EXHIBIT 10.3
STOCK CONTRIBUTION AND EXCHANGE AGREEMENT
BY AND BETWEEN
AEGIS OPERATING PARTNERSHIP, L.P.
AND
[CONTRIBUTOR]
SEPTEMBER 1, 1997
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1. ACCOUNTS AND NOTES OWNED. . . . . . . . . . . . . . . . . . . . 2
1.2. AFFILIATE.. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. AGREEMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4. CLOSING.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5. CLOSING DATE. . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6. CODE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7. COMPANY.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8. CONSIDERATION.. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9. CONTRACTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10. CONTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11. EMPLOYEE BENEFIT PLANS.. . . . . . . . . . . . . . . . . . . . 4
1.12. EQUIPMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.13. ESTIMATED INCOME TAX OBLIGATIONS.. . . . . . . . . . . . . . . 4
1.14. FINANCIAL STATEMENTS.. . . . . . . . . . . . . . . . . . . . . 5
1.15. GUARANTY.. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.16. IPO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.17. KNOWLEDGE OF CONTRIBUTOR.. . . . . . . . . . . . . . . . . . . 5
1.18. LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.19. LOCK-UP AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . 6
1.20. OFFERING PRICE.. . . . . . . . . . . . . . . . . . . . . . . . 6
1.21. OPERATING PARTNERSHIP. . . . . . . . . . . . . . . . . . . . . 6
1.22. OPINION OF OPERATING PARTNERSHIP COUNSEL.. . . . . . . . . . . 6
1.23. PERMITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.24. PERMITTED LIENS. . . . . . . . . . . . . . . . . . . . . . . . 7
1.25. PRICING DATE.. . . . . . . . . . . . . . . . . . . . . . . . . 9
1.26. REAL PROPERTY LEASES.. . . . . . . . . . . . . . . . . . . . . 9
1.27. RELATED AGREEMENTS.. . . . . . . . . . . . . . . . . . . . . . 9
1.28. RELEASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.29. STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.30. STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.31. UNITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.32. ▇▇▇▇▇▇.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II CONTRIBUTION AND EXCHANGE . . . . . . . . . . . . . . . . . . 10
2.1. CONTRIBUTION AND EXCHANGE.. . . . . . . . . . . . . . . . . . . 10
2.2. CONDITIONS PRECEDENT TO CLOSING.. . . . . . . . . . . . . . . . 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR. . . . . . . . 15
3.1. INDIVIDUAL CAPACITY; ENFORCEABILITY.. . . . . . . . . . . . . . 15
(i)
3.2. NO VIOLATION OR CONFLICT BY CONTRIBUTOR.. . . . . . . . . . . . 15
3.3. TITLE TO STOCK. . . . . . . . . . . . . . . . . . . . . . . . . 16
3.4. ORGANIZATION AND AUTHORITY OF COMPANY.. . . . . . . . . . . . . 17
3.5. CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . . 17
3.6. NO VIOLATION OR CONFLICT BY COMPANY.. . . . . . . . . . . . . . 18
3.7. TITLE TO ASSETS.. . . . . . . . . . . . . . . . . . . . . . . . 19
3.8. NO LITIGATION.. . . . . . . . . . . . . . . . . . . . . . . . . 19
3.9. CONDITION OF EQUIPMENT. . . . . . . . . . . . . . . . . . . . . 19
3.10. COMPUTER PROGRAMS AND INTELLECTUAL PROPERTY. . . . . . . . . . 20
3.11. BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . 20
3.12. CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.13. ACCOUNTS OR NOTES OWNED. . . . . . . . . . . . . . . . . . . . 22
3.14. FINANCIAL STATEMENTS.. . . . . . . . . . . . . . . . . . . . . 22
3.15. NO ADVERSE CHANGE. . . . . . . . . . . . . . . . . . . . . . . 23
3.16. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.17. EMPLOYEE AGREEMENTS AND BENEFIT PLANS. . . . . . . . . . . . . 26
3.18. COMPLIANCE WITH LAW. . . . . . . . . . . . . . . . . . . . . . 30
3.19. LENDER APPROVAL. . . . . . . . . . . . . . . . . . . . . . . . 31
3.20. INVESTMENT COMPANY.. . . . . . . . . . . . . . . . . . . . . . 31
3.21. TRANSACTIONS WITH AFFILIATES.. . . . . . . . . . . . . . . . . 31
3.22. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.23. REAL PROPERTY LEASES.. . . . . . . . . . . . . . . . . . . . . 32
3.24. NO BROKER. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.25. SUBSIDIARIES.. . . . . . . . . . . . . . . . . . . . . . . . . 33
3.26. DISCLOSURE.. . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.27. ACQUISITION FOR INVESTMENT.. . . . . . . . . . . . . . . . . . 34
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF OPERATING
PARTNERSHIP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.1. ORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.2. AUTHORIZATION; ENFORCEABILITY.. . . . . . . . . . . . . . . . . 35
4.3. NO VIOLATION OR CONFLICT. . . . . . . . . . . . . . . . . . . . 36
4.4. ACQUISITION FOR INVESTMENT. . . . . . . . . . . . . . . . . . . 36
4.5. UNITS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.6. OPERATING PARTNERSHIP AGREEMENT . . . . . . . . . . . . . . . . 38
ARTICLE V COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . 38
5.1. BOOKS AND RECORDS.. . . . . . . . . . . . . . . . . . . . . . . 38
5.2. OPERATING AGREEMENTS, PRUDENT PRACTICES.. . . . . . . . . . . . 40
5.3 CONFIDENTIAL INFORMATION. . . . . . . . . . . . . . . . . . . . 42
5.4. FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . 46
5.5. ESTIMATED TAX OBLIGATIONS.. . . . . . . . . . . . . . . . . . . 46
5.6. PREPARATION OF TAX RETURNS; TAX COVENANTS.. . . . . . . . . . . 48
5.7. ADDITIONAL AGREEMENTS OF OPERATING PARTNERSHIP. . . . . . . . . 53
5.8. RELEASE OF GUARANTY.. . . . . . . . . . . . . . . . . . . . . . 53
(ii)
ARTICLE VI INDEMNITIES AND ADDITIONAL COVENANTS. . . . . . . . . . . . . 53
6.1. CONTRIBUTOR'S INDEMNITY.. . . . . . . . . . . . . . . . . . . . 53
6.2. OPERATING PARTNERSHIP'S INDEMNITY.. . . . . . . . . . . . . . . 58
[6.3. NONCOMPETITION AGREEMENT.. . . . . . . . . . . . . . . . . . . 61
[6.4. NON-SOLICITATION AGREEMENT.. . . . . . . . . . . . . . . . . . 62
[6.5. COPY OF CERTAIN SECTIONS.. . . . . . . . . . . . . . . . . . . 62
6.6. PURCHASE OF ADDITIONAL SHARES.. . . . . . . . . . . . . . . . . 62
6.7. SOLE REMEDY.. . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE VII MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 63
7.1. ENTIRE AGREEMENT; AMENDMENT.. . . . . . . . . . . . . . . . . . 63
7.2. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.3. GOVERNING LAW.. . . . . . . . . . . . . . . . . . . . . . . . . 65
7.4. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.5. NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.6. COUNTERPARTS; HEADINGS. . . . . . . . . . . . . . . . . . . . . 67
7.7. INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . . . . 67
7.8. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.9. NO RELIANCE.. . . . . . . . . . . . . . . . . . . . . . . . . . 68
(iii)
EXHIBITS
Exhibit 1.11 Employee Agreements and Benefit Plans
Exhibit 1.14 Financial Statements
Exhibit 1.19 Lock-up Agreement
Exhibit 1.22 Opinion of Operating Partnership's Counsel
Exhibit 1.23 Permits
Exhibit 1.24 Permitted Liens
Exhibit 1.26 Real Property Leases
Exhibit 1.28 Release
Exhibit 1.31 Partnership Agreement
Exhibit 3.2 Conflicts
Exhibit 3.3 Stock Title
Exhibit 3.5 Capitalization
Exhibit 3.8 Litigation
Exhibit 3.10 Computer Programs and Intellectual Property
Exhibit 3.12 Contracts
Exhibit 3.15 Adverse Changes
Exhibit 3.16 Taxes
Exhibit 3.21 Transactions with Affiliates
Exhibit 3.22 Insurance
Exhibit 5.3(b) Confidential Information
(iv)
STOCK CONTRIBUTION AND EXCHANGE AGREEMENT
STOCK CONTRIBUTION AND EXCHANGE AGREEMENT, made as of the 1st day of
September, 1997, by and between AEGIS OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership, and [CONTRIBUTOR].
RECITALS
WHEREAS, Contributor owns the Stock; and
WHEREAS, Contributor desires to contribute the Stock to Operating
Partnership and Operating Partnership desires to acquire the Stock from
Contributor; and
WHEREAS, in reliance on the consummation of the transactions
contemplated herein, Operating Partnership is, simultaneously with Closing,
acquiring from Contributor and the other Stockholders, 98.5% of the outstanding
common stock of the Company.
NOW, THEREFORE, in consideration of the Recitals and of the mutual
covenants, conditions and agreements set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, it hereby is agreed that:
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ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings specified:
1.1. ACCOUNTS AND NOTES OWNED.
"Accounts and Notes Owned" shall mean all accounts receivable, notes
receivable, mortgage notes and associated rights owned by the Company.
1.2. AFFILIATE.
"Affiliate" shall mean with respect to Contributor, any person,
entity, firm or corporation that is controlled by or is under common control
with Contributor, and with respect to the Company or Operating Partnership, any
employee of the Company or Operating Partnership, or any person, firm or
corporation that directly or indirectly controls, is controlled by or is under
common control with the Company or Operating Partnership.
1.3. AGREEMENT.
"Agreement" shall mean this Stock Contribution and Exchange Agreement,
together with the Exhibits attached hereto, as the same may be amended from time
to time in accordance with the terms hereof.
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1.4. CLOSING.
"Closing" shall mean the conference held at ___ a.m., local time, on
the Closing Date, at the offices of Operating Partnership.
1.5. CLOSING DATE.
"Closing Date" shall mean the date of the closing of the IPO but in no
event later than December 31, 1997.
1.6. CODE.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
1.7. COMPANY.
"Company" shall mean AEGIS Mortgage Corporation, an Oklahoma
corporation.
1.8. CONSIDERATION.
"Consideration" shall mean the number of Units, valued at a "per-Unit"
price equal to the Offering Price, with an aggregate amount equal to
$[5,712,500.00] [4,712,500][3,266,500].
1.9. CONTRACTS.
"Contracts" shall mean all contracts, agreements, leases,
relationships and commitments, to which the Company is a
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party or by which the Company is bound that are listed on EXHIBIT 3.12 hereof.
1.10. CONTRIBUTOR.
"Contributor" shall mean [________], [a resident of the State of
Texas, residing at _____________________.]
1.11. EMPLOYEE BENEFIT PLANS.
"Employee Benefit Plans" shall mean the employee agreements and
benefit plans of the Company listed on EXHIBIT 1.11 attached hereto.
1.12. EQUIPMENT.
"Equipment" shall mean all machinery, vehicles, equipment, furniture,
fixtures, furnishings, parts, tools, engineering and other items of tangible
personal property owned or leased by the Company.
1.13. ESTIMATED INCOME TAX OBLIGATIONS.
"Estimated Income Tax Obligations" means the income tax obligations of
Contributor arising through ownership of the Company through and including the
day immediately preceding the Closing Date with respect to the Company's taxable
income for the partial 1997 year as determined by the Company in accordance with
SECTION 5.5 hereof.
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1.14. FINANCIAL STATEMENTS.
"Financial Statements" shall mean the audited balance sheet of the
Company as of December 31, 1996, and the related audited statements of income,
changes in stockholders' equity and cashflow of the Company for the fiscal year
then ended, which statements are attached hereto as EXHIBIT 1.14.
1.15. GUARANTY.
"Guaranty" shall mean either (i) the guaranty by Contributor of any
obligations of the Company to the Southwest Bank of Texas or (ii) the guaranty
by Contributor of any obligations of the Company to Bank United.
1.16. IPO.
"IPO" shall mean the initial public offering of common shares of beneficial
interest by AEGIS Investment Trust.
1.17. KNOWLEDGE OF CONTRIBUTOR.
"Knowledge of Contributor" shall mean the actual knowledge of
Contributor, after due investigation and inquiry.
1.18. LAW.
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"Law" shall mean any federal, state, local or other law or
governmental requirement of any kind, and the rules, regulations and orders
promulgated thereunder.
1.19. LOCK-UP AGREEMENT.
"Lock-Up Agreement" means the agreement relating to a lock-up
arrangement between Contributor and ▇▇▇▇▇▇▇▇▇ and Company, Inc. substantially in
the form of EXHIBIT 1.19 attached hereto.
1.20. OFFERING PRICE.
"Offering Price" means the initial offering price to the public of a
single common share of beneficial interest of AEGIS Investment Trust to be
issued in the IPO.
1.21. OPERATING PARTNERSHIP.
"Operating Partnership" shall mean AEGIS Operating Partnership, L.P.,
a Delaware limited partnership.
1.22. OPINION OF OPERATING PARTNERSHIP COUNSEL.
"Opinion of Operating Partnership Counsel" shall mean the opinion of
Hunton & ▇▇▇▇▇▇▇▇, in the form of EXHIBIT 1.22 attached hereto.
1.23. PERMITS.
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"Permits" shall mean all permits, licenses and governmental
authorizations, registrations and approvals used in the conduct of the Company's
business, including, but not limited to, those Permits listed on EXHIBIT 1.23
attached hereto.
1.24. PERMITTED LIENS.
"Permitted Liens" shall mean those liens, encumbrances, mortgages,
charges, claims, restrictions, pledges, security interests, impositions and
other matters affecting the assets that are either (i) listed on EXHIBIT 1.24
attached hereto or (ii) the following:
(a) Liens for taxes not yet due or which are being contested in good faith
and by appropriate proceedings, if adequate reserves with respect
thereto are maintained on the books of the Company, in accordance with
generally accepted accounting principles consistently applied
("GAAP");
(b) Liens relating to borrowings in the ordinary course of business
pursuant to credit facilities existing on the date hereof (or any
renewals or extensions thereof);
(c) Carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's, vendors' or other like
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liens arising in the ordinary course of business and which are not
overdue for a period of more than thirty (30) days or, if so overdue,
which are being contested in good faith and by appropriate proceedings
and against which the Company has provided adequate reserves in
accordance with GAAP;
(d) Pledges or deposits to secure the payment of workers compensation,
unemployment insurance and other social security benefits;
(e) Deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like
nature, in each case incurred in the ordinary course of business;
(f) Zoning restrictions, easements, licenses, restrictions on the use of
real property or minor irregularities in title thereto which do not
impair the use of such property in the operation of business of the
Company or the value of such property; and
(g) Liens, other than in favor of Pension Benefit Guaranty Corporation,
created by or resulting from any legal
-8-
proceedings (including legal proceedings instituted by the Company)
which are being contested in good faith by appropriate proceedings,
including appeals of judgments as to which a stay of execution shall
have been issued and adequate reserves shall have been established.
1.25. PRICING DATE.
"Pricing Date" shall mean the date of pricing of the IPO.
1.26. REAL PROPERTY LEASES.
"Real Property Leases" shall mean the real property leases pursuant to
which the Company possesses all real property used in the conduct of its
business, which leases are listed on EXHIBIT 1.26 attached hereto.
1.27. RELATED AGREEMENTS.
"Related Agreements" shall mean the other contribution agreements
relating to the other Stockholders.
1.28. RELEASE.
"Release" shall mean the mutual release between the Contributor and
Operating Partnership and the Company, substantially in the form of EXHIBIT 1.28
hereof.
1.29. STOCK.
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"Stock" shall mean the [187.5] shares of the issued and outstanding
common stock of the Company, $1.00 par value, owned of record and beneficially
by Contributor.
1.30. STOCKHOLDERS.
"Stockholders" shall mean the owners of 100% of the outstanding stock
of the Company as of the date of this Agreement.
1.31. UNITS.
"Units" shall mean units of limited partnership interests in Operating
Partnership each unit of which will be redeemable for cash, or at the option of
AEGIS Investment Trust, a single common share of beneficial interest of AEGIS
Investment Trust, in the manner set forth in the Amended and Restated Agreement
of Limited Partnership of Operating Partnership, attached as EXHIBIT 1.31
hereto.
1.32. ▇▇▇▇▇▇.
"▇▇▇▇▇▇" shall mean ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a resident of the State of
Texas.
ARTICLE II
CONTRIBUTION AND EXCHANGE
2.1. CONTRIBUTION AND EXCHANGE.
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Subject to the terms and conditions of this Agreement and in
consideration of Operating Partnership's agreement to issue the Units to
Contributor, Contributor hereby agrees to contribute, transfer, assign, convey
and deliver to Operating Partnership on the Closing Date, and Operating
Partnership hereby agrees to acquire and accept the Stock from Contributor.
2.2. CONDITIONS PRECEDENT TO CLOSING.
(a) The obligations of Operating Partnership to issue the Units in
exchange for the Stock on the Closing Date shall be subject to the satisfaction
of the following conditions:
(i) Contributor will contribute and deliver, or will cause to be
contributed and delivered, stock certificates representing the Stock,
duly endorsed in blank or accompanied by stock powers duly executed in
blank, in proper form for transfer;
(ii) Contributor delivers, or causes to be delivered, the Lock-Up
Agreement and the Amended and Restated Agreement of Limited
Partnership of Operating Partnership, attached as EXHIBIT 1.31 hereto;
(iii)all requisite consents and approvals of third parties to the
consummation of the transactions are obtained;
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(iv) the IPO is consummated;
(v) the representations and warranties contained in Article III
hereof, the Exhibits attached hereto and in all certificates and other
documents to be delivered by Contributor pursuant to this Agreement
shall be true, complete and accurate as of the date hereof and at and
as of the Closing Date as though such representations and warranties
were made at and as of such date;
(vi) the Contributor performs, in all material respects, each
covenant and agreement set forth in Article V hereto required to be
performed prior to Closing;
(vii) Contributor delivers to Operating Partnership such
certificates as it may reasonably request on or prior to the Pricing
Date to evidence compliance with the conditions set forth in this
Section 2.2;
(viii)Contributor delivers the Release; and
(ix) each Related Agreement shall have been executed and
delivered by each of the other Stockholders, and each condition
precedent required by
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the Related Agreements shall have been completed or waived.
(b) The obligations of Contributor to contribute the Stock in exchange for
the Units on the Closing Date shall be subject to the satisfaction of the
following conditions:
(i) the Company distributes to Contributor cash in amount
sufficient to allow Contributor to meet his Estimated Income Tax
Obligations up to the Closing Date, determined in accordance with
SECTION 5.5 hereof;
(ii) Operating Partnership delivers, or causes to be issued to
Contributor, the Units in accordance with the terms of this Agreement;
(iii) the IPO is consummated;
(iv) the representations and warranties contained in Article IV
hereof and in all certificates to be delivered by Operating
Partnership pursuant to this Agreement shall be true and accurate as
of the date hereof and at and as of the Closing Date as though such
representations and warranties were made at and as of such date;
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(v) Operating Partnership delivers to Contributor the Release
and such certificates as he may reasonably request on or prior to the
Pricing Date to evidence compliance with the conditions set forth in
this Section 2.2; and
(vi) Operating Partnership delivers, or causes to be delivered,
the Opinion of Operating Partnership's counsel.
(c) On the Pricing Date, Contributor agrees to deliver or cause to be
delivered, in escrow, to Hunton & ▇▇▇▇▇▇▇▇, counsel to Operating Partnership,
the items described in subparagraphs 2.2(a)(i), (ii), (iii) and (vii), and
Operating Partnership agrees to deliver or cause to be delivered, in escrow, to
Hunton & ▇▇▇▇▇▇▇▇ the items in subparagraphs 2.2(b)(ii), (v) and (vi). Unless
otherwise directed by Contributor and Operating Partnership, if the closing is
canceled, postponed or otherwise fails to occur on or before the seventh (7th)
business day following the Pricing Date, Hunton & ▇▇▇▇▇▇▇▇ shall return to
Contributor or Operating Partnership, as the case may be, all items delivered to
them by the end of such day.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR
Contributor hereby represents and warrants to Operating Partnership as
of the date hereof and as of the Closing Date that:
3.1. INDIVIDUAL CAPACITY; ENFORCEABILITY.
Contributor has full power, legal right and capacity to enter into
this Agreement and to perform his obligations hereunder. This Agreement is, and
the other documents and instruments required hereby will be, when executed and
delivered by the parties hereto, the valid and binding obligations of
Contributor, enforceable against Contributor in accordance with their respective
terms, subject to (i) bankruptcy, insolvency, reorganization, moratorium, and
other laws now or hereafter in effect relating to creditor's rights and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3.2. NO VIOLATION OR CONFLICT BY CONTRIBUTOR.
The execution, delivery and performance of this Agreement by
Contributor and the consummation of the other transactions contemplated in the
Recitals hereto do not and will
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not conflict with or violate any Law, judgment, order or decree binding on
Contributor or any contract or agreement to which Contributor is a party or by
which it is bound, the breach of which could have a material adverse effect on
Contributor's ability to consummate the transactions contemplated hereby other
than as set forth in EXHIBIT 3.2 hereof. No notice to, filing or registration
with, or authorization, consent or approval of, any governmental, regulatory or
self-regulatory agency is necessary or is required to be made or obtained by
Contributor in connection with the execution and delivery of this Agreement by
Contributor or the consummation by Contributor of the transactions contemplated
hereby or in the Recitals hereto.
3.3. TITLE TO STOCK.
Immediately prior to the contribution and exchange contemplated in
Section 2.1 hereof, Contributor owned good, valid and marketable title to the
Stock, free and clear of any and all mortgages, liens, encumbrances, charges,
claims, restrictions, pledges, security interests or impositions of any kind or
character other than as set forth on EXHIBIT 3.3. Upon delivery of the Stock to
Operating Partnership at the Closing and upon Operating Partnership's payment of
the Consideration therefor, good and marketable title to the Stock, free and
clear of all
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mortgages, liens, encumbrances, charges, claims, restrictions, pledges, security
interests or impositions of any kind or character, will pass to Operating
Partnership.
3.4. ORGANIZATION AND AUTHORITY OF COMPANY.
The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Oklahoma. The Company has full
corporate power to carry on its business as it is now being conducted and to
own, operate and hold under lease its assets and properties as, and in the
places where, such properties and assets now are owned, operated or held. The
Company is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the failure to be so qualified would
have a material adverse effect on the business, financial condition or results
of operations of the Company.
3.5. CAPITALIZATION.
EXHIBIT 3.5 sets forth the ownership of all of the issued and
outstanding capital stock of the Company and securities convertible into such
capital stock. The Stock has been duly and validly issued and is fully paid and
non-assessable, and constitutes all capital stock of the Company
-17-
owned of record or beneficially by Contributor. Neither the Company nor
Contributor has issued, created or granted any options, warrants or other rights
to subscribe for or purchase any capital stock of the Company or securities
convertible into or exchangeable for, or which otherwise confer on the holder
any right to acquire, any capital stock of the Company, nor is the Company or
Contributor committed to issue any such option, warrant or other right.
3.6. NO VIOLATION OR CONFLICT BY COMPANY.
The execution, delivery and performance of this Agreement and the
consummation of the other transactions contemplated in the Recitals hereto do
not and will not conflict with or violate any Law, judgment, order or decree
binding on the Company, or the Articles of Incorporation or Bylaws of the
Company or any Contract to which the Company is a party or by which it is bound.
On the Closing Date, no notice to, filing or registration with, or
authorization, consent or approval of, any governmental, regulatory or
self-regulatory agency is necessary or is required to be made or obtained by the
Company in connection with the consummation of the transactions contemplated in
this Agreement or in the Recitals hereto other than as set
-18-
forth in EXHIBIT 1.23 or that have otherwise been obtained in accordance with
subsection 2.2(a)(iii).
3.7. TITLE TO ASSETS.
The Company owns good and indefeasible title to all assets and
properties, both tangible and intangible, (a) that are used in the Company's
business, or (b) that are reflected in the Financial Statements (except as
disposed of in the ordinary course of business since the date thereof), free and
clear of any and all mortgages, liens, encumbrances, charges, claims,
restrictions, pledges, security interests or impositions, except for Permitted
Liens, liens securing liabilities disclosed in the Financial Statements and
leased assets and properties.
3.8. NO LITIGATION.
Except as listed in EXHIBIT 3.8 there is no litigation, arbitration
proceeding, governmental investigation, citation or action of any kind pending
or, to the Knowledge of Contributor, proposed or threatened, against the Company
or relating to the business, assets or properties of the Company.
3.9. CONDITION OF EQUIPMENT.
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The Equipment, taken as a whole, is in good operating condition and
repair, subject to ordinary wear and tear, and is substantially fit for the
purposes for which it is intended.
3.10. COMPUTER PROGRAMS AND INTELLECTUAL PROPERTY.
EXHIBIT 3.10 is a true and correct listing as of the date hereof of
all proprietary rights owned or used by the Company in connection with the
conduct of its business and all material computer programs or software owned,
used or licensed by the Company. Except as set forth in EXHIBIT 3.10, there are
no claims or assertions made or, to the Knowledge of Contributor, threatened by
any third party that the Company does not own all right, title and interest in
the intellectual property described in this Section 3.10, that any of the
Company's intellectual property rights are invalid or unenforceable, or that the
Company's use of such rights would infringe upon, impair, dilute or otherwise
damage the proprietary rights of any third party the effect of which would have
a material adverse effect on the business or financial condition of the Company.
To the Knowledge of Contributor, no third party is infringing upon any of the
intellectual property described in this Section 3.10.
3.11. BOOKS AND RECORDS.
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The books and records of Company, including, without limitation,
customer lists and wholesale broker information, are complete and correct in all
material respects.
3.12. CONTRACTS.
EXHIBIT 3.12 attached hereto is a true and complete list as of the
date hereof of all of the Contracts that constitute: (a) a lease of any
personal property with (i) aggregate annual rental payments in excess of
$50,000, or (ii) with a remaining term in excess of three years and which is
non-cancelable without penalty on notice of 90 days or less; (b) an agreement to
purchase or sell a capital asset for a price in excess of $100,000; (c) any
mortgage loan servicing agreements relating to the servicing of mortgage loans
having an aggregate balance as of the date hereof in excess of $2,000,000; (d)
any agreement for the purchase or sale of mortgage loans entered into or
performed after December 31, 1996 relating to the purchase of mortgage loans
having aggregate principal balances in excess of either (i) $500,000 with
respect to any single transaction or (ii) $1,000,000 with respect to any series
of transactions with the same counterparty; or (e) any other agreements
involving an amount in excess of $100,000 or otherwise material to the operation
of the Company that have been entered into or performed
-21-
after December 31, 1996. The Company has performed each material term, covenant
and condition of each of the Contracts which is to be performed by the Company
at or before the date hereof. No event has occurred that would, with the
passage of time or compliance with any applicable notice requirements,
constitute a default by the Company or, to the actual knowledge of Contributor,
any other party under any of the Contracts, and, to the actual knowledge of
Contributor, no party to any of the Contracts intends to cancel, terminate or
exercise any option under any of the Contracts, the result of which would have a
material adverse effect on the business or financial condition of the Company.
3.13. ACCOUNTS OR NOTES OWNED.
The Accounts or Notes Owned all have arisen from BONA FIDE
transactions in the ordinary course of business.
3.14. FINANCIAL STATEMENTS.
The Financial Statements, including the notes thereto, copies of which
are included in EXHIBIT 1.14 hereto, are true and correct in all material
respects, present fairly the financial condition of the Company as of December
31, 1996, and the results of its operations for the fiscal year then ended, and
were
-22-
prepared, except as set forth therein, in accordance with GAAP, applied on a
basis consistent with the Company's past practice. Except as set forth in the
Financial Statements, the Company was not, as of the date thereof, subject to
any material liability of any nature, whether accrued, absolute, contingent or
otherwise and whether due or to become due of a type required to be reflected on
the Financial Statements in accordance with GAAP.
3.15. NO ADVERSE CHANGE.
Except as set forth in EXHIBIT 3.15, since December 31, 1996, there
has not been: (a) any material adverse change in the business, financial
condition or results of operations of the Company; (b) any loss, damage,
condemnation or destruction to the properties of the Company materially
adversely affecting the Company's business or properties; (c) any labor dispute
or disturbance, litigation or any event or condition of any character that could
materially adversely affect the Company's business; (d) any borrowings by the
Company other than borrowings under its existing bank credit facilities in the
ordinary course of business; (e) any mortgage, pledge, lien or encumbrance made
on any of the properties or assets of the Company, except for Permitted Liens;
or (f) any sale, transfer or other disposition
-23-
of assets of the Company other than in the ordinary course of business.
3.16. TAXES.
(a) The Company has filed or will cause to be filed all federal and
state tax returns and reports required to have been filed by or for it on or
before the Closing Date, and all information set forth in such returns or
reports is accurate and complete in all material respects. The Company has paid
or made adequate provision for all taxes, additions to tax, penalties, and
interest for all periods covered by those returns or reports required to be paid
by it. There are no unpaid and delinquent taxes, additions to tax, penalties,
or interest payable by the Company or by any other person that are or could
become a lien on any asset, or otherwise adversely affect the business,
properties, or financial condition, of the Company. The Company has collected
or withheld all amounts required to be collected or withheld by it for any taxes
or assessments, and all such amounts have been paid to the appropriate
governmental agencies or set aside in appropriate accounts for future payment
when due. The Company is in compliance with, and its records contain all
information and documents (including, without limitation, properly completed IRS
Forms W-9) necessary to comply with, all
-24-
information reporting and tax withholding requirements under federal, state, and
local laws, rules, and regulations, and such records identify with specificity
all accounts subject to backup withholding under Section 3406 of the Code. The
balance sheets contained in the Financial Statements of the Company fully and
properly reflect, as of the date thereof, the liabilities of the Company for all
accrued taxes, additions to tax, penalties and interest required to be paid by
it. Except as disclosed in EXHIBIT 3.16, the Company has not granted (nor is it
subject to) any waiver of the period of limitations for the assessment of tax
for any currently open taxable period, and no unpaid tax deficiency has been
asserted against or with respect to the Company by any taxing authority.
EXHIBIT 3.16 describes all tax elections and consents currently in effect with
respect to the Company. Contributor is not a "foreign person" for purposes of
Section 1445 of the Code.
(b) The Company has timely made all elections and taken all other
action required under the Code to qualify as an S corporation and has not taken
or omitted to take any action the taking or omission of which could result in a
challenge to its status as an S corporation. The Company has had in effect
since
-25-
January 1, 1991 a valid election to be taxed as an S corporation under the Code.
(c) Effective on the Closing Date, Contributor will consent to (i)
the revocation of the Company's election under Section 1362(a) of the Code to be
a small business corporation and (ii) the Company's election under Section
1362(e)(3) of the Code not to apply the pro rata allocation rules provided in
Section 1362(e)(2) of the Code for its S termination year.
(d) For income tax purposes, the Company's final tax year as an S
corporation will end on the day immediately preceding the Closing Date.
(e) Contributor represents and warrants that he has obtained from his
own counsel advice regarding the tax consequences of becoming a partner in the
Operating Partnership and of the other transactions contemplated by this
Agreement.
3.17. EMPLOYEE AGREEMENTS AND BENEFIT PLANS.
(a) Attached hereto as EXHIBIT 1.11 is a true and complete list as of
the date hereof of all agreements, written or oral, relating to the compensation
and other benefits of present and former directors, officers, employees,
consultants and other agents of the Company pursuant to which the Company has
-26-
continuing obligations and sets forth a complete list of the employment
contracts, salaries and wages and commission schedules of all employees of the
Company, and the rates of pay of all consultants of the Company, as of the date
hereof. EXHIBIT 1.11 includes all collective bargaining agreements and all
pension, retirement, bonus, stock option, profit sharing, health, disability,
life insurance, hospitalization, education or other similar plans or
arrangements (whether or not subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")), true and complete copies of which (or true
and complete descriptions of which, in the case of oral agreements) have been
made available to Operating Partnership. None of the agreements listed on
EXHIBIT 1.11 will be breached by Contributor's execution, delivery and
performance of this Agreement. To the Knowledge of Contributor, no employee or
consultant of the Company is in violation of any employment contract,
non-competition agreement or any other contract or agreement relating to the
relationship of any such employee or consultant with the Company.
(b) EXHIBIT 1.11 identifies each "pension plan" (as defined in
Section 3(2) of ERISA (the "Pension Plans") and each "welfare plan" (as defined
in ERISA Section 3(1)) (the "Welfare
-27-
Plans") maintained for the benefit of employees of the Company or to which the
Company contributes on behalf of its employees. True and complete copies of
each Employee Benefit Plan have been made available to Operating Partnership.
To the Knowledge of Contributor, each Employee Benefit Plan is enforceable in
accordance with its terms.
(c) EXHIBIT 1.11 identifies each Pension Plan that is intended to be
qualified under Section 401(a) of the Code. Each such Pension Plan complies in
all material respects with applicable Law as of the date hereof, and the
Internal Revenue Service (the "IRS") has issued favorable determination letters
to the effect that the forms of such Pension Plans (or predecessor plans)
satisfy the requirements of Section 401(a) and related Sections of the Code and
such Pension Plans (or predecessor plans) have been operated in reasonable good
faith compliance with the Code. To the Knowledge of Contributor, there are no
facts or circumstances that would jeopardize or adversely affect in any material
respect the qualification under Code Section 401(a) of any Pension Plan that is
intended to be so qualified.
(d) As of the Closing Date, full payment will be made to each
Employee Benefit Plan of all contributions that are required under the terms
thereof and under ERISA or the Code to
-28-
be made on or prior to that date. No "accumulated funding deficiency" (as
defined in ERISA Section 302 or Code Section 412), whether or not waived, exists
with respect to any Pension Plan.
(e) To the Knowledge of Contributor, each Employee Benefit Plan has
been administered substantially in accordance with its terms. In addition, to
the Knowledge of Contributor, each Employee Benefit Plan complies, and has been
administered substantially in accordance with, any applicable provisions of
ERISA and the rulings and regulations promulgated thereunder (including the
continuation coverage requirements of group health plans under the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA")), and all other applicable
Law, and all reports, returns and other documentation that are required to have
been filed with the IRS, the Department of Labor, the Pension Benefit Guaranty
Corporation (the "PBGC") or any other governmental agency (federal, state or
local) have been filed on a timely basis, in each instance in which the failure
to file such reports, returns and other documents would result in any material
liability or obligation to Contributor or the Company. Except as set forth in
EXHIBIT 3.8, no lawsuits or complaints to or by any person or governmental
entity have been filed or, to the
-29-
Knowledge of Contributor, are contemplated or threatened, with respect to any
Employee Benefit Plan.
(f) Except as described on EXHIBIT 1.11, the Company has not received
a notice of, or incurred, any withdrawal liability with respect to a
"multiemployer plan" (as defined in ERISA Section 3(37)).
The Company has not incurred any material liability with respect to
any Welfare Plan or for "welfare benefits" (as defined in Code Section 419) that
is not fully reflected in the Financial Statements. Except as set forth in
EXHIBIT 1.11, or under COBRA, or under the term of a Pension Plan, the Company
is not obligated to provide or to pay any benefits to former employees or to
their dependents or beneficiaries.
3.18. COMPLIANCE WITH LAW.
(a) The conduct of the Company's business and its use of its assets
does not violate or conflict with any Law with respect to the origination and
servicing of mortgage loans.
(b) Nor does the conduct of the Company's business and its use of its
assets violate or conflict with any other Law which violation or conflict would
cause a material adverse change in the assets or properties of the Company or a
material impairment of the business of the Company.
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(c) All governmental approvals, authorizations, Permits and licenses,
including those relating to environmental quality, required by the Company to
conduct its business have been obtained, are in full force and effect and are
being complied with in all material respects.
3.19. LENDER APPROVAL.
The Company is a lender or seller/servicer approved by FNMA, GNMA,
FHLMC, VA and FHA.
3.20. INVESTMENT COMPANY.
The Company is not an investment company as defined by the Investment
Company Act of 1940.
3.21. TRANSACTIONS WITH AFFILIATES.
Except as set forth in EXHIBIT 3.21 or EXHIBIT 1.11, since December
31, 1996, the Company has not, in the ordinary course of business or otherwise,
purchased, leased or otherwise acquired any material property or assets or
obtained any material services from, or sold, leased or otherwise disposed of
any material property or assets or provided any material services to (except
with respect to remuneration for services rendered as a director, officer or
employee of the Company), Contributor, any employee of the Company or any
Affiliate of either of them.
-31-
Except as set forth in EXHIBIT 3.21 or EXHIBIT 1.11, (a) the Contracts do not
include any obligation or commitment between the Company and any Affiliate, and
(b) the assets of the Company do not include any receivable or other obligation
or commitment from an Affiliate to the Company.
3.22. INSURANCE.
EXHIBIT 3.22 contains a list of major policies for property, casualty
and key person life insurance maintained by the Company as of the date hereof.
All such policies are in full force and effect, and no breach or default by the
Company exists under any of such policies to the Knowledge of Contributor and no
event has occurred, that, with the giving of notice or lapse of time, would
constitute a breach or default thereunder.
3.23. REAL PROPERTY LEASES.
EXHIBIT 1.26 contains a list of all Real Property Leases to which the
Company is a party as of the date hereof. Each Real Property Lease is valid,
binding, enforceable and in full force and effect. No breach or default by the
Company or, to the Knowledge of Contributor, any other party, exists under any
of the Real Property Leases, and no event has occurred, that, with the giving of
notice or lapse of time, would constitute a
-32-
breach or default thereunder. Except for the Permitted Liens, the Company has
not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered
any interest in any Real Property Lease.
3.24. NO BROKER.
Neither the Company nor Contributor has had any dealings, negotiations
or communications with any broker or other intermediary in connection with the
transactions contemplated by this Agreement, and neither is committed to any
liability for any brokers' or finders' fees or any similar fees in connection
with the transactions contemplated herein.
3.25. SUBSIDIARIES.
The Company does not own any class of capital stock of any
corporation, or have the right or obligation to acquire any ownership interest
in, any corporation, partnership or other business.
3.26. DISCLOSURE.
Neither this Agreement nor any representations made by Contributor in
any other document delivered in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact or
omits to state a
-33-
material fact necessary to make the statements contained herein or therein not
misleading.
3.27. ACQUISITION FOR INVESTMENT.
Contributor acknowledges that (i) he is an "accredited investor"
within the meaning of Section 501 of the Securities Act of 1933, as amended (the
"Act"), and (ii) the contribution and exchange of the Stock for the Units
contemplated herein has not been registered under the Act, or under any state
securities laws. Contributor represents that he is acquiring the Units (and any
securities exchangeable therefor) for investment and not with a view for the
distribution thereof except in accordance with applicable securities laws.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OPERATING PARTNERSHIP
Operating Partnership hereby represents and warrants to Contributor
that:
4.1. ORGANIZATION.
(a) Operating Partnership is a limited partnership duly formed and
validly existing under the laws of the State of Delaware and has full power to
enter into this Agreement and to perform its obligations hereunder. Operating
Partnership will be
-34-
as of the Closing Date, duly qualified as a foreign limited partnership to do
business, and will be as of the Closing Date, in good standing in each
jurisdiction where the failure to be so qualified would have a material adverse
effect on the business, financial condition or results of operations of
Operating Partnership.
(b) AEGIS Investment Trust is a Maryland real estate investment trust,
duly formed and validly existing under the laws of the State of Maryland. AEGIS
Investment Trust has full power to own the assets it currently owns. AEGIS
Investment Trust will be as of the Closing Date, duly qualified to do business,
and will be as of the Closing Date in good standing, in each jurisdiction where
the failure to be so qualified would have a material adverse effect on the
business, financial condition or results of operations of AEGIS Investment Trust
or Operating Partnership.
4.2. AUTHORIZATION; ENFORCEABILITY.
The execution, delivery and performance by Operating Partnership of
this Agreement and of all of the documents and instruments required hereby from
Operating Partnership are within the power of Operating Partnership and have
been duly authorized
-35-
by all necessary partnership and other action of Operating Partnership. This
Agreement is, and the other documents and instruments required hereby will be,
when executed and delivered by the parties hereto, the valid and binding
obligations of Operating Partnership, enforceable against Operating Partnership
in accordance with their respective terms.
4.3. NO VIOLATION OR CONFLICT.
The execution, delivery and performance of this Agreement by Operating
Partnership do not and will not conflict with or violate any Law, judgment,
order or decree binding on Operating Partnership or the Certificate of formation
or Partnership Agreement of Operating Partnership or any contract or agreement
to which Operating Partnership is a party or by which it is bound. No notice
to, filing or registration with, or authorization, consent or approval of, any
governmental, regulatory or self-regulatory agency is necessary or is required
to be made or obtained by Operating Partnership in connection with the execution
and delivery of this Agreement by Operating Partnership or the consummation by
Operating Partnership of the transactions contemplated hereby or in the Recitals
hereto.
4.4. ACQUISITION FOR INVESTMENT.
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Operating Partnership acknowledges that the transfer of the Stock
contemplated herein has not been registered under the Securities Act of 1933, as
amended, or under any state securities laws. Operating Partnership represents
that it is acquiring the Stock for investment and not with a view for the
distribution thereof except in accordance with applicable securities laws.
4.5. UNITS.
Upon issuance of the Units by Operating Partnership on the Closing
Date in accordance with this Agreement, the Units will be validly issued, free
and clear of any mortgage, pledge, lien, encumbrance, security interest, claim
or rights of interest of any third party whatsoever due to the actions of
Operating Partnership or any Affiliate thereof, and each Unit will be redeemable
for cash, or at the option of AEGIS Investment Trust, a single common share of
beneficial interest of AEGIS Investment Trust, in the manner expressly set forth
in Section 8.05 of the Amended and Restated Agreement of Limited Partnership of
Operating Partnership, attached as EXHIBIT 1.31 hereto.
In the event common shares of beneficial interest of AEGIS Investment
Trust are so issued in redemption of the Units, such common shares of beneficial
interest of AEGIS Investment
-37-
Trust will be validly issued, fully paid and non-assessable, and will be free
and clear of any mortgage, pledge, lien, encumbrance, security interest, claim
or rights of interest of any third party of any nature whatsoever due to the
actions of Operating Partnership or any Affiliate thereof.
4.6. OPERATING PARTNERSHIP AGREEMENT.
As of the Closing Date, the Amended and Restated Agreement of Limited
Partnership of Operating Partnership will contain Sections 2.04(a)(iii), 4.02,
5.01, 5.02, 5.03, 8.05, 8.06 and 9.02 and Article XI, as such Sections and
Article are set forth in the form of Partnership Agreement attached as EXHIBIT
1.31 hereto. further, as of the Closing Date, the Amended and Restated
Agreement of Limited Partnership of Operating Partnership will be in full force
and effect and shall not provide for additional capital contributions on behalf
of the Contributor.
ARTICLE V
COVENANTS AND AGREEMENTS
5.1. BOOKS AND RECORDS.
Each party agrees that it will cooperate with and make available to
the other party, during normal business hours, all
-38-
books, records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing Date and
relating to the conduct of the business of the Company (the "Information") which
are necessary or useful in connection with any tax inquiry, audit, investigation
or dispute, or any litigation or investigation. The party requesting any such
Information shall bear all of the out-of-pocket costs and expenses (including,
without limitation, attorneys' fees, but excluding reimbursement for salaries
and employee benefits) reasonably incurred in connection with providing such
Information. Except with respect to Information that is generally available to
the public or required to be disclosed in connection with the IPO, the party
requesting such Information shall (i) hold all such Information in the strictest
confidence, except as required by applicable Law, (ii) shall disseminate such
Information only to its officers, directors, employees and representatives who
have a need to know such information and who have been advised of the
confidential nature of such Information, (iii) shall, upon request of the other
party, return promptly or destroy all copies of the Information received by it
and all documents created from or incorporating portions of the Information, and
(iv) shall take all steps
-39-
necessary to cause its officers, directors, employees and representatives to
comply with the terms and conditions of this Section 5.1.
5.2. OPERATING AGREEMENTS, PRUDENT PRACTICES.
After the date hereof, Contributor shall cause the Company to conduct
its business consistent with prudent mortgage banking and business practices
until the Closing Date. In addition, Contributor agrees to prohibit the Company
from taking any of the following actions without the prior unanimous consent of
the Stockholders:
(i) Increasing the salary or other compensation of any employee
of the Company by more than 10%;
(ii) entering into any new employment contract providing for
annual salary and other compensation in excess of $75,000;
(iii) entering into any agreement or contract to acquire assets
in excess of $10 million dollars for any single transaction;
(iv) entering into any agreement, contract or arrangement, or the
modification of any existing agreement, contract or arrangement, whether written
or oral, including, but
-40-
not limited to any loans, guaranties or other extensions of credit or credit
support, to which Contributor, or any member of Contributor's family or any
entity controlled by such person, is a party;
(v) entering into any other contract, policy, lease or other
arrangement which would have been required to be listed on EXHIBITS 1.26, 3.12
or 3.22 had such contract, policy, lease or other arrangement been in existence
on the date hereof;
(vi) issuing any equity or debt securities (other than any
indebtedness to banks under credit facilities existing on the date hereof); or
(vii) paying or declaring of any bonuses; PROVIDED, HOWEVER, that
the Company may pay to any Stockholder, on or prior to the Pricing Date, a bonus
for the current year in an amount not to exceed $120,000 per annum; provided
that any such amount is pro-rated for the period from January 1, 1997 to the
Closing Date.
5.3. CONFIDENTIAL INFORMATION.
(a) Except as specifically authorized by the Company in writing, from
the date hereof and continuing forever (except as expressly limited in this
section), Contributor agrees that he
-41-
shall not, directly or indirectly, (i) disclose any Confidential Information to
any individual or entity, or otherwise permit any person or entity to obtain or
disclose any Confidential Information, or (ii) use any Confidential Information
for Contributor's financial gain, whether individually or on behalf of another
individual or entity (whether or not such other individual or entity is any way
employed by or affiliated with the Company). While not in any way limiting the
generality of the foregoing, the prohibitions contained herein shall extend to
any and all financial statements, reports and other documents submitted by the
Company or its agents or representatives to Contributor that constitute
Confidential Information and to any Confidential Information obtained by
Contributor pursuant to any visitation or right of inspection previously granted
to Contributor. Nothing contained herein shall prohibit Contributor from
disclosing or using Confidential Information if and only to the extent required
by Law or a valid order or subpoena issued by a court or administrative agency
of competent jurisdiction, provided that in such event Contributor promptly
notifies the Company or any Affiliate of the Company to which such Confidential
Information relates, to afford the Company or its Affiliate the opportunity to
protect its interests in such
-42-
Confidential Information. Nothing contained in this Section 5.3 shall be
construed as prohibiting Contributor from disclosing or using Confidential
Information that is or has become a matter of public record or known to the
public or members of the mortgage banking industry generally, other than as a
result of improper disclosure.
(b) For the purposes hereof, the term "Confidential Information"
means the following information and compilations of information, in whatever
form or medium (including any copies thereof, relating to any part of the
business of the Company or the business of any Affiliate of the Company provided
to Contributor or any Affiliate thereof or to which Contributor or any Affiliate
thereof had access or which either obtained or compiled or had obtained or
compiled on either's behalf, which information or compilations of information
are not a matter of public record or generally known to the public or members of
the mortgage banking industry: (i) financial information regarding the Company
or any Affiliate of the Company; (ii) for a period of one year from and after
the Closing Date, personnel data, including compensation arrangements, relating
to any employee of the Company as of the Closing Date; (iii) written internal
plans,
-43-
practices, and procedures of the Company; (iv) the identities, addresses, or
requirements of any customers or clients of the Company[; PROVIDED, HOWEVER,
that nothing contained herein shall prevent Contributor or his Affiliates from
competing with the Company at any time or from soliciting business from any
customers of clients of the Company]; and (v) the information contained on
EXHIBIT 5.3(b), which the parties agree shall be deemed confidential for the
purposes hereof.
(c) Contributor acknowledges that a violation of Section 5.3(e) of
this Agreement by Contributor may cause irreparable harm to the Company and
Operating Partnership. Accordingly, Contributor hereby grants the Company and
Operating Partnership the right to seek and be granted injunctive relief for any
such violation, in addition to any other legal remedies that may be available to
the Company and Operating Partnership.
(d) Operating Partnership acknowledges that a violation of Section
5.3(e) of this Agreement by Operating Partnership may cause irreparable harm to
Contributor. Accordingly, Operating Partnership hereby grants Contributor the
right to seek and be granted injunctive relief for any such
-44-
violation, in addition to any other legal remedies that may be available to
Contributor.
(e) No party hereto or any Affiliate thereof shall make any
statements regarding the indemnity provided pursuant to Section 6.1(a) hereof,
or the circumstances regarding the same, whether through the medium of a press
release, public statement or otherwise, without the prior written consent of the
other parties, and the parties shall be in agreement as to the content of such
statement; PROVIDED, HOWEVER, that (i) Operating Partnership or its partners may
make such disclosure of the transaction as, in the reasonable opinion of their
counsel, is required in connection with the IPO, (ii) Operating Partnership or
its partners may make such disclosure as it deems necessary to prospective
officers and directors of the Company, provided that such persons enter into
confidentiality agreements with respect to such information, and (iii) Operating
Partnership or its partners may make such disclosures as necessary in connection
with legal proceedings relating to such matters or to collect amounts owing
under such indemnity. In addition, each of the parties hereto understands and
acknowledges that this Agreement is confidential in nature and each agrees to
engage in all
-45-
reasonable efforts to protect its confidentiality and not to disclose the terms
of this Agreement or the substance of any negotiations between the parties
hereto to any other person or entity except as set forth above.
5.4. FURTHER ASSURANCES.
After the date hereof, each party will cooperate in good faith with
the other and will take all appropriate action and execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the transactions contemplated hereunder.
5.5. ESTIMATED TAX OBLIGATIONS.
Contributor agrees to cause the Company to declare and pay to the
Stockholders prior to the Closing Date dividends in cash totaling in the
aggregate not more than the amount (the "Permitted Distribution") equal to (i)
39.6% of the reasonably estimated total taxable income of the Company allocable
to the Stockholders under the Code after provision for state and local taxes
(the "Interim Earnings") for the period commencing on January 1, 1997 and ending
on the date reflected in the last internal earnings statement (the "Interim
Period"), minus (ii) the aggregate amount of all dividends declared and paid to
-46-
Stockholders since January 1, 1997. The Interim Earnings shall be determined as
follows:
(i) Not later than three business days prior to the Closing
Date, the Company shall deliver to Operating Partnership an income statement of
the Company for the Interim Period, which shall include the Company's good faith
and reasonable estimate of the Company's net income calculated in accordance
with generally accepted accounting principles applied on a basis consistent with
financial statements for the Interim Period ("Interim GAAP Earnings") together
with a schedule showing adjustments to Company's Interim GAAP Earnings to
determine the Interim Earnings.
(ii) Together with such financial statements, the Company shall
deliver to Operating Partnership a certificate of an executive Officer of the
Company (A) showing the amount of the Permitted Distribution and (B) stating
that to the best of his knowledge such financial statements fairly present, in
all material respects, the results of operations of the Company for the Interim
Period, including adjustments necessary for such fair presentation, and
reasonably estimate in good faith the Interim GAAP Earnings, all in accordance
with GAAP applied on a basis consistent with the Financial Statements and the
adjustments
-47-
necessary to determine the Interim Earnings consistent with the Company's prior
Income Tax Returns (as defined below).
(b) Operating Partnership agrees to cause the Company to pay to the
Stockholders an amount, in cash, totaling in the aggregate not more than the
amount (the "Final Payment") equal to (i) 39.6% of the total taxable income of
the Company allocable to the Stockholders under the Code after provision for
state and local taxes (the "Final Earnings") for the period commencing on
January 1, 1997 and ending on the day immediately preceding the Closing Date
(the "Final Period"), minus (ii) the aggregate amount of all dividends declared
and paid to Stockholders during the Final Period, including the Permitted
Distribution. The Final Earnings shall be determined not later than 60 days
after the Closing Date, in the same manner that the Interim Earnings were
determined, and the Final Payment shall be made not later than 60 days after the
Closing Date.
5.6. PREPARATION OF TAX RETURNS; TAX COVENANTS.
(a) Contributor, together with the other Stockholders, shall be
responsible for preparing and filing, at the Company's expense, within the times
and in the manner prescribed by Law (subject, however, to filing under any
extension), all federal or state income tax returns of the Company as an S
corporation
-48-
(E.G., IRS Form 1120S, Schedule K-1(1120S), and similar state returns) for the
tax year ending on the day immediately preceding the Closing Date, as well as
for any prior tax year of the Company that are required to be filed after the
Closing Date (each an "Income Tax Return"). Contributor covenants that (i) any
Income Tax Returns of the Company for any period ending on or before the day
before the Closing Date that are filed after the Closing Date will be complete,
correct and filed consistently with the Company's prior Income Tax Returns and
shall be based on the same tax accounting methods and elections as used for the
Company's tax year immediately preceding the period of such Income Tax Return,
except as otherwise required by law or as agreed upon by Operating Partnership,
on the one hand, and Contributor and the other Stockholders, on the other hand
and (ii) such Income Tax Returns will not be subject to penalties under Sections
6662 and 6663 of the Code relating to accuracy and fraud-related penalties (or
their predecessor provisions of the Code or any corresponding or similar
provision of federal, state, local, foreign, or territorial income tax law).
Contributor and the other Stockholders shall send Operating Partnership a draft
of each such Income Tax Return at least 30 days before the due date of such
Income Tax Return in order to give Operating
-49-
Partnership an opportunity to comment on such Income Tax Return. All Income Tax
Returns that are required to be filed pursuant to this Section 5.6(a) shall not
be unreasonably withheld.
(b) Contributor and Operating Partnership shall cooperate fully as
and to the extent reasonably requested by the other party in connection with the
preparation and filing of any Income Tax Return (including, causing the Company
to execute the Income Tax Return), and the defense of any claim, audit,
litigation or other proceeding, with respect to taxes of the Company or any of
the Stockholders for any period ending on or prior to the day immediately
preceding the Closing Date. Operating Partnership shall cause the Company, at
its expense, to conduct an audit of the Company by an independent certified
public accountant for the period from January 1, 1997 to the day prior to the
Closing Date. Operating Partnership and Contributor agree to abide by all
record retention requirements of, or record retention agreements entered into
with, any taxing authority. To the extent that action by Operating Partnership
or companies controlled by it or Contributor is required by applicable laws,
regulations or administrative pronouncements in order to extend any statute of
limitation for any Income Tax Return, claim, audit, litigation or other
proceeding described above in this
-50-
Section 5.6(b), such party shall take such action as is necessary to extend a
statute of limitations where such extension is reasonably requested by the other
party of such Income Tax Return or defense by such other party of such claim,
audit, litigation or other proceeding. To the extent that neither the Company
nor Operating Partnership is potentially liable under any such claim, audit,
litigation or other proceeding (or to the extent that Contributor admits in
writing to the Company or Operating Partnership that he and not the Company or
Operating Partnership is potentially liable under any such claim, audit,
litigation or other proceeding), Operating Partnership agrees not to take, or
allow the Company to take, any action to extend the statute of limitations for
such actions unless requested or approved by a Stockholder.
(c) Operating Partnership shall cause the Company to provide the
Stockholders with prompt notice of any inquiries, audits, examinations or
proposed adjustments by the IRS or any other similar authorities, which relate
to any period ending on or before the day before the Closing Date. The
Stockholders shall have the sole right to represent the interests of the Company
in any income tax audit or administrative proceeding relating to any period
ending on or before the day before
-51-
the Closing Date, to employ counsel of their choice at their expense, and to
settle any issues and to take any other actions in connection with such
proceedings relating to such periods; PROVIDED, that the Stockholders shall use
reasonable efforts to inform Operating Partnership of the status of any such
proceedings, shall provide Operating Partnership with copies of any pleadings,
correspondence, and other documents as Operating Partnership may reasonably
request, and shall consult with Operating Partnership prior to the settlement of
any such proceedings.
5.7. ADDITIONAL AGREEMENTS OF OPERATING PARTNERSHIP.
(a) Operating Partnership agrees that, for a period of 13 months following
the Closing Date, Operating Partnership will not dispose of the Stock in a
transaction that would result in the allocation of taxable income or gain by
Operating Partnership to Contributor under Section 704(c) of the Code.
(b) Operating Partnership will consent to the Company's election under
Section 1362(e)(3) of the Code not to apply the pro rata allocation rules
provided in Section 1362(e)(2) of the Code for its S termination year.
-52-
(c) For income tax purposes, the Company's initial tax year as a C
corporation will begin on the Closing Date.
5.8. RELEASE OF GUARANTY.
Operating Partnership agrees that, on or before three business days
after the Closing Date, Operating Partnership shall take all necessary action to
cause Contributor to be released from liability under each Guaranty.
ARTICLE VI
INDEMNITIES AND ADDITIONAL COVENANTS
6.1. CONTRIBUTOR'S INDEMNITY.
(a) Contributor, jointly and severally with [ ], hereby agrees to
indemnify and hold harmless Operating Partnership, the Company or any of their
Affiliates from and against, and agrees to defend promptly Operating
Partnership, the Company and any of their Affiliates from and to reimburse
Operating Partnership, the Company and any of their Affiliates for, any and all
losses, damages, costs, expenses, liabilities, obligations and claims of any
kind, including, without limitation, reasonable attorneys' fees and other legal
costs and
-53-
expenses (hereinafter referred to collectively as "Losses"), that either
Operating Partnership, the Company or any of their Affiliates may at any time
suffer or incur, or become subject to, as a result of, arising out of or in
connection with any violation by the Company of any laws of the United States
relating to the trading of securities prior to the Closing Date (other than the
trading of mortgages or securities backed by mortgages).
(b) In addition to the indemnification provided in subparagraph (a)
above, Contributor jointly and severally with each of the other Stockholders of
the Company, hereby agrees to indemnify and hold harmless Operating Partnership,
the Company and any of their Affiliates from and against, and agrees to defend
promptly Operating Partnership, the Company and any of their Affiliates from and
to reimburse Operating Partnership, the Company and any of their Affiliates for,
any and all Losses, that either Operating Partnership, the Company or any of
their Affiliates may at any time suffer or incur, or become subject to, as a
result of or in connection with (i) any breach or inaccuracy of any of the
representations and warranties made by Contributor in this Agreement, and (ii)
any failure by Contributor to perform
-54-
any of his covenants and obligations set forth in this Agreement or in any
document or instrument delivered pursuant hereto or any other breach of this
Agreement; PROVIDED, HOWEVER, that Operating Partnership and the Company shall
have no right to be indemnified, held harmless, defended or reimbursed pursuant
to this Section 6.1(b) unless such right is first asserted (whether or not
Losses have been incurred) by written notice to Contributor delivered (x) with
respect to claims relating to Losses arising out of matters covered in Section
3.18(a), prior to the expiration of the third anniversary of Closing or (y) for
claims relating to any other Losses, prior to March 31, 1999.
(c) The amounts for which Contributor shall be liable under Section
6.1(a) and (b) shall be net of any insurance proceeds or any other recoveries
received by Operating Partnership or the Company in connection with the facts
giving rise to the right of indemnification. In addition, Contributor's
liability for the matters described in Section 6.1(b) shall be limited to
$[2,856,250][$4,712,500][$3,266,500]. There is no limit for a Contributor's
liability under Section 6.1(a).
(d) Contributor shall not be required to indemnify Operating
Partnership, its Affiliates or the Company until the
-55-
aggregate losses incurred by Operating Partnership, its Affiliates or the
Company under this Agreement and the Related Agreements equal or exceed $50,000,
at which time each of the Stockholders shall be jointly and severally liable for
all losses back to the first dollar.
(e) In the event a claim against Operating Partnership or the Company
arises that is covered by the indemnity provisions of Section 6.1(a) or (b),
notice shall be given by the party seeking indemnification to Contributor within
thirty (30) days; provided, however, that the failure to provide any such notice
shall not relieve Contributor from any portion of any liability not caused by
the failure to timely deliver such notice, it being understood and agreed that
this proviso shall not affect the obligations of Operating Partnership or the
Company to deliver a notice of claim in the time frames set forth in Section
6.1(b); PROVIDED, that if Contributor admits in writing to the party seeking
indemnification that such claim, if valid, is covered by the indemnity
provisions of Section 6.1(a) or (b), Contributor shall have the right to contest
and defend by all appropriate legal proceedings such claim and to control all
settlements (unless the indemnified party agrees to assume the cost of
-56-
settlement and to forgo such indemnity) and to select lead counsel to defend any
and all such claims at the sole cost and expense of Contributor notwithstanding
the validity of such claim; PROVIDED, HOWEVER, that Contributor may not effect
any settlement that could result in any cost, expense, liability or harm to the
business or reputation of any indemnified party unless such party consents in
writing to such settlement and Contributor agrees to indemnify such party
therefor. Any indemnified party may select counsel to participate in any
defense at its own cost and expense. In connection with any such claim, action
or proceeding, the parties shall cooperate with each other and provide each
other with access to relevant books and records in their possession.
(f) Contributor's representations and warranties shall survive the
Closing to the extent and for such time as is necessary to enable Operating
Partnership and the Company to enforce their rights to indemnification under
this Section, at which time they will expire.
(g) Notwithstanding the forgoing, Operating Partnership hereby agrees
that for so long as ▇▇▇▇▇▇ is employed by it or any of its Affiliates, it will
collect any amounts owing with respect
-57-
to any such indemnity obligations proportionally from each of the
Stockholders other than ▇▇▇▇▇▇, on the one hand, and ▇▇▇▇▇▇, on the other
hand, on a several and not joint basis, based on the maximum liability amount
for Contributor of $[ ], and a maximum liability amount of $[ ] and
$[ ] for the other Stockholders, respectively.
(h) To the extent Contributor is obligated to indemnify Operating
Partnership for any Losses pursuant to this Section 6.1, Contributor shall make
any indemnification payments promptly; PROVIDED, HOWEVER, that Contributor shall
not be required to make any payments prior to the date thirteen months following
the Closing Date.
6.2. OPERATING PARTNERSHIP'S INDEMNITY.
(a) Operating Partnership hereby agrees to indemnify and hold
Contributor harmless from and against, and agrees to defend promptly Contributor
from and to reimburse Contributor for, any and all Losses that Contributor may
at any time suffer or incur, or become subject to, as a result of or in
connection with (i) any breach or inaccuracy of any of the representations and
warranties made by Operating Partnership in or pursuant to this Agreement or
(ii) any failure by Contributor to perform any
-58-
of its covenants and obligations set forth in this Agreement or any other breach
of this Agreement; PROVIDED, HOWEVER, that Contributor shall have no right to be
indemnified, held harmless, defended or reimbursed pursuant to this Section
6.2(a) unless such right is first asserted (whether or not Losses have been
incurred) by written notice to Operating Partnership no later than March 31,
1999.
(b) The amounts for which Operating Partnership shall be liable under
Section 6.2(a) shall be net of any insurance proceeds received by Contributor in
connection with the facts giving rise to the right of indemnification and shall
be limited to $[ ]. Operating Partnership will not be required to
indemnify any of the Stockholders until the aggregate losses incurred by the
Stockholders under this Agreement and the Related Agreements equal or exceed
$50,000, at which time Operating Partnership shall be liable for all losses back
to the first dollar.
(c) In the event a claim against Contributor arises that is covered
by the indemnity provisions of Section 6.2(a), notice shall be given by
Contributor to Operating Partnership and to each of the other Stockholders
within thirty (30) days; PROVIDED, HOWEVER, that the failure to provide any such
notice
-59-
shall not relieve Operating Partnership from any portion of any liability not
caused by the failure to timely deliver such notice, it being understood and
agreed that this proviso shall not affect the obligations of Contributor to
deliver a notice of claim in the time frame set forth in Section 6.2(a).
Provided that Operating Partnership admits in writing to Contributor that such
claim is covered by the indemnity provisions of Section 6.2(a), Operating
Partnership shall have the right to contest and defend by all appropriate legal
proceedings to such claim and to control all settlements (unless Contributor
agrees to assume the cost of settlement and to forgo such indemnity) and to
select lead counsel to defend any and all such claims at the sole cost and
expense of Operating Partnership; PROVIDED, HOWEVER, that Operating Partnership
may not effect any settlement that could result in any cost, expense, liability
or harm to the business or reputation of Contributor unless Contributor consents
in writing to such settlement and Operating Partnership agrees to indemnify
Contributor therefor. Contributor may select counsel to participate in any
defense at its sole cost and expense. In connection with any such claim, action
or proceeding, the parties shall cooperate with each other and provide each
other with access to relevant books and records in their possession.
-60-
(d) Operating Partnership's representations and warranties shall
survive the Closing to the extent and for such time as is necessary to enable
Contributor to enforce its rights to indemnification under this Section.
[6.3. NONCOMPETITION AGREEMENT.
Contributor agrees that for a period of two years following the
Closing Date he will not, nor will he permit any of his Affiliates to, (a)
directly or indirectly engage in the business of acquiring or trading
owner-financed commercial and residential mortgage loans or (b) solicit the
acquisition of or acquire seasoned mortgage loans from parties to or from whom
the Company has previously sold or purchased seasoned mortgage loans; PROVIDED,
HOWEVER, that this Section 6.3 shall not be construed to prohibit Contributor
and his Affiliates from owning less than an aggregate of 5.0% of the voting
securities of any corporation that is traded on a national securities exchange
or inter-dealer quotation system. Contributor acknowledges that a violation of
this Section may cause irreparable harm to the Company and Operating
Partnership. Accordingly, Contributor hereby grants the Company and Operating
Partnership the right to seek and be granted injunctive relief for any such
violation, in addition to
-61-
any other legal remedies that may be available to the Company and Operating
Partnership.
[6.4. NON-SOLICITATION AGREEMENT.
Beginning on the date of the execution of this Agreement and
continuing until the date that is [one] [two] year[s] following the Closing
Date, Contributor agrees that he will not, nor will he, directly or indirectly,
permit any Affiliate to, solicit for employment or employ any employee of the
Company.]
[6.5. COPY OF CERTAIN SECTIONS.
Contributor agrees that Operating Partnership may provide a copy of
Section 6.3 [and 6.4] to any business or enterprise which he may directly or
indirectly control (whether through the ownership, membership, operation,
financing or otherwise, or through the serving 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).
6.6. PURCHASE OF ADDITIONAL SHARES.
Contributor agrees that at no time shall he (in combination with any
of his Affiliates) purchase additional
-62-
common shares of beneficial interest of AEGIS Investment Trust, which purchase
would result in him owning more than 4.8% of the outstanding common shares of
beneficial interest of AEGIS Investment Trust.
6.7. SOLE REMEDY.
The provisions of this Article VI represent the sole remedy available to
any party hereto for a misstatement or omission from any representation, or a
breach of any warranty or covenant or agreement contained in this Agreement or
any of the documents executed and delivered in connection with the consummation
of the transaction contemplated hereby, and each party hereby unconditionally
waives any other rights that they may have at law or in equity for a
misstatement or omission from any representation, or a breach of any warranty or
covenant or agreement contained in this Agreement or any of the documents
executed and delivered in connection with the consummation of the transaction
contemplated hereby.
ARTICLE VII
MISCELLANEOUS
7.1. ENTIRE AGREEMENT; AMENDMENT.
This Agreement and the documents referred to herein and to be
delivered pursuant hereto constitute the entire agreement
-63-
between the parties pertaining to the subject matter hereof, and supersede all
prior and contemporaneous agreements, understandings, negotiations and
discussions of the parties, whether oral or written, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein or therein. No amendment, supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision of this
Agreement, whether or not similar, nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided. The representations and warranties
of each party hereto shall be deemed to be material and to have been relied upon
by the other party, notwithstanding any investigation heretofore or hereafter
made by the other party.
7.2. EXPENSES.
Whether or not the transactions contemplated by this Agreement are
consummated, each of the parties hereto shall pay the fees and expenses of their
respective counsel, accountants and other experts and the other expenses
incident to the
-64-
negotiation and preparation of this Agreement and consummation of the
transactions contemplated hereby; PROVIDED, HOWEVER, that in the event that such
transactions are effected, Operating Partnership shall pay the legal expenses
incurred by Contributor in respect of the transactions contemplated hereby.
7.3. GOVERNING LAW.
This Agreement shall be construed and interpreted according to the
laws of the State of Texas without regard to the conflicts of law rules thereof.
7.4. ASSIGNMENT.
This Agreement and each party's respective rights hereunder may not be
assigned at any time except as expressly set forth herein without the prior
written consent of the other party.
7.5. NOTICES.
All communications, notices and disclosures required or permitted by
this Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by messenger or by overnight delivery service, or three
days after mailing by registered or certified United States mail, postage
prepaid, return receipt requested, or when received via telecopy,
-65-
telex or other electronic transmission, in all cases addressed to the person for
whom it is intended at his address set forth below or to such other address as a
party shall have designated by notice in writing to the other party in the
manner provided by this Section:
If to Contributor:
[CONTRIBUTOR]
Telecopy no.
With a copy to each other Stockholder:
(1)
Telecopy no.
(2)
Telecopy no.
If to Operating Partnership:
AEGIS Operating Partnership, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. Day and
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy no.
With a copy to: Hunton & ▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ Plaza, East Tower
-66-
Richmond, Virginia 23219
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
Telecopy no. 804/788-8218
7.6. COUNTERPARTS; HEADINGS.
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but such counterparts shall together constitute but
one and the same Agreement. The Table of Contents and Article and Section
headings in this Agreement are inserted for convenience of reference only and
shall not constitute a part hereof.
7.7. INTERPRETATION.
Unless the context requires otherwise, all words used in this
Agreement in the singular number shall extend to and include the plural, all
words in the plural number shall extend to and include the singular and all
words in any gender shall extend to and include all genders. All references to
contracts, agreements, leases, Employee Benefit Plans or other understandings or
arrangements shall refer to oral as well as written matters.
7.8. SEVERABILITY.
If any provision, clause or part of this Agreement, or the application
thereof under certain circumstances, is held
-67-
invalid, the remainder of this Agreement, or the application of such provision,
clause or part under other circumstances, shall not be affected thereby.
7.9. NO RELIANCE.
Except in the case of the Company with respect to the indemnification
provided pursuant to Section 6.1 hereof, no third party is entitled to rely on
any of the representations, warranties or agreements contained in this
Agreement. Operating Partnership, Contributor and the Company shall have no
liability to any third party because of any such reliance.
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IN WITNESS WHEREOF, the parties have caused this Stock Contribution
and Exchange Agreement to be duly executed as of the day and year first above
written.
AEGIS OPERATING PARTNERSHIP, L.P.
By: AEGIS INVESTMENT TRUST,
Its General Partner
By:
-----------------------------------------
▇▇▇▇▇ ▇. Day
Managing Director
CONTRIBUTOR
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