<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 9, 1997
REGISTRATION NO. 333-35473
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4
TO
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AEGIS INVESTMENT TRUST
(Exact name of registrant as specified in governing instruments)
2500 CITYWEST BOULEVARD, SUITE 1200
HOUSTON, TEXAS 77042
(Address of principal executive offices)
------------------------
PATRICK A. WALDEN
AEGIS INVESTMENT TRUST
2500 CITYWEST BOULEVARD, SUITE 1200
HOUSTON, TEXAS 77042
(713) 787-0100
(Name and address of agent for service)
------------------------
COPIES TO:
<TABLE>
<S> <C>
EDWARD L. DOUMA, ESQ. CARY K. HYDEN, ESQ.
Hunton & Williams WILLIAM J. CERNIUS, ESQ.
951 East Byrd Street Latham & Watkins
Richmond, Virginia 23219 650 Town Center Drive
(804) 788-8200 Costa Mesa, California 92626
(714) 540-1235
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT BEING OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF SECURITIES BEING REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Shares of beneficial interest,
$0.01 par value per share.......... 11,500,000 shares $20.00 $230,000,000 $69,697.00(2)
</TABLE>
(1) Includes 1,500,000 Common Shares issuable upon exercise of the underwriters'
overallotment option.
(2) Registration fee previously paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-11 and has duly caused this Amendment No. 4 to
the registration statement to be signed on its behalf by the undersigned
thereunto duly authorized, in the City of Houston, State of Texas, on the 9th
day of December 1997.
<TABLE>
<S> <C> <C>
AEGIS INVESTMENT TRUST
A MARYLAND REAL ESTATE INVESTMENT TRUST
(REGISTRANT)
By: /s/ PATRICK A. WALDEN
-----------------------------------------
Patrick A. Walden
MANAGING DIRECTOR
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below on the 9th day of December 1997 by
the following persons in the capacities indicated.
SIGNATURE TITLE
- ------------------------------ --------------------------
Managing Director, Trustee
/s/ PATRICK A. WALDEN and Co-Chairman of Board
- ------------------------------ of Trustees (Principal
Patrick A. Walden Executive Officer)
Managing Director, Trustee
and Co-Chairman of Board
/s/ JAMES E. DAY of Trustees (Principal
- ------------------------------ Financial Officer and
James E. Day Principal Accounting
Officer)
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS
- -----------
<C> <C> <S>
1.1** -- Form of Underwriting Agreement
3.1* -- Form of Amended and Restated Declaration of Trust of the Registrant
3.2* -- Bylaws of the Registrant
4.1* -- Form of Common Share certificate
5.1** -- Opinion of Hunton & Williams
8.1** -- Opinion of Hunton & Williams as to Tax Matters
10.1* -- Form of First Amended and Restated Agreement of Limited Partnership of AEGIS Operating
Partnership, L.P.
10.2* -- Form of 1997 Plan
10.3* -- Form of Stock Contribution Agreement
10.4* -- Form of Trustees' Plan
10.5* -- Form of Administrative Services Agreement
10.6** -- Form of Loan Servicing Agreement
10.7** -- Form of Loan Sale Agreement
10.8** -- Form of Employment Agreement
21 * -- List of Subsidiaries of Registrant
23.1** -- Consent of Hunton & Williams (included in Exhibits 5.1 and 8.1)
23.2* -- Consent of KPMG Peat Marwick LLP
23.3* -- Consent of Dale M. Hanson to being named as a Trustee nominee
23.4* -- Consent of Jeffrey A. Toole to being named as a Trustee nominee
23.5* -- Consent of James F. Crowley to being named as a Trustee nominee
23.6* -- Consent of Jack W. Schakett to being named as a Trustee nominee
24.1* -- Powers of Attorney (included on signature page)
</TABLE>
- ------------------------
* Filed previously.
** Filed herewith.
*** To be filed by amendment.
<PAGE>
AEGIS INVESTMENT TRUST
10,000,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
December __, 1997
JEFFERIES & COMPANY, INC.
EVEREN SECURITIES, INC.
LEGG MASON WOOD WALKER, INCORPORATED
As Representatives of the Several Underwriters,
c/o Jefferies & Company, Inc.
11100 Santa Monica Boulevard
Los Angeles, California 90025
Ladies and Gentlemen:
AEGIS Investment Trust, a Maryland real estate investment trust (the
"Company"), AEGIS Operating Partnership, L.P., a Delaware Limited Partnership
(the "Operating Partnership") and AEGIS Mortgage Corporation, an Oklahoma
corporation ("AMC"), hereby confirm their agreement with you and each of the
other Underwriters named in SCHEDULE I hereto (collectively, the
"Underwriters," which term shall also include any underwriter substituted as
hereinafter provided in Section 2(b) hereof), for whom you are acting as
Representatives (in such capacity, the "Representatives") with respect to the
purchase by the Underwriters, acting severally and not jointly, of 10,000,000
shares of Common Stock of the Company, $0.01 par value per share (the "Common
Stock") from the Company (said 10,000,000 shares of Common Stock are herein
called the "Underwritten Stock"). The Company proposes to sell to the
Underwriters, acting severally and not jointly, up to 1,500,000 additional
shares of Common Stock (said 1,500,000 shares of Common Stock being herein
called the "Option Stock" and the Option Stock with the Underwritten Stock is
herein collectively called the "Stock"). The Common Stock is more fully
described in the Registration Statement and the Prospectus hereinafter
mentioned.
The Company owns a general partnership interest in the Operating
Partnership and is its sole managing general partner. The Operating
Partnership intends to own and manage a portfolio of mortgage interests and
other investments (the "Properties"). The Operating Partnership also owns
shares of stock in AMC. The Company, the Operating Partnership and AMC are
herein collectively referred to as the "REIT Entities," and all references to
properties or assets of the REIT Entities include, without limitation, the
Properties unless otherwise noted.
The REIT Entities hereby confirm the agreements made with respect to the
purchase of the Stock by the several Underwriters. You represent and warrant
that you have been authorized by each of the other Underwriters to enter into
this Agreement on their behalf and to act for them in the manner herein
provided.
The terms which follow, when used in this Agreement, shall have the
meanings indicated. "Preliminary Prospectus" shall mean any preliminary
prospectus referred to in Section 1(a) below and any preliminary prospectus
included in the Registration Statement on the date that the Registration
Statement becomes effective (the "Effective Date") that omits Rule 430A
Information (as defined below). "Registration Statement" shall mean the
registration statement referred to in Section 1(a) below, including financial
statements, schedules and exhibits, as amended at the Representation Date (as
defined below) or, if not effective at the Representation Date, in the form in
which it shall become effective, or any term sheet filed with the United States
Securities and Exchange Commission (the "Commission") pursuant to Rule 434 of
the rules and regulations (the "Act Regulations") promulgated under the
Securities Act of 1933, as amended (the "Act"), the information deemed to be a
part of the Registration Statement at the time it became effective pursuant to
Rule 430A(b) or Rule 434(d) of the Act Regulations, and, in the event of any
amendment thereto or the filing of any abbreviated registration statement,
pursuant to Rule 462(b) of the Act Regulations relating thereto after the
effective date of such registration statement, shall also mean (from and after
the effectiveness of such amendment or the filing of such abbreviated
registration statement) such registration statement as so amended, together with
any such abbreviated registration statement and, in the event any post-
<PAGE>
effective amendment thereto becomes effective prior to the First Closing Date
(as defined in Section 2 hereof), shall also mean such registration statement
as so amended. Such term shall include Rule 430A Information deemed to be
included therein at the Effective Date as provided by Rule 430A (as defined
below). The prospectus constituting a part of the Registration Statement
(including the Rule 430A Information), as from time to time amended or
supplemented, is hereinafter referred to as the "Prospectus," except that if
any revised prospectus shall be provided to the Underwriters by the Company
which differs from the prospectus on file at the Commission at the Effective
Date, whether or not such revised prospectus is required to be filed by the
Company pursuant to Rule 424 of the Act Regulations, the term "Prospectus"
shall refer to each such revised prospectus from and after the time it is
first provided to the Underwriters for such use; provided, however, that if
in reliance on Rule 434 of the Act Regulations and with the consent of
Jefferies & Company, Inc., the Company shall have provided to the
Underwriters a term sheet pursuant to Rule 434(b) or (c), as applicable,
prior to the time that a confirmation is sent or given for purposes of
Section 2(10)(a) of the Act, the term Prospectus shall mean the "prospectus
subject to completion" (as defined in Rule 434(g) of the Act Regulations)
last provided to the Underwriters by the Company and circulated by the
Underwriters to all prospective purchasers of the Stock (including the
information deemed to be a part of the Registration Statement at the time it
became effective pursuant to Rule 434(d) of the Act Regulations).
Notwithstanding the foregoing, if any revised prospectus shall be
provided to the Underwriters by the Company for use in connection with the
offering of the Stock that differs from the prospectus referred to in the
immediately preceding sentence (whether or not such revised prospectus is
required to be filed with the Commission pursuant to Rule 424(b) of the Act
Regulations), the term Prospectus shall refer to such revised prospectus from
and after the time it is first provided to the Underwriters for such use.
If, in reliance on Rule 434 of the Act Regulations and with the consent of
Jefferies & Company, Inc., the Company shall have provided to the
Underwriters a term sheet pursuant to Rule 434(b) or (c), as applicable,
prior to the time that a confirmation is sent or given for purposes of
Section 2(10)(a) of the Act, the Prospectus and the term sheet, together,
will not be materially different from the prospectus in the Registration
Statement. "Rule 158," "Rule 424," "Rule 430A" and "Rule 434" refer to such
rules under the Act Regulations. "Rule 430A Information" means information
with respect to the Stock and the offering thereof permitted to be omitted
from the Registration Statement when it becomes effective pursuant to Rule
430A.
SECTION 1. REPRESENTATIONS AND WARRANTIES. Each of the REIT Entities,
jointly and severally, represents and warrants to each of the Underwriters as
of the date hereof (such date being referred to as the "Representation
Date"), as follows:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. A Registration Statement
on Form S-11 (File No. 333-35473) with respect to the Stock, including a
prospectus subject to completion, has been prepared by the Company in conformity
with the requirements of the Act and the Act Regulations and has been filed with
the Commission; such amendments to such registration statement, such amended
prospectuses subject to completion and such abbreviated registration statements
pursuant to Rule 462(b) of the Act Regulations as may have been required prior
to the date hereof, have been similarly prepared and filed with the Commission;
and the Company will file such additional amendments to such registration
statement, such amended prospectuses subject to completion and such abbreviated
registration statements as may hereafter be required. Copies of such
registration statement and amendments, of each related Preliminary Prospectus
and of any Rule 434 term sheet and of any abbreviated registration statement
pursuant to Rule 462(b) of the Act Regulations have been delivered to you. The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus or instituted proceedings for that purpose, and each such
Preliminary Prospectus has conformed in all material respects to the
requirements of the Act and the Act Regulations and, as of its date, has not
included any untrue statement of a material fact or omitted to state a material
fact necessary to make the
2
<PAGE>
statements therein, in light of the circumstances under which they were made,
not misleading and at the time the Registration Statement became or becomes,
as the case may be, effective and at all times subsequent thereto up to and
on the First Closing Date (hereinafter defined) and on any later date on
which Option Shares are to be purchased, (a) the Registration Statement and
the Prospectus, and any amendments and supplements thereto and any
abbreviated registration statements, contained and will contain all material
information required to be included therein by the Act and the Act
Regulations and will in all material respects conform to the requirements of
the Act and the Act Regulations; (b) the Registration Statement, and any
amendments or supplements thereto, did not and will not include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
and (c) the Prospectus, and any amendments and supplements thereto and any
abbreviated registration statements, did not and will not include any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the REIT Entities
make no representations, warranties or agreements as to the information
provided in writing to the Company by or on behalf of the Underwriters
expressly for use in the Registration Statement or the Prospectus, and the
REIT Entities agree that the only information provided in writing by or on
behalf of the Underwriters to the Company expressly for use in the
Registration Statement or the Prospectus is (i) that information in the last
paragraph of text on the cover page of the Prospectus concerning the terms of
the offering by the Underwriters; (ii) the legend concerning over-allotments
and stabilizing on the inside front cover page; (iii) the concession and
reallowance figures appearing in the third paragraph and the information in
paragraphs nine, ten, eleven and twelve under the caption "Underwriting."
(b) SUBSIDIARIES. The Company does not own any interest in or control,
directly or indirectly, any corporation, association, partnership, limited
liability company, joint venture or other entity other than AEGIS Operating
Partnership, L.P., a Delaware limited partnership and AEGIS Mortgage
Corporation, an Oklahoma corporation (referred to herein as the
"Subsidiaries") and none of the Subsidiaries owns any interest in or
controls, directly or indirectly, any corporation, association, partnership,
limited liability, joint venture or other entity.
(c) ALL NECESSARY PERMITS, ETC. Each of the Company and the
Subsidiaries has all necessary authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all regulatory or
governmental officials, bodies and tribunals ("Permits") to own or lease its
respective properties and to conduct its businesses as described in the
Registration Statement and Prospectus, and none of the Company nor any of the
Subsidiaries has received any notice or threat of proceedings relating to the
revocation or modification of any such Permits; each of the Company and the
Subsidiaries has fulfilled and performed all of its respective current
obligations with respect to such Permits, and no event has occurred which
allows, or after notice or lapse of time, or both, would allow, revocation or
termination thereof or results in any other material impairment of the rights
of the holder of any such Permit, subject in each case to such qualification
as may be set forth in the Registration Statement and Prospectus; and, except
as described therein, such Permits contain no restrictions that are
materially burdensome to the Company or the Subsidiaries; and each of the
Company and the Subsidiaries is in compliance with all applicable laws,
rules, regulations, orders and consents in all material respects. The
property and businesses of the Company and the Subsidiaries conform in all
material respects to the descriptions thereof contained in the Registration
Statement and the Prospectus.
(d) TITLE TO PROPERTIES. Except as set forth in the Registration
Statement and Prospectus, (i) each of the Company and the Subsidiaries has
good and marketable title to all properties and assets owned by it, including
without limitation, all mortgages, deeds of trust and other security
interests held by or in favor of the Company or the Subsidiaries, in each
case free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest (each of the foregoing, a "Lien") that would
materially affect the value thereof or materially interfere with the use made
or to be made thereof by it; (ii) the agreements to which the Company or any
of the Subsidiaries is a party described in the Registration Statement and
Prospectus are valid agreements, enforceable against (and, to the best of the
Company's and the Subsidiaries' knowledge enforceable by) the Company and the
Subsidiaries (as applicable), except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles and, to the best of the Company's and the
Subsidiaries' knowledge, the other contracting party or parties thereto are
not in material breach or material default under any of such agreements; and
(iii) each of the Company and the Subsidiaries has valid and enforceable
leases for all properties described in the Registration Statement and
Prospectus as leased by it, except as the enforcement thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors, rights generally or by
general equitable principles. Except as otherwise disclosed in the
Registration Statement and Prospectus, each of the Company and the
Subsidiaries owns or leases all such properties as are necessary to its
operations as now conducted or as proposed in the Registration Statement and
Prospectus to be conducted.
(e) COMPANY'S FORMATION AND GOOD STANDING. The Company has been duly
incorporated and is validly existing as a trust in good standing under the
laws of the State of Maryland and has full power and authority
3
<PAGE>
to own, lease and operate its properties and to conduct the business in
which it is engaged or proposes to engage as described in the Prospectus and
to enter into and perform its obligations under this Agreement. The Company
is duly qualified as a foreign trust to transact business and is in good
standing in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing or the conduct of business,
except where the failure to so qualify or to be in good standing would not
have a material adverse effect on the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and the
Subsidiaries considered as one enterprise, whether or not occurring in the
ordinary course of business (a "Material Adverse Event").
(f) AMC'S INCORPORATION AND GOOD STANDING. AMC has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of its state of incorporation with full power and authority to own,
lease and operate its properties and to conduct the business in which it is
engaged or proposes to engage as described in the Prospectus and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or to be in good standing
would not result in a Material Adverse Event. All of the issued and
outstanding shares of capital stock of AMC have been duly authorized and
validly issued, and are fully paid and nonassessable. Except as described in
the Prospectus, all of the shares of capital stock of AMC are owned by the
Company, directly or through Subsidiaries, and are owned free and clear of
any Lien.
(g) OPERATING PARTNERSHIP'S FORMATION AND GOOD STANDING. The Operating
Partnership has been duly formed and is validly existing as a limited
partnership under the laws of the state of its formation with full power and
authority to own, lease and operate its properties and to conduct the
business in which it is engaged or proposes to engage as described in the
Prospectus and is duly qualified as a foreign partnership to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
or to be in good standing would not result in a Material Adverse Event. All
of the partnership interests in the Operating Partnership ("OP Units") have
been duly authorized and validly issued. All of the OP Units which will be
owned by the Company at the time of the Closing, directly or through
Subsidiaries, will have been validly issued and all required capital
contributions with respect thereto will have been made. Except as described
in the Prospectus, at the time of the Closing, all of the OP Units will be
owned by the Company, directly or through Subsidiaries, and will be owned
free and clear of all Liens. At the time of the Closing, the Company will be
the sole general partner of the Operating Partnership.
(h) UNDERWRITING AGREEMENT. The Company and the Subsidiaries have full
legal right, power and authority to enter into this Agreement and perform the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by the Company and each of the Subsidiaries and is a
valid and binding agreement on the part of the Company and the Subsidiaries,
enforceable in accordance with its terms, except as rights to indemnification
hereunder may be limited by applicable law and except as the enforcement
hereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles; the performance of this
Agreement, the issue and sale of the Stock and the consummation of any other
matters herein contemplated will not result in a material breach or violation
of any of the terms and provisions of, or constitute a default under, (i) any
bond, debenture, note or other evidence of indebtedness, or under any lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture
or other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which it or any of the Subsidiaries or their
respective properties may be bound; (ii) the Declaration of Trust or bylaws
of the Company, or the certificate of limited partnership or partnership
agreement of the Operating Partnership (the "OP Partnership Agreement") or
the Articles of Incorporation or bylaws of AMC; or (iii) any law, statute,
order, rule, regulation, writ, injunction, judgment or decree applicable to
the Company or any of the Subsidiaries or their respective properties of any
court, government or governmental agency or body, domestic or foreign. No
consent, approval, authorization or order of or qualification with any court,
government or governmental agency or body, domestic or foreign, with the
ability to bind or restrict the Company or the Subsidiaries or their
respective properties, is required for the execution and delivery of this
Agreement and the consummation by the Company or the Subsidiaries of the
transactions herein contemplated, except such as may be required under the
Act and state securities laws, all of which requirements have been satisfied
in all material respects.
4
<PAGE>
(i) CONTRIBUTION TRANSACTION. The issuance of OP Units to the Company and
the limited partners of the Operating Partnership as described in the Prospectus
(the "Contribution Transaction") has been duly authorized and, when paid for in
accordance with the OP Partnership Agreement, such OP Units will be validly
issued in accordance with the OP Partnership Agreement. The issuance, sale and
delivery of the OP Units in the Contribution Transaction constitute transactions
exempt from registration under Section 4(2) of the Act and such OP Units will
have been offered and sold in compliance with all federal and applicable state
securities laws.
(j) OPERATING PARTNERSHIP. At the time of the Closing, the OP
Partnership Agreement, as amended as of the date of this Agreement, will be
duly and validly authorized, executed and delivered by the Company and,
assuming due authorization, execution and delivery thereof by the other
partners of the Operating Partnership, the OP Partnership Agreement, as so
amended, will be a valid and legally binding agreement of the Operating
Partnership and enforceable against the Operating Partnership in accordance
with its terms. As of the First Closing Date, the Operating Partnership will
be organized in conformity with the requirements for qualification and
taxation as a partnership under the Code, and its method of operation will at
all times have enabled, and its proposed method of operation will enable the
Operating Partnership to qualify as a partnership under the Code. The
execution, delivery and performance of the OP Partnership Agreement will not
contravene any provision of applicable law or the Declaration of Trust or
bylaws of the Company, the certificate of limited partnership of the
Operating Partnership, the Articles of Incorporation or bylaws of AMC or any
agreement or other instrument binding upon the REIT Entities that is material
to the REIT Entities, taken as a whole, or any judgment, order or decree of
any governmental body, agency or court having jurisdiction over any of the
REIT Entities and no consent, approval, authorization or order of or
qualification with any governmental body or agency will be required for the
performance by the Operating Partnership of its obligations under the OP
Partnership Agreement, as so amended.
(k) INTELLECTUAL PROPERTY RIGHTS. Each of the Company and the
Subsidiaries owns or possesses adequate rights to use all patents, patent
applications, patent rights, inventions, trade secrets, know-how, trademarks,
service marks, trade names, copyrights and other similar rights including,
without limitation, rights to the name "Aegis Mortgage Corporation," which
are reasonably necessary to conduct its businesses as described in the
Registration Statement and Prospectus; the expiration of any patents, patent
rights, trade secrets, trademarks, service marks, trade names or copyrights
will not result in a Material Adverse Event; each of the Company and the
Subsidiaries has not received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of the Company or such
Subsidiaries by others with respect to any patent, patent applications,
patent rights, inventions, trade secrets, know-how, trademarks, service
marks, trade names or copyrights; and each of the Company and the
Subsidiaries has not received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of others with respect to
any patent, patent rights, inventions, trade secrets, know-how, trademarks,
service marks, trade names or copyrights which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, might result in
a Material Adverse Event.
(l) CAPITAL STOCK OF THE COMPANY. All outstanding shares of capital
stock of the Company (i) have been duly authorized and validly issued and are
fully paid and nonassessable; and (ii) have been issued in compliance with
all federal and state securities laws. No further approval or authorization
of any shareholder, the Board of Trustees of the Company or others is
required for the issuance and sale or transfer of the Stock hereunder;
(m) RIGHTS AFFECTING STOCK. (i) Except for the units of limited
partnership interest ("Units") to be issued to the current owners of AMC in
connection with the contribution of their common stock in AMC to AEGIS
Operating Partnership, L.P. (the "Contribution Transaction") there are no
outstanding securities convertible into or exchangeable for, and no
outstanding options, warrants or other rights to purchase, any shares of the
capital stock of the Company or the Subsidiaries, nor any agreements or
commitments to issue any of the same; (ii) except for the Units to be issued
to the current owners of AMC in the Contribution Transaction, there are no
registration rights, preemptive rights or other rights to subscribe for or to
purchase the securities of the Company or the Subsidiaries that have not been
complied with or expressly waived prior to the date hereof, or any contracts
or commitments to issue or sell shares of its capital stock or any such
options, rights, convertible securities or obligations; (iii) except for the
Company's ownership limit of 9.8% of the number of outstanding shares of
Common Stock and 9.8% of any class or series of preferred stock, there are no
restrictions upon the voting or transfer of any capital stock pursuant to the
Company's Declaration of Trust or bylaws or any of the Subsidiaries' charter,
bylaws, partnership agreement or
5
<PAGE>
any agreement or other instrument to which the Company or any of the
Subsidiaries is a party; and (iv) the Stock, when issued and delivered
against payment therefor in accordance with the terms of this Agreement, will
be duly and validly issued, fully paid and nonassessable, and will be sold
free and clear of all Liens.
(n) CAPITALIZATION. The authorized and outstanding capital stock of
the Company is as set forth in the Registration Statement and the Prospectus
under the caption "Capitalization" and conforms to the statements relating
thereto contained in the Registration Statement and the Prospectus (and such
statements correctly state the substance of the instruments defining the
capitalization of the Company); and the description of the Company's stock
option, stock bonus and other stock plans or arrangements, and the options or
other rights granted and exercised thereunder, set forth in the Registration
Statement and the Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options and
rights.
(o) FINANCIAL STATEMENTS. KPMG Peat Marwick LLP (i) has reviewed the
balance sheet of the Company, together with the related schedules and notes
as of September 30, 1997; (ii) has examined the financial statements of AMC,
together with the related schedules and notes for each of the years in the
three (3) year period ended December 31, 1996; and (iii) has performed the
procedures set out in Statement on Accounting Standards No. 71 ("SAS 71") for
a review of the interim financial information for each of the nine (9) month
periods ended September 30, 1996 and 1997, filed with the Commission as a
part of the Registration Statement and included in the Prospectus; KPMG Peat
Marwick LLP are independent accountants within the meaning of the Act and the
Act Regulations; the audited financial statements of the Company and AMC,
together with the related schedules and notes, and the unaudited financial
information, forming part of the Registration Statement and Prospectus,
fairly present the financial position and the results of operations of the
Company and AMC, at the respective dates and for the respective periods to
which they apply; and all audited financial statements of the Company and
AMC, together with the related schedules and notes, and the unaudited
financial information, filed with the Commission as part of the Registration
Statement, have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
except as may be otherwise stated therein. The selected financial and
statistical data included in the Registration Statement and the Prospectus
present fairly the information shown therein and have been compiled on a
basis consistent with the audited financial statements presented therein. No
other financial statements or schedules are required to be included in the
Registration Statement. The financial data set forth in the Prospectus under
the captions "Selected Financial Data," and "Capitalization" fairly present
the information set forth therein on a basis consistent with that of the
audited financial statements contained in the Registration Statement. The
financial statements of the Company and AMC and the related notes thereto
included in the Prospectus and in the Registration Statement present fairly
the information contained therein, have been prepared in accordance with the
Commission's rules and guidelines, and have been properly presented on the
bases described therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
(p) INTERNAL ACCOUNTING CONTROLS. Each of the Company and the
Subsidiaries maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(q) INDUSTRY AND MARKET DATA. The statistical, industry and
market-related data included in the Registration Statement and the Prospectus
is reliable and accurate in all material respects.
(r) INSURANCE. Each of the Company and the Subsidiaries maintains
insurance covering its properties, operations, personnel and businesses.
Such insurance insures against such losses and risks as are adequate in
accordance with customary industry practice to protect the Company, the
Subsidiaries and their businesses. Neither the Company nor the Subsidiaries
has received written notice from any insurer or agent of such insurer that
substantial capital improvements or other expenditures will have to be made
in order to continue such insurance. All such insurance is outstanding and
duly in force on the date hereof. Except as otherwise disclosed in the
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Prospectus, each of the Company and its Subsidiaries are insured by
recognized, financially sound and reputable institutions with policies in
such amounts and with such deductibles and covering such risks as are
generally deemed adequate and customary for their businesses including, but
not limited to, policies covering the Company and its Subsidiaries against
business interruptions and policies covering real and personal property owned
or leased by the Company and its Subsidiaries against theft, damage,
destruction, acts of vandalism and earthquakes. The Company has no reason to
believe that it or any Subsidiary will not be able (i) to renew its existing
insurance coverage as and when such policies expire or (ii) to obtain
comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that would
not result in a Material Adverse Effect. Neither of the Company nor any
Subsidiary has been denied any insurance coverage which it has sought or for
which it has applied.
(s) INVESTMENT COMPANY ACT. The Company and its Subsidiaries have
been advised of the rules and requirements under the Investment Company Act
of 1940, as amended (the "Investment Company Act"). Neither the Company nor
any of the Subsidiaries is, and after application of the proceeds from the
sale of the Stock will be, an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act,
and the rules and regulations promulgated thereunder. The Company and each
Subsidiary will conduct its business in a manner so that it will not become
subject to the Investment Company Act.
(t) REIT STATUS. As of the First Closing Date, the Company will be
organized in conformity with the requirements for qualification and taxation
as a real estate investment trust ("REIT") under the Internal Revenue Code of
1986, as amended (the "Code"), and its method of operation has at all times
enabled, and its proposed method of operation will enable, the Company to
qualify as a REIT under the Code. The Company does not know of any event or
condition which would cause, or is likely to cause, the Company to fail to
qualify as a REIT at any time.
(u) COMPLIANCE WITH APPLICABLE LAWS, AGREEMENTS, AND INSTRUMENTS.
Neither of the Company nor any of the Subsidiaries is (i) in violation of its
respective Declaration of Trust, bylaws, partnership agreement or of any law,
ordinance, administrative or governmental rule or regulation applicable to
the Company or the Subsidiaries or of any franchise, license, permit,
judgment or any decree of any court or governmental agency or body having
jurisdiction over the Company or the Subsidiaries; or (ii) in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement,
note, lease, bond, debenture, bank loan, credit agreement or other agreement,
instrument or evidence of indebtedness to which the Company or the
Subsidiaries is a party or by which any of them may be bound, or to which any
of the property or assets of the Company or the Subsidiaries is subject.
(v) PENDING OR THREATENED LITIGATION. There is not any pending or, to
the best of the Company's knowledge, any threatened action, suit, claim or
proceeding against the Company, any of the Subsidiaries or any of their
respective officers or directors (and which are related to the Company or
such Subsidiaries) or any of the respective properties, assets or rights of
the Company or any of the Subsidiaries before any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over
the Company or any of the Subsidiaries or over their respective officers or
properties or otherwise which (a) might result in a Material Adverse Event,
except as disclosed in the Registration Statement; (b) might prevent
consummation of the transactions contemplated hereby; or (c) is required to
be disclosed in the Registration Statement or Prospectus and is not so
disclosed; and there are no agreements, contracts, leases or documents of the
Company or any of the Subsidiaries of a character required to be described or
referred to in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement by the Act or the Rules and Regulations
which have not been accurately described in the Registration Statement or
Prospectus or filed as exhibits to the Registration Statement.
(w) NO MATERIAL ADVERSE EVENTS. Subsequent to the respective dates as
of which information is given in the Registration Statement and Prospectus,
there has not been (i) a Material Adverse Event; (ii) any transaction that is
material to the Company and the Subsidiaries considered as one enterprise,
except transactions entered into in the ordinary course of business; (iii)
any obligation, direct or contingent, that is material to the Company and the
Subsidiaries considered as one enterprise, incurred by the Company or the
Subsidiaries, except obligations incurred in the ordinary course of business;
(iv) any change in the capital stock or outstanding indebtedness of the
Company
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or any of the Subsidiaries that is material to the Company and the
Subsidiaries considered as one enterprise; (v) any dividend or distribution
of any kind declared, paid or made on the capital stock of the Company or any
of the Subsidiaries; or (vi) any loss or damage (whether or not insured) to
the property of the Company or any of the Subsidiaries which has been
sustained or will have been sustained which would result in a Material
Adverse Event.
(x) NO TRANSACTIONS OUTSIDE THE ORDINARY COURSE OF BUSINESS. Except
as disclosed in the Registration Statement and the Prospectus (or any
amendment or supplement thereto or in any abbreviated Registration
Statement), subsequent to the respective dates as of which such information
is given in the Registration Statement and the Prospectus (or any amendment
or supplement thereto or in any abbreviated Registration Statement), neither
the Company nor any of the Subsidiaries has issued any securities, or
incurred any material liability or obligations, direct or contingent, or
entered into any transaction not in the ordinary course of business, or
entered into any transaction with an affiliate (as the term "affiliate" is
defined in Rule 405 promulgated by the Commission pursuant to the Act) of the
Company or the Subsidiaries which would otherwise be required to be disclosed
in the Registration Statement or the Prospectus, declared or paid any
dividend on its stock, or made any other distribution to any of its
shareholders except as disclosed in the Registration Statement or the
Prospectus, and there has not been any material change in the capital stock
or other equity, or material increase in the short-term debt or long-term
debt, of the Company or the Subsidiaries or any development involving or
which may reasonably be expected to result in a Material Adverse Event.
(y) UNLAWFUL PAYMENTS. To the Company's or any Subsidiaries'
knowledge, neither the Company nor any of the Subsidiaries nor any trustee,
director, partner, officer, employee or agent of the Company or any of the
Subsidiaries has made any payment of funds of the Company or the Subsidiaries
in violation of any law or rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the
Registration Statement or the Prospectus. Neither the Company, nor any of
its subsidiaries, nor any director or officer has, at any time during the
last five (5) years, (i) made any unlawful contribution to any candidate for
foreign office or failed to disclose fully any contribution in violation of
law; or (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States or
any jurisdiction thereof.
(z) LABOR DISPUTES. There is (i) no unfair labor practice complaint
pending or, to the best knowledge of the Company or any of the Subsidiaries,
threatened against the Company or any of the Subsidiaries before the National
Labor Relations Board or any state or local labor relations board, and no
significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against the Company
or the Subsidiaries, or, to the best knowledge of the Company or any of the
Subsidiaries, threatened against any of them; (ii) no strike, labor dispute,
slowdown or stoppage pending against the Company or the Subsidiaries, or, to
the best knowledge of the Company or any of the Subsidiaries, threatened
against the Company or any of the Subsidiaries; and (iii) to the best
knowledge of the Company or any of the Subsidiaries, no union representation
question existing with respect to the employees of the Company or the
Subsidiaries and, to the best knowledge of the Company or any of the
Subsidiaries, no union organizing activities are taking place, except (with
respect to any matter specified in clause (i), (ii) or (iii) above, singly or
in the aggregate) such as could not reasonably be expected to result in a
Material Adverse Event.
(aa) TAX LAW COMPLIANCE. The Company and the Subsidiaries have timely
filed all necessary federal, state and foreign income and franchise tax returns
and have paid all taxes required to be paid by any of them and, if due and
payable, any related or similar assessments, fine or penalty levied against any
of them, and there is no tax deficiency that has been or, to the best of the
Company's or any of the Subsidiaries' knowledge, might be asserted against the
Company or any of the Subsidiaries that might result in a Material Adverse
Event; and all tax liabilities are adequately provided for on the books of the
Company and the Subsidiaries.
(bb) ENVIRONMENTAL VIOLATIONS OR CLAIMS. Neither the Company nor any
of the Subsidiaries is in Violation (as defined below) of any federal, state,
local or foreign laws or regulations relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), including,
without limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants,
wastes, toxic substances,
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hazardous substances, petroleum or petroleum products ("Materials of
Environmental Concern"), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern (collectively, "Environmental
Laws"), which Violation could be reasonably expected to result in a Material
Adverse Event. As used herein, "Violation" includes, but is not limited to,
noncompliance with any permit or other governmental authorization required
under applicable Environmental Laws and noncompliance with the terms and
conditions of any such permit or authorization. In addition, (a) neither the
Company nor any of the Subsidiaries has received any communication, whether
from a governmental authority, citizens' group, employee or otherwise,
alleging that the Company or any of the Subsidiaries is not in full
compliance with any Environmental Laws or permit or authorization required
under applicable Environmental Laws where such failure to comply may be
reasonably expected to result in a Material Adverse Event; and (b) there are
no circumstances that may be reasonably anticipated to prevent or interfere
with such full compliance in the future. There is no claim, action, cause of
action, investigation or written notice by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) arising
out of, based on or resulting from (i) the presence, or release into the
environment, of any Material of Environmental Concern at any location owned
or operated by the Company or any of the Subsidiaries; or (ii) circumstances
forming the basis of any Violation, or alleged violation, of any
Environmental Law (collectively, "Environmental Claims") pending or
threatened against the Company or any of the Subsidiaries or against any
person or entity whose liability for any Environmental Claim the Company or
any of the Subsidiaries has retained or assumed either contractually or by
operation of law which liability or violation could be reasonably expected to
result in a Material Adverse Event. There are no past or present actions,
activities, circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge, presence or disposal of
any Material of Environmental Concern, that could form the basis of any
Environmental Claim against the Company or the Subsidiaries, or against any
person or entity whose liability for any Environmental Claim the Company or
any of the Subsidiaries has retained or assumed, either contractually or by
operation of law, which claim could be reasonably expected to result in a
Material Adverse Event.
(cc) PERIODIC REVIEW OF COSTS OF ENVIRONMENTAL COMPLIANCE. Prior to
originating any commercial mortgage or foreclosing or taking a deed in lieu
with respect to any property, the Company conducts a review of the effect of
Environmental Laws on such property and the operations conducted thereon, in
the course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up or compliance with Environmental Laws or
any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the basis of
such review and the amount of its established reserves, the Company has
reasonably concluded that to date such associated costs and liabilities with
respect to any such properties would not, individually or in the aggregate,
result in a Material Adverse Effect.
(dd) NO PRICE STABILIZATION OR MANIPULATION. The Company, its
Subsidiaries, its trustees, directors, officers, partners, employees and
agents have not taken and will not take, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Stock. Additionally, the
Company, its Subsidiaries, its trustees, directors, partners, officers,
employees or agents have not distributed and will not distribute without your
prior written consent prior to the later of (a) the First Closing Date, or
any date on which Option Stock is to be purchased, as the case may be, and
(b) completion of the distribution of the Stock, any offering material in
connection with the offering and sale of the Stock other than any Preliminary
Prospectuses, the Prospectus, the Registration Statement and other materials,
if any, permitted by the Act.
(ee) EXCHANGE LISTING. The Stock is duly authorized for listing,
subject to official notice of issuance, on the New York Stock Exchange, Inc.
(herein called "NYSE").
(ff) RELATED PARTY TRANSACTIONS. There are no outstanding loans,
advances (except normal advances for business expenses in the ordinary course
of business) or guarantees of indebtedness by the Company or its Subsidiaries
to or for the benefit of any of the trustees, partners, officers or directors
of the Company or its Subsidiaries or any of the members of the families of
any of them, except as disclosed in the Registration Statement and the
Prospectus. There are no business relationships or related party transactions
involving the Company or any
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Subsidiary or any other person required to be described in the
Registration Statement which have not been described as required.
(gg) LOCK-UP AGREEMENT. The Company will use its best efforts to
cause the persons listed on SCHEDULE III attached hereto to agree that,
without the prior written consent of Jefferies & Company, Inc., he, she or it
will not, without the prior written consent of Jefferies & Company, Inc.,
during the period ending two (2) years, or one (1) year, as applicable, after
the date of the Prospectus, (1) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option to contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock,
or (2) enter into any swap or similar agreement that transfers, in whole or
in part, the economic risk of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The
foregoing provisions shall not apply to (A) the Common Stock to be sold to
the Underwriters pursuant to this agreement; (B) options granted by the
Company to purchase Common Stock granted under its option plans described in
the Registration Statement; (C) for some persons, any pledge of Common Stock
in connection with borrowings that, in the aggregate, do not exceed 50% of
the value of the Common Stock at the time of any such borrowing and the
maturity of which shall be no earlier than one year from and after the date
of the Prospectus; and (D) transfers, without consideration, of the Common
Stock or any securities convertible into, or exercisable or exchangeable for
Common Stock to family members or to one or more trusts established for the
benefit of one or more family members are permitted at any time, provided
that the transferee execute and deliver to Jefferies & Company, Inc., an
agreement whereby the transferee agrees to be bound by all of the foregoing
terms and provisions.
In addition, such holder will agree that, without the prior written
consent of Jefferies & Company, Inc. on behalf of the Underwriters, it will
not, from the date hereof through the period ending two (2) years after the
date of the Prospectus, make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable for Common Stock. For purposes of this
Section 3 and subparagraph (a)(ii) of Section 5, a holder shall be deemed to
beneficially own shares of Common Stock that are issuable upon the exercise
of options, warrants or other rights to acquire Common Stock on or before one
(1) year following the First Closing Date.
(hh) DOING BUSINESS WITH CUBA. Each of the Company and the
Subsidiaries has complied with and will be in compliance with the provisions
of that certain Florida act relating to doing business with Cuba, codified as
Section 517.075 of the Florida statutes, and the rules and regulations
promulgated thereunder or is exempt therefrom.
(ii) ERISA COMPLIANCE. The Company and its Subsidiaries and any
"employee benefit plan" (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or maintained
by the Company, its Subsidiaries or their "ERISA Affiliates" (as defined
below) are in compliance in all material respects with ERISA. "ERISA
Affiliate" means, with respect to the Company or a Subsidiary, any member of
any group of organizations described in Sections 414(b),(c),(m) or (o) of the
Internal Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company or such
Subsidiary is a member. No "reportable event" (as defined under ERISA) has
occurred or is reasonably expected to occur with respect to any "employee
benefit plan" established or maintained by the Company, its Subsidiaries or
any of their ERISA Affiliates. No "employee benefit plan" established or
maintained by the Company, its Subsidiaries or any of their ERISA Affiliates,
if such "employee benefit plan" were terminated, would have any "amount of
unfunded benefit liabilities" (as defined under ERISA). Neither the Company,
its Subsidiaries nor any of their ERISA Affiliates has incurred or reasonably
expects to incur any liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "employee benefit plan" or (ii)
Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its Subsidiaries or any of their
ERISA Affiliates that is intended to be qualified under Section 401(a) of the
Code is so qualified and nothing has occurred, whether by action or failure
to act, which would cause the loss of such qualification.
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(ii) MATERIAL CONTRACTS. There are no contracts or other documents
required to be described in the Registration Statement or to be filed as
exhibits to the Registration Statement by the Securities Act which have not
been described or filed as required. Neither the Company nor any of its
Subsidiaries is subject to any collective bargaining agreements.
(kk) VALID SECURITY INTERESTS. With respect to each loan secured by
real estate or personal property in which AMC is the lender, AMC holds a
valid, perfected priority security interest in the applicable real or
personal property and the loan documents executed by or in favor of AMC in
connection with each such loan are valid and enforceable in accordance with
their respective terms.
(ll) TITLE INSURANCE. Title insurance in favor of AMC and in sufficient
amounts is in force with respect to each of the real properties owned by AMC
and/or in which AMC holds a mortgage, deed of trust or other interests as
security for a loan to the owner thereof.
SECTION 2. SALE AND DELIVERY TO THE UNDERWRITERS; CLOSING.
(a) THE UNDERWRITTEN STOCK. The Company agrees to issue and sell the
Underwritten Stock to the several Underwriters upon the terms herein set
forth. On the basis of the representations, warranties and agreements herein
contained, and upon the terms but subject to the conditions herein set forth,
the Underwriters agree, severally and not jointly, to purchase from the
Company the respective number of shares of Underwritten Stock set forth
opposite their names on Schedule 1. The purchase price per share of
Underwritten Stock to be paid by the several Underwriters to the Company
shall be $[___] per Share. The initial public offering price per share for
the Underwritten Stock shall be $[_____].
(b) THE FIRST CLOSING DATE. Delivery of the Underwritten Stock to be
purchased by the Underwriters and payment therefor shall be made at the
offices of [Latham & Watkins or Hunton & Williams] (or such other place as
may be agreed to by the Company and the Representatives) at 9:30 a.m. New
York City time, on [___], or such other time and date not later than 1:30
p.m. New York City time, on [___] as the Representatives shall designate by
notice to the Company (the time and date of such closing are called the
"First Closing Date"). The Company hereby acknowledges that circumstances
under which the Representatives may provide notice to postpone the First
Closing Date as originally scheduled include, but are in no way limited to,
any determination by the Company or the Representatives to recirculate to the
public copies of an amended or supplemented Prospectus or a delay as
contemplated by the provisions of Section 9.
(c) THE OPTION STOCK; THE SECOND CLOSING DATE. In addition, on the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase, severally
and not jointly, up to an aggregate of 1,500,000 shares of Option Stock from
the Company at the purchase price per Share to be paid by the Underwriters
for the Underwritten Stock. The option granted hereunder is for use by the
Underwriters solely in covering any over-allotments in connection with the
sale and distribution of the Underwritten Stock. The option granted
hereunder may be exercised at any time upon notice by the Representatives to
the Company, which notice may be given at any time within 30 days from the
date of this Agreement. Such notice shall set forth (i) the aggregate number
of shares of Option Stock as to which the Underwriters are exercising the
option, (ii) the names and denominations in which the shares of Option Stock
are to be registered and (iii) the time, date and place at which such shares
of Option Stock will be delivered (which time and date may be simultaneous
with, but not earlier than, the First Closing Date; and in such case the term
"First Closing Date" shall refer to the time and date of delivery of the
Underwritten Stock and the Option Stock). Such time and date of delivery, if
subsequent to the First Closing Date, is called the "Second Closing Date" and
shall be determined by the Representatives and, unless the Company otherwise
consents, shall not be earlier than two nor later than seven full business
days after delivery of such notice of exercise. If any shares of Option Stock
are to be purchased, each Underwriter agrees, severally and not jointly, to
purchase the number of shares of Option Stock (subject to such adjustments to
eliminate fractional Shares as the Representatives may determine) that bears
the same proportion to the total number of shares of Option Stock to be
purchased as the number of shares of Underwritten Stock set forth on Schedule
1 opposite the name of
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such Underwriter bears to the total number of shares of Option Stock. The
Representatives may cancel the option at any time prior to its expiration by
giving written notice of such cancellation to the Company.
(d) PUBLIC OFFERING OF THE STOCK. The Representatives hereby advise
the Company that the Underwriters intend to offer for sale to the public, as
described in the Prospectus, their respective portions of the Stock as soon
after this Agreement has been executed and the Registration Statement has
been declared effective as the Representatives, in their sole judgment, has
determined is advisable and practicable.
(e) PAYMENT FOR THE STOCK. Payment for the Stock shall be made at the
First Closing Date (and, if applicable, at the Second Closing Date) by wire
transfer of immediately available funds to the order of the Company or to such
account as the Company may designate.
It is understood that the Representatives have been authorized, for
their own account and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Underwritten Stock and any Option Stock the Underwriters have agreed to
purchase.
(f) DELIVERY OF THE STOCK.
(i) The Company shall deliver, or cause to be delivered, to the
Representatives for the accounts of the several Underwriters certificates
for the Underwritten Stock at the First Closing Date, against the
irrevocable release of a wire transfer of immediately available funds for
the amount of the purchase price therefor. The Company shall also deliver,
or cause to be delivered, to the Representatives for the accounts of the
several Underwriters, certificates for the Option Stock the Underwriters
have agreed to purchase at the First Closing Date or the Second Closing
Date, as the case may be, against the irrevocable release of a wire
transfer of immediately available funds for the amount of the purchase
price therefor. The certificates for the Stock shall be in definitive form
and registered in such names and denominations as the Representatives shall
have requested at least two full business days prior to the First Closing
Date (or the Second Closing Date, as the case may be) and shall be made
available for inspection not later than 1:00 p.m. New York City time on the
business day preceding the First Closing Date (or the Second Closing Date,
as the case may be) at such location as the Representatives may designate.
(ii) Notwithstanding the terms of the preceding subsection 2(f)(i) or
elsewhere in this Agreement that contemplate physical certificates for the
Stock, upon the Company's request but only with the consent of the
Representatives the Stock may be issued without certificates and
constructive delivery of such uncertificated Stock to the Underwriter may
be accomplished through the FAST system of The Depository Trust Company by
the Company causing the transfer agent and registrar of the Stock, on the
applicable First Closing Date, to issue one or more Depository Trust
Company Book Entry Positions, representing in the aggregate the number of
shares of Stock to be delivered to the Representatives on such First
Closing Date, to such account or accounts as shall be specified by the
Representatives in an instruction letter or other communication to the
Company or such transfer agent.
(g) TIME OF THE ESSENCE. Time shall be of the essence, and delivery
at the time and in the manner specified in this Agreement is a further
condition to the obligations of the Underwriters.
(h) DELIVERY OF PROSPECTUS TO THE UNDERWRITERS. Not later than 12:00
p.m. on the second business day following the date the Stock is released by
the Underwriters for sale to the public, the Company shall deliver or cause
to be delivered copies of the Prospectus in such quantities and at such
places as the Representatives shall request.
SECTION 3. COVENANTS OF THE COMPANY. Each of the REIT Entities, jointly
and severally, covenant with each underwriter as follows:
(a) SECURITIES ACT COMPLIANCE. The Company will use its best efforts to
cause the Registration Statement, if not effective at the Representation
Date, and any amendment thereof, to become effective as promptly
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as possible after the filing thereof. The Company will not file any
amendment to the Registration Statement or amendment or supplement to the
Prospectus, any Rule 434 Act Regulation term sheet or any 462(b) Act
Regulation abbreviated Registration Statement, to which the Representatives
shall reasonably object in writing after a reasonable opportunity to review
such amendment or supplement. Subject to the foregoing sentences in this
Section 3(a), if the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectus or supplement to the
Prospectus is otherwise required under Rule 424(b), the Company will cause
the Prospectus to be completed, or such supplement thereto to be filed with
the Commission pursuant to the applicable paragraph of Rule 424(b) within the
time period prescribed and will provide evidence reasonably satisfactory to
the Representatives of such timely filing. The Company promptly will advise
the Representatives (i) when the Registration Statement, if not effective at
the Representation Date, and any amendment thereto, shall have become
effective; (ii) when the Prospectus, and any supplement thereto, shall have
been filed (if required) with the Commission pursuant to Rule 424(b); (iii)
when any amendment to the Registration Statement shall have been filed or
become effective; (iv) of any request by the Commission for any amendment of
or supplement to the Registration Statement or any Prospectus or for any
additional information; (v) of the receipt by the Company of any notification
of, or if the Company otherwise has knowledge of, the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding for that
purpose; and (vi) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Stock for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of
any such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS. If, at any time
when a prospectus relating to the Stock is required to be delivered under the
Act, any event occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein in the light
of the circumstances under which they were made not misleading, or if it
shall be necessary to amend the Registration Statement or amend or supplement
the Prospectus to comply with the Act or the Act Regulations, the Company
promptly will prepare and file with the Commission, subject to the second
sentence of Section 3(a)(i), an amendment or supplement which will correct
such statement or omission or effect such compliance.
(c) USE OF PROSPECTUS. The Company consents to the use of the
Prospectus in accordance with the provisions of the Act and with the
securities or Blue Sky laws of the jurisdictions in which Stock is offered by
the Underwriters and by all dealers to whom Stock may be sold, both in
connection with the offering and sale of the Stock and for such period of
time thereafter as the Prospectus is required by the Act to be delivered in
connection with the sales by any Underwriter or dealer. The Company will
comply with all requirements imposed upon it by the Act, as now and hereafter
amended, so far as necessary to permit the continuance of sales of or dealing
in the Stock in accordance with the provisions hereof and of the Prospectus.
(d) EARNINGS STATEMENT. Not later than the 45th day following the end
of the fourth fiscal quarter first occurring after the "effective date" (as
defined in Rule 158 under the Act) of the Registration Statement (the
"Effective Date"), the Company will mail and make generally available to its
security holders a consolidated earnings statement covering a period of at
least twelve (12) months beginning with the first full calendar quarter
following the Effective Date which shall satisfy the provisions of Section
11(a) of the Act and Rule 158 thereunder and shall advise you in writing when
such statement has been made so available.
(e) DELIVERY OF REGISTRATION STATEMENT, AMENDMENTS AND SUPPLEMENTS. The
Company will furnish to the Representatives, without charge, one signed copy of
the Registration Statement (including exhibits thereto) and, so long as delivery
of a prospectus by the Underwriters or a dealer may be required by the Act, as
many copies of each Preliminary Prospectus and the Prospectus and all amendments
and supplements thereto as the Representatives may request.
(f) USE OF PROCEEDS. The Company will apply the net proceeds from the
sale of the Stock to be sold hereunder in accordance with the description set
forth in the "Use of Proceeds" section of the Prospectus.
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(g) BLUE SKY COMPLIANCE. The Company will cooperate with the
Representatives and its counsel in connection with endeavoring to obtain and
maintain the qualification or registration, or exemption from qualification,
of the Stock for offer and sale under the applicable securities or Blue Sky
laws of such states and other jurisdictions of the United States as the
Representatives may designate and shall comply with such laws and shall
continue such qualifications, registrations and exemptions in effect so long
as required for the distribution of the Stock. Notwithstanding anything to
the contrary, in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to taxation or general service of process in
any jurisdiction where it is not now so subject. The Company will advise the
Representatives promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Stock for offering,
sale or trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the issuance of any
order suspending such qualification, registration or exemption, the Company
shall use its best efforts to obtain the withdrawal thereof at the earliest
possible moment.
(h) PERIODIC REPORTING OBLIGATIONS. The Company, during the period
when the Prospectus is required to be delivered under the Act or the Exchange
Act, will file all documents required to be filed with the Commission and the
NYSE pursuant to the Exchange Act within the time periods required by the
Exchange Act and the Exchange Act Regulations.
(i) FUTURE REPORTS TO THE REPRESENTATIVES. During a period of five (5)
years commencing with the date hereof, the Company will furnish to the
Representatives, and to each Underwriter who may so request in writing,
copies of all periodic and special reports furnished to shareholders of the
Company and of all information, documents and reports filed with Commission
pursuant to the Act or the Securities Exchange Act of 1934, as amended
(herein called the "Exchange Act").
(j) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. The Company
agrees that it will not, without the prior written consent of Jefferies &
Company, Inc., during the period ending 180 days after the date of the
Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option to contract to sell, grant any
option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or (ii)
enter into any swap or similar agreement that transfers, in whole or in part,
the economic risk of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing provisions shall not apply to (A) the Common Stock to be sold to
the Underwriters pursuant to this Agreement; and (B) options granted by the
Company to purchase Common Stock granted under its option plans described in
the Registration Statement. For purposes of this paragraph a sale, offer, or
other disposition shall be deemed to include any sale to an institution which
can, following such sale, sell Common Stock in reliance on Rule 144A.
(k) REIT STATUS. The Company shall operate so as to qualify as a REIT
in accordance with the requirements of Sections 856-860 of the Tax Code, and
shall not revoke its election to be taxed as a REIT unless revoked by a
shareholder vote in accordance with the Company's Declaration of Trust and
Bylaws.
(l) PRESS RELEASES. If at any time during the 90-day period after the
Registration Statement becomes effective any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
opinion the market price for the Stock has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates
a supplement to or amendment of the Prospectus), the Company will, after
written notice from you advising the Company to the effect set forth above,
consult with you regarding the need to disseminate a press release or other
public statement responding to or commenting on such rumor, publication or
event.
(m) UNCERTIFICATED STOCK. In the event that any portion of the Stock is
issued without certificates pursuant to section 2-210 of the Maryland General
Corporation Law (the "MGCL") and as may be permitted under Section 2(f) above,
at the time of issue of such Stock the Company shall send, or cause to be sent,
to the shareholder a written statement of the information required on
certificates by section 2-211 of the MGCL, and shall otherwise maintain full
compliance with sections 2-210 and 2-211 of the MGCL.
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(n) CONTINUING INCLUSION ON THE NYSE. The Company will use its
reasonable best efforts to continue the inclusion of the Stock on the NYSE
and will use its reasonable best efforts to comply in all material respects
with all of the rules and regulations thereof applicable to the Company and
the trading of such securities.
(o) ACCOUNTING AND TAX ADVICE. The Company will engage and retain a
"Big 4" Accounting Firm as its qualified accountants and such tax experts at
such accounting firm with experience in advising REITs as are reasonably
acceptable to the Representatives for a period of not less than two years
beginning on the First Closing Date to assist the Company in developing and
maintaining appropriate accounting systems and testing procedures and to
conduct quarterly compliance reviews designed to determine compliance with
the REIT provisions of the Tax Code and the maintenance of Company's exempt
status under the Investment Company Act. Any written reports of such
compliance reviews shall be made available to the Representatives.
(p) INVESTMENT ADVISORS ACT. The Company will not, and will not permit
any of its Subsidiaries to, engage in any activity which would cause or
require such entity to register as an investment advisor under the Investment
Advisors Act of 1940. Without limiting the generality of the foregoing, the
Company will not, and will not permit any Subsidiary to, (i) render
investment advice to more than fifteen clients, (ii) hold itself out
generally to the public as an investment advisor, or (iii) act as an
investment advisor to any investment company that is registered under the
Investment Company Act.
(q) SEC COMPLIANCE PROGRAM AND INSIDER TRADING COMPLIANCE POLICY.
Promptly after the First Closing Date, the Company shall adopt and implement
(i) a compliance program, reasonably acceptable to counsel for the
Underwriters, to ensure compliance with the reporting requirements under the
Exchange Act and the securities laws generally and (ii) an insider trading
compliance policy, reasonably acceptable to counsel for the Underwriters, to
govern their employees' and directors' trading in securities of the Company
and all Company affiliates in accordance with federal law and all applicable
state blue sky laws.
Jefferies & Company, Inc., on behalf of the several Underwriters, may, in
its sole discretion, waive in writing the performance by the Company of any one
or more of the foregoing covenants or extend the time for their performance.
SECTION 4. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated hereby are consummated or this Agreement becomes effective or is
terminated, the Company, the Operating Partnership and AMC, jointly and
severally, agree to pay and will pay (directly or by reimbursement), and will
be responsible for, all costs, fees and expenses incident to the performance
of the obligations of the Company the Operating Partnership and AMC under
this Agreement, including but not limited to costs, fees and expenses related
to the following, if incurred, (a) the printing and filing of the
Registration Statement as originally filed and of each amendment thereto; (b)
the printing and/or copying of this Agreement; (c) the preparation, issuance
and delivery of the Stock to the Underwriters, including capital duties,
stamp duties and transfer taxes, if any, payable upon issuance of any of the
Stock or the sale of the Stock to the Underwriters; (d) the fees and
disbursements of the Company's counsel and accountants; (e) the qualification
of the Stock under state securities laws, including filing fees and the fees
and disbursements of counsel for the Representatives in connection therewith
and in connection with the preparation of any Blue Sky survey and any
supplemental Blue Sky survey; (f) the printing and delivery to the
Underwriters of copies of the Registration Statement as originally filed and
of each amendment thereto, of the Preliminary Prospectus and of the
Prospectus and of any amendments or supplements thereto; (g) the printing
and/or copying and delivery to the Underwriters of copies of the Blue Sky
survey and any supplemental Blue Sky survey; (h) the fees and expenses
incurred in connection with the listing of the stock on any national
securities exchange or Nasdaq; and (i) the fees payable to the National
Association of Securities Dealers, Inc. ("NASD") and the fees and
disbursements of counsel for the Representatives in connection with any NASD
filings or communications.
If this Agreement is terminated by the Representatives in accordance with
the provisions of Sections 5 or 8 hereof, or if the sale to the Underwriters of
the Stock or the First Closing Date is not consummated because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or to comply with any provision hereof, the Company shall reimburse the
Representatives and the other Underwriters upon demand for all
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of their reasonable out-of-pocket expenses, including but not limited to the
reasonable fees and disbursements of their counsel, printing expenses, travel
expenses, facsimile, telephone, postage and related expenses.
SECTION 5. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligation
of the Underwriters to purchase the Stock hereunder is subject to the
continued accuracy of the representations and warranties of the REIT Entities
contained herein as of the date hereof and as of the First Closing Date (and,
if applicable, as of the Second Closing Date), to the accuracy of the
statements of the Company made in any certificate or certificates pursuant to
the provisions hereof as of the date hereof and as of the First Closing Date
(and, if applicable, as of the Second Closing Date), to the performance by
the Company of its obligations hereunder, and to the following further
conditions:
(a) REGISTRATION STATEMENT EFFECTIVENESS. The Registration Statement
shall have become effective not later than 5:30 P.M. New York City time on
the date hereof, or at such later date as may be approved by the
Representatives and the Company and shall remain effective at the First
Closing Date and at the Second Closing Date. No stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
Act or proceedings therefor initiated or, to the knowledge of the Company or
the Representatives, threatened by the Commission and any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to
the satisfaction of Underwriters' Counsel.
(b) LEGAL PROCEEDINGS. All corporate proceedings and other legal
matters in connection with this Agreement, the form of Registration Statement
and the Prospectus, and the registration, authorization, issue, sale and
delivery of the Stock, shall have been reasonably satisfactory to
Underwriters' Counsel, and such counsel shall have been furnished with such
papers and information as they may reasonably have requested to enable them
to pass upon the matters referred to in this Section.
(c) NO MATERIAL ADVERSE EVENT. Subsequent to the execution and
delivery of this Agreement, and prior to the First Closing Date or Second
Closing Date, as applicable, there shall not have been a Material Adverse
Event, which, in your sole judgment, is material and adverse and that makes
it, in your sole judgment, impracticable or inadvisable to proceed with the
public offering of the Stock as contemplated by the Prospectus.
(d) OPINION OF COUNSEL FOR THE COMPANY. The Company shall have
furnished to the Representatives the opinion of Hunton & Williams, counsel to
the Company, addressed to the Underwriters and dated as of the First Closing
Date, substantially in the form attached hereto as SCHEDULE III, with such
changes as may be reasonably requested by the Representatives, and if Option
Stock is purchased at any date after the First Closing Date, an additional
opinion from Hunton & Williams, addressed to the Underwriters and dated the
Second Closing Date, confirming that the statements expressed as of the First
Closing Date in such opinion remain valid as of the Second Closing Date.
(e) OPINION OF SPECIAL MARYLAND COUNSEL. On the First Closing Date
and the Second Closing Date, if applicable, the Representatives shall have
received the favorable opinion of Ballard Spahr Andrews & Ingersoll, special
Maryland counsel for the Company, addressed to the Underwriters and dated as
of the First Closing Date and, if applicable, the Second Closing Date, the
form of which is attached as Schedule IV.
(f) OPINION OF COUNSEL FOR THE UNDERWRITERS. Latham & Watkins,
counsel for the Underwriters, shall have furnished to the Underwriters an
opinion with respect to such matters as may be reasonably requested by the
Representatives, dated as of the First Closing Date, and if Option Stock is
purchased at any date after the First Closing Date, an additional opinion
addressed to the Underwriters and dated the Second Closing Date confirming
that the statements expressed as of the First Closing Date in such opinion
remain valid as of the Second Closing Date.
(g) OFFICERS' CERTIFICATES. The Company shall furnish the
Representatives a certificate of the Company, the Operating Partnership and
AMC, signed by the President and the Chief Financial Officer of the Company
and AMC, dated the First Closing Date (and, if applicable, the Second Closing
Date), certifying as to such
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matters as the Representatives shall have reasonably requested, including
without limitation the matters to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplement or amendment to the Prospectus and this Agreement
and that, to their knowledge:
(i) the representations and warranties of the REIT Entities contained
in this Agreement are true and correct on and as of the First Closing Date,
and, if applicable, on and as of the Second Closing Date; and the Company,
the Operating Partnership and AMC have each complied with all the
agreements and satisfied all the conditions under this Agreement on its
part to be performed or satisfied at or prior to the First Closing Date
(and, if applicable, at or prior to the Second Closing Date);
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the knowledge of the Company, threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus, there has been no Material Adverse Event.
(h) ACCOUNTANTS' COMFORT LETTER. At the Effective Date, the
Representation Date and at the First Closing Date (and, if applicable, at the
Second Closing Date), KPMG Peat Marwick, LLP shall have furnished to the
Underwriters a letter or letters, dated respectively as of the Effective
Date, the Representation Date and the First Closing Date (and, if applicable,
the Second Closing Date), in form and substance reasonably satisfactory to
the Underwriters, covering the time periods and relating to the procedures
referred to in Section 1(o) hereof and containing statements and information
of the type customarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain other
information contained in the Registration Statement and the Prospectus (and
the Representatives shall have received such additional conformed copies of
such accountants' letter as Representative's counsel shall reasonably
request).
(i) EXCHANGE LISTING. Prior to the First Closing Date, the Stock
shall have been duly authorized for listing on the NYSE upon official notice
of issuance.
(j) LOCK-UP AGREEMENTS. On or prior to the First Closing Date, you
shall have received from all of the persons and entities set forth on
SCHEDULE II attached hereto, executed lock-up agreements.
If any condition specified in this Section 5 shall not have been
fulfilled in all material respects when and as required to be fulfilled, this
Agreement may be terminated by the Representatives by written notice to the
REIT Entities at or prior to the First Closing Date. All the agreements,
opinions, certificates and letters mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only
if Latham & Watkins, counsel for the Underwriters, shall be satisfied that
they comply in form and scope.
SECTION 6. INDEMNIFICATION AND CONTRIBUTION.
(a) Each of the REIT Entities agree, jointly and severally, to
indemnify, defend and hold harmless each Underwriter and its affiliates and
their respective officers, shareholders, counsel, agents, employees,
directors and any person who controls each Underwriter or any of their
respective affiliates within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, and the respective officers, shareholders, counsel,
agents, employees and directors of such persons (each Underwriter and each
such other person or entity being referred to herein as an "Indemnified
Person"), to the fullest extent lawful from and against any loss, expense,
liability or claim (including the reasonable cost of investigating such
claim) which, jointly or severally, the Indemnified Persons may incur under
the Act, the Exchange Act or otherwise, as such expenses are incurred,
insofar as such loss, expense, liability or claim (i) arises out of or is
based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof) or in a
Prospectus (including any Preliminary Prospectus); (ii) arises out of or is
based upon any omission or alleged omission to state a material fact required
to be stated in either such Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof) or such
Prospectus
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(including any Preliminary Prospectus) or necessary to make the statements
made therein not misleading, except insofar as any such loss, expense,
liability or claim arises out of or is based upon any untrue statement or
omission or alleged untrue statement or omission which has been made therein
or omitted therefrom in reliance upon and in conformity with the information
provided in writing to the Company by or on behalf of the Underwriters,
expressly for use in the Registration Statement or the Prospectus, and the
REIT Entities agree that the only such information provided in writing by or
on behalf of the Underwriters, expressly for use in the Registration
Statement or the Prospectus, is (x) that information in the last paragraph of
text on the cover page of the Prospectus concerning the terms of the offering
by the Underwriters; (y) the legend concerning over-allotments and
stabilizing on the inside front cover page; and (z) the concession and
reallowance figures appearing in the third paragraph and the information in
paragraphs nine, ten, eleven and twelve under the caption "Underwriting;" or
(iii) any act or failure to act or any alleged act or failure to act by any
Underwriter in connection with, or relating in any manner to, the Stock or
the offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out of or
based upon matters covered by clause (i) or (ii) above (provided that the
REIT Entities shall not be liable under this clause (iii) to the extent that
it is determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly from any
such acts or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct).
Notwithstanding anything to the contrary, the indemnity agreement contained
in this Section 6(a) with respect to any Preliminary Prospectus or amended
Preliminary Prospectus shall not inure to the benefit of the Indemnified
Person from whom the person asserting any such loss, expense, liability or
claim purchased the Stock which is the subject thereof, if the Prospectus
corrected any such alleged untrue statement or omission and if such
Underwriter failed to send or give a copy of the Prospectus to such person at
or prior to the written confirmation of the sale of Stock to such person,
provided that the Company has delivered the Prospectus to the Underwriters in
sufficient quantity not less than one full business day prior to the sale to
the person asserting such claim. The foregoing indemnity agreement shall be
in addition to any liability which the REIT Entities may otherwise have.
If any action or proceeding (including any government investigation) is
brought or asserted against any Underwriter or their respective officers,
shareholders, employees, directors or any person who controls any of the
Underwriters (as described above) in respect of which indemnity may be sought
against the REIT Entities pursuant to this Section 6(a), such Underwriter
shall promptly notify the REIT Entities in writing of the institution of such
action (provided, that the failure to give such notice shall not relieve the
REIT Entities of any liability which it may have pursuant to this Agreement,
unless it shall have been determined by a court of competent jurisdiction by
final judgment that such failure has resulted in the forfeiture of
substantive rights or defenses by the indemnifying party) and the REIT
Entities shall assume the defense of such action, including the employment of
counsel and payment of reasonable expenses. Such Underwriter or such
officer, shareholder, employee, director or person who controls the
Underwriter (as described) shall have the right to employ its or their own
counsel in any such case and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter
or of such persons unless: (i) the REIT Entities shall have failed to assume
the defense of such action or proceeding or the REIT Entities shall have
failed to employ counsel reasonably satisfactory to the Underwriter in any
such action; or (ii) such Indemnified Party or parties shall have been
advised by counsel that there may be one or more defenses available to it or
them that are different from or additional to those available to the REIT
Entities (in which case, if such indemnified party or parties notifies the
REIT Entities in writing that it elects to employ separate counsel at the
expense of the REIT Entities, the REIT Entities shall not have the right to
assume the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne,
jointly and severally, by the REIT Entities and paid as incurred; provided,
that the REIT Entities shall be responsible for the fees and expenses of only
one counsel for all Indemnified Parties hereunder. Anything in this
paragraph to the contrary notwithstanding, the REIT Entities shall not be
liable for any settlement of any such claim or action effected without its
prior written consent, which consent shall not be unreasonably withheld.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the REIT Entities and the Company's trustees, directors, officers,
shareholders, counsel, agents and employees and any person who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act from and against any loss, expense, liability or claim
(including the reasonable cost of investigation) which, jointly or severally,
the REIT Entities or any such person may incur under the Act, the Exchange
Act or otherwise, as such expenses are incurred insofar as such loss,
expense, liability or claim arises out of or is based upon any untrue
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statement or omission or alleged untrue statement or omission which has been
made in or omitted from the Registration Statement (or in the Registration
Statement as amended by any posteffective amendment thereof) or in the
Prospectus (including any Preliminary Prospectus) in reliance upon and in
conformity with the information relating to the Underwriters furnished in
writing by or on behalf of the Underwriters to the Company. The REIT
Entities agree that the only information provided in writing by or on behalf
of the Underwriters to the Company, expressly for use in the Registration
Statement or the Prospectus, is (i) that information in the last paragraph of
text on the cover page of the Prospectus concerning the terms of the offering
by the Underwriters; (ii) the legend concerning over-allotments and
stabilizing on the inside front cover page; and (iii) the concession and
reallowance figures appearing in the third paragraph and the information in
paragraphs nine, ten, eleven and twelve under the caption "Underwriting".
If any action is brought against the Company, the Operating Partnership,
AMC or any person in respect of which indemnity may be sought against any
Underwriter pursuant to the foregoing paragraph, the Company, the Operating
Partnership, AMC or such person shall promptly notify such Underwriter in
writing of the institution of such action (provided, that the failure to give
such notice shall not relieve such Underwriter of any liability which it may
have pursuant to this Agreement, unless it shall have been determined by a
court of competent jurisdiction by final judgment that such failure has
resulted in the forfeiture of substantive rights or defenses by the
indemnifying party) and the Underwriters shall assume the defense of such
action, including the employment of counsel and payment of reasonable
expenses. The REIT Entities or such person shall have the right to employ
its or their own counsel in any such case and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the REIT Entities or such person unless: (i) such Underwriters shall have
failed to assume the defense of the action or shall have failed to employ
counsel reasonably satisfactory to the Company, or (ii) such indemnified
party or parties shall have been advised by counsel that there may be one or
more defenses available to it or them that are different from or additional
to those available to such Underwriters (in which case, if such indemnified
party or parties notifies the Underwriters in writing that it elects to
employ separate counsel at the expense of the Underwriters, such Underwriters
shall not have the right to assume the defense of such action on and expenses
shall be borne by the Underwriters and paid as incurred; provided, that the
Underwriters shall be responsible for the fees and expenses of only one
counsel for all indemnified parties. Anything in this paragraph to the
contrary notwithstanding, the Underwriters shall not be liable for any
settlement of any such claim or action effected without the written consent
of such Underwriter, which consent shall not be unreasonably withheld.
(c) If the indemnification provided for in this Section 6 is unavailable
to an indemnified party under subsection (a) or (b) of this Section 6 in respect
of any losses, damages, expenses, liabilities or claims referred to therein,
then the indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, expenses, liabilities or
claims (i) in such proportion as is appropriate to reflect the relative benefits
received by the REIT Entities, on the one hand, and each Underwriter, on the
other hand, from the offering of the Stock or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the REIT Entities, on the one hand, and
each Underwriter, on the other hand, in connection with the statements or
omissions which resulted in such losses, expenses, liabilities or claims, as
well as any other relevant equitable considerations. The relative benefits
received by the REIT Entities, on the one hand, and each Underwriter, on the
other hand, shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received under the Agreement by each Underwriter. The
relative fault of the Company, the Operating Partnership and AMC, on the one
hand, and of each Underwriter, on the other hand, shall be determined by
reference to, among other things, whether the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission relates to
information supplied by the REIT Entities or by such Underwriter and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, expenses, liabilities and claims referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any claim
or action.
(d) The REIT Entities and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 6 were determined
by pro rata allocation or by any other method of allocation
19
<PAGE>
that does not take account of the equitable considerations referred to in
Section 6(c) above. Notwithstanding the provisions of this Section 6, each
Underwriter shall not be required to contribute any amount in excess of the
underwriting discounts and commissions received by it. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The indemnity and contribution agreements contained in this Section
6 shall remain in full force and effect irrespective of any investigation
made by or on behalf of the Underwriters, or any of their officers,
employees, directors, shareholders, counsel, agents or any person who
controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, by or on behalf of the REIT Entities, the
Company's directors, officers, counsel, agents, employees or any person who
controls the Company, within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, and shall survive any termination of this Agreement
or the issuance and delivery of the Stock. The REIT Entities and each
Underwriter agree promptly to notify the others of the commencement of any
litigation or proceeding against it and, in the case of the Company, against
any of its respective officers and directors in connection with the issuance
and sale of the Stock, or in connection with the Registration Statement or
Prospectus.
SECTION 7. SURVIVAL. All representations, warranties, indemnities and
agreements contained in this Agreement, or contained in certificates of
officers of the Company and AMC submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made
by or on behalf of the several Underwriters or any of their respective
officers, employees, directors, shareholders or person who controls any
Underwriter, or by or on behalf of the REIT Entities and shall survive
delivery of the Stock to and payment for the Stock by the several
Underwriters and any termination of this Agreement.
SECTION 8. TERMINATION OF AGREEMENT.
(a) The Representatives shall have the right to terminate this
Agreement by giving notice as hereinafter specified in Section 10 hereof at
any time at or prior to the First Closing Date or on or prior to any later
date(s) on which Option Stock may be purchased, as the case may be, (i) if
the Company shall have failed, refused or been unable to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled is not
fulfilled, including, without limitation, any change in the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company and the Subsidiaries considered as one enterprise
from that set forth in the Registration Statement or Prospectus, which, in
your sole judgment, is material and adverse, or (ii) if additional material
governmental restrictions, not in force and effect on the date hereof, shall
have been imposed upon trading in securities generally or minimum or maximum
prices shall have been generally established on the New York Stock Exchange
or on the American Stock Exchange or in the over the counter market by the
NASD, or trading in securities generally shall have been suspended on either
such exchange or in the over the counter market by the NASD, or if a banking
moratorium shall have been declared by federal or New York authorities, or
(iii) if the Company or one of the Subsidiaries shall have sustained a loss
by strike, fire, flood, earthquake, accident or other calamity of such
character as to interfere materially with the conduct of the business and
operations of the Company regardless of whether or not such loss shall have
been insured, or (iv) if there shall have been a material adverse change in
the general political or economic conditions or financial markets as in your
reasonable judgment makes it inadvisable or impracticable to proceed with the
offering, sale and delivery of the Stock, or (v) if there shall have been an
outbreak or escalation of hostilities or of any other insurrection or armed
conflict or the declaration by the United States of a national emergency
which, in the reasonable opinion of the Representatives, makes it
impracticable or inadvisable to proceed with the public offering of the Stock
as contemplated by the Prospectus.
(b) If this Agreement is terminated pursuant to this Section or any
other provision of this Agreement, such termination shall be without
liability of any party to any other party except as provided in Sections 4
and 6.
SECTION 9. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more
of the Underwriters shall fail at the First Closing Date (or the Second
Closing Date) to purchase the shares of Underwritten Stock or Option Stock,
as the case may be, which it or they are obligated to purchase under this
Agreement (the
20
<PAGE>
"Defaulted Stock"), the Representatives shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than
all, of the Defaulted Stock in such amounts as may be agreed upon and upon
the terms herein set forth. if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) If the number of shares of Defaulted Stock does not exceed 10% of
the total number of shares of Stock to be purchased on such date by all
Underwriters, the non-defaulting Underwriters shall be obligated to purchase
the full amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) If the number of shares of Defaulted Stock exceeds 10% of the
total number of shares of Stock to be purchased on such date by all
Underwriters, this Agreement shall terminate without liability on the part of
any non-defaulting Underwriter or the REIT Entities.
No action taken pursuant to this Section 9 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, the Representatives and the Company shall have the right to
postpone the First Closing Date for a period not exceeding seven days in order
to effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements.
SECTION 10. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Representatives shall be directed to Jefferies & Company, Inc., 11100 Santa
Monica Boulevard, Los Angeles, California 90025, attention of Robert M.
Werle, with a copy to Latham & Watkins, 650 Town Center Drive, Suite 2000,
Costa Mesa, California 92626-1925, attention Cary K. Hyden, Esq. Notices to
the Company and to the Operating Partnership shall be directed to James E.
Day, AEGIS Investment Trust, 2500 CityWest Boulevard, Suite 1200, Houston,
Texas 77042; with a copy to Hunton & Williams, Riverfront Plaza East Tower,
951 East Byrd Street, Richmond, Virginia 23219-4074, attention of Edward L.
Douma, Esq.
SECTION 11. PARTIES. This Agreement shall inure to the benefit of
and be binding upon the Underwriters, the Company, the Operating Partnership,
AMC and their respective executors, administrators, assigns, successors and
legal Representatives. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to provide any person, firm or corporation,
other than the Underwriters, the Company, the Operating Partnership, AMC and
their respective successors and legal Representatives and the controlling
persons and officers, employees, directors and shareholders referred to in
Sections 6 and 7 and their respective heirs and legal Representatives, any
legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein or therein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters, the Company, the Operating
Partnership, AMC and their respective successors and legal Representatives,
and said controlling persons, shareholders, officers and directors and their
respective heirs and legal Representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Stock from the Underwriters
shall be deemed to be a successor or assign by reason merely of such purchase.
SECTION 12. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State.
SECTION 13. GENERAL PROVISIONS. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written
or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may
be executed in two or more counterparts, each one of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party
whom the condition is meant to benefit. The Section headings herein are for
the convenience of the parties
21
<PAGE>
only and shall not affect the construction or interpretation of this
Agreement. In this Agreement unless the context otherwise requires, (i)
singular words shall connote the plural number as well as the singular and
vice versa, and the masculine shall include the feminine and the neuter, and
(ii) all references to particular articles, sections, subsections, clauses or
exhibits are references to articles, sections, subsections, clauses or
exhibits of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification and contribution provisions of Section 6, and is fully
informed regarding said provisions. Each of the parties hereto further
acknowledges that the provisions of Section 6 hereto fairly allocate the
risks in light of the ability of the parties to investigate the REIT
Entities, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any preliminary
prospectus and the Prospectus (and any amendments and supplements thereto),
as required by the Act and the Exchange Act.
22
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its
terms.
Very truly yours,
AEGIS INVESTMENT TRUST, a Maryland trust
By:
----------------------------------------
Name: James E. Day
Title: Managing Director
AEGIS OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership
By: AEGIS INVESTMENT TRUST,
----------------------------------------
a Maryland trust,
its sole general partner
By:
------------------------------------
James E. Day
Managing Director
AEGIS MORTGAGE CORPORATION,
an Oklahoma corporation
By:
----------------------------------------
Name : Patrick A. Walden
Title: Managing Director
CONFIRMED AND ACCEPTED, as of the date first above written:
JEFFRIES & COMPANY, INC.
EVEREN SECURITIES, INC.
LEGG MASON WOOD WALKER, INCORPORATED
By: JEFFERIES & COMPANY, INC.
By:
-----------------------------
Robert M. Werle
Managing Director-
For themselves and as Representatives of the other Underwriters named in this
Agreement
23
<PAGE>
EXHIBIT 5.1
December 9, 1997
Board of Trustees
AEGIS Investments Trust
2500 CityWest Boulevard, Suite 1200
Houston, TX 77042
AEGIS INVESTMENT TRUST
REGISTRATION STATEMENT ON FORM S-11
-----------------------------------
Gentlemen:
We have acted as counsel to AEGIS Investment Trust, a Maryland real
investment trust (the "Company"), in connection with the Registration
Statement on Form S-11, that is being filed on the date hereof with the
Securities and Exchange Commission (the "Registration Statement"), with
respect to 10,000,000 shares of the Company's common shares of beneficial
interest, $.01 par value (the "Common Shares"), which are proposed to be
offered and sold as described in the Registration Statement.
In rendering this opinion, we have relied upon, among other things, our
examination of such records of the Company and certificates of its officers
and of public officials as we have deemed necessary.
Based upon the foregoing and having regard for such legal considerations
as we have deemed relevant, we are of the opinion that the issuance of the
Shares as described in the Registration Statement has been validly authorized
and, when issued and sold as described in the Registration Statement, the
Common Shares will be legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the
statement made in reference to this firm under the caption "Legal Matters" in
the Registration Statement.
Very truly yours,
/s/ HUNTON & WILLIAMS
---------------------------
<PAGE>
December 9, 1997
AEGIS Investment Trust
2500 CityWest Blvd., Suite 1200
Houston, Texas 77042
AEGIS INVESTMENT TRUST
QUALIFICATION AS
REAL ESTATE INVESTMENT TRUST
Ladies and Gentlemen:
We have acted as counsel to AEGIS Investment Trust, a Maryland real
estate investment trust (the "Company"), in connection with the preparation of a
Form S-11 registration statement (the "Registration Statement") filed with the
Securities and Exchange Commission ("SEC") on September 12, 1997 (No.
333-35473), as amended through the date hereof, with respect to the offering and
sale (the "Offering") of up to 10,000,000 common shares of beneficial interest,
par value $0.01 per share, of the Company (the "Common Shares"), and the
Company's contribution of the net proceeds of the Offering to AEGIS Operating
Partnership, L.P., a Virginia limited partnership (the "Partnership"), in
exchange for a 90.12% general partnership interest in the Partnership. You have
requested our opinion regarding certain U.S. federal income tax matters in
connection with the Offering.
The Company, through the Partnership, plans to acquire certain
mortgage loans, mortgage-backed securities, and other mortgage-related assets.
The Partnership will invest the Offering proceeds contributed by the Company in
short-term, interest-bearing securities until the Partnership identifies
mortgage-related assets for acquisition. The Partnership will own all of the
nonvoting stock of AEGIS Mortgage Corporation ("AMC"), representing 97% of
the beneficial interests therein. The voting stock of AMC, representing
3% of the beneficial interests therein, will be owned by Messrs. Walden
and Day.
<PAGE>
AEGIS Investment Trust
December 9, 1997
Page 2
In giving this opinion letter, we have examined the following:
1. the Company's Declaration of Trust, as duly filed with the Department of
Assessments and Taxation of the State of Maryland on August 13, 1997;
2. the Company's Amended and Restated Declaration of Trust, a form of which is
filed as an exhibit to the Registration Statement;
3. the Company's Bylaws;
4. the Registration Statement, including the prospectus contained as part of
the Registration Statement (the "Prospectus");
5. the Amended and Restated Limited Partnership Agreement of the Partnership
(the "Partnership Agreement") between the Company, as general partner, and
Messrs. Walden and Day, as limited partners, in the form filed as an exhibit
to the Registration Statement; and
6. such other documents as we have deemed necessary or appropriate for
purposes of this opinion.
In connection with the opinions rendered below, we have assumed, with
your consent, that:
1. each of the documents referred to above has been duly authorized, executed,
and delivered; is authentic, if an original, or is accurate, if a copy; and has
not been amended;
2. during its short taxable year ending December 31, 1997 and future taxable
years, the Company will operate in a manner that will make the representations
contained in a certificate, dated the date hereof and executed by a duly
appointed officer of the Company (the "Officer's Certificate"), true for such
years;
3. the Company will not make any amendments to its organizational documents or
the Partnership Agreement after the date of this opinion that would affect its
qualification as a real estate investment trust (a "REIT") for any taxable year;
and
<PAGE>
AEGIS Investment Trust
December 9, 1997
Page 3
4. no action will be taken by the Company or the Partnership after the date
hereof that would have the effect of altering the facts upon which the opinions
set forth below are based.
In connection with the opinions rendered below, we also have relied
upon the correctness of the representations contained in the Officer's
Certificate. No facts have come to our attention, however, that would cause us
to question the accuracy and completeness of the facts contained in the
documents and assumptions set forth above, the representations set forth in the
Officer's Certificate, or the Prospectus in a material way. In addition, to the
extent that any of the representations provided to us in the Officer's
Certificate are with respect to matters set forth in the Internal Revenue Code
of 1986, as amended (the "Code"), or the Treasury regulations thereunder (the
"Regulations"), we have reviewed with the individuals making such
representations the relevant portions of the Code and the applicable
Regulations.
Based on the documents and assumptions set forth above, the
representations set forth in the Officer's Certificate, and the discussion in
the Prospectus under the caption "Federal Income Tax Considerations" (which is
incorporated herein by reference), we are of the opinion that:
(a) commencing with the Company's short taxable year beginning on the
day before the closing date of the Offering and ending December 31, 1997,
the Company will qualify to be taxed as a REIT pursuant to sections 856
through 860 of the Code, and the Company's organization and proposed method
of operation will enable it to continue to meet the requirements for
qualification and taxation as a REIT under the Code; and
(b) the descriptions of the law and the legal conclusions contained
in the Prospectus under the caption "Federal Income Tax Considerations" are
correct in all material respects, and the discussion thereunder fairly
summarizes the federal income tax considerations that are likely to be
material to a holder of the Common Shares.
We will not review on a continuing basis the Company's compliance with the
documents or assumptions set forth above, or the representations set forth in
the Officer's Certificate. Accordingly, no assurance can be given that the
actual results of the Company's
<PAGE>
AEGIS Investment Trust
December 9, 1997
Page 4
operations for any given taxable year will satisfy the requirements for
qualification and taxation as a REIT.
The foregoing opinions are based on current provisions of the Code and
the Regulations, published administrative interpretations thereof, and published
court decisions. The Internal Revenue Service has not issued Regulations or
administrative interpretations with respect to various provisions of the Code
relating to REIT qualification. No assurance can be given that the law will not
change in a way that will prevent the Company from qualifying as a REIT.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the references to Hunton & Williams
under the caption "Federal Income Tax Considerations" in the Prospectus. In
giving this consent, we do not admit that we are in the category of persons
whose consent is required by Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations promulgated thereunder by the SEC.
The foregoing opinions are limited to the U.S. federal income tax
matters addressed herein, and no other opinions are rendered with respect to
other federal tax matters or to any issues arising under the tax laws of any
other country, or any state or locality. We undertake no obligation to update
the opinions expressed herein after the date of this letter. This opinion
letter is solely for the information and use of the addressee and the purchasers
of the Common Shares pursuant to the Prospectus, and it may not be distributed,
relied upon for any purpose by any other person, quoted in whole or in part or
otherwise reproduced in any document, or filed with any governmental agency
without our express written consent.
Very truly yours,
/s/ Hunton & Williams
---------------------------------
<PAGE>
EXHIBIT 10.6
FORM OF
SERVICING AGREEMENT
THIS SERVICING AGREEMENT (the "Agreement"), dated as of December 15,
1997, is made by and between AEGIS INVESTMENT TRUST, a Maryland real estate
investment trust ("Owner") and AEGIS MORTGAGE CORPORATION, an Oklahoma
corporation ("Servicer").
RECITALS
A. From time to time the Owner may agree to buy mortgages on real
estate.
B. The Servicer is engaged in the business of servicing mortgages and
desires and is willing to service mortgages for the Owner and the Owner
desires to have mortgages serviced by the Servicer.
Accordingly, the Servicer and the Owner agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. "MORTGAGE LOAN"; "MORTGAGOR". The term "Mortgage
Loan(s)" as used herein shall mean loans secured by real estate serviced for
the owner by the Servicer and shall include both the instrument creating the
security interest in the real estate and debt instrument evidencing the
obligation secured thereby, unless the context otherwise requires. The term
"Mortgagor" shall be deemed to include the maker of the security instrument,
the maker of the debt instrument, and any subsequent owner of the mortgaged
premises, unless the context otherwise requires.
ARTICLE II
DUTIES AND OBLIGATIONS OF SERVICER
Section 2.1. APPLICATION OF THIS AGREEMENT. This Agreement shall
govern the servicing by the Servicer of all Mortgage Loans which the Servicer
shall agree to service for the Owner. This Agreement has been duly
authorized, executed and delivered by Servicer and constitutes a valid
obligation of Servicer enforceable in accordance with its terms.
<PAGE>
Section 2.2. ASSUMPTION OF DUTIES; STANDARD OF CARE. Servicer agrees
that it shall at all times service the Mortgage Loan in accordance with all
applicable statutes; regulations, contractual provisions, and in accordance
with prudent mortgage banking practices. It is understood and agreed that
Servicer shall exercise the same standard of care that it exercises in the
servicing of Mortgage Loans for its own account. Correspondingly, Owner does
hereby grant to the Servicer the right to exercise and enjoy all of the
rights, powers and privileges typically enjoyed by a lender servicing
mortgages for its own account except as otherwise provided herein. Among the
services to be provided by Servicer during the service period are:
(a) Proceed diligently to collect all payments due under the terms
of each Mortgage Loan as it becomes due, except that Servicer shall not
accelerate the maturity, file suit or initiate foreclosure of any Mortgage
Loan without prior approval from the Owner.
(b) Keep a complete, accurate and separate account of and properly
apply all sums collected by it from the Mortgagor on account of each such
Mortgage Loan for principal and interest, taxes, assessments, and other
public charges, hazard insurance premiums and mortgage insurance premiums;
and upon request, furnish Owner with evidence acceptable to Owner of all
expenditures for taxes, assessments and other public charges, hazard
insurance premiums and mortgage insurance premiums.
(c) Deposit funds remitted by the Mortgagor for the purpose of
paying principal and interest, taxes, assessments, hazard insurance premiums,
mortgage insurance premiums and other such charges in one or more escrow
accounts maintained and held in the name of Servicer.
(d) Perform such other customary duties, furnish such other
reports and execute such other documents in connection with its duties
hereunder as Owner from time to time may reasonably require, provided that
such duties, reports or documents are compatible with duties normally
undertaken, reports normally furnished, and documents normally executed by
the Servicer in the ordinary course of its loan servicing activities.
Section 2.3. FEES AND ADVANCES. Servicer shall be responsible for any
advances required for the various mortgage escrow/impound accounts, and shall
be responsible for prompt payment of all hazard insurance premiums and real
estate taxes. If adequate funds are not held in escrow to pay, when due,
real estate taxes or insurance premiums on any property securing a Mortgage
Loan, Servicer shall advance sufficient funds to cover any such deficiency in
a manner to ensure timely payment of such taxes of insurance premiums.
Servicer shall also bear all costs normally associated with servicing,
including but not limited to interest, if any, payable on escrow accounts.
2
<PAGE>
Section 2.4. REMITTANCES. The Servicer shall remit actual collected
principal and interest payments less Servicer's compensation as provided in
Section 3.1 hereof, at least monthly.
Section 2.5. AVAILABILITY OF ORIGINAL DOCUMENTS. Owner shall, or
shall cause its custodian to, make available to Servicer original loan
documents to the extent reasonably necessary to enable Servicer to carry out
normal servicing functions including, but not limited to, payoffs and
satisfactions.
ARTICLE III
COMPENSATION OF SERVICER
Section 3.1. SERVICER'S COMPENSATION. The Servicer's compensation for
the performance of its duties hereunder with respect to each Mortgage Loan,
shall consist of an amount to be deducted by the Servicer from the portion of
each monthly installment applicable to interest when and as collected.
Unless otherwise agreed by the parties, the rate of compensation for
servicing of Mortgage Loans shall be eight dollars per loan per month
($8.00/loan/month), plus any late charges applicable. Such compensation
shall be paid for any Mortgage Loans held for all or any part of the month.
The Servicer shall also be entitled to miscellaneous fees, earnings from
escrow deposits, or other income as is customarily provided by the servicing
rights. Servicing compensation shall be due to the Servicer with respect to
any Mortgage Loan beginning with the date of commencement of the servicing
duties by the Servicer until termination or relinquishment thereof.
ARTICLE IV
MISCELLANEOUS
Section 4.1. INDEMNIFY. The Servicer shall indemnify the Owner and
hold it harmless for any loss, damage or expense that the Owner may sustain
as a result of any failure on the part of the Servicer properly to perform
its services, duties, and obligations under this Agreement.
Section 4.2. TERMINATION. The Owner may terminate servicing by the
Servicer with respect to any Mortgage Loan or all Mortgage Loans at any time
with or without cause upon sixty (60) days written notice; provided, however,
if such termination is without cause, the Owner shall pay Servicer a
"Cancellation of Servicing" fee equal to the "fair market value" of the
portfolio so terminated, as determined in good faith by both of the parties.
Upon termination by the Owner of servicing with respect to any Mortgage Loan,
the Servicer shall promptly supply any reports, documents, and
3
<PAGE>
information as are requested by the Owner, and shall use its best efforts to
effect the orderly and efficient transfer of servicing to a new servicer
designated by the Owner, including preparation of any accounting and
statement in the form requested by the Owner.
Section 4.3. ASSIGNMENT BY THE OWNER. The Owner shall have the right,
with consent of the Servicer, to assign, convey or transfer, in whole or in
part, its interest under this Agreement with respect to any Mortgage Loan,
and assignee or transferee shall accede to the rights and obligations
hereunder of the Owner. All references to the Owner shall be deemed to
include its assignee, designee or transferee. The Owner shall have the right
to direct the Servicer to send remittances, notices, reports and other
communications to any person or entity designated by the Owner, and may
designate any such person to exercise any and all rights of the Owner
hereunder, provided that the Servicer will be reimbursed for any costs of
providing such duplicate reports.
Section 4.4. ASSIGNMENT BY THE SERVICER. The Servicer agrees that
because of the nature of the services to be performed, it shall not have the
right to assign its interests under this Agreement, except upon written
authorization by the Owner. In the event that the Owner authorizes a
subcontract for the servicing of any Mortgage Loan, the Servicer shall not be
relieved of any of its obligations under this Agreement with respect to the
servicing of such Mortgage Loan.
Section 4.5. EQUAL OPPORTUNITY. Servicer shall comply with Title VI
of the Civil Rights Act of 1964, and title VIII of the Civil Rights Act of
1968, and any applicable regulations and orders thereunder and with Executive
Order 11063, Equal Opportunity in Housing, issued by the President of the
United States on November 20, 1962.
Section 4.6. NOTICE. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly given or delivered if delivered personally or mailed by registered or
certified mail return receipt requested with first class postage prepaid as
follows:
If to Owner:
AEGIS Investment Trust
2500 City West Blvd., Suite 1200
Houston, Texas 77042
Attn: Managing Director
If to Servicer:
Aegis Mortgage Corporation
5208 W. Reno, Suite 255
4
<PAGE>
Oklahoma City, OK 73127
Attn: George Ford
or such other address as any person may request by notice given. Notices
sent as provided herein shall be deemed to have been delivered on the fifth
business day following the date on which it is so mailed.
Section 4.7. GOVERNING LAW. This agreement shall be governed by and
construed under the laws of the State of Texas without regard to such state's
provisions pertaining to choice of law.
Section 4.8. AMENDMENT. This Agreement, including any Schedules or
Exhibits hereto and all other agreements and documents executed in connection
herewith, constitutes the entire agreement among the parties hereto with
respect to the subject hereof and no amendment, alteration or modification of
the Agreement shall be valid unless in each instance such amendment,
alteration or modification is expressed in a written instrument duly executed
by each party hereto.
Section 4.9. COUNTERPARTS. This Agreement may be executed
simultaneously in any number of counterparts. Each counterpart shall be
deemed to be an original, and all such counterparts shall constitute one and
the same instrument.
Section 4.10. EXHIBITS AND SCHEDULES. The exhibits and schedules to
this Agreement, as amended or modified from time to time, are hereby
incorporated and made a part hereof and are an integral part of this
Agreement.
Section 4.11. NO THIRD PARTY BENEFICIARIES. Each of the provisions of
this Agreement is for the sole and exclusive benefit of the parties hereto,
respectively, as their interests shall appear, and shall not be deemed to be
for the benefit of any other person or entity or group of persons or entities.
Section 4.12. .SURVIVAL. This Agreement, and the representations and
warranties contained herein, shall survive the Purchase and shall not merge
into the purchase documents.
Section 4.13. SUCCESSORS AND ASSIGNS. This Agreement shall bind and
inure to the benefit of each party hereto, and to each party's successors,
assigns, agents and representatives.
5
<PAGE>
Section 4.14. SEVERABILITY CLAUSE. Any part, provision, representation
or warranty of this Agreement that is prohibited or that is held to be void
or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions.
6
<PAGE>
IN WITNESS WHEREOF, each party has caused this instrument to be signed
in its corporate name on its behalf by its proper officials duly authorized.
AEGIS MORTGAGE CORPORATION
Servicer
By
-------------------------------------
Name:
Title:
AEGIS INVESTMENT TRUST
Owner
By
-------------------------------------
Name:
Title:
7
<PAGE>
EXHIBIT 10.7
FORM OF
LOAN SALE AND PURCHASE AGREEMENT
THIS LOAN SALE AND PURCHASE AGREEMENT, dated as of December 15, 1997
(the "Agreement"), is made by and between AEGIS INVESTMENT TRUST, a Maryland
real estate investment trust ("Purchaser"), and AEGIS MORTGAGE CORPORATION,
an Oklahoma corporation ("Seller").
RECITALS
A. Seller is engaged in the business of originating and selling
mortgage loans secured by real property.
B. Seller may desire to sell and Purchaser may desire to purchase from
Seller from time to time certain of those mortgage loans.
C. The parties intend hereby to set forth the terms and conditions upon
which the transactions will be effected.
Accordingly, in consideration of the promises and the mutual agreements
contained herein, the Purchaser and Seller agree as follows:
AGREEMENT
Section 1. DEFINITIONS. Whenever used herein, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
Acquisition Cost: Amount paid by Seller to acquire mortgage loans
whether through its retail or wholesale production operation or acquired
through its loan trading operations.
Agreement: This Loan Sale and Purchase Agreement and all amendments
hereof and supplements hereto.
Assignment of Security Instrument: Assignment of all Seller's rights,
title and interest in and to a Security Instrument for the benefit of
Purchaser, in a form acceptable to Purchaser, to be executed by Seller in
connection with each Mortgage Loan purchased hereunder, as applicable.
Custodian: [ ], or its successor in interest or assign,
or any successor to the Custodian.
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Document Delivery Procedures: Procedures established by Purchaser for
the delivery of Mortgage Loan Documents evidencing Mortgage Loans to be
purchased hereunder, attached hereto as Exhibit "B", as may be amended from
time to time by Purchaser in its sole discretion.
Mortgage Loans: Each Mortgage Loan identified in the Schedule of Loans
Delivered that, from time to time, are subject to this Agreement.
Mortgage Loan Documents: For any Mortgage Loan, at least the documents
listed on Exhibit "B" hereto, as well as any other documents in Seller's
possession relating to the Mortgage Loan.
Mortgaged Premises: The fee simple interest in real property for each
Mortgage Loan purchased, covered by a Security Instrument and securing an
Obligor's indebtedness under the related Note.
Note: Instrument evidencing the indebtedness of the Obligor under a
Mortgage Loan.
Obligor: The borrower or borrowers under a Note, any other person or
entity who owes payments under a Note, or a subsequent owner of Mortgaged
Premises who has assumed the respective Security Instrument.
Purchase Date: The funding date for the purchase of Mortgage Loans
hereunder as agreed to by the parties in writing on the Schedule of Loans
Delivered.
Schedule of Loans Delivered: A listing of Mortgage Loans that the
Purchaser has agreed to be purchase pursuant to Section 2(a) hereof, that at
a minimum includes the loan number, borrower name, and loan amount, and such
other pertinent information that Purchaser deems reasonably necessary in the
circumstances, and that is also readily available to Seller.
Security Instrument: All deeds of trust, deeds to secure debt, trust
deeds or mortgages, as applicable securing repayment of the indebtedness
evidenced by a Note executed by an Obligor for a Mortgage Loan purchased
hereunder, as applicable.
Section 2. AGREEMENT TO SELL AND PURCHASE.
(a) Pursuant to the terms of this Agreement, Seller hereby agrees to
offer the Purchaser the option to purchase, subject to the terms of this
Agreement, all rights, title and interest of the Seller in and to all of the
mortgage loans or mortgage-related assets originated, owned or acquired by
the Seller (the "Right of First Offer"). If the Purchaser exercises such
option, the Seller agrees to sell,
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transfer, assign, set over and convey to Purchaser all rights, title and
interest of the Seller in and to the Mortgage Loans selected by the Purchaser
and the Purchaser hereby agrees to purchase the Mortgage Loans listed on the
Schedule of Mortgage Loans Delivered.
(b) The Purchase Price paid by Purchaser to Seller for Mortgage Loans
shall be as follows:
(i) For Owner-Financed Mortgage Loans, the percentage of the
Acquisition Cost for Owner-Financed Mortgage Loans delivered to the
Purchaser under this Agreement as set forth on Exhibit "C" attached hereto,
plus any other direct costs allocable to the acquisition of such Owner-
Financed Mortgage Loans. Such percentage will be agreed to by an officer
of both Seller and Purchaser and may change based on the nature of Owner-
Financed Mortgage Loans being purchased. Any revision to such Purchase
Price percentage will be presented to the Board of Directors of the Seller
and the Board of Trustees of the Purchaser at their regularly scheduled
meetings for review and approval.
(ii) For Seasoned Mortgage Loans, the percentage of the Acquisition
Cost for the Seasoned Mortgage Loans delivered to the Purchaser under this
Agreement as set forth on Exhibit "C" attached hereto. plus any other
direct costs allocable to the acquisition of such Seasoned Mortgage Loans.
Such percentage will be agreed to by an officer of both Seller and
Purchaser and may change based on the nature of Seasoned Mortgage Loans
being purchased. Any revisions to such Purchase Price percentage will be
presented to the Board of Directors of the Seller and the Board of Trustees
of the Purchaser at their regularly scheduled meetings for review and
approval.
(iii) For Other Mortgage Loans, the "fair market value" for such
Mortgage Loans. Such "fair market value" will be agreed to by an officer
of both Seller and Purchaser and will be based on readily available
sources, including, if applicable, the Seller's wholesale rate sheet.
Purchaser hereby agrees to purchase Mortgage Loans, at the agreed upon
Purchase Price, on the date the Seller commits to purchase the loan from its
customer or such other date agreed to between the parties. Purchaser also agrees
to pay the Purchase Price in full at the applicable Purchase Date for such
Mortgage Loan, or reimburse the Seller for the net interest cost incurred, if
any, related to such Mortgage Loans.
(c) Unless otherwise agreed to by the parties hereto, the sale of Mortgage
Loans hereof shall be on a "servicing retained" basis and Seller agrees to
Service the Mortgage Loans on behalf of the Purchaser pursuant to the
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Servicing Agreement (the "Servicing Agreement"), dated as of the date hereof,
between the Seller and the Purchaser, as it may be amended from time to time.
Section 2.1. RELATIONSHIP BETWEEN PURCHASER AND SELLER. Seller is
acting as an independent contractor and not as an agent of the Purchaser for
purposes of acquiring Mortgage Loans and selling such Mortgage Loans to
Purchaser. Purchaser and Seller are not partners or joint venturers with each
other and nothing herein shall be construed to make them such partners or
joint venturers or impose any liability as such on either of them. In that
regard, this Agreement is not intended to be an exclusive arrangement;
however, the Seller is obligated to provide Purchaser with the option to
purchase any Mortgage Loans acquired by it pursuant to the Right of First
Offer. Subject to the Right of First Offer and unless otherwise agreed to by
both parties, nothing herein shall prevent Seller from engaging in other
businesses or from rendering other services of any kind to any other person
or entity, including the sale of its mortgage loans, or the servicing of
loans.
Section 2.2. TERM OF AGREEMENT. The initial term of this Agreement
will terminate on December 31, 1998. The initial term, and each renewal
term, shall automatically renew on each anniversary date for a one (1) year
renewal term until either party provides at least three (3) months' prior
written notice of its intent to terminate this Agreement at the end of the
related term.
Section 3. DELIVERY OF DOCUMENTS AND OTHER INFORMATION. Seller will
deliver to the Custodian the Mortgage Loan Documents and upon receipt by
Seller of the Purchase Price, Seller will instruct the Custodian to release
the Mortgage Loan Documents to Purchaser.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER WITH RESPECT TO
AUTHORITY AND OTHER MATTERS. Seller hereby makes as of the Purchase Date the
following representations and warranties:
(a) Seller has not dealt with any broker or agent or other parties who
might be entitled to a fee or commission in connection with this transaction
other than Purchaser or its affiliates, or which has been paid or otherwise
provided for;
(b) Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Oklahoma with full corporate power
necessary to carry on its business as now being conducted; Seller has the
full corporate power and authority to execute and deliver this Agreement and
to perform in accordance herewith; the execution, delivery and performance of
this Agreement (including all instruments of transfer to be delivered
pursuant to this Agreement) by the Seller and the consummation of the
transactions contemplated hereby have been duly and validly authorized; this
Agreement
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evidences the valid, binding and enforceable obligation of the Seller, and
all requisite corporate action has been taken by the Seller to make this
Agreement valid and binding upon the Seller in accordance with its terms;
(c) The consummation of the transactions contemplated by this Agreement
is in the ordinary course of business of the Seller, and the transfer,
assignment and conveyance of all documents by the Seller pursuant to this
Agreement are not subject to the bulk transfer or any similar statutory
provision in effect in any applicable jurisdiction;
(d) Neither the execution and delivery of this Agreement, the sale of
Mortgage Loans to the Purchaser, or the transactions contemplated hereby, nor
the fulfillment of or compliance with the terms and conditions of this
Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Seller's charter or by-laws or any legal
restriction or any material agreement or instrument to which the Seller is
now a party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any
law, rule, regulation, order, judgment or decree to which the Seller or its
property is subject, or impair the ability of the Purchaser to realize on the
Mortgage Loans, or impair the value of the Mortgage Loans;
(e) Except as otherwise disclosed to the Purchaser, there is no action,
suit, proceeding or investigation pending, or to the Seller's knowledge
threatened against the Seller that, either in any one instance or in the
aggregate, is likely to result in any material adverse change in the
business, operations, financial condition, properties or assets of the
Seller, or in any material impairment of the right or ability of the Seller
to carry on its business substantially as now conducted, or in any material
liability on the part of the Seller, or that would draw into question the
validity of this Agreement or the Mortgage Loans or of any action taken or to
be taken in connection with the obligations of the Seller contemplated
herein, or that would be likely to impair materially the ability of the
Seller to perform under the terms of this Agreement;
(f) No consent, approval, authorization or order of any court or
governmental agency is required for the execution, delivery and performance
by the Seller, or compliance by the Seller, with this Agreement or the sale
of the Mortgage Loans as evidenced by the consummation of the transactions
contemplated by this Agreement, or if required, such approval has been
obtained prior to the Purchase Date. However, Seller's participation in this
Agreement will be approved by its Board of Directors;
(g) Seller used no adverse selection procedures in selecting the
Mortgage Loans from among the outstanding mortgage loans in its portfolio as
to which representations and warranties in this Section of the Agreement
could be made;
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(h) Seller will treat the disposition of the Mortgage Loans as a sale of
assets for financial accounting and reporting purposes;
(i) Seller is the sole owner of, and has the full right to sell to the
Purchaser, all rights with respect to the servicing of the Mortgage Loans
following the Purchase Date;
(j) Seller will not solicit any of the borrowers listed on the Schedule
of Loans Delivered in order to refinance their mortgage loan without prior
written approval from the Purchaser; and
(k) Seller hereby warrants that it is compliance with all applicable
licensing requirements of federal, state, and local governmental authorities,
including, without limitation, any such requirements in the jurisdictions in
which each Mortgaged Premises is located.
Section 4.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER REGARDING
INDIVIDUAL MORTGAGE LOANS. Unless otherwise agreed to on the Purchase Date
of any pool of Mortgage Loans, Seller hereby represents and warrants to
Purchaser with respect to each Mortgage Loan that, as of the Purchase Date
thereof:
(a) The information set forth on the Schedule of Loans Delivered is
complete, true and correct in all material respects.
(b) All policies of title insurance, hazard insurance, and flood
insurance respecting such Mortgage Loan and the related premises and
improvements thereon are in full force and effect, have been fully paid and
have been issued by sound and financially responsible insurance companies,
duly licensed and qualified to transact business, and are in such amounts as
are reasonably required by Purchaser or as required by law. All such policies
insure Seller, among others, as loss payee thereunder, in a form such that it
may be endorsed to Purchaser as loss payee as required hereunder, and there
are no facts or circumstances which could provide a basis for revocation of
any policies or defense to any claims made thereon. If such Property is
located in a flood area identified by the Federal Emergency Management Agency
("FEMA") pursuant to the National Flood Insurance Act of 1968, as amended,
(the "Act") a flood insurance policy issued by FEMA, or one conforming to the
requirements of the Federal Housing Administration, has been obtained and
complies with this Subsection (b) and the Act.
(c) The Mortgage Loan is secured by a valid, existing and enforceable lien
on the Mortgaged Premises, including improvements with respect to the foregoing.
The Security Instrument is subject only to the lien of (a) current real
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property taxes and assessments, (b) covenants, conditions and restrictions,
rights of way, easements and other matters of public record as of the date of
recording acceptable to mortgage lending institutions generally and
specifically referred to in the title insurance policy and which do not
adversely affect the appraised value of the Mortgaged Premises set forth in
such appraisal; and (c) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of the security
intended to be provided by the Security Instrument or the use, enjoyment,
value or marketability of the related Mortgaged Premises;
(d) The Note and the Security Instrument are genuine, and each is the
legal, valid and binding obligation of the maker thereof enforceable in
accordance with its terms subject to bankruptcy, reorganization or other
similar laws. All parties to the Note and the Security instrument had legal
capacity to enter into the Mortgage Loan and to execute and deliver the Note
and the Security Instrument, and the Note and the Security Instrument have
been duly and properly executed by such parties;
(e) The terms of the Note and the Security instrument have not been
impaired, waived, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary to protect the interest of
the Purchaser and which has been delivered to the Custodian. The substance of
any such waiver has been approved by the issuer of any related Primary
Mortgage Insurance Policy and the title insurer, to the extent required by
the policy, and its terms are reflected on the Schedule of Loans Delivered.
No borrower has been released, in whole or in part, except in connection with
an assumption agreement approved by the issuer of any related Primary
Mortgage Insurance Policy and the title insurer, to the extent required by
the policy, and which assumption agreement is part of the Mortgage Loan
Documents delivered to the Custodian and the terms of which are reflected in
the Schedule of Loans Delivered.
(f) The Mortgage Loan is not subject to any right of rescission,
set-off, counterclaim or defense, including without limitation the defense of
usury, nor will the operation of any of the terms of the Note or the Security
Instrument, or the exercise of any right thereunder, render either the Note
or the Security instrument unenforceable, in whole or in part, or subject to
any right of rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto;
(g) There are no defaults in complying with the terms of the Security
Instruments, and all taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
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remains unpaid and which has been assessed but is not yet due and payable.
The Seller has not advanced funds, or induced, solicited or knowingly
received any advance of funds by a party other than the borrower, directly or
indirectly, for the payment of any amount required under the Mortgage Loan,
except for interest accruing from the date of the Note or date of
disbursement of the Mortgage Loan proceeds, whichever is later;
(h) Requirements of any federal, state or local law including, without
limitation, usury, truth-in-lending, real estate settlement procedures,
consumer credit protection, equal credit opportunity or disclosure laws
applicable to the Mortgage Loan have been complied with in all material
respects;
(i) The Security Instrument has not been satisfied, canceled,
subordinated or rescinded in whole or in part, and the Mortgaged Premises has
not been released from the lien of the Security Instrument, in whole or in
part, nor has any instrument been executed that would effect any such
release, cancellation, subordination or rescission;
(j) The proceeds of the Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder, and any and all
requirements as to completion of any on-site or off-site improvement and
disbursements of any escrow funds thereof have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Security Instrument were paid, and the Borrower is not
entitled to any refund of any amounts paid or due under the Note or Security
Instrument;
(k) Unless otherwise specified in the Schedule of Mortgage Loans, Seller
is the sole owner of the Mortgage Loan and there has not been any other sale
or assignment thereof. The related Note and Security Instrument delivered to
Purchaser are the only executed copies thereof.
(l) There is no default, breach, violation or event of acceleration
existing under the Security Instrument or the Note and no event which, with
the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of
acceleration, and neither the Seller nor its predecessors have waived any
default, breach, violation or event of acceleration;
(m) There are no mechanics' liens or claims which have been filed for
work, labor or material affecting the Mortgaged Premises which are or may be
liens prior to or equal to the lien of the related Security Instrument;
(n) There is no proceeding pending for total or partial condemnation of
the related Mortgaged Premises or any part thereof and such Mortgaged
Premises are free of material damage. No improvement encumbered by such
Mortgage
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Loan is in violation of any applicable zoning law or regulation, building
code or any valid restrictive or protective covenant or setback line. No
improvement on such Mortgaged Premises is a mobile home or manufactured home
unless specifically approved by Purchaser in writing prior to purchase;
(o) The Mortgage Loan was underwritten generally in accordance with the
underwriting guidelines of the Seller as presented to the Purchaser;
(p) The related Security Instrument contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Premises of the
benefits of the security provided thereby, including: (a) in the case of a
Security Instrument designated as a deed of trust, by trustee's sale; and (b)
otherwise by judicial foreclosure. In the event that such Security Instrument
constitutes a deed of trust, a trustee, duly qualified under applicable law
to serve as such, has been properly designated and currently so serves, and
is named in the Security Instrument or has been substituted in accordance
with applicable law and no fees or expenses will become payable by Purchaser
to such trustee under the deed of trust, except in connection with a
trustee's sale after default by the Obligor;
(q) The origination and collection practices used with respect to the
Mortgage Loan have been in all respects legal, proper, prudent and customary
in the mortgage origination and servicing business, and have been in all
respects in compliance with all applicable laws and regulations. With respect
to escrow deposits and escrow payments, all such payments are in the
possession of the Seller and there exist no deficiencies in connection
therewith for which customary arrangement for repayment thereof have not been
made. All escrow payments have been calculated and collected in full
compliance with state and federal law;
(r) Such Mortgage Loan does not fall within the coverage of Section
103(aa) of the Truth-in-Lending Act, as amended, nor Section 226.32 of
Federal Reserve Board Regulation Z, as amended, which govern certain
mortgages commonly known as "high cost mortgages" or "Section 32 loans";
(s) The Mortgage Premises is free from any and all toxic or hazardous
substances, and there exists no violation of any local, state or federal
environmental law, rule or regulation; and
(t) No prepayment penalty, as set forth in the terms of the Note and
Security instrument, has been waived or limited before or after an interest
rate change date.
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Section 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser hereby makes as of the Purchase Date the following representations
and warranties:
(a) Purchaser is acquiring Mortgage Loans for its own account only and
not for any other person;
(b) The Purchaser considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
(c) The Purchaser is a real estate investment trust duly organized,
validly existing and in good standing under the laws of the State of Maryland
with full corporate power necessary to carry on its business as now being
conducted; the Purchaser has the full corporate power and authority to
execute and deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement by the Purchaser and
the consummation of the transactions contemplated hereby have been duly and
validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Purchaser, and all requisite corporate action
has been taken by the Purchaser to make this Agreement valid and binding upon
the Purchaser in accordance with its terms;
(d) The consummation of the transactions contemplated by this Agreement
is in the ordinary course of business of the Purchaser;
(e) Neither the execution and delivery of this Agreement, the
acquisition of the Mortgage Loans by the Purchaser or the transactions
contemplated hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement, will conflict with or result in a breach of any
of the terms, conditions or provisions of the Purchaser's declaration of
trust or by-laws or any legal restriction or any material agreement or
instrument to which the Purchaser is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing,
or result in the violation of any law, rule, regulation, order, judgment or
decree to which the Purchaser or its property is subject;
(f) There is no action, suit, proceeding or investigation pending, or to
the Purchaser's knowledge threatened against the Purchaser that, either in
any one instance or in the aggregate, may result in any material adverse
change in the business, operations, financial condition, properties or assets
of the Purchaser, or in any material impairment of the right or ability of
the Purchaser to carry on its business substantially as now conducted, or
result in any material liability on the part of the Purchaser, or that would
draw into question the validity of this
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Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Purchaser contemplated herein, or that
would be likely to impair materially the ability of the Purchaser to perform
under the terms of this Agreement; and
(g) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Purchaser of or compliance by the Purchaser with this
Agreement, or the acquisition of the Mortgage Loans as evidenced by the
consummation of the transactions contemplated by this Agreement, or if
required, such approval has been obtained prior to the Purchase Date.
However, Purchaser's participation in this Agreement will be approved by its
Board of Trustees.
Section 6. REMEDIES. In the event that a party discovers a breach of a
representation and warranty set forth in Section 4, Section 4.1 or Section 5
that materially and adversely affects the value of any of the Mortgage Loans
or the interest of the Purchaser therein, such party shall give prompt notice
to the other parties hereto. The party in breach shall have 60 days, after
receipt of notice of such breach, in which to cure in all material respects
such breach. In the event that the Seller is unable to cure in all material
respects a breach of a representation and warranty set forth in Section 4 or
Section 4.1 as to any Mortgage Loans, then the Seller shall promptly
repurchase each affected Mortgage Loan at a price equal to the unpaid
principal balance of such Mortgage Loan multiplied by the applicable purchase
price percentage plus accrued and unpaid interest thereon at the gross coupon
rate through the date of repurchase (the Repurchase Date). In the event that
the Seller repurchases a Mortgage Loan such Mortgage Loan will be returned to
the Seller.
As an additional remedy, the Seller shall indemnify the Purchaser and
hold it harmless against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other
costs and expenses arising out of or resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from, (a) a
breach by the Seller of any of its covenants, representation or warranties
contained in this Agreement or (b) the servicing of any Mortgage Loan prior
to the transfer of servicing.
The Purchaser shall indemnify the Seller and hold it harmless against
any losses, damages, penalties, fines, forfeiture, reasonable and necessary
legal fees and related costs, judgments and other costs and expenses arising
out of or resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, (a) a breach by the Purchaser of any of its
covenants, representations or warranties contained in this Agreement or (b)
the servicing of any Mortgage Loan following the transfer of servicing.
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Section 7. SUCCESSOR AND ASSIGNS. This Agreement shall bind and inure
to the benefit of and be enforceable by the Seller and the Purchaser and the
respective successors and assigns of the Seller and the Purchaser. This
Agreement shall not be assigned, pledged or hypothecated by the Seller to a
third party without the consent of the Purchaser or the successors and
assigns of the Purchaser which shall not be unreasonably withheld or delayed.
Section 8. CONDITIONS TO CLOSING. The obligations of the Seller and
the Purchaser to consummate the sale and purchase of the Mortgage Loans on
the Purchase Date are subject to the satisfaction of the following conditions:
(a) All representations and warranties of Seller and Purchaser under
this Agreement shall be true and correct as of the Purchase Date, and no
event shall have occurred that, with notice or the passage of time, would
constitute a default under this Agreement;
(b) All Mortgage Loan Documents shall have been delivered to the
Custodian; and
(c) All other terms and conditions of this Agreement shall have been
complied with in all material respects.
Subject to the foregoing conditions, Purchaser shall pay the Purchase
Price to Seller on the Purchase Date by wire transfer of immediately
available funds to the account designated by Seller.
Section 9. COSTS. Seller shall pay any commissions due its salesmen,
the legal fees and expenses of its attorneys, and fees incurred in connection
with the transfer of the Mortgage Loan Documents to the Custodian. Seller
shall prepare the Assignment of Security Instrument and pay all recording
fees with respect to the transfer of each Mortgage Loan to Purchaser or its
designee.
Section 10. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly given or delivered if delivered personally or mailed by registered or
certified mail return receipt requested with first class postage prepaid as
follows:
If to Purchaser:
AEGIS Investment Trust
2500 City West Blvd., Suite 1200
Houston, Texas 77042
Attn: Managing Director
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If to Seller:
Aegis Mortgage Corporation
5208 W. Reno, Suite 255
Oklahoma City, OK 73127
Attn: Managing Director
or such other address as any person may request by notice given. Notices
sent as provided herein shall be deemed to have been delivered on the fifth
business day following the date on which it is so mailed.
Section 11. GOVERNING LAW. This agreement shall be governed by and
construed under the laws of the State of Texas without regard to such state's
provisions pertaining to choice of law.
Section 12. AMENDMENT. This Agreement, including any Schedules or
Exhibits hereto and all other agreements and documents executed in connection
herewith, constitutes the entire agreement among the parties hereto with
respect to the subject hereof and no amendment, alteration or modification of
the Agreement shall be valid unless in each instance such amendment,
alteration or modification is expressed in a written instrument duly executed
by each party hereto.
Section 13. COUNTERPARTS. This Agreement may be executed
simultaneously in any number of counterparts. Each counterpart shall be
deemed to be an original, and all such counterparts shall constitute one and
the same instrument.
Section 14. EXHIBITS AND SCHEDULES. The exhibits and schedules to this
Agreement, as amended or modified from time to time, are hereby incorporated
and made a part hereof and are an integral part of this Agreement.
Section 15. NO THIRD PARTY BENEFICIARIES. Each of the provisions of
this Agreement is for the sole and exclusive benefit of the parties hereto,
respectively, as their interests shall appear, and shall not be deemed to be
for the benefit of any other person or entity or group of persons or entities.
Section 16. SURVIVAL. This Agreement, and the representations and
warranties contained herein, shall survive the Purchase and shall not merge
into the purchase documents.
Section 17. SUCCESSORS AND ASSIGNS. This Agreement shall bind and
inure to the benefit of each party hereto, and to each party's successors,
assigns, agents and representatives.
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Section 18. SEVERABILITY CLAUSE. Any part, provision, representation
or warranty of this Agreement that is prohibited or that is held to be void
or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions.
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IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the date first above written.
AEGIS INVESTMENT TRUST
Purchaser
By:
------------------------------
Name:
Title:
AEGIS MORTGAGE CORPORATION
Seller
By:
------------------------------
Name:
Title:
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the ___
day of December, 1997 ("Effective Date"), by and between Aegis Investment
Trust, a Maryland real estate investment trust (the "Company"), Aegis
Mortgage Corporation, an Oklahoma corporation ("AMC" and together with the
Company collectively referred to as the "Employers"), and [PATRICK A. WALDEN]
(the "Employee"). The Employers and the Employee may be referred to herein
collectively as the "Parties" and individually as a "Party".
ARTICLE I
TERM OF EMPLOYMENT
The Employers now hereby employ the Employee and the Employee hereby
accepts employment with the Employers for a period beginning as of the
Effective Date and ending December __, 2000 (the "Initial Termination Date"),
subject, however, to earlier termination as hereinafter provided.
The terms of this Agreement shall continue beyond the Initial
Termination Date in the following manner: on December __, 1999, and on each
anniversary date therefrom (each an "Anniversary Date") the Termination Date
shall be automatically extended by one year (the "Extended Termination Date")
unless either the Employee or either of the Employers gives the other Party
written notice at least thirty (30) days prior to such Anniversary Date that
the Termination Date then in effect shall not be so extended. If such notice
is given, the Initial Termination Date or the Extended Termination Date then
in effect, as the case may be, shall not be extended. Any extensions
thereafter shall require a written contract or written amendment hereto. The
Initial Term and any extended term are sometimes referred to in this
Agreement as the "Term".
ARTICLE II
DUTIES OF EMPLOYEE
2.01 DUTIES. The Employee is engaged to be a Managing Director of the
Company and a Managing Director of AMC. The Employee's duties and powers as
such shall be determined from time to time by the board of trustees of the
Company (the "Board of Trustees") and the Board of Directors of AMC (the
"Board of Directors"). To the extent that there is any conflict in the
instructions from the Board of Trustees and the Board of Directors, the
instructions of the Board of Trustees shall control. The Employee shall
perform and discharge such duties well and faithfully, and shall be subject
to the supervision and direction of the Board of Trustees and the Board of
Directors.
2.02 FULL TIME EMPLOYMENT. The Employee shall devote his entire
productive time, ability, and attention to the business of the Employers
during the Term. During the Term, the Employee shall not, directly or
indirectly, render any services of a business, commercial or professional
nature to any other person, corporation,
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firm or organization, whether for compensation or otherwise, without the
prior written consent of the Employers. The execution and performance of the
Employee's duties under this Agreement do not conflict with or result in a
breach of or a default under any agreement, contract or instrument to which
the Employee is a party or by which the Employee is bound.
2.03 NO RELOCATION. Notwithstanding any contrary provision in this
Agreement, in performing his duties and fulfilling the requirements of his
employment, the Employee's home office will be in the Metropolitan
Statistical Area of Houston, Texas.
ARTICLE III
COMPENSATION AND BENEFITS
3.01 BASE COMPENSATION. As partial compensation for services rendered
and the Employee's covenants and agreements under this Agreement, during the
Term the Employee shall be entitled to receive from the Employers a base
salary of $225,000 per year, payable in the same manner as the Company pays
its other employees. The base salary shall be reviewed on an annual basis by
the Compensation Committee of the Board of Trustees (the "Compensation
Committee"), and may be increased, but not decreased, in the sole discretion
of the Compensation Committee.
3.02 FORMULA BONUS. In addition to the compensation specified in
Section 3.01 above, the Employers shall pay to the Employee on a quarterly
basis an amount equal to 7.5% of the amount (the "7.5% Amount") by which (i)
the Company's Return on Equity (as hereinafter defined) exceeds (ii) the
Threshold Yield (as hereinafter defined) for such fiscal quarter multiplied
by the Average Net Worth (as hereinafter defined) for such quarter. The 7.5%
Amount shall be paid to the Employee in arrears within [60] days following
the end of such fiscal quarter ending March 30, June 30 and September 30 of
each year and within [90] days following the fiscal quarter ending December
31 of each fiscal year. Except as set forth below, the 7.5% Amount shall be
based on the Company's internal financial statements. For the purposes of
this Section 3.02, the term "Company's Return on Equity" shall mean (i) the
Company's Net Income (as hereinafter defined) multiplied by four and then
(ii) divided by the Average Net Worth. The term "Net Income" means the
Company's net income as determined in accordance with generally accepted
accounting principles for such fiscal quarter prior to the deduction of the
7.5% Amount, the deduction for dividends paid and any net operating loss
deductions arising from losses in prior periods. The term "Average Net
Worth" means arithmetic average of the sum of the gross proceeds from any
offering of the Company's equity securities by the Company before any
underwriting discounts and commission and other expenses and costs relating
to such equity offering, plus the Company's retained earnings without taking
into account any losses incurred in prior periods computed by taking the
daily average of such values during such period. The term "Threshold Yield"
means (i) the Ten-Year U.S. Treasury Rate (as hereinafter defined) for the
period in
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question plus (ii) 200 basis points. The term "Ten-Year U.S. Treasury Rate"
means the arithmetic average of the weekly average yield to maturity for
actively traded current coupon U.S. Treasury fixed interest rate securities
(adjusted to constant maturities of ten years) published by the Federal
Reserve Board during a quarter, or, if such rate is not published by the
Federal Reserve Board, then the rate published by any Federal Reserve Bank or
agency or department of the federal government that most closely approximates
the Ten-Year U.S. Treasury Rate selected by the Company. The earnings shown
on the financial statements of the Company shall be final and binding upon
the Parties unless the Employee shall within five days of the announcement of
such earnings dispute the amount of such earnings and in which event the
matter shall be submitted to a major independent accounting firm for its
determination.
3.03 BENEFIT PLAN. The Employers agree to include the Employee in any
benefit plan adopted by such Employer for the benefit of its senior
employees, including the Company's 1997 Share Incentive Plan. Such benefits
shall at a minimum include health and life insurance benefits.
3.04 EXPENSES. The Employers, in accordance with the rules and
regulations that the Employers may issue and revise from time to time, shall
reimburse the Employee for business expenses directly and reasonably incurred
in the performance of his duties.
3.05 STOCK OPTIONS. The Employee will be entitled to options to acquire
200,000 share of Company's common stock ("Common Stock") pursuant to the
Company's 1997 Share Incentive Plan.
3.06 TERMINATION WITHOUT CAUSE. In the event this Agreement is
terminated other than pursuant to (x) Section 4.03 hereof or (y) the
voluntary termination by the Employee for other than Good Cause (as
hereinafter defined) (i) the Employers shall pay to the Employee an amount
equal to two times (a) the total annual compensation payable under Section
3.01 of this Agreement and (b) the additional compensation, if any, under
Section 3.02 of this Agreement earned by the Employee for the preceding
fiscal year (together with the payments provided in Section 3.06(iii) below,
the "Severance Payment"), (ii) all of the Employee's options to purchase
Common Stock owned outright or contingently shall immediately vest and become
immediately exercisable, (iii) the Employers will provide health benefits to
the Employee and the Employee's dependents at Employers' expense for the two
year period following such termination, and (iv) the Employers shall have no
further liability or obligation to the Employee for compensation hereunder
except as provided above. The payments made by the Employers to the Employee
under Section 3.06 shall be paid in monthly installments over a two year
period beginning on the date that termination of this Agreement becomes
effective. Notwithstanding any provision hereof to the contrary, if the
Employee is terminated for "cause" pursuant to Section 4.03 hereof, or if the
Employee resigns for other than Good Cause, then the Employee will not
entitled to any severance pursuant to this Section 3.06 and the Employers'
sole obligation to the Employee
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shall be to paid the compensation due to the Employee under Section 3.01
through the date of termination and the compensation earned under Section
3.02 through the last full fiscal quarter prior to such termination. The
term "Good Cause" means the occurrence of any of the following events without
the written consent of Employee: (i) the forced relocation, without the
consent or approval of Employee, of the principal place of business of
Employee's employment to a place that is more than 50 miles from Houston,
Texas, or (ii) any removal of Employee from his position as Managing Director
of the Company, or a material and adverse change in Employee's work
environment, or (iii) the assignment to Employee of any duties or
responsibilities inconsistent with Employee's duties and responsibilities as
a Managing Director of the Company.
3.07 SAVINGS CLAUSE. If by reason of section 280G of the Code any
payment or benefit received or to be received by Employee (whether payable
pursuant to the terms of this Agreement ("Contract Payments") or any other
plan, arrangements or agreement with the Employers or an Affiliate (as
defined below) (collectively with the Contract Payments, "Total Payments")
would not be deductible (in whole or part) by the Employers, an Affiliate or
other person making such payment or providing such benefit, then the
Severance Payments shall be reduced (to zero if necessary) and, if Severance
Payments are reduced to zero, other Contract Payments shall be reduced (to
zero if necessary) and, if Contract Payments are reduced to zero, other Total
Payments shall be reduced (to zero if necessary) until no portion of the
Total Payments is not deductible by reason of section 280G of the Code. For
purposes of this limitation, (a) no portion of the Total Payments the receipt
or enjoyment of which Employee shall have effectively waived in writing prior
to the date of payment of the Severance Payments shall be taken into account;
(b) no portion of the Total Payments shall be taken into account which in the
opinion of tax counsel selected by the Employers' independent auditors and
acceptable to Employee does not constitute a "parachute payment" within the
meaning of section 280G(b)(2) of the Code (without regard to subsection
(A)(ii) thereof); (c) the Severance Payments (and, thereafter, other Contract
Payments and other Total Payments) shall be reduced only to the extent
necessary so that the Total Payments (other than those referred to ion
clauses (a) and (b) of Section 3.06(i) in their entirety constitute
reasonable compensation for services actually rendered within the meaning of
section 280G(b)(4) of the Code, in the opinion of the tax counsel referred to
in clause (b), and (d) the value of any noncash benefit or any deferred
payment or benefit included in the Total Payments shall be determined by the
Corporation's independent auditors in accordance with the principles of
sections 280G(d)(3) and (4) of the Code. For purposes of this Section 3.07,
the term "Affiliate means the Employers' successors, any Person whose actions
result in a Change in Control or any corporation affiliated (or which, as a
result of the completion of the transactions causing a Change in Control
shall become affiliated) with the Employers within the meaning of section
1504 of the Code.
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ARTICLE IV
TERMINATION
This Agreement shall terminate prior to the expiration of its Term upon
the occurrence of any one of the following events:
4.01 DISABILITY. In the event that the Employee is unable fully to
perform his duties and responsibilities hereunder to the full extent required
by the Board of Trustees by reason of illness, injury or incapacity or
otherwise results in employee being unable to meet the definition of "a
qualified individual with a disability" found in Section 12.111 of the
American with Disabilities Act (42 U.S.C.Section 12.111[8]), for ninety (90)
consecutive days, during which time the Employee shall continue to be
compensated as provided in Sections 3.01 and 3.02 hereof, this Agreement may
be terminated by the Employers, and the Employers shall have no further
liability or obligation to the Employee for compensation hereunder; provided,
however, that Employee will be entitled to receive the payments prescribed
under any disability benefits plan in which Employee was participating. In
the event of any dispute between the Employers and the Employee under this
Section 4.01 as to whether the Employee's employment may be terminated under
this Section, the Employee shall submit to a physical examination by a
licensed physician selected by the Employers, and the determination of such
physician shall be binding on the Parties.
4.02 DEATH. In the event that the Employee dies during the Term, the
Employers shall pay to his executors, legal representatives or administrators
an amount equal to the installment of the Employee's compensation set forth
in Section 3.01 for the month in which the Employee dies and in Section 3.02
hereof for the fiscal quarter in which the Employee dies, and thereafter the
Employers shall have no further liability or obligation hereunder to the
Employee's executors, legal representatives, administrators, heirs or assigns
or any other person claiming under or through the Employee; provided,
however, that the Employee's executors, legal representatives and
administrators will be entitled to receive and disburse to the proper persons
the payments prescribed under any death or disability benefits plan in which
Employee was participating.
4.03 CAUSE. Nothing in this Agreement shall be construed to prevent the
termination of this Agreement by the Employers for "cause". For purposes of
this Agreement, "cause" shall mean (i) the Employee's intentional or
deliberate failure to perform or observe (other than by reason of illness,
injury or incapacity) any of the material terms or provisions of this
Agreement, including the failure of the Employee to follow the directions of
the Board of Trustees, (ii) dishonesty, misconduct or action on the part of
the Employee that is or is reasonably likely to be materially damaging or
detrimental to the business of the Employers, (iii) conviction of a felony,
or of any misdemeanor involving moral turpitude, (iv) insobriety or drug
addiction that is materially
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affecting or is likely to materially affect the Employee's ability to perform
the services required of him hereunder, or (v) misappropriation of funds.
Subject to applicable cure periods as set out in the next sentence, the
Employee's employment may be terminated for cause at any time. Prior to
terminating this Agreement on account of a cause described in clause (i)
above (but not for any of the other enumerated "causes"), the Employers shall
give the Employee thirty (30) days' written notice and an opportunity to cure
such failure to the reasonable satisfaction of the Employers. Upon
termination for cause, the Employers shall pay to the Employee the
compensation due to the Employee under Section 3.01 through the date of
termination and the compensation earned under Section 3.02 through the last
full fiscal quarter prior to such termination. Following a termination for
cause and payment of the amounts required under this Section, the Employers
shall have no further duty or obligation to the Employee; provided, however,
that the Employee shall continue to be bound by Article V.
ARTICLE V
PROPERTY RIGHTS
5.01 NON-COMPETITION. During the two years following the termination of
his employment under this Agreement with either of the Employers for any
reason (the "Non-Competition Period"), Employee shall not, directly or
indirectly, either as an employee, employer, consultant, member, agent,
lender, principal, partner, stockholder, corporate officer, director, or in
any other individual or representative capacity, engage or participate in any
business that is in competition with the business of either of the Employers,
except as approved in writing by such Employer.
5.02 SOLICITATION. During the two year period following the termination
of this Agreement, the Employee agrees not to, directly or indirectly, call
on or solicit, any person who or which during the Term was or had been an
employee of either of the Employers.
5.03 CONFIDENTIAL INFORMATION. The Employee will not, during the Term
of or after the termination of this Agreement, disclose any confidential
information of the Employers to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever, nor shall the Employee
make use of any such confidential information for his own purposes or for the
benefit of any person, firm, corporation or other entity (except the
Employers) under any circumstances during the Term, or after the termination,
of this Agreement. Confidential information does not include any information
which (i) is or becomes generally available to the public or (ii) is or
becomes available to the Employee on a nonconfidential basis from a source
other than either of the Employers, provided that such source is not and was
not bound by a confidentiality agreement with or other obligation of secrecy
to either of the Employers known to the Employee. Employee agrees that, upon
termination of this Agreement or on demand of either of the Employers, at any
time, he shall immediately deliver all such
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printed or written material and copies thereof to the applicable Employer.
5.04 REASONABLENESS OF RESTRICTIONS. The Employee agrees that (a) the
covenants contained in Sections 5.01, 5.02 and 5.03 hereof are necessary for
the protection of each of the Employer's business goodwill and trade secrets,
(b) a portion of the compensation paid to Employee under this Agreement is
paid in consideration of the covenants herein contained, the sufficiency of
which consideration is hereby acknowledged, (c) Employee is not, and under
this Agreement, will not be engaged in a common calling, and (d) if the scope
of any restriction contained in Sections 5.01, 5.02 or 5.03 is too broad to
permit enforcement of such restriction to its full extent, then such
restriction shall be enforced to the maximum extent permitted by law, and the
parties hereto hereby consent that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction.
5.04 ENFORCEMENT. The Employee acknowledges that the restrictions
contained in Sections 5.01, 5.02 and 5.03 hereof are reasonable and necessary
to protect the legitimate interests of each of the Employers and their
affiliates, that the Employers would not have entered into this Agreement in
the absence of such restrictions, and that any violation of any provision of
those Sections will result in irreparable injury to each of the Employers.
The Employee also acknowledges that each of the Employers shall be entitled
to preliminary and permanent injunctive relief, which rights shall be
cumulative and in addition to any other rights or remedies to which such
Employer may be entitled.
5.05 COPY OF COVENANTS. Until the expiration of the applicable
restrictions, the Employee will provide, and either of the Employers
similarly may provide, a copy of the covenants contained in Sections 5.01,
5.02 and 5.03 of this Agreement to any business or enterprise which the
Employee may directly or indirectly own, manage, operate, finance, join,
control or participate in the ownership, management, operation, financing, or
control of, or serve as an officer, director, employee, partner, principal,
agent, representative, consultant, lender or otherwise, or with which he may
use his name or permit his name to be used.
ARTICLE VI
GENERAL PROVISIONS
6.01 NOTICES. Any notices to be given hereunder by either Party to the
other may be effected either by personal delivery in writing or by mail,
registered or certified, postage prepaid with return receipt requested:
If to the Employers:
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If to the Employee:
Mailed notices shall be addressed to the Parties at the addresses set forth
above, but each Party may change his address by written notice in accordance
with this Section 6.01. Notices delivered personally shall be deemed
communicated as of the date of actual receipt; mailed notices shall be deemed
communicated as of ten (10) days after mailing.
6.02 ENTIRE AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or in writing, between the Parties hereto with
respect to the employment of the Employee by the Employers, and contains all
of the covenants and agreements between the Parties with respect to such
employment in any manner whatsoever.
6.03 CERTAIN ACKNOWLEDGMENTS. The Employee by his execution and
delivery of this Agreement represents to each of the Employers as follows:
(i) That Employee has been advised by the Employers to have this
Agreement reviewed by an attorney representing the Employee, and
the Employee has either had this Agreement reviewed by such
attorney or has chosen not to have this Agreement reviewed
because the Employee, after reading the entire Agreement, fully
and completely understands each provision and has determined not
to obtain the services of an attorney.
(ii) The Employee either on his own or with the assistance and advice
of his attorney has in particular reviewed Article V and
understands and accepts that the restrictions imposed on the
Employee by Article V are reasonable and necessary for the
protection of the property rights of each of the Employers.
6.04 HEADINGS. The headings or titles to sections in this Agreement are
intended solely for convenience, and no provision of this Agreement is to be
construed by reference to the heading or title of any section.
6.05 AMENDMENT OR MODIFICATION; WAIVER. No provision of this Agreement
may be amended, modified or waived unless such amendment, modification or
waiver is authorized by the Board of Trustees and the Board of Directors and
is agreed to in writing, signed by Employee and by an officer of each of the
Employers (other than the Employee) thereunto duly authorized. Except as
otherwise specifically provided in this Agreement, no waiver by any Party
hereto of any breach by any other Party of any condition or provision of this
Agreement to be performed by such other Party
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shall be deemed a waiver of a similar or dissimilar provision or condition at
the same or at any prior or subsequent time; nor shall the receipt or
acceptance of the Employee's employment be deemed a waiver of any condition
or provision hereof.
6.06 NO SET-OFF. There shall be no right of set-off or counterclaim, in
respect of any claim, debt or obligation, against the payments or benefits to
be made or provided for in this Agreement.
6.07 ASSIGNABILITY. The Employee shall not assign, pledge or encumber
any interest in this Agreement or any part thereof without the express
written consent of the Employers, this Agreement being personal to the
Employee. This Agreement shall, however, inure to the benefit of the
Employee's estate, dependents, beneficiaries and legal representatives. This
Agreement shall not be assignable by each of the Employers without the
written consent of the Employee.
6.08 GOVERNING LAW. This Agreement has been negotiated, executed and
delivered in the State of Texas, and shall in all respects be interpreted,
construed and governed by and in accordance with the internal substantive law
of the State of Texas.
6.09 SEVERABILITY. Each provision of this Agreement constitutes a
separate and distinct undertaking, covenant and/or provision hereof. In the
event that any provision of this Agreement shall finally be determined to be
unlawful, such provision shall be deemed severed from this Agreement, but
every other provision of this Agreement shall remain in full force and
effect, and in substitution for any such provision held unlawful, there shall
be substituted a provision of similar import reflecting the original intent
of the Parties to the extent permissible under law.
6.10 ENFORCEMENT. In the event it becomes necessary for any Party to
file suit to enforce this Agreement or any provision contained herein, the
prevailing Party in such action shall be entitled to recover, in addition to
all other remedies or damages, court costs, expenses of litigation and
reasonable attorneys' fees incurred in such suit.
6.11 ARBITRATION. (a) Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, which cannot be settled by
mutual agreement of the Employee and each of the Employers shall be settled
by arbitration, with Houston, Harris County, Texas as the forum, in
accordance with the rules of the American Arbitration Association, and
judgment upon the award rendered through such arbitration may be entered in
any court having jurisdiction thereof.
(b) After the initiation of arbitration, the Parties shall attempt to
agree upon an arbitrator. In the absence of such agreement, there shall be
three arbitrators; one designated in writing by the Employee and one
designated in writing by both of the Employers each within 30 days after
arbitration has been
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initiated and the third to be chosen by the two designated arbitrators within
40 days after arbitration has been initiated.
(c) Any decision by the arbitrators must be concurred by all the
arbitrators.
(d) The award of the arbitrators shall be final and binding upon the
Parties without appeal or review except as permitted by the arbitration laws
of Texas. Application may be had by either Party to any court of general
jurisdiction for entry and enforcement of judgement based on said award.
EXECUTED at Houston, Texas, as of the day and year first above written.
EMPLOYERS: AEGIS INVESTMENT TRUST
By:
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Name:
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Title:
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AEGIS MORTGAGE CORPORATION
By:
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Name:
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Title:
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EMPLOYEE:
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