) there has
been no material violation of any applicable provision of ERISA which
could result in a material liability being imposed upon the Company, OP or
the Subsidiaries; (B) each Company Benefit Plan intended to qualify under
Section 401(a) of the Code has received (or prior to the Closing Date
shall have received) a favorable determination letter with respect to such
qualification and, to the knowledge of the Company, nothing has occurred
which could reasonably be expected to jeopardize such favorable
determination; (C) neither the Company nor any other member of the Company
Controlled Group is subject to any material outstanding liability or
obligation relating to any such Company Benefit Plan (other than the
obligation to make contributions to, or pay benefits with respect to, any
such Company Benefit Plan, such contributions and/or
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benefits being made or paid no later than the date(s) required by law or
the terms of such Company Benefit Plan); and (D) to the knowledge of the
Company there are no actual or pending claims or actions (other than
claims for benefits in the ordinary course) relating to any such Company
Benefit Plan.
(iii) There are no unfunded and accrued benefit obligations
for which contributions have not been properly accrued to the extent
required by GAAP, on the consolidated financial statements of the Company,
OP or the Subsidiaries, which obligations would have a Material Adverse
Effect.
(k) Title to and Sufficiency of Assets. OP directly, or indirectly
through a wholly-owned or controlled subsidiary, owns good and marketable (or
good and indefeasible if located in Texas) title to all assets which are
material to the businesses of the Company, OP and the Subsidiaries taken as a
whole, free and clear of any and all Liens except as set forth in the SEC
Documents prior to the date hereof and, in the case of real property, any "OP
Permitted Exceptions" (defined below). Such assets include all tangible and
intangible real or personal property, contracts and rights necessary or required
for the operation of the business of the Company, OP and the Subsidiaries. "OP
Permitted Exceptions" shall refer to any Liens (i) itemized on the title
insurance policies listed on Schedule 4.1(k) attached hereto, complete and
accurate copies of which have been delivered to Contributors, (ii) for current
taxes not yet due and payable, or (iii) which, with respect to any particular
real property, have arisen since the date of the title insurance policy covering
such real property, provided that the items described by this clause (iii) shall
not cumulatively result in a Material Adverse Effect.
(l) Absence of Certain Changes or Events. Except as disclosed in the
SEC Documents or on Schedule 4.1(l), since October 1, 2000, the Company, OP and
the Subsidiaries have conducted their respective businesses in the ordinary
course and, there has not been (i) any damage, destruction or loss, whether
covered by insurance or not, which is required to be disclosed in any document
filed or to be filed with the SEC; (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of the Company's, OP's, or any Subsidiary's stock
or other ownership interests, except for cash dividends in respect of the
Company's stock or OP's Units consistent with past practices; (iii) any change
in the Company's, OP's, or any Subsidiary's significant accounting policies; or
(iv) any transaction, commitment, dispute or other event or condition (financial
or otherwise) of any character (whether or not in the ordinary course of
business) which is required to be disclosed in any document filed or to be filed
with the SEC.
(m) Maryland Anti-takeover Statutes Not Applicable. The Company's
Charter and/or bylaws provide that all "change-in-control," "fair price,"
"interested stockholder," "business combination," "control share acquisition,"
"merger moratorium," "voting sterilization" and all other anti-takeover and
stockholder protection laws enacted under the Maryland Act or any other internal
laws of the state of Maryland (collectively, "State Takeover Laws") are
inapplicable to this Agreement and the transactions contemplated hereby and such
Charter and/or bylaw provisions have been duly authorized and adopted as
provided by applicable law.
(n) Indebtedness. As of September 30, 2000, the Company, OP and the
Subsidiaries collectively owe approximately $62,172,524.00 in outstanding
principal (the "OP Debt"). Other than the OP Debt, none of the Company, OP or
the Subsidiaries has incurred, assumed or guaranteed any indebtedness for
borrowed money. The individual loans comprising the OP Debt are identified on
Schedule 4.1(n) attached hereto. The Company and OP are not aware of any default
under any notes, mortgages, security agreements, or other loan documents
evidencing or securing the OP Debt or any portion thereof or of any event (other
than the transactions contemplated herein) which has occurred which with notice
or the passage of time would constitute a default thereunder. OP has provided to
Contributors a true, correct and complete copy of all documents relating to the
OP Debt, including all notes and the security documents. The Company and OP
represent that such security documents do not secure any indebtedness other than
the OP Debt and none of the OP Debt is secured by any other property or assets
other than the assets of the Company, OP or the Subsidiaries.
(o) Vote Required. The affirmative vote of the holders of shares of
Common Stock entitled to cast a majority of all of the votes entitled to be cast
on the matter is the only vote of the holders of any class or series of stock of
the Company necessary to approve this Agreement, the Charter Amendments and the
transactions contemplated hereby. Except for the Company Stockholder Approval
Condition, the execution and delivery of this Agreement and the performance by
OP of its obligations under this Agreement require no further action or approval
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of OP's partners or of any other individuals or entities in order to constitute
this Agreement as a binding and enforceable obligation of OP.
(p) Environmental Matters. Except as set forth on Schedule 4.1(p),
the operations of the Company, OP and the Subsidiaries, to their knowledge, are
in compliance with all applicable "Environmental Laws" (as defined herein) and
all of the Company Permits issued pursuant to Environmental Laws, except where
the failure to comply would not have a Material Adverse Effect. The Company, OP
and the Subsidiaries, to their knowledge, have obtained all of the Company
Permits under all applicable Environmental Laws necessary to operate their
businesses. None of the Company, OP or the Subsidiaries has received any written
notification from any Governmental Entity asserting that the Company, OP or the
Subsidiaries is in violation of any Environmental Laws or any Company Permits
issued pursuant to any Environmental Law. Except as set forth on Schedule
4.1(p), to the Company's, OP's and each Subsidiary's knowledge, there are no
investigations of the business, operations or properties of the Company, OP or
the Subsidiaries pending or threatened by any Governmental Entity which would
result in a Material Adverse Effect. Except as set forth on Schedule 4.1(p) or
disclosed in written environmental reports made available to Contributors, to
the Company's, OP's and each Subsidiary's knowledge, there is not located at any
of the properties currently or formerly owned or operated by the Company, OP or
the Subsidiaries any "Hazardous Substances" (defined below), underground storage
tanks ("USTs") or asbestos-containing materials or polychlorinated biphenyls
("PCBs"). The Company, OP and the Subsidiaries have all made available to
Contributors all environmental audits, studies, reports, analyses and results of
investigations in their possession, custody or control that have been performed
with respect to their currently or formerly owned or operated properties. None
of the Company, OP or the Subsidiaries is aware of any environmental audits,
studies, reports, analyses and results of investigations not within their
possession, custody or control that have been performed with respect to their
properties.
For purposes of this Agreement, "Environmental Law" means any foreign,
federal, state or local statute, regulation, ordinance or rule of common-law as
now or hereafter in effect in any way relating to the protection of human health
and safety or the environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. ss. 9601 et.
seq.), the Hazardous Materials Transportation Act (49 U.S.C. ss.1801 et. seq.),
the Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et. seq.), the
Clean Water Act (33 U.S.C. ss. 1251 et. seq.), the Clean Air Act (42 U.S.C. ss.
7401 et. seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et. seq.),
the Federal Insecticide, Fungicide and Rodenticide Act (17 U.S.C. ss.136 et.
seq.), and the Occupational Safety and Health Act (29 U.S.C. ss. 651 et. seq.),
and the rules and regulations promulgated thereunder. The term "Hazardous
Substances" shall mean waste, hazardous waste, pollutants, hazardous substances,
hazardous materials, petroleum or any fraction thereof as those substances may
be listed, defined or regulated by Environmental Laws; provided, however, that
the term shall not include substances whose existence on any given property is
in full compliance with all Environmental Laws.
(q) Insurance. Schedule 4.1(q) contains a list of all policies or
binders of fire, liability, property, vehicular and other insurance held by the
Company, OP or the Subsidiaries. All of such policies and binders are in full
force and effect, valid, binding and enforceable in accordance with their terms.
There is no default by the Company, OP or the Subsidiaries with respect to any
material provision contained in any such policy or binder nor has there been any
failure to give any notice or present any claim under any such policy or binder
in due and timely fashion. No notice of cancellation or nonrenewal of any such
policy or binder has been received. There are no outstanding requirements or
recommendations by (i) any insurance company that issued such a policy, (ii) any
board of fire underwriters or other body exercising similar functions, or (iii)
the holder of any mortgage encumbering an insured property, requiring or
recommending any repairs or work to be done at an insured property.
(r) FCPA. None of the Company, OP or the Subsidiaries nor, to the
Company's knowledge, any of their respective directors, managers, members,
partners or officers, has (i) used any of the Company's, OP's or Subsidiary's
funds for any unlawful contribution, endorsement, gift, entertainment or other
unlawful expense relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from any of the Company's, OP's or Subsidiary's funds; (iii) violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended ("FCPA");
or (iv) made any bribe, rebate, payoff, influence payment, "kickback" or other
unlawful payment to any person or entity with respect to any of the Company's,
OP's or Subsidiary's matters.
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(s) Company Affiliate Transactions. From January 1, 1998 to the date
hereof, all transactions, agreements or understandings between or among the
Company, OP and/or any Subsidiary on the one hand, and any of the Company's,
OP's or Subsidiary's respective directors, managers, members, stockholders,
partners, officers, or affiliates (including without limitation Advisor and its
affiliates) on the other hand, that were required to be disclosed pursuant to
Item 404 of Regulation S-K under the Securities Act have been so disclosed.
(t) Company Internal Controls. The Company, OP and the Subsidiaries
maintain accurate books and records reflecting their respective assets and
maintain proper and adequate internal accounting controls in accordance with
recommended practices for publicly-traded companies. The books of account, stock
records, minute books and other records of the Company, OP and the Subsidiaries
are complete and correct in all material respects.
(u) Investment Company Act. None of the Company, OP or the
Subsidiaries is (nor immediately after consummation of the transactions
contemplated by this Agreement shall be) an investment company within the
meaning of, or a company controlled by an investment company within the meaning
of, or otherwise subject to any provisions of, the Investment Company Act of
1940, as amended (the "Investment Company Act") and the rules and regulations of
the SEC thereunder.
(v) Organizational Instruments. The Company and/or OP heretofore has
furnished to Contributors complete and correct copies of the charter, articles
or certificate of incorporation, bylaws, articles or certificate of formation or
organization, regulations, limited liability company agreement, agreement of
organization, articles or certificate of limited partnership, limited
partnership agreement (or equivalent organizational documents), as applicable,
in each case as amended or restated to the date hereof, of the Company, OP and
each of the Subsidiaries. None of the Company, OP or the Subsidiaries is in
violation of any provisions of its charter, articles or certificate of
incorporation, bylaws, articles or certificate of formation or organization,
regulations, limited liability company agreement, agreement of organization,
articles or certificate of limited partnership, limited partnership agreement
(or equivalent organizational documents), as applicable.
(w) Disclosure. No representation or warranty made by the Company or
OP in this Agreement and no statement of the Company or OP contained in the
Schedules hereto or in any certificate delivered by the Company or OP pursuant
to this Agreement, contains any untrue statement of a material fact or omits any
material fact necessary to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading; it being hereby
agreed and understood that for purposes of this Section 4.1(w) the term
"material" shall be measured by reference to the Company, OP and the
Subsidiaries, considered as an entirety.
(x) Property Condition. To the Company's and OP's knowledge, true
and complete copies of all leases for premises in excess of 5,000 rentable
square feet and other documents relating thereto affecting the property of the
Company, OP and/or the Subsidiaries have been made available to Contributors.
Except as set forth on Schedule 4.1(x), each of such leases is in full force and
effect and, to the Company's or OP's knowledge, none of the parties thereto is
in default of any of its obligations thereunder and no event has occurred that,
with the giving of notice or passage of time, or both, would constitute a
default thereunder. The information contained in the rent roll attached hereto
as Schedule 4.1(x) and made a part hereof is true and complete in all respects
on the date hereof, all rents are being paid and are current, except as any such
arrearages are otherwise set forth in Schedule 4.1(x), no tenant under any such
lease has paid any rent, fees, or other charges for more than one month in
advance, except as otherwise set forth in Schedule 4.1(x), and no such tenant is
or has been entitled to any free rent, abatement of rent or similar concession,
except as set forth in Schedule 4.1(x). None of the Company, OP or the
Subsidiaries has assigned, mortgaged, pledged, sublet, hypothecated or otherwise
encumbered any of its rights or interests under any of their respective leases
except as listed on Schedule 4.1(x). There are no actions, claims or proceedings
pending or, to the Company's or OP's knowledge, threatened by, any tenant,
governmental entity (zoning or otherwise) or any other party against the
Company, OP and/or the Subsidiaries or against their properties, except as
otherwise set forth in Schedule 4.1(x), nor, to the Company's or OP's knowledge,
is there any basis for any such action, proceeding or investigation. To the
Company's or OP's knowledge, all of the personal property of the Company, OP
and/or the Subsidiaries are free of material defects and in good working order.
Except as set forth on Schedule 4.1(x), to the Company's or OP's knowledge, none
of the Company's, OP's and/or the Subsidiaries' tenants is contesting any tax,
operating cost or other escalation payments or occupancy charges, or any other
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amounts payable under its lease, and no steps have been taken by any of the
Company, OP and/or the Subsidiaries with respect to any negotiation or appraisal
of rent under any of such leases, and no such negotiations or appraisals are
pending. To the Company's or OP's knowledge, 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 such lease except as otherwise
set forth in Schedule 4.1(x). To the Company's or OP's knowledge, all work (i.e.
tenant improvement allowances) required to be performed by any party to any of
such leases has been completed and amounts owed in connection therewith have
been fully paid, except as otherwise set forth in Schedule 4.1(x). To the
Company's or OP's knowledge, all material representations on the part of the
landlord contained in such leases are true and correct. To the Company's or OP's
knowledge, there is no breach or violation of any provision of any such lease
granting "exclusive" uses or prohibiting or restricting competing or similar
uses, and no such lease allows the space demised to be used for any purpose
which is prohibited by a restrictive covenant or the terms of any other of such
leases. To the Company's or OP's knowledge, the water, sewer, gas, electrical
and other utilities now serving their or the Subsidiaries' properties are
adequate to service the normal operation of such properties. With the exception
of any tenants pursuant to their respective leases, no person, firm, corporation
or other entity has any right or option to acquire the Company's, OP's and/or
the Subsidiaries' properties or any portion thereof.
SECTION 4.2 Representations and Warranties of Contributors. Contributors
jointly and severally represent and warrant to the Company as follows:
(a) Organization, Standing and Power. Each Contributor and each
Contributed Partnership is a corporation, limited partnership, or limited
liability company, as the case may be, duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of incorporation or
organization and has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted, and is duly
qualified and in good standing to transact business in each jurisdiction in
which the nature of its business or the ownership or leasing of its properties
makes such qualification necessary, except where the failure to be in good
standing or so to qualify would not have a material adverse effect on the
properties, assets, financial condition (exclusive of changes in general
industry or market conditions) or operations of the Properties taken as a whole
(a "Contributor Material Adverse Effect").
(b) Authority. Each Contributor has all requisite corporate,
partnership or limited liability company power and authority, as applicable, to
(i) enter into this Agreement, and (ii) consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by each Contributor has
been duly authorized by all necessary corporate, partnership or limited
liability company action, as applicable, and the consummation by each
Contributor of the transactions contemplated hereby has been duly authorized by
all necessary corporate, partnership or limited liability company action, as
applicable. This Agreement has been duly executed and delivered by each
Contributor and constitutes a valid and binding obligation of each Contributor,
enforceable against each Contributor in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally.
The equity owners of each Contributor and each Contributed Partnership have,
prior to the date hereof, provided all necessary consents with respect to the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated by this Agreement. The execution and delivery of
this Agreement does not, and the consummation by each Contributor of the
transactions contemplated hereby will not, result in any Violation pursuant to
(i) any provision of the certificate of incorporation, bylaws, agreement of
limited partnership, certificate of limited partnership, certificate of
formation, operating agreement, stockholder agreement, or analogous instruments
of formation or governance of any Contributor presently in effect or, (ii)
subject to obtaining any requisite lender's consent, any loan or credit
agreement, note, mortgage, indenture, lease, employee benefit plan or other
agreement, obligation, instrument, permit, concession, franchise, license,
judgment, writ, order, decree, statute, law, ordinance, rule or regulation
applicable to any Contributor or its respective properties or assets, except in
the case of this clause (ii), for any such Violation which would not have a
Contributor Material Adverse Effect. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity, is required by, or with respect to any Contributor in connection with
the execution and delivery of this Agreement or the consummation by such
Contributor of the transactions contemplated hereby, except for (i) all
applicable filings, if any, with, and submissions of information to, the FTC and
DOJ pursuant to the HSR Act, and (ii) such other filings, authorizations, orders
and approvals as may be required and which heretofore have been made or
obtained.
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(c) Title to Contributed Partnership Interests. Each Contributor has
good and marketable title to their respective interests in the Contributed
Partnerships listed on Exhibit A to be contributed hereunder, free and clear of
all Liens, except as set forth on Schedule 4.2(c). Each Contributor has the
power and authority to own its respective Intangible Property, and the
contribution of such Intangible Property pursuant to this Agreement is, to the
extent necessary, authorized and within the power of each Contributor. At the
Closing, OP will receive good and marketable title to the respective interests
in the Contributed Partnerships listed on Exhibit A free and clear of all Liens,
except as set forth on Schedule 4.2(c). In each case where a Contributed
Partnership is being transferred to OP and OP does not receive legal and
beneficial title to one-hundred percent (100%) of the partnership interests in a
Contributed Partnership, the partnership interests being contributed to OP shall
provide OP sufficient control to direct the actions of such Contributed
Partnership. Each partnership agreement of the Contributed Partnerships has been
duly authorized, executed and delivered by each party thereto and constitutes a
valid and binding obligation of those parties, enforceable in accordance with
its terms. True and complete copies of such partnership agreements have been
delivered to the Company and have not been amended since their respective dates.
(d) Financial Statements.
(i) The Contributors have delivered to the Company an audited
combined statement of revenues and direct operating expenses for the year
ended December 31, 1999, of the Properties (other than the Development
Partnerships). Such audited combined statement has been prepared in
accordance with generally accepted accounting principles (except as may be
indicated in the Independent Auditors' Report dated July 17, 2000, or the
notes to such combined statement) and fairly presents the consolidated
financial position of such Properties at the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended. Since December 31, 1999, there has not been any change in the
financial condition, operations, or results of operations of the
Properties which would have a Contributor Material Adverse Effect nor have
the Properties (other than the Development Partnerships) become encumbered
by any additional liabilities except for (i) liabilities or obligations
incurred in the ordinary course of business consistent with past practice,
(ii) liabilities incurred in connection with or as a result of this
Agreement and the transactions contemplated hereby, and (iii) such other
liabilities and obligations which, individually or in the aggregate, are
de minimus.
(ii) The Contributors of POB have delivered to the Company
unaudited financial statements of POB for the year ended December 31,
1999. Such financial statements fairly present the financial position of
POB at the dates thereof and the results of POB's operations and cash
flows for the period then ended. Since December 31, 1999, there has not
been any change in the financial condition, operations, or results of
operations of POB which would have a Contributor Material Adverse Effect
nor has POB become encumbered by any additional liabilities except for (i)
liabilities or obligations incurred in the ordinary course of business
consistent with past practice, (ii) liabilities incurred in connection
with or as a result of this Agreement and the transactions contemplated
hereby, and (iii) such other liabilities and obligations which,
individually or in the aggregate, are de minimus.
(e) Information Supplied. None of the information supplied by any
Contributor for inclusion in the Company Proxy Statement shall, at the date
first mailed to holders of the Common Stock and on the date of the Stockholders'
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(f) Compliance with Applicable Laws. Each Contributor and each
Contributed Partnership holds all permits, licenses, variances, exemptions,
orders, authorizations and approvals of all Governmental Entities which are
material to the operation of its business (the "Contributor Permits"). Each
Contributor and each Contributed Partnership is in compliance with the terms of
its respective Permits, except where the failure so to comply would not have a
Contributor Material Adverse Effect. The business of each Contributor and each
Contributed Partnership is not being conducted in violation of any law,
ordinance or regulation of any Governmental Entity, except for violations which
do not have a Contributor Material Adverse Effect. No investigation or review by
any Governmental Entity with respect to any Contributor or any Contributed
Partnership
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is pending or, to the knowledge of such Contributor, threatened, nor has any
Governmental Entity indicated an intention to conduct the same other than those
the outcome of which would not have a Contributor Material Adverse Effect.
(g) Litigation. Except as disclosed in Schedule 4.2(g), there is no
suit, action or proceeding pending in which process has been served or, to the
knowledge of the applicable Contributor, threatened against or affecting any
Contributor or Contributed Partnership or any of their respective properties,
which, if determined adversely to such Contributor or Contributed Partnership
would have a Contributor Material Adverse Effect, nor is there any judgment,
decree, writ, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against any Contributor or Contributed Partnership which has or
would have a Contributor Material Adverse Effect. To Contributors' knowledge,
without investigation as otherwise required by Section 10.10, the pending or
threatened claims listed on Schedule 4.2(g) are or would be covered by insurance
except as otherwise noted on such schedule.
(h) Taxes. Each Contributor and Contributed Partnership has timely
filed or caused to be timely filed all material tax or informational returns
required to be filed by any of them or with respect to their Property and has
paid or properly accrued all taxes required to be paid as shown on such returns
and all such tax returns and reports are complete and accurate in all material
respects. No material deficiencies for any taxes have been proposed, asserted or
assessed by any Governmental Entity against any Contributor or Contributed
Partnership or with respect to any Property. No requests for waivers of the time
to assess taxes are pending and no tax returns of any Contributor or Contributed
Partnership or with respect to any Property has been or are currently being
audited by any applicable taxing authority. There are no tax liens on any
properties of any Contributor or Contributed Partnership other than liens for
current taxes not past due and payable. The audited financial statements for the
year ended December 31, 1999, for the Properties delivered to the Company and/or
OP reflect an adequate accrual in accordance with GAAP (without regard to any
amounts reserved for deferred taxes and without regard to the materiality
thereof) for all unpaid taxes payable with respect to the Properties for all
taxable periods and portion thereof through the date of such financial
statements. Each of the Contributors and Contributed Partnerships has had since
its inception and will continue to have through the Closing Date the federal tax
status (i.e., partnership, C corporation or S corporation) such entity reported
on its 1999 federal tax returns, except as results from any actions taken
pursuant to this Agreement. Except as set forth on Schedule 4.2(h), none of the
Contributors or Contributed Partnerships has been at any time a member of any
partnership, joint venture or other arrangement or contract which is a Tax
Partnership or the holder of a beneficial interest in any trust for any period
for which the statute of limitations for any tax has not expired, except for a
Tax Partnership which is a Contributed Partnership. The Contributors and
Contributed Partnerships have withheld or collected and paid over to the
appropriate governmental authorities or are properly holding for such payment
all material taxes required by law to be withheld or collected. There are no tax
sharing agreements or similar arrangements with respect to or involving any of
the Contributors or Contributed Partnerships except as set forth on Schedule
4.2(h), none of which shall affect the Properties following Closing.
(i) Certain Agreements. Except as set forth on Schedule 4.2(i), no
Contributor or Contributed Partnership is a party to any oral or written
agreement relating to any Property not terminable on 60 days' or less notice
involving the payment of more than $30,000 per annum, or union, guild or
collective bargaining agreement.
(j) Title of Properties. Each Contributor and each Contributed
Partnership owns good and marketable (or good and indefeasible if located in
Texas) title to its Property free and clear of all Liens except, in the case of
real property, any "Permitted Exceptions" (defined below). "Permitted
Exceptions" shall refer to any Liens (i) itemized on the title insurance
policies listed on Schedule 4.2(j) attached hereto, complete and accurate copies
of which have been delivered to the Company, (ii) comprising or securing the
Debt, (iii) for current taxes not yet due and payable, or (iv) which, with
respect to any particular real property, have arisen since the date of the title
insurance policy covering such real property, provided that the items described
by this clause (iv) shall not cumulatively result in a Contributor Material
Adverse Effect. The Tangible Properties and the assets of the Contributed
Partnerships comprise all of the retail real estate investment properties owned
directly or indirectly by POB.
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(k) Absence of Certain Changes or Events. Except as disclosed in
Schedule 4.2(k), or except as contemplated by this Agreement, since January 1,
2000, each Contributor and Contributed Partnership has conducted its respective
business in the ordinary course and there has not been (i) any damage,
destruction or loss, whether covered by insurance or not, which would have a
Contributor Material Adverse Effect; (ii) any change in any Contributor's or
Contributed Partnership's significant accounting policies; or (iii) any
transaction, commitment, dispute or other event or condition (financial or
otherwise) of any character (whether or not in the ordinary course of business)
which has or would have, a Contributor Material Adverse Effect.
(l) Environmental Matters. The operations of each Contributor and
each Contributed Partnership, to Contributor's knowledge, is in compliance with
all applicable Environmental Laws and all Contributor Permits issued pursuant to
Environmental Laws, except where the failure to comply would not have a
Contributor Material Adverse Effect. Each Contributor and each Contributed
Partnership, to Contributor's knowledge, has obtained all Contributor Permits
under all applicable Environmental Laws necessary to operate its respective
business. No Contributor or Contributed Partnership has received any written
notification from any Governmental Entity asserting that such Contributor or
Contributed Partnership is in violation of any Environmental Law or any
Contributor Permits issued pursuant to any Environmental Law. Except as set
forth on Schedule 4.2(l), there are no investigations of the properties of any
Contributor or Contributed Partnership, to Contributor's knowledge, pending or,
to such Contributor's knowledge threatened, by any Governmental Entity, which
would result in a Contributor Material Adverse Effect. Except as disclosed on
written environmental reports made available to the Company or OP, to
Contributor's knowledge, there is not located at any of the Properties or any of
the properties of the Contributed Partnership any Hazardous Substances, USTs,
asbestos-containing materials, or PCBs. Each Contributor and Contributed
Partnership has made available to the Company all environmental audits, studies,
reports, analyses and results of investigations in its possession, custody or
control that have been performed with respect to the properties of such
Contributor or Contributed Partnership. None of the Contributors or the
Contributed Partnerships is aware of any environmental audits, studies, reports,
analyses and results of investigations not within their possession, custody or
control that have been performed with respect to the Properties.
(m) Benefit Plans.
(i) Except for POB's simplified employee pension (SEP) plan
(the "POB Benefit Plan"), none of the Contributed Partnerships nor any
other member of a "Contributed Partnership Controlled Group" (as hereafter
defined) maintains, contributes to or participates in, or has any
obligation to maintain, contribute to or participate in, any employee
benefit plan (within the meaning of Section 3(3) of ERISA), retirement or
deferred compensation plan, incentive compensation plan, consulting
agreement, unemployment compensation plan, vacation pay plan, severance
plan, retiree medical plan, bonus plan, stock compensation plan or any
other type of employee-related arrangement, program, policy, plan or
agreement. The term "Contributed Partnership Controlled Group" means the
Contributed Partnerships and each other corporation or other entity which
has at any other time been under common control with the any Contributed
Partnership pursuant to Sections 414(b), (c), (m) or (o) of the Code.
(ii) With respect to the POB Benefit Plan, (A) there has been
no material violation of any applicable provision of ERISA which could
result in a material liability being imposed upon the Contributed
Partnerships; (B) none of the Contributed Partnerships nor any other
member of the Contributed Partnership Controlled Group is subject to any
material outstanding liability or obligation relating to the POB Benefit
Plan; and (C) to the knowledge of the Contributors there are no actual or
pending claims or actions (other than claims for benefits in the ordinary
course) relating to the POB Benefit Plan.
(iii) There are no unfunded and accrued benefit obligations
for which contributions have not been properly accrued to the extent
required by GAAP, on the financial statements of the Contributed
Partnerships, which obligations would have a Contributor Material Adverse
Effect.
(n) Insurance. Schedule 4.2(n) contains a list of all policies or
binders of fire, liability, property, vehicular and other insurance held by
Contributors and the Contributed Partnerships. All of such policies
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and binders are in full force and effect, valid, binding and enforceable in
accordance with their terms. There is no default by the Contributors or the
Contributed Partnerships with respect to any material provision contained in any
such policy or binder nor has there been any failure to give any notice or
present any claim under any such policy or binder in due and timely fashion. No
notice of cancellation or nonrenewal of any such policy or binder has been
received. There are no outstanding requirements or recommendations by (i) any
insurance company that issued such a policy, (ii) any board of fire underwriters
or other body exercising similar functions, or (iii) the holder of any mortgage
encumbering an insured property, requiring or recommending any repairs or work
to be done at an insured property.
(o) FCPA. No Contributor or Contributed Partnership or, to such
Contributor's knowledge, any of its members, managers, partners, officers or
directors, has (i) used any Contributor's or Contributed Partnership's funds for
any unlawful contribution, endorsement, gift, entertainment or other unlawful
expense relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
such Contributor's or Contributed Partnership's funds; (iii) violated any
provision of the FCPA; or (iv) made any bribe, rebate, payoff, influence
payment, "kickback" or other unlawful payment to any person or entity with
respect to any Contributor's or Contributed Partnership's matters.
(p) Contributor Internal Controls. Each Contributor and each
Contributed Partnership maintains accurate books and records reflecting its
assets and maintains proper and adequate internal accounting controls which
provide assurance that (i) transactions are executed with management's
authorization; (ii) transactions are recorded as necessary to permit preparation
of the consolidated financial statements of such Contributor or Contributed
Partnership and to maintain accountability for the assets of such Contributor or
Contributed Partnership; (iii) access to the assets of such Contributor or
Contributed Partnership is generally permitted only in accordance with
management's authorization; (iv) the reported accountability of the assets of
such Contributor or Contributed Partnership is compared with existing assets at
regular intervals; and (v) accounts, notes and other receivables and inventory
are recorded accurately, and proper and adequate procedures are implemented to
effect the collection of such receivables on a current and timely basis. The
books of account, stock records, minute books and other records of each
Contributor or Contributed Partnership are complete and correct in all material
respects.
(q) Organizational Instruments. Each Contributor heretofore has
furnished to the Company complete and correct copies of the respective
organizational and constituent instruments and documents of such Contributor and
its Contributed Partnership, if applicable, in each case as amended or restated
to the date hereof. No Contributor or Contributed Partnership is in violation of
any provisions of its respective organizational and constituent instruments and
documents.
(r) Disclosure. No representation or warranty made by any
Contributor in this Agreement and no statement of any Contributor contained in
the Schedules hereto or in any certificate delivered by any Contributor pursuant
to this Agreement, contains any untrue statement of a material fact or omits any
material fact necessary to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading; it being hereby
agreed and understood that for purposes of this Section 4.2(r), the term
"material" shall be measured by reference to the Contributors, considered as an
entirety.
(s) Debt. As of September 30, 2000, (i) the Tangible Property and P
O'B. Apollo Florida, L.P. are subject to indebtedness in the aggregate principal
amount of $142,111,670.11 (the "Debt"), and (ii) the Contributed Partnerships
(other than POB or P O'B. Apollo Florida, L.P.) collectively owe approximately
$2,058,059.00 in outstanding principal (the "Contributed Partnerships' Debt").
The individual loans comprising the Debt are identified on Exhibit A attached
hereto and the loans comprising the Contributed Partnerships' Debt are
identified on Schedule 4.2(s) attached hereto (with the exception of POB's loans
which will be paid off at or prior to Closing). OP acknowledges and agrees that
the Contributors are contributing the Tangible Properties, and OP is accepting
the Tangible Properties, subject to the Debt. Contributors are not aware of any
default under any notes, mortgages, security agreements, or other loan documents
evidencing or securing the Debt, the Contributed Partnerships' Debt, or any
portion thereof or of any event (other than the transactions contemplated
herein) which has occurred which with notice or the passage of time would
constitute a default thereunder. Contributors have provided to OP a true,
correct and complete copy of all documents relating to the Debt and the
Contributed Partnerships' Debt, including all notes and the security documents.
Contributors represent that such security
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documents do not secure any indebtedness other than the Debt or the Contributed
Partnerships' Debt and none of the Debt or the Contributed Partnerships' Debt is
secured by any other property or assets other than the Properties or the assets
of the Contributed Partnerships.
(t) Property Condition. To Contributors' knowledge, true and
complete copies of all Leases for premises in excess of 5,000 rentable square
feet and other documents relating thereto have been made available to the
Company. Except as set forth on Schedule 4.2(t), each of the Leases is in full
force and effect and, to Contributors' knowledge, none of the parties thereto is
in default of any of its obligations thereunder and no event has occurred that,
with the giving of notice or passage of time, or both, would constitute a
default thereunder. The information contained in the rent roll attached hereto
as Schedule 4.2(t) and made a part hereof is true and complete in all respects
on the date hereof, all rents are being paid and are current, except as any such
arrearages are otherwise set forth in Schedule 4.2(t), no tenant under any such
lease has paid any rent, fees, or other charges for more than one month in
advance, except as otherwise set forth in Schedule 4.2(t), and no such tenant is
or has been entitled to any free rent, abatement of rent or similar concession,
except as set forth in Schedule 4.2(t). No Contributor has assigned, mortgaged,
pledged, sublet, hypothecated or otherwise encumbered any of its rights or
interests under any of their respective Leases except in connection with the
Debt. There are no actions, claims or proceedings pending or, to the
Contributors' knowledge, threatened by, any tenant, governmental entity (zoning
or otherwise) or any other party against Contributors (in connection with the
Properties), or against the Properties, except as otherwise set forth in
Schedule 4.2(t), nor, to Contributors' knowledge, is there any basis for any
such action, proceeding or investigation. To Contributors' knowledge, all of the
FF&E are free of material defects and in good working order. To Contributors'
knowledge, 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 any Contributor with respect to any negotiation or
appraisal of rent under any of the Leases, and no such negotiations or
appraisals are pending. To Contributors' knowledge, 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 except as otherwise
set forth in Schedule 4.2(t). To Contributors' knowledge, all work (i.e. tenant
improvement allowances) 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, except as otherwise set forth in Schedule 4.2(t). To Contributors'
knowledge, all material representations on the part of the landlord contained in
the Leases are true and correct. To Contributors' knowledge, except as otherwise
set forth in Schedule 4.2(t), there is no breach or violation of any provision
of any Lease granting "exclusive" uses or prohibiting or restricting competing
or similar uses, and no Lease allows the space demised to be used for any
purpose which is prohibited by a restrictive covenant or the terms of any other
Lease. To Contributors' knowledge, the water, sewer, gas, electrical and other
utilities now serving the Properties are adequate to service the normal
operation of the Properties, and all of the Contributors' rights and interest in
any utility deposits, if transferable, shall be assigned to OP at the Closing.
With the exception of any tenants pursuant to their respective Leases, no
person, firm, corporation or other entity other than the Company and OP by
reason of this Agreement has any right or option to acquire the Properties or
any portion thereof.
ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.1 Covenants of the Company, OP and Contributors. During the
period from the date of this Agreement and continuing until the Closing Date,
the Company and OP jointly and severally each agree, as to themselves and the
Subsidiaries, and the Contributors jointly and severally agree, as to
themselves, the Properties and the Contributed Partnerships, that (except as
otherwise expressly contemplated or permitted by this Agreement, or to the
extent that the other party shall consent in writing):
(a) Ordinary Course. Each of the Company, OP, the Subsidiaries, and
Contributors shall, and shall cause the Contributed Partnerships to, conduct its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted. Each of the Company, OP, the Subsidiaries, and
the Contributors shall, and shall cause the Contributed Partnerships to, use its
reasonable best efforts to preserve intact its present business organizations,
keep available the services of its present officers and employees and preserve
satisfactory relationships with customers, suppliers and others having business
dealings with it to the end that its on-going businesses shall not be impaired
in any material respect at the Closing Date; provided, however, that without
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limiting the generality of the foregoing, each of the Company, OP, the
Subsidiaries, the Contributors shall, and shall cause the Contributed
Partnerships to, conduct their respective businesses substantially in accordance
with the operating and capital budgets heretofore approved and presently in
effect for their respective properties.
(b) Dividends; Changes in Stock. The Company shall not, nor shall
the Company permit OP or any Subsidiary to, nor shall the Company, OP or any
Subsidiary propose to, (i) declare or pay any dividends (whether of cash, stock
or other property) on or make any other distributions in respect of its stock,
(ii) split, combine or reclassify, or issue or authorize or propose the issuance
of any other securities in respect of, in lieu of or in substitution for, any
shares of its stock, or (iii) redeem, repurchase or otherwise acquire for value,
or permit any other person or entity to redeem, repurchase or otherwise acquire
for value, any shares of its stock, except in the case of clause (i) above,
ordinary cash dividends consistent with past practices and as otherwise required
to preserve and maintain the Company's status as a REIT through the Closing
Date.
(c) Issuance of Securities. Except as expressly permitted herein,
the Company shall not, nor shall the Company permit OP or any Subsidiary to,
issue, deliver or sell, or authorize or propose the issuance, delivery or sale
of, any shares of any class or series of its stock, any voting debt securities
or any securities convertible into, or exchangeable or exercisable for, any such
shares of stock or voting debt securities. No Contributor shall permit any
Contributed Partnership to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of any class or series of its stock,
any voting debt securities or any securities convertible into, or exchangeable
or exercisable for, any such shares of stock or voting debt securities.
(d) Governing Documents. None of the Company, OP, the Subsidiaries,
or Contributors shall, or shall permit the Contributed Partnerships, to amend or
restate or propose to amend or restate its charter, articles or certificate of
incorporation, bylaws, articles or certificate of formation or organization,
regulations, limited liability company agreement, agreement of organization,
articles or certificate of limited partnership, limited partnership agreement or
any analogous organizational or constituent instruments, except to the extent
necessary to facilitate consummation of the transaction contemplated hereby.
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(e) No Solicitation.
(i) Until the termination of this Agreement in accordance with
Article 9 hereof, none of Company, OP or the Subsidiaries shall, directly
or indirectly, (and none of the Company, OP or the Subsidiaries shall
authorize or permit any of their respective officers, directors,
employees, managers, investment bankers, financial advisors, attorneys,
accountants, brokers or other representatives or agents (collectively, the
"Representatives") to directly or indirectly) (A) solicit, initiate,
facilitate or encourage (including by way of furnishing information or
assistance) the submission or receipt of any "Alternative Transaction" (as
defined below); provided, however, that upon the execution and delivery of
this Agreement, the Company and the Contributors shall jointly issue a
press release in substantially the same form as attached hereto as Exhibit
G; or (B) participate or engage in negotiations or discussions, disclose
any material non-public information relating to the Company, OP or the
Subsidiaries, or afford access to the properties, books or records of the
Company, OP or the Subsidiaries, in connection with any Alternative
Transaction (or propose or agree to do any of the foregoing) and the
Company shall notify Contributors within 48 hours of receipt by the
Company, OP or any Subsidiary, or by any of their Representatives, of all
relevant terms of any such inquiries or proposals or requests for
information relating to the Company, OP or any Subsidiary or access to
properties, books or records of the Company, OP or any Subsidiary so
received by any of them relating to any Alternative Transaction and if
such inquiry or proposal or request is in writing, the Company shall
within 48 hours of receipt by the Company, OP or any Subsidiary, or by any
of their Representatives, deliver or cause to be delivered to Contributors
a copy of such inquiry or proposal or request (or a complete summary
thereof if it is not in writing) and the Company shall keep Contributors
fully informed of the status and details of any such inquiry, proposal or
request or any correspondence or communications related thereto and shall
provide Contributors with five days' advance notice of any agreement to be
entered into with any person making such inquiry or proposal or request;
provided, however, that at any time prior to Closing, the Company Board
may cause the Company to furnish information to, and may participate in
discussions or negotiations with, any person who (without any
solicitation, initiation, encouragement, discussion or negotiation,
directly or indirectly, by or with the Company, OP or any Subsidiary or
their respective Representatives) has submitted a written proposal to the
Company Board relating to an Alternative Transaction if, and only to the
extent that, (i) the Company Board shall have concluded in good faith,
after considering applicable provisions of state law, that such action is
necessary to prevent the Company Board from violating its duties to the
Company's stockholders under Section 2-405.1 of the Maryland General
Corporation Law (the "Statutory Duties"), (ii) the Company Board
determines (based upon the advice of the Company's independent financial
advisors or investment bankers of nationally recognized reputation) in the
proper exercise of its Statutory Duties to the Company's stockholders that
such Alternative Transaction provides greater value to the stockholders of
the Company than the transactions contemplated in this Agreement, (iii)
such person enters into a confidentiality agreement on terms substantially
similar to and no less restrictive to such person than that certain Letter
Agreement dated October 14, 1999 (the "Confidentiality Agreement"),
entered into between the Company and POB, and (iv) the Company may not
furnish any information to such person if it has not, prior to the date
thereof, notified the Contributors in writing of its intent to furnish
information to such person (specifying the nature and identity of the
information to be so furnished) and providing the same information
concurrently to the Contributors if not previously provided to
Contributors in the identical form. For purposes of this Agreement,
"Alternative Transaction" shall mean any of the following (other than the
transactions contemplated by this Agreement) involving the Company, OP or
any Subsidiary: (i) any sale, lease, exchange, transfer or other
disposition of all or a material portion of the assets of the Company, OP
and the Subsidiaries, taken as a whole; (ii) any merger, consolidation,
share exchange, business combination or similar transaction involving the
Company, OP or any Subsidiary; or (iii) any transaction or series of
transactions in which (x) the Company, OP or any Subsidiary acquires
assets in exchange for securities representing 20% or more of the
outstanding voting shares or Units of the Company and/or OP and (y) the
composition of the Company Board is changed so that affiliates of the
Advisor no longer constitute a majority of the members of the Company
Board.
Anything to the contrary in this Section 5.1(e)
notwithstanding, nothing contained in this Section 5.1(e) shall prohibit
the Company or the Company Board from taking and disclosing to the
Company's stockholders pursuant to Rules 14d-9 and 14e-2(a) and
Regulations 14A and 14C under the
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Exchange Act, a position with respect to a tender or exchange offer or
solicitation of proxies conducted by a third party or from making such
disclosure to Company's stockholders, or otherwise, as may be required by
applicable law (including, without limitation, requirements of the
Exchange Act and the regulations promulgated thereunder, the regulations
of any national securities exchange registered pursuant to Section 6 of
the Exchange Act or U.S. inter-dealer quotation system of a registered
national securities association); provided that neither the Company nor
the Company Board (or any special or other committee thereof) shall,
except as set forth in Sections 5.1(e)(ii), withdraw, modify or change (or
propose to withdraw, modify or change) its recommendation of approval of
this Agreement or approve or recommend (or propose to approve or
recommend) an Alternative Transaction.
(ii) Except as provided in the next sentence, neither the
Company nor the Company Board (or any special or other committee thereof)
shall (A) withdraw, modify or change (or propose to withdraw, modify or
change) in a manner adverse to any Contributor, the recommendation by the
Company Board (or any such committee) of the approval of this Agreement
and the transactions contemplated hereby, (B) approve or recommend (or
propose to approve or recommend) an Alternative Transaction, or (C) cause
the Company, OP or any Subsidiary to enter into a definitive agreement
with respect to an Alternative Transaction. Notwithstanding the
immediately preceding sentence, if the Company Board determines that an
Alternative Transaction is financially superior to the transactions
contemplated hereby in accordance with the standards, terms, conditions,
and procedures set forth in Section 5.1(e)(i), then the Company Board may
withdraw, modify or change its recommendation of approval of this
Agreement and the transactions contemplated hereby, affirmatively approve
or recommend an Alternative Transaction or cause the Company to enter into
an agreement with respect to an Alternative Transaction; provided, that,
in the case of approving, recommending or causing the Company to enter
into an agreement with respect to an Alternative Transaction, such
approval, recommendation or execution and delivery shall occur not earlier
than the tenth day next following Contributors' receipt of written notice
(by facsimile) advising Contributors that the Company Board has received
an Alternative Transaction, specifying the material terms and conditions
thereof (including, without limitation, the price, structure, tax and
accounting treatment, financing requirements (if any), requisite
regulatory consents and approvals (if any) and the anticipated timing of
receipt of such approvals and, if then known, the approximate anticipated
date of consummation thereof) and identifying the person(s) proposing such
Alternative Transaction.
(iii) In the event that the Company releases any third party
from its obligations under any standstill agreement or arrangement
relating to an Alternative Transaction or otherwise under any
confidentiality or other similar agreement relating to information
material to the Company, OP or the Subsidiaries, the Company shall
simultaneously release Contributors from their obligations and
restrictions under the Confidentiality Agreement.
(iv) Notwithstanding anything in this Section 5.1(e) to the
contrary, the Company may participate or engage in negotiations or
discussions and disclose material non-public information relating to the
Company, OP or the Subsidiaries to a party (the "Target") which has been
mutually agreed to in writing by the Company and POB; provided, however,
that the Company, OP and the Subsidiaries (A) keep Contributors fully
informed regarding the timing, nature and content of all discussions and
correspondence with the Target or its representatives, (B) proceed in good
faith to consummate the transactions contemplated by this Agreement as
soon as possible in a commercially-reasonable manner as if such
negotiations or discussions were not taking place, and (C) otherwise fully
comply with, and perform, all of their duties and obligations under this
Section. Any transaction with the Target which is consummated by the
Company, OP or any Subsidiary to the exclusion of the transactions
contemplated in this Agreement shall be considered an "Alternative
Transaction".
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(f) Acquisitions.
(i) Subject to the Company's right to engage in an Alternative
Transaction, none of the Company, OP or the Subsidiaries shall acquire or
agree to acquire by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of,
or by any other manner, any business or corporation, partnership, limited
liability entity, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets, in each
case, which are material, individually or in the aggregate, to the
Company, OP and the Subsidiaries taken as a whole without Contributors
prior written consent, which consent shall not be unreasonably withheld or
delayed. Acquisitions in excess of 25,000 rentable square feet or having a
total purchase price in excess of $1,500,000 (including assumed
liabilities, if any) shall be deemed to be material to the Company, OP and
the Subsidiaries taken as a whole for purposes of this Section.
Contributors hereby consent to the consummation of the acquisitions listed
on Schedule 5.1(f) on substantially the same terms as listed on such
schedule.
(ii) Upon the execution of any purchase agreement by a
Contributor, a Contributed Partnership, Philip O'B. Montgomery III, Randy
S. Twist, or William Douglas Archer, or any affiliate of such natural
persons (collectively, the "Restricted Persons") to acquire an
Income-Producing Property (defined below), Contributors shall promptly
send the Company a full and complete copy of such purchase agreement. With
regard to any acquisition of an Income-Producing Property by any
Restricted Person after the date hereof and prior to Closing, (A) any
asset management agreement entered into by the Restricted Person with
regard to such Income-Producing Property shall automatically be included
within the definition of the Property to be contributed to OP by such
Contributor pursuant to this Agreement without change to the
Consideration, (B) OP shall have the option, exercisable at Closing with
prior notice to Contributors, to purchase such Income-Producing Property
at its appraised fair market value at the time of Closing, and (C) if OP
does not exercise the foregoing option, any and all current or future
employees and/or officers of the Company, OP and/or the Subsidiaries which
directly or indirectly own or hold any beneficial interest in such
Income-Producing Property shall liquidate such beneficial interests within
twelve months after Closing. In the event that such liquidation does not
occur within the time period specified, such employees and officers shall,
at the Company's option, contribute their interests in such
Income-Producing Property to OP at their cost. With regard to any purchase
agreement regarding the acquisition of an Income-Producing Property by a
Restricted Person which is still pending as of the Closing Date, (D) OP
shall have the option, exercisable at Closing with prior notice to
Contributors, to receive an assignment of, and assume, all of the
Restricted Person's rights and obligations under such purchase agreement
in return for the reimbursement to the Restricted Person at Closing of
such Restricted Person's out-of-pocket expenses incurred in connection
with, or pursuant to, such purchase agreement (including any earnest money
deposits to the extent credited to OP), and (E) if OP does not exercise
the foregoing option, any and all current or future employees and/or
officers of the Company, OP and/or the Subsidiaries which directly or
indirectly will own or hold any beneficial interest in the underlying
Income-Producing Property shall liquidate such beneficial interests within
twelve months after the closing of the purchase agreement. In the event
that such liquidation does not occur within the time period specified,
such employees and officers shall, at the Company's option, contribute
their interests in such Income-Producing Property to OP at their cost.
Notwithstanding the foregoing, none of the Restricted Persons shall (F)
enter into a purchase agreement for the purchase of an Income-Producing
Property which is not freely assignable by such Restricted Person or (G)
acquire or agree to acquire without the Company's prior written consent
any property which is located within five miles of, and is, in the
reasonable discretion of the Company Board, in direct competition with,
any property owned by the Company, OP or any Subsidiary or listed on
Schedule 5.1(f). An "Income-Producing Property" shall mean any property
that, at the time of its acquisition, (H) is generating lease revenues in
the retail real estate or related business, and (I) is anticipated to have
less than 60% of its value, after the completion of any new construction
(exclusive of tenant refurbishments) planned to be commenced within two
years after acquisition, resulting from such new construction.
(g) Dispositions. Except as set forth on Schedule 5.1(g), none of
the Company, OP or the Subsidiaries shall sell, transfer, encumber or otherwise
dispose of or agree to sell, transfer, encumber or otherwise
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dispose of, any of its assets, which are material to the Company, OP and the
Subsidiaries taken as a whole without Contributors prior written consent, which
consent shall not be unreasonably withheld or delayed. Dispositions in excess of
25,000 rentable square feet or having a total sales price in excess of
$1,500,000 (including assumed liabilities, if any) shall be deemed to be
material to the Company, OP and the Subsidiaries taken as a whole for purposes
of this Section. Except as permitted in Sections 5.1(i) and 6.18 below, no
Contributor or Contributed Partnership (other than a Development Partnership)
shall sell, transfer, encumber or otherwise dispose of its Property.
Notwithstanding anything herein to the contrary, no Contributor or Contributed
Partnership shall sell, transfer, encumber or otherwise dispose of its Property
to or for the benefit of another Contributor or an affiliate of any Contributor.
(h) No Material Changes to Contracts. Except as set forth on
Schedule 5.1(h)-1, none of the Company, OP, or the Subsidiaries shall amend,
modify, alter, enter into, extend, renew or terminate or agree to amend, modify,
alter, enter into, extend, renew or terminate any of its leases, contracts or
other agreements which are material to the Company, OP and the Subsidiaries
taken as a whole without Contributors' prior written consent, which consent
shall not be unreasonably withheld or delayed. None of the Contributors or the
Contributed Partnerships shall amend, modify, alter, enter into, extend, renew
or terminate or agree to amend, modify, alter, enter into, extend, renew or
terminate any of its leases, contracts or other agreements which are material to
the Contributors and the Contributed Partnerships taken as a whole without the
Company's prior written consent, which consent shall not be unreasonably
withheld or delayed. Notwithstanding the immediately foregoing sentence, except
as set forth on Schedule 5.1(h)-2, none of the Contributors or the Contributed
Partnerships shall terminate or agree to terminate any of its leases (regardless
of materiality) prior to the end of the lease term without the Company's prior
written consent, which consent shall not be unreasonably withheld or delayed.
Any lease, contracts or other agreements with a tenant leasing 15,000 rentable
square feet or more shall be deemed to be material (i) to the Company, OP and
the Subsidiaries taken as a whole and (ii) to Contributors and the Contributed
Partnerships taken as a whole, for purposes of this Section.
(i) Indebtedness. None of the Company, OP or the Subsidiaries shall
incur, assume or guarantee any indebtedness for borrowed money other than the OP
Debt. Notwithstanding the foregoing, the Company, OP and/or the Subsidiaries may
incur, assume or guarantee any indebtedness for borrowed money if such
incurrence, assumption or guarantee constitutes refinancing indebtedness for
borrowed money of the Company, OP and/or the Subsidiaries in existence as of the
date hereof (and to the extent such refinancing indebtedness does not materially
exceed the principal amount of the refinanced indebtedness or contain materially
different terms, restrictions or obligations). The Company shall obtain and
deliver to Contributors not less than fifteen (15) days before the Closing Date
an estoppel letter substantially in the form attached to this Agreement as
Exhibit H from each of the lenders of the OP Debt. From the date hereof through
and including the Closing Date, none of the Company, OP or the Subsidiaries
shall draw down or borrow any monies pursuant to the First Amended and Restated
Revolving Credit Agreement dated as of July 9, 1998, as amended from time to
time (the "BankBoston Agreement"), by and between OP and BankBoston, N.A.
("Lender"), for any purpose other than (i) payment of dividends and lease
commissions in the ordinary course of business, (ii) acquisitions in accordance
with Section 5.1(f), and (iii) the payment of expenses incurred by the Company,
OP or the Subsidiaries in respect of the construction of expansions on or
renovations of the existing facilities.
Except for indebtedness existing as of the date hereof, no
Contributor shall incur, assume or guarantee any indebtedness for borrowed money
which encumbers its Property. Except for indebtedness existing as of the date
hereof, no Contributed Partnership (other than a Development Partnership) shall
incur, assume or guarantee any indebtedness for borrowed money. Notwithstanding
the foregoing, any Contributor and any Contributed Partnership may incur, assume
or guarantee any indebtedness for borrowed money if such incurrence, assumption
or guarantee constitutes refinancing indebtedness for borrowed money of such
Contributor or Contributed Partnership in existence as of the date hereof (and
to the extent such refinancing indebtedness does not materially exceed the
principal amount of the refinanced indebtedness or contain materially different
terms, restrictions or obligations). Notwithstanding the foregoing, the Company
and OP agree that Contributors may incur indebtedness up to $3,000,000 to be
secured by the Property located at Franklin Park Mall in Spokane, Washington for
the purpose of demolition and construction work required in connection with the
Bed, Bath & Beyond lease and buy out of the Ernst lease in accordance with the
terms set forth on Schedule 5.1(i)-1 hereof, and indebtedness for tenant
improvements for the REI lease at Highlands Center, provided that such
indebtedness shall be included
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within the definition of "Debt". The Contributors of POB agree to pay all of
POB's loans and other debts for borrowed money at or prior to Closing.
Upon the execution of any application, term sheet, commitment, loan
agreement or like documents by a Development Partnership in connection with any
recourse indebtedness for borrowed money (or any assumption or guarantee
thereof), Contributors shall promptly send the Company full and complete copies
of such loan documents. With regard to any new or additional recourse
indebtedness incurred, guaranteed or assumed after the date hereof and prior to
Closing, (i) OP shall have the option, exercisable at Closing with prior notice
to Contributors, to exclude the property encumbered by such new or additional
recourse indebtedness without any change to the Consideration, and (ii) if OP
does exercise the foregoing option, any and all current or future employees
and/or officers of the Company, OP and/or the Subsidiaries which directly or
indirectly own or hold any beneficial interest in such excluded property shall
liquidate such beneficial interests in an orderly manner within twelve months
after Closing. In the event that such liquidation does not occur within the time
period specified, such employees and officers shall, at the Company's option
exercisable at any time after such time period, contribute their interests in
such property (subject to any debt thereon) to OP for no additional
Consideration. Notwithstanding the foregoing, any Development Partnership may
incur, assume or guarantee (i) any recourse indebtedness for borrowed money if
either (A) such incurrence, assumption or guarantee constitutes refinancing
indebtedness for borrowed money of such Development Partnership in existence as
of the date hereof (and to the extent such refinancing indebtedness does not
materially exceed the principal amount of the refinanced indebtedness or contain
materially different terms, restrictions or obligations) or (B) for any pro
forma development loan listed on Schedule 5.1(i)-2, such recourse indebtedness
does not materially differ from the principal amount, term, interest rate or
other terms of such pro forma development loan listed on such schedule, and (ii)
any non-recourse indebtedness.
(j) Other Actions. None of the Company, OP, the Subsidiaries or
Contributors shall take any action that would or reasonably would be likely to
result in any of its representations and warranties set forth in this Agreement
being untrue as of the date made (to the extent so limited) or any of the
conditions to the Agreement set forth in Article VII hereof not being satisfied.
(k) Advice of Changes; SEC Filings. Each of the Company, OP and
Contributors shall confer on a regular basis with the other, report on
operational matters and promptly advise the other in writing of any change or
event having, or which insofar as reasonably can be foreseen would have, a
Material Adverse Effect or a Contributor Material Adverse Effect. Each of the
Company, OP and Contributors promptly shall provide the other with true and
complete copies of all filings made by it with any Governmental Entity in
connection with this Agreement and the transactions contemplated hereby.
(l) Certain Other Actions.
(i) From time to time prior to the Closing Date, the Company,
OP and Contributors promptly shall supplement or amend the Schedules to
this Agreement theretofore prepared by it with respect to any matter
which, if existing as of the date hereof, would be required to be set
forth therein. It is hereby agreed that no such supplement or amendment
shall be deemed to or constitute a cure of any breach of any
representation or warranty by the applicable party unless all of the
non-breaching parties agree thereto in writing or proceed with the Closing
with full knowledge of such supplement or amendment.
(ii) The Company, OP, the Subsidiaries, the Contributors, and
the Contributed Partnerships shall duly and timely file all reports,
federal, state and local tax returns and other documents required to be
filed with federal, state, local and other authorities, subject to
extensions permitted by applicable law; provided that, in the case of the
Company such extensions do not adversely affect the status of the Company
as a qualified REIT under the Code.
(iii) None of the Company, OP, the Subsidiaries, the
Contributors, or the Contributed Partnerships shall make or rescind any
express or deemed election relative to taxes (unless, in the case of the
Company, it is required by law or necessary to preserve the status of the
Company as a REIT for Federal income tax purposes).
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(iv) The Company and the Contributors promptly shall notify
the other party of any action, suit, proceeding, claim or audit pending
against or with respect to the Company, OP, and the Subsidiaries, on the
one hand, or the Contributors and the Contributed Partnerships, on the
other hand, in respect of any federal, state or local taxes where there is
a reasonable probability of a determination or decision by a relevant
authority which would materially increase the tax liabilities of any such
party, and none of the Company, OP, the Subsidiaries, the Contributors, or
the Contributed Partnerships shall change any of the tax elections,
accounting methods, conventions or principles which relate to such party
that insofar as reasonably could be foreseen would materially increase
such party's liabilities.
(v) The Company shall take (or refrain from taking, as
applicable) such action(s) as are necessary to maintain through the
Closing Date the status of the Company as a REIT and OP's and each
Subsidiary's current federal income tax status.
(vi) The Company covenants that it will use its reasonable
best efforts to negotiate an agreement as to the participation amounts due
under the FHA mortgage loan and related equity loan on Woodgate Manor
Apartments and to accept repayment of such loans if the borrower makes
payment thereon.
ARTICLE 6
ADDITIONAL AGREEMENTS
SECTION 6.1 Preparation of the Company Proxy Statement. The Company shall
prepare and file with the SEC, as promptly as reasonably practicable after the
date hereof, the Company Proxy Statement. The Company Proxy Statement shall
include the recommendation of the Board of Directors of the Company that the
transactions contemplated hereby be approved by the holders of the Common Stock.
Contributors shall cooperate with the Company in the preparation of the Company
Proxy Statement and provide any information regarding the Contributors or the
Property required to be placed in the Company Proxy Statement or otherwise
required by the SEC, including without limitation any unaudited financial
statements for interim financial reporting periods, and shall have the
opportunity to review the Company Proxy Statement prior to submission to the
SEC. The Company shall use diligent efforts to clear the Company Proxy Statement
with the SEC as promptly as practicable after such filing.
SECTION 6.2 Access to Information. Upon reasonable notice, the Company and
OP shall (and shall cause each of the Subsidiaries to) and each Contributor and
Contributed Partnership shall afford to the officers, employees, accountants,
counsel and other agents and representatives of the other, access, during normal
business hours during the period from the date hereof until the Closing Date, to
all of its properties, books, contracts, commitments and records (including,
without limitation, using its best efforts to afford access to, the audit work
papers of the independent auditor of each of the Company, OP, the Subsidiaries,
the Contributors and the Contributed Partnerships) and, during such period, such
entities shall furnish promptly to the other (a) as to the Company, a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the Securities Act and the
Exchange Act and (b) all other information concerning its business, properties
and personnel as such other party reasonably may request. The Company, OP and
each Contributor shall waive any accountant/client privilege that may exist, and
take all other necessary action, to ensure the delivery by the independent
auditor of the Company and the Contributors of audit work papers to the party
requesting such information. The parties shall hold all such information in
confidence in accordance with the terms of the Confidentiality Agreement which
shall continue to bind the parties thereto and hereto from the date thereof
until the completion of the Closing.
SECTION 6.3 Company Stockholders' Meeting. The Company shall duly notice
and convene as promptly as practicable after the date hereof the Company
Stockholders' Meeting for the purpose of voting upon the adoption of this
Agreement, the Charter Amendments and the transactions contemplated hereby. The
Company (through the Company Board) shall recommend to the holders of Common
Stock the approval and adoption of all such matters; and shall use its best
efforts to solicit and, if necessary, resolicit the vote of the holders of
Common Stock in favor of adoption of this Agreement and the transactions
contemplated hereby (including, if necessary,
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adjourning or postponing, and subsequently reconvening, the Company
Stockholders' Meeting for the purpose of obtaining such votes and engaging proxy
solicitation professionals); provided, however, that notwithstanding anything to
the contrary contained in this Agreement, the Company Board may withdraw, modify
or change such recommendation (including in a manner adverse to Contributors)
under the circumstances set forth in the second sentence of Section 5.1(e)(ii)
without any liability or obligation to Contributor (except as set forth in
Section 6.7(b)).
The Company may, if the Company Board withdraws, modifies or changes its
recommendation under the circumstances set forth in the second sentence of
Section 5.1(e)(ii), delay the filings or mailing, as the case may be, of the
Company Proxy Statement or the convening of the Company Stockholders' Meeting,
in each case to the extent necessary to revise the Company Proxy Statement to
reflect such withdrawal, modification or change and to provide the minimum
notice thereof required under applicable law or the Company's charter or bylaws.
The "Charter Amendments", as such term is used herein, shall mean the
amendments to the Charter and/or bylaws of the Company and to the limited
partnership agreement and/or certificate of limited partnership of OP in
substantially the same forms as attached hereto as Exhibit I.
SECTION 6.4 Consents and Approvals. The Company, OP and each Contributor
shall take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to the transactions
contemplated hereby (including furnishing all information in connection with
approvals of or filings with any Governmental Entity) and shall cooperate with
and furnish information to each other in connection with any such requirements
imposed upon it or any of the Subsidiaries or Contributed Partnerships in
connection with the transactions contemplated hereby. The Company and OP shall,
and shall cause its Subsidiaries to, and each Contributor shall, and shall cause
each Contributed Partnership to, take all reasonable actions necessary to obtain
(and shall cooperate with the other in obtaining) each consent, authorization,
order or approval of, and each exemption by, each Governmental Entity and other
person or entity, required to be obtained or made by the parties hereto or any
of the Subsidiaries or Contributed Partnerships in connection with this
Agreement and the transactions contemplated hereby or the taking of any action
contemplated hereby.
SECTION 6.5 Reservation of Shares; Validity of Shares. Promptly after the
date hereof, the Company shall take all necessary action, if any, to ensure that
the maximum number of shares of Common Stock which shall be issuable upon
exchange of the Units are authorized and reserved for issuance. All shares of
Common Stock issued upon exchange of the Units of the Contributors, when so
issued, shall be duly authorized, validly issued, and fully paid and
non-assessable.
SECTION 6.6 Employee Benefit Plans. The Company agrees that the Company
Benefit Plans in effect on the date hereof shall, to the extent practicable,
remain in effect after the Closing Date until the Company thereafter determines
otherwise.
SECTION 6.7 Expenses; Liquidated Damages.
(a) General Rule. Except as hereafter provided in this Agreement,
all fees and expenses incurred in connection with the preparation, execution and
delivery of this Agreement (including all Exhibits hereto and instruments and
agreements prepared and delivered in connection herewith), and the transactions
contemplated hereby shall be paid by the party incurring such fees or expenses,
whether or not the transactions are consummated or abandoned.
(b) Contributors' Expenses; Termination Fee.
(i) Provided that none of the Contributors then is in material
breach of any of its representations, warranties or agreements under this
Agreement, the Company and/or OP shall pay or cause to be paid to
Contributors all of "Contributors' Expenses" (as hereinafter defined) if
this Agreement shall be terminated by Contributors pursuant to Sections
9.1(b)(i), 9.3(a)(iii) or 9.3(b). "Contributors' Expenses" shall mean fees
and out-of-pocket expenses reasonably and actually incurred and paid by or
on behalf of Contributors in connection with this Agreement and the
consummation of the transactions
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contemplated hereby or thereby, including all reasonable fees and expenses
of outside legal counsel, accountants, experts, financial advisors and
consultants to Contributors. The parties hereto agree that Contributors'
Expenses shall be capped as set forth on Exhibit J attached hereto,
subject to increase for legal fees with the consent of the Company (not to
be unreasonably withheld or delayed) in the event the aggregate of all
other line item expenses are in excess of $450,000. The Contributors'
Expenses must be clearly documented to be eligible for reimbursement.
(ii) Provided that none of the Contributors then is in
material breach of any of its representations, warranties or agreements
under this Agreement, if this Agreement shall be terminated pursuant to
Sections 9.1(f) or 9.1(g), then the Company and/or OP shall pay (or cause
to be paid) to Contributors by wire transfer of same day funds to an
account designated in writing by Contributors to the Company a termination
fee in the amount of $3,000,000, which fee shall be payable by the Company
and/or OP not later than the third business day next following the date of
termination of this Agreement pursuant to Sections 9.1(f) or 9.1(g).
(iii) In addition, provided that none of the Contributors then
is in material breach of any of its representations, warranties or
agreements under this Agreement, if this Agreement shall be terminated and
prior to the expiration of the 12-month period next following the date of
such termination, an Alternative Transaction is entered into, then the
Company and/or OP shall pay or cause to be paid to Contributors by wire
transfer of same day funds to an account designated in writing by
Contributors to the Company, a termination fee in the amount of
$3,000,000, which fee shall be payable by the Company and/or OP not later
than the third business day next following the date of entering into such
Alternative Transaction.
(c) Company's Expenses. Provided that neither the Company nor OP is
then is in material breach of any of their representations, warranties or
agreements under this Agreement, the Contributors shall pay or cause to be paid
to Company and/or OP all of the "Company Expenses" (as hereinafter defined) if
this Agreement shall be terminated by the Company pursuant to Sections
9.1(b)(ii), 9.3(c)(iii) or 9.3(d). "Company Expenses" shall mean fees and
out-of-pocket expenses reasonably and actually incurred and paid by or on behalf
of the Company and/or OP in connection with this Agreement and the consummation
of the transactions contemplated hereby or thereby, including all reasonable
fees and expenses of outside legal counsel, accountants, experts, financial
advisors and consultants to the Company and/or OP. The parties hereto agree that
the Company Expenses shall be capped as set forth on Exhibit K attached hereto,
subject to increase for legal fees with the consent of the Contributors (not to
be unreasonably withheld or delayed) in the event the aggregate of all other
line item expenses are in excess of $160,000. The Company Expenses must be
clearly documented to be eligible for reimbursement.
(d) It is expressly agreed that all amounts to be paid pursuant to
Sections 6.7(b) and 6.7(c) represent liquidated damages negotiated at
arm's-length and do not constitute, and are not intended by the parties to
operate as, a penalty.
(e) The Company and/or OP shall promptly pay or cause to be promptly
paid (not later than 10 days after submission of reasonably itemized invoices or
other reasonable documentary evidence therefor) by wire transfer of same day
funds to Contributors, Contributors' Expenses if this Agreement shall be
terminated under any of the circumstances set forth in Section 6.7(b).
Contributors shall promptly pay or cause to be promptly paid (not later than 10
days after submission of reasonably itemized invoices or other reasonable
documentary evidence therefor) by wire transfer of same day funds to the
Company, the Company Expenses if this Agreement shall be terminated under any of
the circumstances set forth in Section 6.7(c).
SECTION 6.8 Brokers or Finders. Each of the Contributors, the Company and
OP covenants as to itself and its affiliates, that no agent, broker, investment
banker, financial advisor or other person or entity is or will be entitled to
receive any broker's or finder's fee or any other commission or similar fee in
connection with any of the transactions contemplated by this Agreement, except
for Bear, Stearns & Co. Inc., whose fees and expenses shall be fully paid for by
the Company in accordance with the Company's agreement with such firm (a true
and complete copy of which has been attached hereto as Schedule 6.81), and
Prudential Securities Incorporated and First Union Securities, Inc. whose fees
and expenses shall be fully paid for by Contributors in accordance with
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Contributors' agreements with such firms (a true and complete copy of Prudential
Securities Incorporated's agreement has been attached hereto as Schedule 6.82);
provided, however, that up to the amount of Prudential Securities Incorporated's
original fees and expenses set forth in Schedule 6.82 shall be paid by OP or
reimbursed by OP to Contributors at Closing regardless of whether paid to
Prudential Securities Incorporated or First Union Securities, Inc. or a
combination thereof. Each of the Contributors, on the one hand, and the Company
and OP, on the other hand, hereby agree to indemnify and hold harmless the other
from and against any and all claims, liabilities or obligations with respect to
any other fees, commissions or expenses asserted by any person on the basis of
any act or statement alleged to have been made by such party or its affiliate.
SECTION 6.9 Board of Directors.
(a) Prior to the Closing Date, the Company shall have taken all
requisite corporate action and, if necessary, obtained all approvals of the
Company's stockholders to increase the size of the Company Board to seven
directors and to cause the two nominees designated by Contributors to serve as
directors of the Company, each for an initial term commencing at the Closing
Date and expiring on the date of the third annual meeting of the Company's
stockholders next following the Closing Date or until his or her successor is
duly elected and qualified. In addition to such nominees, Contributors shall
designate two additional nominees to serve as independent directors of the
Company, such nominees to be acceptable to the Company. The initial terms of
these two additional nominees shall commence on the Closing Date and expire on
the date of the second and third annual meetings, respectively, of the Company's
stockholders next following the Closing Date or when their successors are duly
elected and qualified.
(b) Advisor shall designate three nominees to serve as directors of
the Company, two of which will be independent directors of the Company, such
independent directors to be acceptable to Contributors. The initial term of the
non-independent director shall commence on the Closing Date and expire on the
date of the second annual meeting of the Company's stockholders next following
the Closing Date or when his or her successor is duly elected and qualified. The
initial terms of the two independent directors shall commence on the Closing
Date and expire on the date of the first annual meeting of the Company's
stockholders next following the Closing Date or when their successors are duly
elected and qualified.
(c) For purposes of the Section, a director of the company shall be
considered to be "independent" if such director (i) is not an officer, partner,
member or principal of the Company, OP, any Subsidiary, any Contributor, any
Contributed Partnership or Advisor, (ii) is not related by birth or marriage to
any of the foregoing, (iii) is not a representative, trustee, agent, counsel or
accountant for any of the foregoing or for a major beneficial owner of the
Company, OP, any Subsidiary, any Contributor, any Contributed Partnership or
Advisor, and (iv) is, in the view of the Company Board, otherwise free of any
relationship that may interfere with the exercise of such person's independent
judgment.
SECTION 6.10 Additional Agreements. Upon the terms and subject to the
conditions of this Agreement, the Company, OP and each Contributor agrees to
take (or cause to be taken or cause to be done), all reasonable actions
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
subject to the receipt of the Company Stockholder Approval Condition, including,
without limitation, cooperating fully with the other party, including by
provision of information and making all necessary filings in connection with,
among other things, any Governmental Entity approval, and including the issuance
of Common Stock upon exchange of the Units of the Contributors for Common Stock.
In case at any time after the Closing Date any further action is necessary or
desirable to carry out the purposes of this Agreement or to vest OP with full
title to the Properties, the proper officers and directors of each party to this
Agreement shall promptly take all such necessary action.
SECTION 6.11 Conveyance Taxes. Each Contributor, OP and the Company shall
cooperate in the preparation, execution and filing of all tax returns,
questionnaires, applications or other documents regarding any conveyance taxes
which become payable in connection with the transactions contemplated by this
Agreement that are required to be filed prior to the Closing Date. The Company
will, or will cause OP, as appropriate, to pay or cause to be paid, without
deduction or withholding from any amounts payable to the holders of the Units,
all mortgage, excise, intangibles, sales, value added, stock transfer and stamp
taxes, any recording, registration and
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other fees and any similar taxes, that become payable in connection with the
transactions contemplated by this Agreement. Contributors shall pay, without
reimbursement from the Company or OP, all real estate transfer and conveyance
taxes and fees that become payable in connection with the transactions
contemplated by this Agreement.
SECTION 6.12 Public Announcements. Subject to Section 5.1(e)(i), the
Company, OP and the Contributors shall consult with each other prior to issuing
any press release or making any public statement or announcement (whether or not
jointly made) with respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable rules or regulations of the
SEC or any national securities exchange registered pursuant to Section 6 of the
Exchange Act or U.S. inter-dealer quotation system of a registered national
securities association, the Company, OP or the Contributors, as the case may be,
shall not issue any such press release or make any such public statement or
announcement prior to such consultation.
SECTION 6.13 Notification of Certain Matters. With respect to events known
to them, the Company and OP shall give prompt notice to the Contributors and
Contributors shall give prompt notice to the Company, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause any representation or warranty given by them and contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Closing Date, (ii) any material failure of the Company, OP, or any
Contributor, as the case may be, to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it hereunder, (iii) any notice of, or other communication relating to, a default
(or an event which with notice, lapse of time or both, would become a default)
received by the Company, OP, the Subsidiaries, Contributors or the Contributed
Partnerships subsequent to the date hereof and prior to the Closing Date, under
any material agreement or instrument, (iv) any notice or other communication
from any person or entity alleging that the consent of such person or entity is
or may be required in connection with the transactions contemplated by this
Agreement, or (v) any Material Adverse Effect or Contributor Material Adverse
Effect (other than changes resulting from general economic conditions or
conditions relating generally to the real estate industry) shall have occurred
or reasonably be likely to occur; provided, however that the delivery of any
notice pursuant to this Section 6.13 shall not cure any breach or noncompliance
under this Agreement or limit or otherwise affect the remedies available
hereunder to the party receiving such notice unless all of the non-breaching
parties proceed with the Closing with full knowledge of the matters referred to
in any such notice.
SECTION 6.14 Tax Provisions. With respect to the Properties, OP shall use
the remedial method contained in the Regulations promulgated under Section
704(c) of the Code to take into account any variation between the adjusted basis
of the Property and its fair market value. With respect to any OP asset for
which the Gross Asset Value (as that term is defined in the OP Partnership
Agreement) of the asset is different than the tax basis for federal income tax
purposes (including without limitation any difference resulting from the
revaluation of such asset pursuant to Regulation Section 1.704-1(b)(2)(iv)(f) in
connection with the contributions to the OP pursuant to this Agreement) of the
asset, the allocations of Tax Items (as that term is defined in the Partnership
Agreement) shall be the remedial method contained in the Regulations under
Section 704(c) of the Code.
If requested by Contributors, OP shall reasonably cooperate with
Contributors in the preparation and filing of such tax returns and reports.
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SECTION 6.15 Assumption of Debt.
(a) Prior to the Closing Date, OP and the Contributors shall
cooperate to obtain every necessary consent required in connection with OP's
assumption of the loans comprising the Debt and the transfers of the Contributed
Partnerships, and the Contributors and/or their partners and affiliates release
from such loans and any guaranties thereof, at Closing. OP shall use its best
efforts to assume each and every loan comprising the Debt and shall pay all
costs, fees and taxes incurred in connection with such assumptions and transfers
including, without limitation, any prepayment premiums, loan application and
loan assumption fees up to $600,000, in the aggregate, (any overage to be paid
by Contributors) as are necessary to fully assume the Debt and transfer the
Contributed Partnerships. Upon any assumption of Debt or any acceptance of any
Contributed Partnerships by OP, OP shall either (i) cause the holders of such
Debt and any Contributed Partnership Debt of such Contributed Partnerships to
release Contributors and their partners and affiliates from any obligations
thereunder from and after the Closing Date or (ii) indemnify Contributors and
their partners and affiliates (including any guarantors of such Debt or
Contributed Partnership Debt) from any obligations under such Debt or
Contributed Partnership Debt from and after the Closing Date.
(b) If for any reason the parties hereto have not been able to
obtain prior to the Closing Date (i) a lender's consent to OP's assumption of
any Debt or the transfer of any Contributed Partnership as provided herein or
(ii) refinancing of such Debt or Contributed Partnership Debt in full in
accordance with the terms of Section 5.1(i) of this Agreement, then such
Property shall not be contributed to OP and the Consideration shall be reduced
by the Consideration allocated to such Property on Exhibit A; provided, however,
that if Property having an aggregate Consideration in excess of $50,000,000 is
not contributed to OP pursuant to this paragraph, then the Company and/or OP may
terminate this Agreement.
(c) With regard to any Property which is not contributed to OP at
Closing pursuant to Section 6.15(b) above, (i) notwithstanding anything stated
in this Agreement to the contrary, all of Contributor's rights and obligations
under any asset management agreement concerning such Property shall be included
within the definition of the Property to be contributed to OP at Closing by such
Contributor pursuant to this Agreement without any increase in the
Consideration, and (ii) OP shall have the option, exercisable at any time on or
before the first anniversary of the Closing Date, to purchase such Property for
the Consideration allocated to such Property on Exhibit A and pursuant to the
other applicable terms of this Agreement including the release and/or
indemnification of Contributors and their partners and affiliates from any
obligations under any Debt or Contributed Partnership Debt concerning such
Property. Subject to updating the rent roll referred to in Section 4.2(t), the
applicable representations and warranties set forth in Section 4.2, including
without limitation those set forth in Sections 4.2(j), (k), (l), (n) and (t),
shall be true and correct as if made with respect to such Property, on an
individual basis, as of the date of purchase of such Property by OP. In the
event of a material breach of such a representation or warranty resulting in a
reduction in value of such Property, the parties agree that if in their mutual,
reasonable determination such reduction in value can be compensated for by a
reduction in the Consideration allocated to such Property on Exhibit A, the
Consideration allocated to such Property shall be reduced by an amount equal to
such reduction in value as mutually, reasonably determined by the parties.
(d) If OP does not exercise the option set forth in Section
6.15(c)(ii) above, Contributors, within ten business days after the first
anniversary of the Closing Date, shall offer to sell such Property to OP at a
price to be determined by Contributors (an "Offer Price"). If OP does not accept
such offer with thirty days of OP's receipt thereof, (i) subject to
Contributors' obligation, if any, to make a new offer as set forth in the last
sentence of this Section 6.15(d), such offer shall automatically terminate, (ii)
Contributors shall use reasonable efforts to market the Property for sale, and
(iii) Contributors shall be free to sell such Property to any third party on
substantially the same pricing and economic terms as those offered to OP
provided that (A) the sales price of such Property (without regard to closing
costs or prorations) is equal to or in excess of ninety-five percent (95%) of
the Offer Price and (B) the sale of such Property closes within six months of
the termination of such offer. If Contributors do not sell the Property under
the terms of this subsection, Contributors and OP shall repeat the foregoing
procedures of this subsection until the Property is sold by Contributors.
SECTION 6.16 Maintenance of Debt. OP covenants to Contributors and the
Assignees that OP will not prepay any portion of the Debt or the Contributed
Partnerships' Debt until one (1) year from the Closing Date;
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provided, however, that OP may (i) allow the principal balance of the Debt and
the Contributed Partnerships' Debt to amortize according to the terms of the
underlying loan as they existed immediately prior to the Closing or (ii)
refinance such Debt in any manner that does not adversely affect a Contributor's
tax burden or the timing thereof. Notwithstanding any other provision of this
Agreement to the contrary, OP shall indemnify each Contributor and Assignee
against any and all tax liability, including reasonable attorneys' fees,
incurred by such Contributor or Assignee as a result of OP's breach of its
obligations under this paragraph. The obligations of OP contained in this
paragraph shall survive Closing.
SECTION 6.17 Restrictions on Subsequent Sale of Properties. For the
benefit of each Contributor and Assignee, OP covenants and agrees that, until
one (1) year from the Closing Date, OP shall not sell, assign, transfer or
otherwise dispose of OP's interest in the Properties (or the property owned by
the Contributed Partnership if such Contributor contributed interests in a
Contributed Partnership) (other than by lease of such property to a third-party
tenant or by means of a tax-free exchange of property complying with Section
1031 of the Code), without such Contributor's (or such Contributor's Assignees')
prior written consent, which shall not be unreasonably withheld or delayed. OP
shall indemnify such Contributor and its Assignees against any and all tax
liability, including reasonable attorneys' fees, incurred by such Contributor or
its Assignees as a result of OP's breach of its obligations under this
paragraph. The obligations of OP contained in this paragraph shall survive
Closing.
SECTION 6.18 Permitted Sales of Properties. The Company and OP agree that
the Contributors shall be permitted to sell the Properties listed on Schedule
6.18 prior to Closing and, upon any such sale, the Consideration and its
components shall be reduced by the gross sales price of such transferred
Property. No sales permitted by this paragraph shall be made to another
Contributor or an affiliate of any Contributor.
SECTION 6.19 Pre-Closing Distributions from Contributed Partnerships.
Subject to Contributors' obligations under Section 5.1(a) for the period from
the date hereof until immediately prior to the Closing, the Company and OP
acknowledge and agree that the Contributed Partnerships intend, and shall be
permitted, to make distributions of all of their available cash (less any
reserve, escrow or suspense accounts required under such Contributed
Partnership's loan documents or capital budgets necessary to operate their
respective properties) at any time prior to Closing. Each Contributor shall be
reimbursed by OP in cash at Closing for such Contributor's pro rata share of any
reserve, escrow or suspense accounts required under its Contributed
Partnership's loan documents or capital budgets which are funded at the time of
the Closing.
SECTION 6.20 Employment and Non-Competition Agreements. Effective as of
the Closing Date, the Company shall have elected each of the following persons
to the position listed opposite such person below; provided, however, that the
Company may waive any requirements that such election of Ms. Hayes and Mr.
Magner occur and such waiver shall bind all other parties hereto. As soon as
possible after Closing, but effective as of the Closing Date, the Company shall
enter into employment agreements with such persons in such position pursuant to
an employment agreement (collectively, the "Employment Agreements") in a form
mutually agreeable to such persons and the Compensation Committee of the Company
Board:
Philip O'B. Montgomery III President and Chief Executive Officer
Randy S. Twist Chief Operating Officer
William Douglas Archer Chief Financial Officer
Gayle Hayes Director of Property Management
Richard Magner Director of Construction Management
The Employment Agreements shall contain initial terms of employment of two (2)
years from the Closing Date and shall contain such salaries, benefits,
incentives, severance packages, and other remuneration and duties as are
reasonable and customary for similar officers of other publicly-traded real
estate investment trusts similar to the Company. The specific compensation
packages for each such employee shall be negotiated between such employee and
the Compensation Committee of the Company Board. The parties acknowledge that
the Company has retained Ernst & Young LLP to evaluate what is reasonable and
customary compensation for the first three positions listed above.
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In addition, on the Closing Date, each of the persons listed above in this
section shall enter into a Non-Competition Agreement (collectively, the
"Non-Competition Agreements") in substantially the same form as attached hereto
as Exhibit L.
SECTION 6.21 Purchase Restrictions. Contributors agree that they and their
affiliates shall not directly or indirectly buy, accept, or otherwise acquire
(or offer, contract for, or accept any options, warrants or other rights to buy,
accept, or otherwise acquire) any Common Stock except that Contributors may buy,
accept or acquire Common Stock or Units (i) if approved by a majority of the
independent directors of the Company Board, (ii) as expressly permitted in this
Agreement, (iii) as part of their remuneration as an employee, officer,
consultant or director of the Company, OP or the Subsidiaries, or (iv) in the
form of distributions from the Company, OP or the Subsidiaries as a result of
their ownership of Units or Common Stock. For purposes of this section, the term
"affiliates" shall mean persons controlling, controlled by or under common
control with a Contributor.
SECTION 6.22 Development Partnerships. The Contributed Partnerships
denoted with an asterisk (*) on Exhibit A are referred to herein as the
"Development Partnerships". In addition to such Development Partnerships, all
entities formed or capitalized between the date of this Agreement and Closing in
which any of Philip O'B. Montgomery III, Randy S. Twist, or William Douglas
Archer has an ownership or beneficial interest shall automatically be a
Development Partnership under this Agreement and shall be included within the
term "Development Partnership". Except as expressly restricted or prohibited by
the terms of this Agreement, the Development Partnerships shall be free to
acquire, dispose of, finance, refinance, encumber or otherwise deal with any of
their assets. The parties agree that, due to the inherently fluid nature of the
assets contained within the Development Partnerships, the Consideration
allocated to the Development Partnerships shall not be subject to adjustment of
any kind due to any changes in the nature or the composition of such assets
between the date hereof and the Closing, including without limitation any
addition, substitution, modification, encumbrance, termination or removal of any
of such assets. Contributors agree that the Consideration attributed to the
Development Partnerships shall be reduced dollar for dollar for any capital
distributions made to Contributors from any Development Partnership resulting
from (i) any sale or encumbrance of any assets of a Development Partnership
prior to the time it is acquired by OP (whether at Closing or thereafter
pursuant to Section 5.1(i) hereof) or (ii) any brokerage or development fees
earned within ninety (90) days prior to the time such Development Partnership is
acquired by OP (whether at Closing or thereafter pursuant to Section 5.1(i)
hereof) to the extent actually collected by the Development Partnerships,
Contributors, and/or affiliates or employees of the Development Partnerships or
the Contributors.
SECTION 6.23 Advisory Fees. The Company, OP and Contributors acknowledge
that, from time to time after the Closing, Advisor may be engaged by the Company
Board to act in an advisory role on behalf of the Company and/or OP
notwithstanding the fact that one or more affiliates of Advisor may be then
serving on the Company Board. The parties hereto agree that Advisor shall be
permitted to serve in such role(s) subject to the approval of such engagement
(i) by the disinterested members of Company Board in compliance with applicable
statutory, regulatory and other corporate governance requirements and (ii) on
such terms as are no less advantageous to the Company and/or OP than the most
favorable disinterested third-party of equal experience and ability.
SECTION 6.24 Grant of Company's Existing Stock Options. Notwithstanding
anything to the contrary contained herein, Contributors agree that the Company
shall be entitled to grant at any time prior to Closing options for the purchase
of up to an aggregate of 234,522 shares of Common Stock at a strike price equal
to or above $11.00 per share of Common Stock. The Company represents that such
options represent the unissued balance of stock options currently eligible for
grant by the Company out of a total of 832,254 stock options authorized by the
Company Board on September 30, 1997, under the Aegis Realty, Inc. Incentive
Share Option Plan.
SECTION 6.25 Voting Rights. The Company and OP agree that, the Partnership
Agreement shall be amended to provide that, for so long as the Contributors
and/or their affiliates in the aggregate own Units representing, on an
as-converted basis without any cash redemptions, at least twenty percent (20%)
of the outstanding voting Common Stock, the Company, as the sole general partner
of OP, shall have the obligation to obtain the approval of the holders of a
majority of such Units for any "Major Decision" (as defined in the Amendment).
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SECTION 6.26 Confidentiality. The parties hereto agree to be bound by the
terms of the Confidentiality Agreement as if such parties were originally
parties thereto; provided, however, that the parties shall be bound by the terms
of the Confidentiality Agreement from the date hereof until the completion of
the Closing notwithstanding anything therein to the contrary.
SECTION 6.27 Due Diligence, Title and Closing Costs.
(a) OP shall pay all third-party costs relating to environmental
studies ordered by the Company and/or OP on the Properties and escrow and
related fees. The cost of preparing, printing and mailing the Company Proxy
Statement shall be borne by OP and/or the Company.
(b) Contributors shall pay all third-party costs incurred by any
party hereto relating to any audits of Contributors, the Contributed
Partnerships or any of their properties or operations. The Contributors shall
pay all third-party costs relating to environmental studies ordered by the
Contributors on the Company's, OP's or the Subsidiaries properties. All
out-of-pocket costs listed in this paragraph or on Exhibit J borne by
Contributors shall be reimbursed to Contributors at Closing, provided that such
costs are clearly documented.
(c) Contributors shall pay all (i) premiums for the Title Policies
(defined below), (ii) third-party costs relating to surveying the Properties,
and (iii) conveyance taxes on the transfer of the Properties.
SECTION 6.28 Title Policies. As soon as practicable after the date hereof,
the Company shall request bids from the title insurance companies listed on
Schedule 6.28, on the total cost of (i) issuing ALTA (or equivalent) fee title
Owner's Policies of Title Insurance issued to OP insuring good and marketable
(or if the Land is in Texas, good and indefeasible) fee simple title to the Land
and Improvements in amounts mutually acceptable to OP and Contributors with such
endorsements (including non-imputation and fairway endorsements on the
Contributed Partnerships' properties) as reasonably requested by OP (the "Title
Policies") and (ii) performing any escrow, closing or other services anticipated
to be performed by the title company at Closing. As soon as practicable after
the receipt of such bids, the Company shall cause the title company with the
lowest total bid (the "Title Company") to issue to OP title commitments for the
Title Policies. Contributors shall forthwith undertake, with due diligence, to
eliminate all Liens except for the Permitted Exceptions and any other exceptions
appearing in such commitments which may reasonably be removed at a cost which
does not exceed $37,500 per Property. If Contributors are unable to convey good
and marketable title in accordance with the terms of this Agreement on the
Closing Date, Contributors shall so notify OP and OP may thereafter, at its
option (which option shall be set forth in a notice from the OP to Contributors)
(i) accept title to the Property subject to such exceptions, without any
abatement of the Consideration, or (ii) refuse to accept the contribution of the
affected Property with a corresponding adjustment to the Consideration and its
components.
SECTION 6.29 Surveys. As soon as practicable after the date hereof,
Contributors shall request updates to the most recent surveys of the Land and
Improvements and shall deliver copies of such surveys to the Company and the
Title Company. Each update shall be a current "as built" ALTA/ACSM survey of the
Land and Improvements made on the ground and certified by a professional land
surveyor licensed in the state in which the Land is located depicting: (i) the
locations of all existing easements, fences, encroachments, conflicts,
protrusions, alleys, streets, roads, and rightsofway on or adjacent to the Land
which are visible on the ground or listed in the title commitment relating to
the Property issued by the Title company (with recording information shown if
applicable); (ii) accurately show the locations of all existing improvements,
monuments, sidewalks, driveways, parking lots and other visible items on the
Land; (iii) accurately show all areas designated as being flood prone or subject
to special flood hazards or other hazardous conditions according to the most
current official maps of the Flood Insurance Administration, the Federal
Emergency Management Agency or any other public or semipublic body charged with
determining the existence of such conditions which has jurisdiction over the
Properties; (iv) set forth a metes and bounds description of the Land and, if
applicable, a description by reference to a recorded plat or map; and (v)
contain a certification by the surveyor in form reasonably acceptable and
addressed to OP, POB, Lender and the Title Company, indicating that the survey
was made on the ground and accurately shows all the matters required above. The
legal description of the Land contained in the Survey, once the correctness
thereof has
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been confirmed by the parties hereto, shall be used as the description of the
Land in the Title Policies and deeds to be delivered by Contributors to OP at
Closing.
SECTION 6.30 Environmental Reports. Each of the parties shall give to the
other parties hereto reasonable access to its properties prior to Closing for
the purpose of physically inspecting the property and performing Phase I
environmental reports. If any environmental report suggests that additional
environmental investigations or studies should be conducted on any particular
property, the owner of such property, upon request, shall make such property
available for reasonable additional investigations and/or studies including soil
tests and other inspections (so long as such tests and inspections do not
unreasonably interfere with the normal use and occupancy of such property). The
party requesting any particular environmental study shall have the obligation to
repair any damage to property caused by such investigation, which obligation
shall survive any termination of this Agreement. Each party covenants and agrees
that no property investigated by it shall be damaged or impaired in any way as
the result of its activities thereon and hereby agrees to indemnify and hold the
owner of such property harmless from and against any claims, causes of action,
damages and expenses (including attorneys' fees) to the extent resulting from
any such test or inspection conducted by the indemnifying party thereon.
Notwithstanding the foregoing paragraph, after sixty (60) days from the date of
this Agreement (unless Contributors are notified by the Company or OP that they
may start sooner), Contributors may retain an environmental engineer or other
professional to conduct environmental studies and/or tests for in-ground
Hazardous Substances in, under or upon the Cactus Village Shopping Center. If
such engineer or professional recommends remediation of any such Hazardous
Substances detected in, under or upon the Cactus Village Shopping Center, such
engineer or professional shall recommend remediation procedures and obtain a
cost budget for such remediation. If OP disagrees with the recommended
remediation procedures and/or the cost budget for such remediation, and
Contributors and OP can not agree on mutually-acceptable procedures and/or
costs, then OP and Contributors shall submit such dispute to binding arbitration
with the American Arbitration Association in Phoenix, Arizona. Upon mutual
agreement or a decision by the arbitration panel on the procedures and costs, OP
shall start such remediation procedures as soon as commercially reasonable in
compliance with all Environmental Laws. All costs of the foregoing studies,
tests and remediation procedures shall be borne by OP, except any arbitration
costs shall be split equally between OP and the Contributors.
SECTION 6.31 Properties. The Properties represent all of the retail real
property owned or controlled directly or indirectly by Philip O'B. Montgomery
III, POB or their respective affiliates.
ARTICLE 7
CONDITIONS PRECEDENT
SECTION 7.1 Conditions to Each Party's Obligation to Effect the
Contribution. The respective obligation of each party to consummate the
transactions contemplated hereby shall be subject to the satisfaction prior to
the Closing Date of the following conditions:
(a) Company Stockholder Approval. This Agreement, the Charter
Amendments, and the transactions contemplated hereby shall have been approved by
the affirmative vote of the requisite holders of the Common Stock.
(b) BankBoston Financing. The Company shall have obtained Lender's
approval of a renegotiated line of credit facility on commercially reasonably
terms which will not prohibit the transactions contemplated in this Agreement.
The Company and OP shall use best efforts to obtain such approval prior to
Closing.
(c) Opinions of Financial Advisor. The special committee of the
Company Board has received the written opinion of Bear, Stearns & Co. Inc., a
true and complete copy of which has been delivered (but not addressed) to
Contributors, to the effect that the consideration to be issued as provided for
in this Agreement is fair to the Company from a financial point of view and the
written opinion of Houlihan Lokey Howard & Zukin, a true and complete copy of
which has been delivered (but not addressed) to Contributors, to the effect that
the
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transactions comprising the internalization of the Company's management are fair
to the holders of Common Stock from a financial point of view.
(d) Other Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, any Governmental Entity the
failure to obtain which would have a Material Adverse Effect or a Contributor
Material Adverse Effect, shall have been duly and timely filed and obtained and
all applicable waiting periods, if any, pursuant to the HSR Act shall have
expired or been early terminated.
(e) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other similar order issued by any court
of competent jurisdiction or Governmental Entity preventing, materially delaying
or impairing consummation of the transactions contemplated hereby shall be in
effect.
(f) State Takeover Laws. Consummation of the transactions
contemplated by this Agreement shall not be subject to the provisions of any
State Takeover Laws.
SECTION 7.2 Conditions of Obligations of Contributors. The obligations of
the Contributors to consummate the transactions contemplated hereby are subject
to the satisfaction of the following conditions unless waived in writing by the
Contributors:
(a) Representations and Warranties. All of the representations and
warranties of the Company and OP set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except for
representations and warranties that (i) expressly speak only as of a specific
date or time which need only be true and correct as of such date and time, and
(ii) by their terms are qualified by materiality or any analogous limitation on
scope which, for purposes of this Section 7.2(a), shall be true and correct in
all respects), and Contributors shall have received a certificate signed on
behalf of the Company and OP by the chief executive officer or the chief
financial officer of the Company to such effect.
(b) Performance of Obligations of the Company and OP. The Company
and OP shall have performed all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and Contributors shall have
received a certificate signed on behalf of the Company and OP by the chief
executive officer or chief financial officer of the Company to such effect.
(c) Consents. The Company and /or OP shall have obtained the consent
or approval of each person or entity whose consent or approval shall be required
to permit the completion of the transactions contemplated hereby, except for
those the failure of which so to obtain would not, in the reasonable opinion of
Contributors, have a Material Adverse Effect.
(d) Non-foreign Status. The Company and OP shall have delivered a
certificate of non-foreign status which meets the requirements of Treasury
Regulation Section 1.1445-2, duly executed and acknowledged, certifying that the
Company and OP are not foreign persons for United States income tax purposes.
(e) Tax Opinions. Contributors shall have received an opinion from
counsel to the Company in substantially the form set forth in Exhibit M hereto
dated the Closing Date to the effect that (i) since its formation, the Company
was organized and has operated in conformity with the requirements for
qualification as a REIT under the Code, (ii) OP has been since its formation and
continues to be taxed for federal income tax purposes as a partnership, and not
as a corporation or association taxable as a corporation, and (iii) the
transactions contemplated in this Agreement will not prevent the Company from
continuing to operate in conformity with the requirements for qualification as a
REIT under the Code.
(f) Termination of Outside Advisors. The transaction contemplated in
that certain Management Internalization Agreement (the "Management
Internalization Agreement") attached hereto as Exhibit N shall have closed in
accordance with its terms, and Contributors shall have received a certificate
signed on behalf of the Company and OP by the chief executive officer or chief
financial officer of the Company to such effect. The Management Internalization
Agreement shall not be amended, modified or terminated without Contributors'
prior
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written approval and no duties or obligations of any party contained therein may
be modified or waived in any manner without Contributors' prior written
approval.
(g) Legal Opinions. Contributors shall have received an opinion from
counsel to the Company to the effect that (i) OP is a limited partnership
validly existing and in good standing under the laws of the State of Delaware,
(ii) the Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Maryland, (iii) each of the Company
and OP has the requisite corporate or partnership power and authority to own
their respective properties and conduct their respective businesses as now
conducted, and to execute, deliver and perform their respective obligations
under this Agreement and the agreements to be executed, delivered and performed
by the Company and/or OP pursuant hereto (the "OP Closing Documents"), (iv) all
necessary corporate or partnership action, as applicable, has been taken to
authorize the execution, delivery and performance by the Company and OP of this
Agreement and the OP Closing Documents to which they are a party, (v) all
necessary approvals, consents, and authorizations required from the Company or
OP or any owners of any interest in any of such entities have been obtained,
(vi) the individual or individuals who have executed this Agreement and the OP
Closing Documents on behalf of each of the Company and/or OP have the authority
to bind such entities to the terms and conditions of this Agreement and the OP
Closing Documents, (vii) each of this Agreement and the OP Closing Documents has
been duly executed and delivered by the Company and/or OP as applicable, and
(viii) to counsel's actual knowledge without investigation, (A) there is no
litigation or other claim pending before any court or administrative or other
governmental body or overtly threatened by a written communication against the
Company and/or OP or the Subsidiaries or their properties, (B) none of the
Company, OP or the Subsidiaries is subject to any bankruptcy or other insolvency
proceedings or any assignment for the benefit of creditors or any similar
proceedings for the benefit of creditors, and (C) none of the Company, OP or the
Subsidiaries or their respective properties is operating under or subject to any
receiver, trustee or similar entity for the benefit of creditors.
(h) Composition of Compensation Committee. Prior to Closing, the
nominees referred to in Section 6.9(a) of this Agreement shall have been elected
to the Company Board and a Compensation Committee shall have been created which
is composed of three non-management directors designated by Contributors in
accordance with Section 6.9(a).
SECTION 7.3 Conditions of Obligations of the Company and OP. The
obligations of the Company and OP to consummate the transactions contemplated
hereby is subject to the satisfaction of the following conditions unless waived
in writing by the Company and/or OP:
(a) Representations and Warranties. The representations and
warranties of the Contributors set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except for
representations and warranties that (i) expressly speak only as of a specific
date or time which need only be true and correct as of such date and time, and
(ii) that, by their terms are qualified by materiality or any analogous
limitation on scope which, for purposes of this Section 7.3 (a), shall be true
and correct in all respects) and the Company shall have received a certificate
signed on behalf of the Contributors by their designated representative to such
effect.
(b) Performance of Obligations of Contributors. Contributors shall
have performed all obligations required to be performed by them under this
Agreement at or prior to the Closing Date, and the Company shall have received a
certificate signed on behalf of the Contributors by their designated
representative to such effect.
(c) Consents. Contributor shall have obtained the consent or
approval of each person whose consent or approval shall be required in
connection with the transactions contemplated hereby under any loan or credit
agreement, note, mortgage, indenture, lease or other agreement or instrument,
except those for which failure to obtain such consents and approvals would not,
in the reasonable opinion of the Company, have a Contributor Material Adverse
Effect, or materially affect the consummation of the transactions contemplated
hereby.
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(d) Non-foreign Status. Each of the Contributors shall have
delivered a certificate of non-foreign status which meets the requirements of
Treasury Regulation Section 1.1445-2, duly executed and acknowledged, certifying
that such Contributor is not a foreign person for United States income tax
purposes.
(e) Legal Opinions. The Company shall have received an opinion from
counsel to the Contributors to the effect that (i) each Contributor and
Contributed Partnership is a corporation, limited liability company or limited
partnership validly existing and in good standing under the laws of their
respective states of formation, (ii) each Contributor and Contributed
Partnership has the requisite corporate, limited liability company or
partnership power and authority to own their respective properties and conduct
their respective businesses as now conducted, and to execute, deliver and
perform their respective obligations under this Agreement and the agreements to
be executed, delivered and performed by Contributor pursuant hereto (the
"Contributor Closing Documents"), (iii) all necessary corporate, limited
liability company or partnership action, as applicable, has been taken to
authorize the execution, delivery and performance by the Contributors of this
Agreement and the Contributor Closing Documents to which they are a party, (iv)
all necessary approvals, consents, and authorizations required from the
Contributors or any owners of any interest in any of such entities have been
obtained, (v) the individual or individuals who have executed this Agreement and
the Contributor Closing Documents on behalf of each of the Contributors have the
authority to bind such entities to the terms and conditions of this Agreement
and the Contributor Closing Documents, (vi) each of this Agreement and the
Contributor Closing Documents has been duly executed and delivered by the
Contributors as applicable, and (vii) to counsel's actual knowledge without
investigation, (A) there is no litigation or other claim pending before any
court or administrative or other governmental body or overtly threatened by a
written communication against the Contributors or the Contributed Partnerships
or their properties, (B) none of the Contributor or the contributed Partnerships
is subject to any bankruptcy or other insolvency proceedings or any assignment
for the benefit of creditors or any similar proceedings for the benefit of
creditors, and (C) none of the Contributors or the contributed Partnerships or
their respective properties is operating under or subject to any receiver,
trustee or similar entity for the benefit of creditors.
ARTICLE 8
CLOSING AND CLOSING DOCUMENTS
SECTION 8.1 Closing. The consummation and closing (the "Closing") of the
transactions contemplated under this Agreement shall take place at the offices
of Jenkens & Gilchrist, P.C. in Dallas, Texas, or such other place as is
mutually agreeable to the parties on the date that is thirty (30) days following
the satisfaction of the Company Stockholder Approval Condition at the Company
Stockholders' Meeting, but not later than the date referred to into Section
9.1(d) below (the "Closing Date"), or as otherwise set by agreement of the
parties.
SECTION 8.2 Contributor's Deliveries. At the Closing, Contributors shall
deliver the following to OP in addition to all other items required to be
delivered to OP or the Company by Contributors:
(a) Contributors' Deeds. For each Contributor which is contributing
Tangible Property, a limited or special warranty deed duly executed and
acknowledged by such Contributor in recordable form, granting and conveying to
OP good and indefeasible title in fee simple to the Land and Improvements
comprising its Property, free and clear of all Liens other than the Permitted
Exceptions;
(b) Assignment and Assumption of Partnership Interests. For each
Contributor which is contributing Intangible Property consisting of partnership
or membership interests, an Assignment And Assumption of Partnership Interests
in substantially the same form as Exhibit O attached hereto (collectively, the
"Assignments of Partnership Interests"), duly executed by such Contributor,
assigning and conveying to OP all of such Contributor's right, title and
interest in and to such partnership or membership interests free and clear of
all Liens;
(c) Stock Powers. For each Contributor which is contributing
Intangible Property consisting of shares of stock, a stock power duly executed
by such Contributor assigning and conveying to OP all of such Contributor's
right, title and interest in and to such stock free and clear of all Liens;
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(d) Assignments and Bills of Sale. For each Contributor which is
contributing Tangible Property, an Assignment and Assumption Agreement and Bill
of Sale in substantially the same form as Exhibit P attached hereto
(collectively, the "Assignments and Bills of Sale"), duly executed by such
Contributor, assigning and conveying to OP all of its right, title and interest
in and to its Property other than the Land and Improvements free and clear of
all Liens other than the Debt;
(e) Amendment to the Partnership Agreement. An amendment to the
Partnership Agreement to effect each Contributor=s admission as a limited
partner of OP in substantially the same form as Exhibit Q attached hereto (the
"Amendment"), duly executed by each Contributor;
(f) Registration Rights Agreement. The Registration Rights Agreement
duly executed by each Contributor and the Assignees;
(g) Lock-up Agreements. The Lock-up Agreements duly executed by each
Contributor and Assignee;
(h) Exchange Rights Agreements. The Exchange Rights Agreements duly
executed by each Contributor and Assignee;
(i) Qualifying Partner Questionnaires. The Qualifying Partner
Questionnaires duly executed by each Contributor and Assignee indicating that
each Contributor and Assignee receiving Units is an accredited investor;
(j) NonForeign Affidavits. An affidavit in substantially the same
form as Exhibit R attached hereto, duly executed by each Contributor, as
required by Section 1445 of the Internal Revenue Code, specifying (i) that such
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) such Contributor's taxpayer
identification number or U.S. employer identification number, and (iii) such
Contributor's office address;
(k) Down-date Certificates. A certificate executed by the
Contributors dated as of the Closing Date certifying that all of the
representations and warranties set forth in this Agreement remain true as of the
Closing Date, or if not, specifying the respect in which any such representation
or warranty is no longer true and updating through the Closing Date the rent
roll attached hereto as Schedule 4.2(t);
(l) Joint Notification Letters. All necessary or advisable
notification letters to any tenant under a Lease advising it of the changes in
ownership and the transfer of such tenant's Deposit (if any) and directing that
rentals or other payments thereafter be paid to a payee designated by OP, and
otherwise complying with applicable law ("Joint Notification Letters") executed
by the appropriate Contributor;
(m) Non-Competition Agreements. The Non-Competition Agreements duly
executed by Messrs. Montgomery, Archer and Twist;
(n) Authority Documents. Evidence satisfactory to OP that the person
or persons executing the closing documents on behalf of Contributors have full
right, power and authority to do so;
(o) Title Policies. The Title Policies issued by the Title Company
in accordance with this Agreement.
(p) Plans, Keys, and Records. To the extent not previously delivered
to and in the possession of OP, all Plans and Specs, all keys for the Tangible
Property (which keys shall be properly tagged for identification), all Records,
and all Licenses; and
(q) Miscellaneous. Such other instruments as are customarily
executed in the county or parish where the Land is located in order to
effectuate the conveyance of property similar to the Tangible Property with the
effect that, after the Closing, OP will have succeeded to all of the rights,
titles, and interests of Contributors
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related to the Tangible Property and Contributors will no longer have any
rights, titles, or interests in and to the Tangible Property.
SECTION 8.3 The Company's and OP's Deliveries. At the Closing, OP and/or
the Company shall deliver the following to Contributors:
(a) Cash Portion of the Consideration. At or prior to Closing,
Contributors shall provide the Company and OP with instructions (with amounts)
on how to disburse the Cash Portion among up to five representatives of the
Contributors for such representatives further distribution to the Contributors;
(b) Certificates. Unit certificates duly issued by OP in the name of
each Contributor as of the Closing Date representing the Units to which such
Contributor is entitled pursuant to Section 3.3 of this Agreement;
(c) Debt Assumption. Evidence of OP's assumption of the Debt with
all necessary consent of the lenders holding or servicing the Debt and the
release of all Contributors;
(d) Assignments of Partnership Interests. The Assignments of
Partnership Interests duly executed and acknowledged by OP;
(e) Assignments and Bills of Sale. The Assignments and Bills of Sale
duly executed by OP;
(f) Amendment to the Partnership Agreement. The Amendment duly
executed by the Company, as the sole general partner, and all other necessary
parties other than Contributors;
(g) Registration Rights Agreement. The Registration Rights Agreement
duly executed by the Company;
(h) Exchange Rights Agreements. The Exchange Rights Agreements duly
executed by OP and the Company;
(i) NonForeign Affidavits. An affidavit in substantially the same
form as Exhibit R attached hereto, duly executed by each of the Company and OP,
as required by Section 1445 of the Internal Revenue Code, specifying (i) that
the Company and OP are 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) such the Company's and
OP's respective taxpayer identification numbers or U.S. employer identification
numbers, and (iii) the Company's and OP's respective office addresses;
(j) Down-date Certificates. A certificate executed by the Company
and OP dated as of the Closing Date certifying that all of the representations
and warranties set forth in this Agreement remain true as of the Closing Date,
or if not, specifying the respect in which any such representation or warranty
is no longer true and updating through the Closing Date the rent roll attached
hereto as Schedule 4.1(x);
(k) Joint Notification Letters. The Joint Notification Letters
executed by OP;
(l) Non-Competition Agreements. The Non-Competition Agreements duly
executed by Ms. Hayes and Mr. Magner (if elected as officers of the Company
pursuant to Section 6.20 above);
(m) Authority Documents. Evidence satisfactory to Contributors that
the person or persons executing the closing documents on behalf of OP and the
Company have full right, power and authority to do so; and
(n) Miscellaneous. Such other instruments as are customarily
executed in the county or parish where the Land is located in order to
effectuate the conveyance of property similar to the Tangible Property.
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SECTION 8.4 Prorations. At Closing, the following items of revenue,
expense and related matters concerning the Properties (and the properties owned
or operated by the Contributed Partnerships other than the Development
Partnerships) shall be prorated, adjusted and appropriated in cash as of 12:01
A.M. on the Closing Date:
(a) Property Taxes. Real estate taxes, personal property or use
taxes and sewer rents, on the basis of the best available estimates for such
taxes and rents that will be due and payable on the Land and Improvements for
the calendar year in which the Closing occurs;
(b) Operating Costs. All costs and expenses of operating the
Property, and amounts paid or payable under the Service Contracts and Leases
including common area maintenance charges;
(c) Lease Rents. Rents under Leases (including that portion of
percentage rents attributable to any period of time prior to the Closing Date)
and other revenues as and when collected. If OP receives any rents from tenants
under Leases after the Closing Date then such collections shall first be applied
to rents accruing on or after the Closing Date, and OP shall promptly remit the
balance, if any, to the appropriate Contributor to the extent any pre-Closing
Date rental obligation under such tenant's Lease remains unpaid to such
Contributor. The Company and OP shall use reasonably efforts to collect such
delinquent rents on a Contributor's behalf;
(d) Extraordinary Capital Expenditures. Each Contributor shall be
credited at Closing for all amounts expended by such Contributor for
non-recurring, capital expenditures which are a direct result of a new lease or
otherwise produce incremental revenue. Such new lease shall be approved by the
Company in accordance with Section 5.1(h) above. The Company will not credit the
Contributors for capital expenditures which (i) have already been budgeted for
by Contributors and appear on the attached Schedule 4.2(t) or (ii) occur in the
normal course of business and do not produce incremental revenue.
(e) Deposits. OP shall receive a cash credit in an amount equal to
the sum of all prepaid rentals and all security deposits, common area
maintenance fees and deposits and other deposits paid by tenants and not
properly applied as of the Closing to a monetary obligation of the related
tenant (collectively, the "Tenant Security Deposits");
(f) Sales Taxes. All sales, use and occupancy taxes, if any, due or
to become due in connection with revenues received from the Properties prior to
the Closing Date, and all use and occupancy taxes, if any, payable in connection
with any of the transactions contemplated by the Agreement will be paid by
Contributor. Contributor shall be entitled to receive any rebates or refunds on
taxes paid by Contributor prior to the Closing.
(g) Debt. All interest and other charges payable in connection with
the Debt (other than outstanding principal and any fees, taxes or other costs
associated with the assumption of the Debt by OP).
(h) Cash. All cash, short-term investments and other like cash items
(including any reserve, escrow or suspense accounts required under a Property's
or a Contributed Partnership's loan documents or capital budgets) shall be
distributed or reimbursed by OP to the appropriate Contributor(s).
SECTION 8.5 Reconciliation and Final Payment. Contributors and OP shall
reasonably cooperate after Closing to make a final determination of the
prorations required hereunder. Upon the final reconciliation of the prorations
under this Section, 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. The obligations to calculate such prorations, make such
reconciliations and pay any such sums shall survive the Closing.
SECTION 8.6 Accounts Payable. Contributors shall retain and be responsible
for the payment of all accounts payable relating to the Tangible Properties
accrued prior to and as of the Closing and payable after the Closing. All
accounts payable owed by the Contributed Partnerships on the Closing Date shall
remain the obligations of Contributed Partnerships and the appropriate
Contributor shall be charged for its allocable share thereof. OP shall be
responsible for the particular accounts payable relating to the Properties
accruing after the Closing.
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SECTION 8.7 Accounts Receivable. All accounts receivable generated from
the operation of the Tangible Properties prior to the Closing Date shall remain
the property of Contributors and shall not be transferred to OP. All accounts
receivable owned by the Contributed Partnerships on the Closing Date shall be
remain the property of Contributed Partnerships and the appropriate Contributor
shall be credited for its allocable share thereof. OP shall forward to
Contributor, promptly upon receipt (but without recourse or warranty of any kind
with respect to any endorsement by OP on checks therefor), any and all payments
on such accounts receivable due to a Contributor hereunder and collected by OP
following the Closing Date.
SECTION 8.8 Employees. To the extent permitted by applicable law, the
Company or OP, as appropriate, shall hire substantially all of the employees of
POB as of the Closing Date. Contributors represent that no Contributor is
subject to the Worker Adjustment and Retraining Notification Provisions of 29
U.S.C., Section 2102. OP shall be responsible for the wages, salaries and
benefits of the POB employees hired following Closing under OP's own wage and
salary rates and benefit plans and OP shall receive a credit at Closing for all
such accrued benefits assumed by OP at Closing.
SECTION 8.8 Proration of POB's Operating Costs. At Closing, all of POB's
revenue and expense items shall be pro rated, adjusted and appropriated in cash
as of 12:01 A.M. on the Closing Date including, but not limited to, all office
leases, equipment leases, security deposits held by third parties for the
benefit of POB, accounts payable, accounts receivable, and accrued but unpaid
compensation and benefits payable to POB's employees. All cash, short-term
investments and other like cash items shall be distributed by POB to its
shareholders immediately prior to Closing.
ARTICLE 9
TERMINATION AND AMENDMENT
SECTION 9.1 Termination. This Agreement may be terminated at any time
prior to the Closing Date, whether before or after approval of the matters
presented in the Company Proxy Statement by the holders of Common Stock:
(a) by the mutual written consent of the Contributors and the
Company;
(b) by (i) Contributors, if there has been a material breach of any
representation, warranty, covenant or agreement on the part of the Company or OP
set forth in this Agreement which has not been cured within 20 business days
next following receipt by the Company of notice of such breach (except for a
representation, warranty, covenant or agreement that by its own terms is
qualified by materiality or an analogous standard, which shall not be qualified
by materiality pursuant to the terms of this Section 9.1(b)), or (ii) the
Company, if there has been a material breach of any representation, warranty,
covenant or agreement on the part of Contributors set forth in this Agreement
which has not been cured within 20 business days next following receipt by
Contributors of notice of such breach;
(c) by either the Contributors or the Company if any permanent
injunction or other order of a court, Governmental Entity or other competent
authority preventing consummation of the transactions contemplated hereby shall
have been issued;
(d) by either Contributor or the Company if the transactions
contemplated hereby shall not have been consummated at or prior to 5:00 p.m.,
Eastern time, on the later to occur of (i) December 31, 2001, or (ii) six months
from the date that the Company receives final clearance from the SEC of the
Company Proxy Statement;
(e) by Contributors, if the Company Stockholder Approval Condition
shall not have been satisfied by or prior to 5:00 p.m., Eastern time, on the
later to occur of (i) December 31, 2001, or (ii) six months from the date that
the Company receives final clearance from the SEC of the Company Proxy
Statement;
(f) by the Contributors if (i) the Company Board (or any special or
other committee thereof) shall have withdrawn, modified or changed in a manner
adverse to any Contributor its recommendation of approval (by the holders of
Common Stock) of this Agreement and the transactions contemplated hereby, or
shall have
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approved or recommended (to the holders of Common Stock) an Alternative
Transaction or (ii) the Company shall have entered into a definitive agreement
with respect to an Alternative Transaction;
(g) by the Company, upon entering into a definitive agreement in
respect of an Alternative Transaction pursuant to Section 5.1(e)(i) hereof;
provided that the Company has complied with all provisions of Section 5.1(e),
including the notice provisions thereof, and satisfies its payment obligations
as provided in Section 6.7; or
(h) (i) by the Contributors, if there shall have occurred or there
shall exist any events, changes, set of circumstances or conditions having, or
which reasonably could be likely to have, a Material Adverse Effect or there is
discovered any material environmental or physical structural defect not
disclosed before the date hereof (other than matters covered by Section
10.1(c)(ii)) or (ii) the Company, if there shall have occurred or there shall
exist any events, changes, set of circumstances or conditions having, or which
reasonably could be likely to have, a Contributor Material Adverse Effect or
there is discovered any material environmental or physical structural defect not
disclosed before the date hereof.
Notwithstanding anything to the contrary contained in this Section 9.1, the
parties agree that, if a party attempts to terminate this Agreement pursuant to
either of Sections 9.1(b) or 9.1(h) above for any reason(s) which can be
remedied monetarily by the non-terminating party, then the non-terminating party
shall have the right to delay the effective date of the attempted termination
for thirty (30) days upon notice to the terminating party within 24 hours of the
non-terminating party's receipt of the termination notice. During such delay
period, the parties agree to negotiate in good faith a reasonable monetary
remedy to cure the terminating party's reason(s) for seeking to terminate this
Agreement.
SECTION 9.2 Effect of Termination. If this Agreement is terminated either
by the Company or the Contributors as provided in Section 9.1, this Agreement
forthwith shall become null and void and there shall be no liability or
obligation on the part of the Contributors, or the Company, or any of their
respective officers or directors, except (a) with respect to the last sentence
of Section 6.2, and Sections 6.7 and 6.8 and (b) to the extent that such
termination results from the willful breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this
Agreement, except as provided in Section 10.7.
SECTION 9.3 Remedies for Breach of this Agreement.
(a) Willful Breach by the Company or OP. Provided that neither the
Company nor OP has grounds for termination as set forth in Section 9.1, if the
Contributors have the right under Section 9.1(b)(i) to terminate this Agreement
due to a willful breach of any representation, warranty, covenant or agreement
set forth herein, then Contributors shall be entitled, in their sole discretion,
(i) to pursue all their available remedies at law, (ii) to sue for specific
performance, or (iii) to terminate this Agreement upon notice to the Company and
receive a reimbursement of the Contributors' Expenses pursuant to Section
6.7(b)(i). The foregoing remedies are each exclusive of the others.
(b) Non-Willful Breach by the Company or OP. Provided that neither
the Company nor OP has grounds for termination as set forth in Section 9.1, if
the Contributors have the right under Section 9.1(b)(i) to terminate this
Agreement due to a non-willful breach of any representation, warranty, covenant
or agreement set forth herein, then Contributors shall be entitled to terminate
this Agreement upon notice to the Company and receive a reimbursement of the
Contributors' Expenses pursuant to Section 6.7(b)(i).
(c) Willful Breach by Contributors. Provided that none of the
Contributors has grounds for termination as set forth in Section 9.1, if the
Company or OP have the right under Section 9.1(b)(ii) to terminate this
Agreement due to a willful breach of any representation, warranty, covenant or
agreement set forth herein, then the Company shall be entitled, in its sole
discretion, (i) to pursue all its available remedies at law, (ii) to sue for
specific performance, or (iii) to terminate this Agreement upon notice to the
Contributors and receive a reimbursement of the Company Expenses pursuant to
Section 6.7(c). The foregoing remedies are each exclusive of the others.
(d) Non-Willful Breach by Contributors. Provided that none of the
Contributors has grounds for termination as set forth in Section 9.1, if the
Company or OP have the right under Section 9.1(b)(ii) to terminate
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this Agreement due to a non-willful breach of any representation, warranty,
covenant or agreement set forth herein, then the Company shall be entitled to
terminate this Agreement upon notice to the Contributors and receive a
reimbursement of the Company Expenses in accordance with Section 6.7(c).
SECTION 9.4 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized as appropriate by the respective parties,
at any time before or after approval of the matters presented in connection with
the transactions contemplated hereby by the holders of Common Stock, but, after
any such approval, no amendment shall be made which by law requires further
approval by such holders without obtaining such further approval. This Agreement
may not be amended except by an instrument in writing signed on behalf of all of
the parties hereto.
SECTION 9.5 Extension; Waiver. At any time prior to the Closing Date, the
parties hereto, by action taken or authorized as appropriate by the respective
parties, may, to the extent legally permissible, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE 10
GENERAL PROVISIONS
SECTION 10.1 Survival of Representations, Warranties and Agreements;
Indemnification.
(a) All covenants (other than those in Section 2.3, Section 6.21
(which survives indefinitely), and this Section and those which have been
expressly waived by the party entitled thereto), and all representations and
warranties contained in this Agreement and made at Closing, shall survive
Closing for one (1) year from the Closing Date. No claim for a breach of any
representation or warranty or covenant contained in this Agreement may be
maintained by any party alleging such breach or misrepresentation unless such
aggrieved party shall have delivered a written notice ("Notice of Breach")
specifying the details (to the extent known at such time) of such claimed breach
to the alleged breaching party within: (A) as to breaches of representations and
warranties, one (1) year from the Closing Date, except as provided in Section
10.1(b)(ii), and (B), as to breaches or defaults in covenants, one year from the
date the obligation to perform the covenant to which the breach or default
pertains first arises (the "Survival Period"). Each representation, warranty,
covenant and agreement contained herein, and each exception thereto, is
independent of all other warranties, representations, covenants, agreements and
exceptions contained herein (whether covering an identical or related subject
matter) and must be independently and separately complied with and satisfied. No
such representation or warranty shall be deemed to have been waived, affected or
impaired by any investigation made by the party to whom such representation or
warranty is given hereunder unless such party proceeded with the Closing with
full knowledge of the facts arising to a breach of any such representations or
warranties.
(b) (i) To the extent and in the manner provided in this Section,
each of the Contributors, jointly and severally, hereby agrees to
indemnify and hold harmless the Company, OP and their respective
successors and assigns from, against and in respect of all Losses (defined
below) (other than Losses described in Section 10.1(b)(ii) below)
sustained or incurred as a result of, or arising out of, (i) any
inaccuracy in or breach of any representation or warranty of any of the
Contributors in this Agreement or (ii) any breach of any covenant or
agreement to be performed post-Closing by any of the Contributors pursuant
to this Agreement or any document delivered by Contributors to the
Company, OP or any Subsidiary at Closing.
(ii) To the extent and in the manner provided in this Section,
each of the Contributors of the stock of POB, jointly and severally,
hereby agrees to indemnify and hold harmless the Company, OP and their
respective successors and assigns from, against and in respect of all
Losses sustained or incurred as a result of, or arising out of, any
inaccuracy in or breach of any representation or
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warranty of any of the Contributors in Section 4.2(d)(ii) of this
Agreement, provided that the Notice of Breach shall be delivered to the
Contributors of the stock of POB within two (2) years of the Closing Date.
(c) (i) To the extent and in the manner provided in this Section,
each of the Company and OP, jointly and severally, hereby agrees to
indemnify and hold harmless the Contributors and their respective
successors and assigns from, against and in respect of any and all Losses
(other than Losses described in Section 10.1(c)(ii) below) sustained or
incurred as a result of, or arising out of, (i) any inaccuracy in or
breach of any representation or warranty of the Company or OP in this
Agreement or (ii) any breach of any covenant or agreement to be performed
post-Closing by the Company or OP pursuant to this Agreement or any
document delivered by the Company, OP or any Subsidiary to Contributors at
Closing;
(ii) To the extent and in the manner provided in this Section,
each of the Company and OP, jointly and severally, hereby agrees to
indemnify and hold harmless the Contributors and their respective
successors and assigns from, against and in respect of any and all Losses
sustained or incurred as a result of, or arising out of, the existence of
Hazardous Substances, USTs, asbestos-containing materials or PCBs in,
under or upon the Cactus Village Shopping Center in concentrations
exceeding applicable cleanup levels which require remediation under
Environmental Laws.
(d) If a claim arises as to which a party hereto is entitled to
indemnification hereunder (an "Indemnitee"), such Indemnitee shall issue a
Notice of Breach within the Survival Period to the party obligated to indemnify
the Indemnitees (an "Indemnitor") specifying the details of such claim of Loss
(as to which notice to Contributors in accordance with Section 10.2 below shall
be considered sufficient notice as to all Contributors and as to which notice to
the Company in accordance with Section 10.2 below shall be considered sufficient
notice as to the Company and OP); provided, however, that the failure to provide
the Notice of Breach as aforesaid shall not relieve an Indemnitor from its
indemnification obligations hereunder unless, and only to the extent, that (i)
such failure materially prejudices the Indemnitor's defense with regard to such
claim or (ii) the Notice of Breach is not delivered during the Survival Period.
(e) Notwithstanding anything herein to the contrary:
(i) No claim for indemnity may be maintained with respect to
Losses under subsection 10.1(b) or 10.1(c) unless an Indemnitee shall have
delivered the Notice of Breach to the Indemnitor on or before the
expiration of the Survival Period;
(ii) The obligation of any Indemnitor to indemnify any
Indemnitee hereunder for a Loss shall be reduced to the extent that the
Indemnitee is entitled to payment for all or a portion of such Loss under
any insurance policy or policies;
(iii) The Company and OP shall not be entitled to seek
indemnification for Losses under Section 10.1(b)(i) hereunder until the
aggregate amount of such Losses shall equal $500,000, in which event the
Company and OP shall be entitled to seek indemnification for the total
amount of such Losses;
(iv) The Contributors shall not be entitled to seek
indemnification for Losses under Section 10.1(c)(i) hereunder until the
aggregate amount of such Losses shall equal $500,000 (prior to the
application of any Gross Up Amount (defined below)), in which event the
Contributors shall be entitled to seek indemnification for the total
amount of such Losses including any Gross Up Amount; and
(v) The Contributors shall not be entitled to seek
indemnification for Losses under Section 10.1(c)(ii) hereunder until the
aggregate amount of such Losses shall equal $200,000 (prior to the
application of any Gross Up Amount), in which event the Contributors shall
be entitled to seek indemnification for the total amount of such Losses
including any Gross Up Amount; and
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(vi) The total amount of Losses to which the Company, OP and
the Subsidiaries shall be entitled to indemnification under Section
10.1(b)(i) hereunder shall not exceed $5,000,000, and the total amount of
Losses to which the Company, OP and the Subsidiaries shall be entitled to
indemnification under Section 10.1(b)(ii) hereunder shall not exceed
$7,000,000.
(vii) The total amount of Losses to which the Contributors
shall be entitled to indemnification under Section 10.1(c)(i) hereunder
shall not exceed $5,000,000 prior to any Gross Up Amount, and the total
amount of Losses to which the Contributors shall be entitled to
indemnification under Section 10.1(c)(ii) hereunder shall not exceed
$2,000,000 prior to any Gross Up Amount.
(f) The term "Losses" shall be defined as follows:
(i) As such term relates to economic detriments suffered
directly by the Company, OP or the Subsidiaries: all demands, claims,
actions or causes of action, assessments, taxes, losses, fines, penalties,
damages, liabilities, costs, charges and expenses (including, without
limitation, reasonable attorneys' and accountants's fees, expenses and
costs of litigation including any such fees, expenses and costs to enforce
the terms of this Section);
(ii) As such term relates to economic detriments suffered
directly by the Contributors: all demands, claims, actions or causes of
action, assessments, taxes, losses, fines, penalties, damages,
liabilities, costs, charges and expenses (including, without limitation,
reasonable attorneys' and accountants's fees, expenses and costs of
litigation including any such fees, expenses and costs to enforce the
terms of this Section) plus the Gross Up Amount; and
(iii) As such term relates to economic detriments suffered
indirectly by the Contributors by virtue of their ownership interests in
OP: the product of (A) Contributors' percentage of direct and indirect
ownership interests in OP as of the completion of the Closing multiplied
by (B) the aggregate of all demands, claims, actions or causes of action,
assessments, taxes, losses, fines, penalties, damages, liabilities, costs,
charges and expenses (including, without limitation, reasonable attorneys'
and accountants's fees, expenses and costs of litigation including any
such fees, expenses and costs to enforce the terms of this Section) borne
by the Company, OP or the Subsidiaries plus (C) the Gross Up Amount. The
Losses defined in this Section 10.1(f)(iii) are not intended to be
duplicative of the Losses defined in Section 10.1(f)(ii), or vice versa.
The term "Gross Up Amount" is that amount necessary to "gross up" the amount of
any Losses defined in Sections 10.1(f)(ii) or (iii) by the Contributor's
percentage direct and indirect ownership interests in OP as of the completion of
the Closing by using the following formula:
Gross Up Amount = Losses (before inclusion of any Gross Up Amount) divided
by (1 minus Contributors' percentage direct and indirect ownership
interest in OP as of the completion of the Closing) minus Losses (before
inclusion of any Gross Up Amount).
(g) Recourse for the indemnity obligations of the Contributors set
forth in subsection 10.1(b)(i) above shall be limited solely to the Indemnity
Collateral (as defined below) valued at $11.00 per Unit. Recourse for the
indemnity obligations of the Contributors of the stock of POB set forth in
Section 10.1(b)(ii) above shall be limited solely to (i) the Indemnity
Collateral and (ii) personal recourse to Philip O'B. Montgomery III except for
the assets set forth on Schedule 10.1(g); provided, however, that the
Indemnitees shall exhaust the Indemnity Collateral prior to pursuing personal
recourse against Mr. Montgomery. Recourse for the indemnity obligations of the
Company and OP set forth in subsection 10.1(c) shall be, at the option of the
Indemnitee, to Units or Common Stock (in each case valued at $11.00 per Unit or
share of Common Stock). The term "Indemnity Collateral" shall mean (x)
$6,250,000 worth of Contributors' Units (valued at $11.00 per Unit); (y) any
Common Stock received by Contributors as a result of the exchange of any
Indemnity Collateral for Common Stock; and (z) cash or in-kind distributions,
share splits or other securities received or receivable with respect to any
Indemnity Collateral.
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(h) With respect to the indemnity obligations of the Contributors
set forth under subsection 10.1(b) hereof, the Contributors hereby grant to the
Indemnified Parties, a first and prior lien upon and a continuing security
interest in the Indemnity Collateral and in any proceeds or substitution
thereof, whether now existing or hereafter acquired. Any transfers permitted by
the Partnership Agreement or otherwise by the Contributors of their Indemnity
Collateral shall expressly remain subject to the liens and security interests
granted hereby until and unless such liens and security interests are released
in accordance with the provisions of this subsection 10.1(g). In connection with
the grant of such security interests, the Contributors on the date of Closing
shall deliver such instruments, including stock transfer powers duly endorsed in
blank, as shall be necessary to grant to the Company and OP a fully perfected
first priority security interest in any Indemnity Collateral that may, after the
date hereof, be issued to such persons by share dividend, split or similar
distribution, and shall execute and deliver UCC Financing Statements and such
other documents and take such other action necessary to grant the Company and OP
a fully perfected first priority security interest in all of the Indemnity
Collateral. In the event the Contributors are determined to have an
indemnification obligation pursuant to this Section, then each Indemnitee shall
have all of the rights now or hereafter existing under applicable law, and all
rights as a secured creditor under the Uniform Commercial Code in all relevant
jurisdictions, and each of the Contributors agrees to take all such actions as
may be reasonably requested of them by an Indemnitee to insure that the
Indemnitee can realize on such security interest. The liens and security
interests with respect to one hundred percent (100%) in fair market value of the
Indemnity Collateral granted hereunder shall not be released until the
expiration of one (1) year from the Closing Date (the "Release Date"); provided,
however, that if a claim for indemnification under this Section hereof has been
made and is continuing at the Release Date, that amount of the Indemnity
Collateral otherwise to be released at the Release Date, and equal up to one
hundred twenty-five percent (125%) of the amount of such claim shall not be
released until the final disposition of such indemnification claim. Upon
satisfaction of the conditions to the release of the liens and security
interests and the Indemnity Collateral, the Company and OP shall prepare and
file all documents and shall take all other action necessary to release such
security interests in the Indemnity Collateral, as applicable. Nothing herein
shall prevent Contributors from granting second liens or security interests in
the Indemnity Collateral which are subordinate and inferior to the Company's and
OP's first and prior lien on, and perfected security interest in, the Indemnity
Collateral.
(i) Indemnification of the Indemnitees pursuant to this Section 10.1
shall be the exclusive post-Closing remedy of the Indemnitees for any breach of
any representation, obligation, warranty or covenant of any of the Indemnitors
and the liability of all such parties shall be limited as expressly provided in
this Section 10.1.
SECTION 10.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given upon receipt if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified in a notice given in accordance with
this Section 10.2):
(a) if to Contributors, to:
P. O'B. Montgomery & Company
5550 LBJ Freeway, Suite 380
Dallas, Texas 75240
(972) 455-4900 (telephone)
(972) 490-4905 (facsimile)
Attention: Philip O'B. Montgomery III
with copies (which shall not constitute notice pursuant to
this Section 10.2) to:
Apollo Real Estate Advisors, L.P.
1301 Avenue of the Americas
New York, New York 10019
(212) 515-3233 (telephone)
(212) 515-3284 (facsimile)
Attention: Richard Mack
- and -
-51-
<PAGE>
Jenkens & Gilchrist, P.C.
1445 Ross Avenue, Suite 2900
Dallas, Texas 75202
(214) 855-4500 (telephone)
(214) 855-4300 (facsimile)
Attention: Winston W. Walp II, Esq.
- and -
(b) if to the Company, to:
Aegis Realty, Inc.
625 Madison Avenue
New York, New York 10022
(212) 421-2310 (telephone)
(212) 593-5794 (facsimile)
Attention: Stuart Boesky,
President and Chief Operating Officer,
with a copy (which shall not constitute notice pursuant to
this Section 10.2) to:
Paul, Hastings, Janofsky & Walker LLP
75 East 55th Street
New York, New York 10022
(212) 318-6859 (telephone)
(212) 318-6971 (facsimile)
Attention: Mark Schonberger, Esq.
SECTION 10.3 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement," "the date hereof," and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to the
date first written above.
SECTION 10.4 Counterparts. This Agreement may be executed in one or more
counterparts (including by facsimile transmission), all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by all of the parties hereto and delivered to
the other parties; it being hereby understood that all parties need not sign the
same counterpart.
SECTION 10.5 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein, which
are hereby incorporated herein and made a part hereof for all purposes as if
fully set forth herein) and the Confidentiality Agreement (a) constitutes the
entire agreement among the parties with respect to the subject matter hereof,
and supersedes all prior agreements and understandings, both written and oral,
among the parties hereto with respect to the subject matter hereof, and (b) is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
SECTION 10.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws of conflicts)
of the State of New York, applicable to contracts executed and performed
entirely in such jurisdiction.
-52-
<PAGE>
SECTION 10.7 No Remedy in Certain Circumstances. Each party agrees that,
should any court, Governmental Entity or other competent authority hold any
provision of this Agreement or portion hereof to be null, void or unenforceable,
or order or direct any party to take any action inconsistent herewith or not to
take any action required herein, the other party shall not be entitled to
specific performance of such provision or part hereof or thereof or to any other
remedy, including, without limitation, limited to money damages, for breach
hereof or thereof or of any other provision of this Agreement or portion hereof
as a result of such holding or order.
SECTION 10.8 Assignment. Except as provided in Section 3.9 of this
Agreement, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties, provided that no such assignment shall relieve the assigning party of
its obligations hereunder if such assignee does not perform such obligations.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and assigns including without limitation the Assignees.
SECTION 10.9 Gender and Number Classification. All words used herein,
irrespective of the number and gender specifically used, shall be deemed and
construed to include or mean any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context requires.
SECTION 10.10 Knowledge. For purposes of this Agreement, "knowledge", "to
its knowledge", or analogous expressions, when used (i) with reference to the
Company, OP or the Subsidiaries means actual knowledge of a particular fact or
set of circumstances, events or conditions by Mr. Stuart Boesky, Mr. Jeff
Suchman, Mr. Alan Hirmes, Ms. Gayle Hayes, Mr. Rich Magner, Mr. Orin Shakerdge
and/or Mr. Michael Wirth without investigation or inquiry, and (ii) with
reference to Contributors, means actual knowledge of a particular fact or set of
circumstances, events or conditions by Mr. Phillip O'B. Montgomery, Mr. Randy
Twist, Mr. Doug Archer, Mr. Austin Neuhoff and/or Mr. Lance Taylor after due
inquiry solely of property managers for the Properties but not otherwise.
SECTION 10.11 Time Periods. Time is of the essence as to all matters
contained in the Agreement. 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 of Texas, State of New York, or 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.
SECTION 10.12 Condemnation and Destruction.
(a) If, prior to the Closing Date, all or any portion of any
Property or any assets of the Company, OP or any Subsidiary is taken by eminent
domain (or is the subject of a pending or contemplated taking which has not been
consummated), the owner of such property shall notify the other parties hereto
of such fact and such taking shall not result in any adjustment to the
Consideration; provided, however, that each party shall have any termination
rights granted to such party herein in the event that any such taking results in
a Material Adverse Effect or a Contributor Material Adverse Effect. The
Contributor of any condemned Property shall assign and turn over to OP at the
Closing, and OP and the Company shall be entitled to receive and keep, all
amounts awarded or to be awarded as the result of such taking.
(b) If, prior to the Closing Date, all or any material portion of
any Property or any assets of the Company, OP or any Subsidiary is damaged or
destroyed by fire or other casualty, the owner of such property shall notify the
other parties hereto of such fact and such destruction or casualty shall not
result in any adjustment to the Consideration; provided, however, that each
party shall have any termination rights granted to such party herein in the
event that any such destruction or casualty results in a Material Adverse Effect
or a Contributor Material Adverse Effect. The Contributor of any destroyed or
damaged Property shall assign and turn over to OP at the Closing, and OP and the
Company shall be entitled to receive and keep, all insurance proceeds paid or to
be paid as the result of such destruction or casualty.
-53-
<PAGE>
SECTION 10.13 Exhibits and Schedules. The fact that any item or
information has been included in any of the exhibits or schedules hereto shall
not be construed to establish, in whole or in part, any standard of materiality.
[Signatures on following pages numbered S-1 through S-42.]
IN WITNESS WHEREOF, Contributors, the Company and OP have caused this
Agreement to be executed and delivered by their respective officers thereunto
duly authorized, all as of the date first written above.
AEGIS REALTY, INC.,
a Maryland corporation
By: /s/ Stuart J. Boesky
--------------------
Name: Stuart J. Boesky
Title: President
AEGIS REALTY OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership
By: Aegis Realty, Inc., a Maryland corporation,
its general partner
By: /s/ Stuart J. Boesky
--------------------
Name: Stuart J. Boesky
Title: President
-54-
<PAGE>
Contributors of 100% interest in P O'B. Apollo Florida, L.P. (owns River Run,
Apopka, FL and Piedmont Plaza, Mirimar, FL):
AP-GP POB IV LLC,
a Delaware limited liability company
By: Kronus Property IV, Inc., a Delaware
corporation, its manager
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
P. O'B. Capital Partners IV, L.P.,
a Texas limited partnership
By: P. O'B. Operating Partners IV, L.P., a Texas
limited partnership, its general partner
By: Montgomery Operating Partners IV, Inc., a
Texas corporation, its general partner
By: /s/ Randy Twist
----------------
Name: Randy Twist
Title: Executive Vice President
Apollo Real Estate Investment Fund IV, L.P.,
a Delaware limited partnership
By: Apollo Real Estate Advisors IV, L.P.,
its managing general partner
By: Apollo Real Estate Capital Advisors IV, Inc.,
its general partner
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
S-55
<PAGE>
Contributors of Sonora, Sonora, CA:
P O'B. Apollo Sonora, L.P.,
a Delaware limited partnership
By: AP Sonora, LLC, a Delaware limited liability
company, its general partner
By: Kronus Property IV, Inc., a Delaware
corporation, its manager
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
By: P. O'B. Capital Sonora, LLC, a Delaware
limited liability company, its general
partner
By: P. O'B. Capital Partners IV, L.P., a
Texas limited partnership, its
sole member
By: P. O'B. Operating Partners, IV,
L.P., a Texas limited partnership,
its general partner
By: Montgomery Operating Partners IV,
Inc., a Texas corporation, its
general partner
By: /s/ Randy Twist
---------------
Name: Randy Twist
Title: Executive Vice President
S-56
<PAGE>
Consented to by:
Apollo Real Estate Investment Fund IV, L.P.,
a Delaware limited partnership, its limited partner
By: Apollo Real Estate Advisors IV, L.P., its
general partner
By: Apollo Real Estate Capital Advisors IV,
Inc., its general partner
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
S-57
<PAGE>
Contributors of Country Hills Plaza, Ogden, UT:
P O'B. Apollo Ogden, L.P.,
a Delaware limited partnership
By: AP-GP Ogden LLC, a Delaware limited liability
company, its general partner
By: Kronus Property, Inc., its manager
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
By: P. O'B. Capital Partners I, L.P., a Texas
limited partnership, its general partner and a
limited partner
By: P. O'B. Operating Partners I, L.P., a
Texas limited partnership, its general
partner
By: Montgomery Operating Partners, Inc., a
Texas corporation, its general partner
By: /s/ Randy Twist
---------------
Name: Randy Twist
Title: Executive Vice President
S-58
<PAGE>
Consented to by:
Apollo Real Estate Investment Fund II, L.P.,
a Delaware limited partnership, its limited partner
By: Apollo Real Estate Advisors II, L.P., its managing
general partner
By: Apollo Real Estate Capital Advisors II, Inc.,
its general partner
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
S-59
<PAGE>
Contributors of Marketplace Shopping Center, Independence, MO:
P O'B. Apollo Independence, L.P.,
a Delaware limited partnership
By: AP-GP Ogden LLC, a Delaware limited liability
company, its general partner
By: Kronus Property, Inc., its manager
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
By: P. O'B. Capital Partners I, L.P., a Texas
limited partnership, its general partner and
a limited partner
By: P. O'B. Operating Partners I, L.P., a
Texas limited partnership, its general
partner
By: Montgomery Operating Partners, Inc.,
a Texas corporation, its general
partner
By: /s/ Randy Twist
---------------
Name: Randy Twist
Title: Executive Vice President
S-60
<PAGE>
Consented to by:
Apollo Real Estate Investment Fund II, L.P.,
a Delaware limited partnership, its limited
partner
By: Apollo Real Estate Advisors II, L.P.,
its managing general partner
By: Apollo Real Estate Capital Advisors II,
Inc., its general partner
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
S-61
<PAGE>
Contributors of Skillman/Abrams Plaza, Dallas, TX:
P O'B. Apollo S/A, L.P.,
a Delaware limited partnership
By: AP-GP POB III LLC, a Delaware limited liability
company, its general partner
By: Kronus Property III, Inc., its manager
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
By: P. O'B. Capital Partners I, L.P., a Texas
limited partnership, its general partner and a
limited partner
By: P. O'B. Operating Partners I, L.P.,
a Texas limited partnership, its general
partner
By: Montgomery Operating Partners, Inc.,
a Texas corporation, its general
partner
By: /s/ Randy Twist
---------------
Name: Randy Twist
Title: Executive Vice President
S-62
<PAGE>
Consented to by:
Apollo Real Estate Investment Fund III, L.P.,
a Delaware limited partnership, its limited partner
By: Apollo Real Estate Advisors III, L.P., its
managing general partner
By: Apollo Real Estate Capital Advisors III, Inc.,
its general partner
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
S-63
<PAGE>
Contributors of Plaza Rios, Dallas, TX:
P O'B. Apollo P/R, L.P.,
a Delaware limited partnership
By: AP-GP POB III LLC, a Delaware limited liability
company, its general partner
By: Kronus Property III, Inc., its manager
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
By: P. O'B. Capital Partners I, L.P., a Texas
limited partnership, its general partner and a
limited partner
By: P. O'B. Operating Partners I, L.P., a Texas
limited partnership, its general partner
By: Montgomery Operating Partners, Inc., a
Texas corporation, its general partner
By: /s/ Randy Twist
---------------
Name: Randy Twist
Title: Executive Vice President
S-64
<PAGE>
Consented to by:
Apollo Real Estate Investment Fund III, L.P.,
a Delaware limited partnership, its limited partner
By: Apollo Real Estate Advisors III, L.P., its
managing general partner
By: Apollo Real Estate Capital Advisors III, Inc.,
its general partner
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
S-65
<PAGE>
Contributors of Court Street Plaza, Pasco, WA:
P O'B. Apollo Pasco, L.P.,
a Delaware limited partnership
By: AP-GP Ogden LLC, a Delaware limited liability
company, its general partner
By: Kronus Property, Inc., its manager
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
By: P. O'B. Capital Partners I, L.P., a Texas
limited partnership, its general partner and a
limited partner
By: P. O'B. Operating Partners I, L.P., a Texas
limited partnership, its general partner
By: Montgomery Operating Partners, Inc., a
Texas corporation, its general partner
By: /s/ Randy Twist
---------------
Name: Randy Twist
Title: Executive Vice President
S-66
<PAGE>
Consented to by:
Apollo Real Estate Investment Fund II, L.P.,
a Delaware limited partnership, its limited partner
By: Apollo Real Estate Advisors II, L.P., its
managing general partner
By: Apollo Real Estate Capital Advisors II,
Inc., its general partner
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
S-67
<PAGE>
Contributors of Cheyenne - Hobby Lobby, Cheyenne, WY:
P O'B. Apollo Cheyenne, L.P.,
a Delaware limited partnership
By: AP-GP POB III LLC, a Delaware limited liability
company, its general partner
By: Kronus Property III, Inc., its manager
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
By: P. O'B. Capital Partners III, L.P., a Texas
limited partnership, its general partner and a
limited partner
By: P. O'B. Operating Partners III, L.P., a
Texas limited partnership, its general
partner
By: Montgomery Operating Partners III,
Inc., a Texas corporation, its
general partner
By: /s/ Randy Twist
---------------
Name: Randy Twist
Title: Executive Vice President
S-68
<PAGE>
Consented to by:
Apollo Real Estate Investment Fund III, L.P.,
a Delaware limited partnership, its limited partner
By: Apollo Real Estate Advisors III, L.P., its
managing general partner
By: Apollo Real Estate Capital Advisors III,
Inc., its general partner
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
S-69
<PAGE>
Contributors of Tacoma Place, Tacoma, WA:
P O'B. Apollo Tacoma, L.P.,
a Delaware limited partnership
By: AP-GP POB III LLC, a Delaware limited liability
company, its general partner
By: Kronus Property III, Inc., its manager
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
By: P. O'B. Capital Partners I, L.P., a Texas
limited partnership, its general partner and a
limited partner
By: P. O'B. Operating Partners I, L.P., a Texas
limited partnership, its general partner
By: Montgomery Operting Partners, Inc., a
Texas corporation, its general partner
By: /s/ Randy Twist
---------------
Name: Randy Twist
Title: Executive Vice President
S-70
<PAGE>
Consented to by:
Apollo Real Estate Investment Fund III, L.P.,
a Delaware limited partnership, its limited partner
By: Apollo Real Estate Advisors III, L.P., its
managing general partner
By: Apollo Real Estate Capital Advisors III,
Inc., its general partner
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
S-71
<PAGE>
Contributors of Tacoma Place Pad, Tacoma, WA:
P O'B. Apollo Tacoma Pad, L.P.,
a Delaware limited partnership
By: AP-GP POB III LLC, a Delaware limited liability
company, its general partner
By: Kronus Property III, Inc., its manager
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
By: P. O'B. Capital Partners I, L.P., a Texas
limited partnership, its general partner and a
limited partner
By: P. O'B. Operating Partners I, L.P., a
Texas limited partnership, its general partner
By: Montgomery Operating Partners, Inc.,
a Texas corporation, its general partner
By: /s/ Randy Twist
----------------
Name: Randy Twist
Title: Executive Vice President
S-72
<PAGE>
Consented to by:
Apollo Real Estate Investment Fund III, L.P.,
a Delaware limited partnership, its limited partner
By: Apollo Real Estate Advisors III, L.P., its
general partner
By: Apollo Real Estate Capital Advisors III, Inc.,
its general partner
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
S-73
<PAGE>
Contributors of San Mar Village, San Marcos, TX:
P O'B. Apollo San Marcos, L.P.,
a Delaware limited partnership
By: AP-GP POB III LLC, a Delaware limited liability
company, its general partner
By: Kronus Property III, Inc., its manager
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
By: P. O'B. Capital Partners III, L.P., a Texas
limited partnership, its general partner and a
limited partner
By: P. O'B. Operating Partners III, L.P., a
Texas limited partnership, its general partner
By: Montgomery Operating Partners III, Inc.,
a Texas corporation, its general partner
By: /s/ Randy Twist
----------------
Name: Randy Twist
Title: Executive Vice President
S-74
<PAGE>
Consented to by:
Apollo Real Estate Investment Fund III, L.P.,
a Delaware limited partnership, its limited partner
By: Apollo Real Estate Advisors III, L.P., its
general partner
By: Apollo Real Estate Capital Advisors III, Inc.,
its general partner
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
S-75
<PAGE>
Contributors of Highlands Center, Kennewick, WA:
P O'B. Apollo Highlands, L.P.,
a Delaware limited partnership
By: AP-GP POB III LLC, a Delaware limited liability
company, its general partner
By: Kronus Property III, Inc., its manager
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
By: P. O'B. Capital Partners III, L.P., a Texas
limited partnership, its general partner and a
limited partner
By: P. O'B. Operating Partners III, L.P., a Texas
limited partnership, its general partner
By: Montgomery Operating Partners III, Inc.,
a Texas corporation, its general partner
By: /s/ Randy Twist
---------------
Name: Randy Twist
Title: Executive Vice President
S-76
<PAGE>
Consented to by:
Apollo Real Estate Investment Fund III, L.P.,
a Delaware limited partnership, its limited partner
By: Apollo Real Estate Advisors III, L.P.,
its general partner
By: Apollo Real Estate Capital Advisors III, Inc.,
its general partner
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
S-77
<PAGE>
Contributors of Franklin Park Mall, Spokane, WA:
P O'B. Apollo Franklin Park, L.P.,
a Delaware limited partnership
By: AP-GP POB III LLC, a Delaware limited liability
company, its general partner
By: Kronus Property III, Inc., its manager
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
By: P. O'B. Capital Partners III, L.P., a Texas
limited partnership, its general partner and a
limited partner
By: P. O'B. Operating Partners III, L.P., a
Texas limited partnership, its general
partner
By: Montgomery Operating Partners III, Inc.,
a Texas corporation, its general partner
By: /s/ Randy Twist
---------------
Name: Randy Twist
Title: Executive Vice President
S-78
<PAGE>
Consented to by:
Apollo Real Estate Investment Fund III, L.P.,
a Delaware limited partnership, its limited partner
By: Apollo Real Estate Advisors III, L.P.,
its general partner
By: Apollo Real Estate Capital Advisors III, Inc.,
its general partner
By: /s/ Richard Mack
----------------
Name: Richard Mack
Title: Vice President
S-79
<PAGE>
Contributors of Coronado, Sante Fe, NM:
P O'B. Apollo Sante Fe, L.P.,
a Delaware limited partnership
By: AP-GP Century, LLC, a Delaware limited liability
company, its general partner
By: AP Century IV Operating Corporation, a
Delaware corporation, its manager
By: /s/ Andy Cohen
-------------
Name: Andy Cohen
Title: Vice President
By: P. O'B. Capital Partners III, L.P., a Texas
limited partnership, its general partner and a
limited partner
By: P. O'B. Operating Partners III, L.P., a
Texas limited partnership, its general
partner
By: Montgomery Operating Partners III, Inc.,
a Texas corporation, its general partner
By: /s/ Randy Twist
---------------
Name: Randy Twist
Title: Executive Vice President
S-80
<PAGE>
Consented to by:
AP Century I, L.P.,
a Delaware limited partnership, its limited partner
By: AP-GP Century, LLC, a Delaware limited liability
company, its managing general partner
By: AP Century IV Operating Corporation,
a Delaware corporation, its manager
By: /s/ Andy Cohen
-------------
Name: Andy Cohen
Title: Vice President
S-81
<PAGE>
Contributors of University Place, Lincoln, NE:
P. O'B. Apollo Lincoln, L.P.,
a Delaware limited partnership
By: AP-GP Century, LLC, a Delaware limited liability
company, its general partner
By: AP Century IV Operating Corporation, a
Delaware corporation, its manager
By: /s/ Andy Cohen
-------------
Name: Andy Cohen
Title: Vice President
By: P.O'B. Capital Partners III, L.P., a Texas
limited partnership, its general partner and a
limited partner
By: P.O'B. Operating Partners III, L.P., a Texas
limited partnership, its general partner
By: Montgomery Operating Partners III, Inc.,
a Texas corporation, its general partner
By: /s/ Randy Twist
---------------
Name: Randy Twist
Title: Executive Vice President
S-82
<PAGE>
Consented to by:
AP Century I, L.P.,
a Delaware limited partnership, its limited partner
By: AP-GP Century, LLC, a Delaware limited liability
company, its managing general partner
By: AP Century IV Operating Corporation, a
Delaware corporation, its manager
By: /s/ Andy Cohen
--------------
Name: Andy Cohen
Title: Vice President
S-83
<PAGE>
Contributors of Washington Plaza, Richland, WA:
P. O'B. Apollo Richland, L.P.,
a Delaware limited partnership
By: AP-GP Century, LLC, a Delaware limited liability
company, its general partner
By: AP Century IV Operating Corporation, a
Delaware corporation, its manager
By: /s/ Andy Cohen
--------------
Name: Andy Cohen
Title: Vice President
By: P.O'B. Capital Partners III, L.P., a Texas
limited partnership, its general partner and
a limited partner
By: P.O'B. Operating Partners III, L.P., a Texas
limited partnership, its general partner
By: Montgomery Operating Partners III, Inc.,
a Texas corporation, its general partner
By: /s/ Randy Twist
---------------
Name: Randy Twist
Title: Executive Vice President
S-84
<PAGE>
Consented to by:
AP Century I, L.P.,
a Delaware limited partnership, its limited partner
By: AP-GP Century, LLC, a Delaware limited liability
company, its managing partner
By: AP Century IV Operating Corporation,
a Delaware corporation, its manager
By: /s/ Andy Cohen
--------------
Name: Andy Cohen
Title: Vice President
S-85
<PAGE>
Contributors of Holly Farm, Milwaukie, OR:
P. O'B. Apollo Holly Farm, L.P.,
a Delaware limited partnership
By: AP-GP Century, LLC, a Delaware limited liability
company, its general partner
By: AP Century IV Operating Corporation,
a Delaware corporation, its manager
By: /s/ Andy Cohen
--------------
Name: Andy Cohen
Title: Vice President
By: P.O'B. Capital Partners III, L.P., a Texas
limited partnership, its general partner and a
limited partner
By: P.O'B. Operating Partners III, L.P., a
Texas limited partnership, its general
partner
By: Montgomery Operating Partners III, Inc.,
a Texas corporation, its general partner
By: /s/ Randy Twist
---------------
Name: Randy Twist
Title: Executive Vice President
S-86
<PAGE>
Consented to by:
AP Century I, L.P.,
a Delaware limited partnership, its limited partner
By: AP-GP Century, LLC, a Delaware limited liability
company, its managing general partner
By: AP Century IV Operating Corporation, a Delaware
corporation, its manager
By: /s/ Andy Cohen
--------------
Name: Andy Cohen
Title: Vice President
S-87
<PAGE>
Contributors of Marysville Towne Center, Marysville, WA:
P. O'B. Apollo LMPSF, L.P.,
a Delaware limited partnership
By: AP-GP Century, LLC, a Delaware limited liability
company, its general partner
By: AP Century IV Operating Corporation, a
Delaware corporation, its manager
By: /s/ Andy Cohen
--------------
Name: Andy Cohen
Title: Vice President
By: P. O'B. Capital Partners III, L.P., a Texas limited
partnership, its general partner and a limited partner
By: P. O'B. Operating Partners III, L.P., a Texas
limited partnership, its general partner
By: Montgomery Operating Partners III, Inc.,
a Texas corporation, its general partner
By: /s/ Randy Twist
---------------
Name: Randy Twist
Title: Executive Vice President
S-88
<PAGE>
Consented to by:
AP Century I, L.P.,
a Delaware limited partnership, its limited partner
By: AP-GP Century, LLC, a Delaware limited liability
company, its managing general manager
By: AP Century IV Operating Corporation, a Delaware
corporation, its manager
By: /s/ Andy Cohen
--------------
Name: Andy Cohen
Title: Vice President
S-89
<PAGE>
Contributors of Odessa Staples, Odessa, TX:
POB Odessa, L.P., a Texas limited partnership
By: POB Montgomery Development Corporation, a Texas
corporation, its general partner
By: /s/ Phillip O'B. Montgomery, III
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Phillip O'B. Montgomery, III, President
Consented to by:
/s/ Phillip O'B. Montgomery, III
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Philip O'B. Montgomery, III, Limited Partner
/s/ Harold Montgomery
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Harold Montgomery, Limited Partner
/s/ Will S. Montgomery
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Will S. Montgomery, Limited Partner
/s/ Carter Montgomery
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Carter Montgomery, Limited Partner
/s/ Randy Twist
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Randy Twist, Limited Partner
/s/ William Douglas Archer
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William Douglas Archer, Limited Partner
/s/ Austin Neuhoff
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Austin Neuhoff, Limited Partner
/s/ Douglas Maclay, Sr
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Douglas Maclay, Sr., Limited Partner
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Contributors of P. O'B. Harker Heights, L.P.*:
P. O'B. Montgomery Development Corporation,
a Texas corporation
By: /s/ Phillip O'B. Montgomery, III
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Phillip O'B. Montgomery, III, President
/s/ Philip O'B. Montgomery, III
----------------------------------------
Philip O'B. Montgomery, III
/s/ Harold Montgomery
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Harold Montgomery
/s/ Will S. Montgomery
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Will S. Montgomery
/s/ Carter Montgomery
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Carter Montgomery
/s/ Randy S. Twist
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Randy S. Twist
/s/ William Douglas Archer
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William Douglas Archer
/s/ Lance Taylor
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Lance Taylor
/s/ Douglas W. Maclay
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Douglas W. Maclay
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Contributors of POB Monroe, L.P.* and P. O'B. Greenville, L.P.*:
P. O'B. Montgomery Development Corporation,
a Texas corporation
By: /s/ Phillip O'B. Montgomery, III
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Phillip O'B. Montgomery, III, President
/s/ Phillip O'B. Montgomery, III
--------------------------------------
Philip O'B. Montgomery, III
/s/ Harold Montgomery
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Harold Montgomery
/s/ Will S. Montgomery
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Will S. Montgomery
/s/ Carter Montgomery
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Carter Montgomery
/s/ Randy S. Twist
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Randy S. Twist
/s/ William Douglas Archer
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William Douglas Archer
/s/ Austin Neuhoff
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Austin Neuhoff
/s/ Douglas W. Maclay
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Douglas W. Maclay
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Contributor of general partner interest in Keller Crossing Limited Partnership*:
P O'B. Operating Partners II, L.P.,
a Texas limited partnership
By: P.O'B. Montgomery Development Corporation, a
Texas corporation, its general partner
By: /s/ Phillip O'B. Montgomery, III
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Phillip O'B. Montgomery, III, President
Contributors of general partner interest and 32_% limited partner interest in
POB Gallatin, L.P.*:
Montgomery MT Company, L.L.C.,
a Texas limited liability company
/s/ Phillip O'B. Montgomery, III
---------------------------------------------------
Phillip O'B. Montgomery, III, President
POB Operating MT, L.P.,
a Texas limited partnership
By: Montgomery MT Company, LLC, a Texas limited
liability company, its general partner
/s/ Phillip O'B. Montgomery, III
---------------------------------------------------
Phillip O'B. Montgomery, III, President
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Contributor of 49.5% limited partner interest in POB Missoula, L.P.*:
Missoula Operating Partners, L.P.,
a Texas limited partnership
By: Missoula POB, Inc., a Texas corporation,
its general partner
/s/ Phillip O'B. Montgomery, III
--------------------------------------------
Phillip O'B. Montgomery, III, President
Consented to by:
Missoula Co GP, Inc., a Texas corporation
By: /s/ Phillip O'B. Montgomery, III
----------------------------------------
Philip O'B Montgomery, III, President
Contributor of 50.0% of the Common Stock of Missoula CO GP, Inc.*:
/s/ Phillip O'B. Montgomery, III
--------------------------------------------
Philip O'B. Montgomery, III
Contributor of general partner interest in Ohio/121 Limited Partnership*:
P. O'B. Ohio, L.P.
a Texas limited partnership
By: P.O'B. Montgomery Development Corporation,
a Texas corporation, its general partner
By: /s/ Phillip O'B. Montgomery, III
-----------------------------------------
Phillip O'B. Montgomery, III, President
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Contributors of 100.0% of the Common Stock of P. O'B. Montgomery & Company*:
/s/ Philip O'B. Montgomery, III
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Philip O'B. Montgomery, III
/s/ Carter Montgomery
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Carter Montgomery
/s/ Will S. Montgomery
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Will S. Montgomery
/s/ Harold Montgomery
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Harold Montgomery
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