SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT made as of the 19th day of October, 1999 by and among
Bond Purchase, L.L.C. ("Bond Purchase") and the persons and entities listed on
Exhibit A hereto (collectively, with Bond Purchase, the "Bond Purchase Parties")
and CGS Real Estate Company, Inc. ("CGS") and the persons and entities listed on
Exhibit B hereto (collectively, with CGS, the "CGS Parties").
WITNESSETH:
WHEREAS, certain of the Bond Purchase Parties and certain of the CGS Parties
have been engaged in protracted and expensive litigation relating to certain of
the entities listed on Exhibit C hereto (the "Xxxxxx/Sierra Partnership
Parties"); and
WHEREAS, Bond Purchase has filed proxy material with the Securities and
Exchange Commission ("SEC") seeking to solicit consents from limited partners of
certain of the Xxxxxx/Sierra Partnership Parties; and
WHEREAS, there are currently pending five separate litigations, as listed on
Exhibit D hereto, which the parties wish to resolve, settle and dismiss with
prejudice; and
WHEREAS, none of the parties hereto admits any liability or obligation to any
of the other parties and is entering into this Settlement Agreement solely for
the purpose of minimizing the expense of these litigations and to put to rest
forever and resolve with finality all issues pertaining to the management and
ownership of certain of the Xxxxxx/Sierra Partnership Parties; and
WHEREAS, it is the express intention of the parties in entering into this
Settlement Agreement that all disputes, past, present and future, between the
Bond Purchase Parties and the CGS Parties pertaining in any way to the
Xxxxxx/Sierra Partnership Parties shall be released and resolved forever and
that none of the parties hereto shall hereafter xxx or assert any claims
relating in any way to
forever and that none of the parties hereto shall hereafter xxx or assert any
claims relating in any way to the Xxxxxx/Sierra Partnership Parties against any
other party to this Settlement Agreement except for claims arising out of this
Settlement Agreement; and
WHEREAS, it is the intention of the parties that the Bond Purchase Parties
withdraw all of their proxy material currently on file with the SEC and that the
parties agree to (a) certain standstill agreements with respect to the
Xxxxxx/Sierra Partnership Parties; and (b) not disparage any other party to this
Settlement Agreement; and
WHEREAS, it is the intent of the parties that all of the terms and conditions
(and all of the obligations of the parties) set forth in this Settlement
Agreement shall be concluded and exchanged simultaneously. To that end, the
parties are establishing an escrow agreement of even date herewith (the "Escrow
Agreement") in the form of Exhibit E hereto;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. Shares Of Xxxxxx Realty Trust, Inc. (the "REIT").
-------------------------------------------------
(a) Delivery of Shares. On or before the Closing Date (as defined in
Paragraph 11 hereof), the parties which are designated as selling parties on
Exhibit 1 (a) hereto shall deliver to the Escrow Agent (as defined in the Escrow
Agreement) (i) certificates representing 75,763 shares of Common Stock in the
REIT (the "REIT Shares"), and (ii) signature guaranteed stock powers, executed
in blank, transferring all of the REIT Shares; and
2
(b) Payment For Shares. On or before the Closing Date, Bond Purchase or its
assigns shall deliver to the Escrow Agent by check or wire transfer the sum of
$10.00 per share for each of the REIT Shares reflected on Exhibit l(a) hereto;
and
(c) Closing. Payment to the persons listed on Exhibit 1(a) and delivery of
the stock certificates and stock powers to Bond Purchase shall be made pursuant
to the terms of the Escrow Agreement.
(d) Representations Of CGS Parties. The CGS Parties hereby represent and
warrant to the Bond Purchase Parties that on the date hereof and on the Closing
Date (i) each of the parties listed on Exhibit l(a) is the sole owner of the
REIT Shares listed next to their name on Exhibit 1(a) free and clear of any
liens, claims or encumbrances; (ii) each of the parties listed on Exhibit 1(a)
has not assigned, pledged, transferred, hypothecated, margined or otherwise
encumbered the REIT Shares listed next to their name on Exhibit 1(a); (iii) each
of the parties listed on Exhibit l(a) has full power and authority to transfer
title to the REIT Shares and perform its other obligations under this Settlement
Agreement without the consent or approval of any other person or entity; (iv)
the transfer of the REIT Shares and the capital stock of Xxxxxx-4 G.P. (as
hereinafter defined) and the execution of the agreements entered into in
connection herewith have been duly authorized by all necessary action on its
part; (v) this agreement and each agreement to be entered into in connection
herewith constitutes or will constitute the legal, valid and binding obligation
of such person, enforceable in accordance with its terms; (vi) the execution and
delivery of this Settlement Agreement and all other agreements to be executed
and delivered by each of the parties listed on Exhibit l(a), and the
consummation of the transactions contemplated hereby and thereby by such
parties, will not violate any provision of, or constitute a default under, any
law, regulation, order or judgment or any contract or other agreement to which
any of such parties is a party or by which any of such parties is bound or
result in the creation or imposition of any lien, claim, charge
3
or encumbrance of any nature whatsoever upon any of the REIT Shares; (vii) upon
delivery to Bond Purchase and/or its assignees by the Escrow Agent of the duly
endorsed certificates representing the REIT Shares set forth on Exhibit1(a)
pursuant to this Settlement Agreement and the Escrow Agreement, and for the
consideration provided herein, Bond Purchase and/or its assignees will be vested
with full right and title, free of all liens, claims, charges and encumbrances
of others of every character, to the REIT Shares represented thereby, and
subject to no restrictions as to transferability other than compliance with
state and federal securities laws and the REIT's articles of incorporation and
bylaws; (viii) the persons listed on Exhibit l(d) hereto constitute all of the
directors and officers of the REIT, and (ix) set forth on Exhibit 1(a) hereto is
a schedule showing all of the REIT Shares owned beneficially or of record by the
CGS Parties or their Affiliates (as defined in the Securities Act of 1933, as
amended (the "Securities Act")), or any person acting in concert with or as part
of a "Group" (within the meaning of Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) with them or any officer or
director or any of the foregoing, and all of the REIT Shares which any of the
foregoing has an option, warrant or right to acquire or has entered into an
agreement or understanding with respect to the acquisition thereof.
2. Resignations From The Board Of Directors Of The REIT.
-----------------------------------------------------
On or before the Closing Date, each of the persons listed on Exhibit 1(d)
hereto shall deliver to the Escrow Agent (a) resignations from all corporate
officers and from the board of directors of the REIT in the form of Exhibit 2-1
hereto; and (b) a unanimous written consent of the Board of Directors, in the
form of Exhibit 2-2 hereto, executed by all of the members of the board of
directors of the REIT, which will have the effect, if and when the Closing
occurs, of appointing the initial new member of the board of directors of the
REIT (who shall be one of the persons listed on Exhibit 2-3), who will then
appoint the other persons listed on Exhibit 2-3 hereto as the new board of
directors of the REIT.
4
3. Termination of Management Agreements.
-------------------------------------
On or before the Closing Date, CGS shall cause to be delivered to the Escrow
Agent a termination of each of the management and other service agreements
between CGS or its "Affiliates" (as defined in Section 405 of the Securities
Act) and the REIT or Xxxxxx-4 in the form of Exhibit 3 hereto. No termination or
other unearned fee shall be payable in connection therewith, but subject to the
provisions of Section 14 hereof, CGS or such Affiliates shall be entitled to
fees and expenses accrued in the ordinary course of business in accordance with
past practice pursuant to such agreements.
4. Form 8-K For The REIT.
----------------------
Each of the parties hereto hereby agrees that a Form 8-K, in the form
attached hereto as Exhibit 4, shall be filed with the SEC by the REIT as soon as
possible after the Closing (as defined in paragraph 11 hereof) takes place (but
only if the Closing in fact takes place).
5. Future REIT Management/D&O Insurance/Indemnity. From and after the Closing
-----------------------------------------------
Date:
(a) the CGS Parties hereby agree that they shall not, directly or indirectly,
be involved in the management of the REIT;
(b) Bond Purchase hereby covenants and agrees, on its own behalf, and on
behalf of the REIT (such covenants to be effective only if the Closing takes
place) that (i) prior to the Closing the REIT may purchase D&O tail coverage
pursuant to which the present D&O insurance shall be maintained in force with
respect to transactions occurring prior to the Closing Date covering the parties
listed on Exhibit 1(d) hereto and each of the CGS Parties at the present limits
until December 31, 2004, at no cost or expense to any of them, and (ii)
subsequent to the Closing, it will not take any action to terminate or limit
such coverage; and
5
(c) Bond Purchase covenants that (i) at the Closing, indemnities, in the form
attached hereto as Exhibit 5(c)-1, will be delivered by Bond Purchase to the CGS
Parties, their control persons and each of the persons listed on Exhibit 1(d)
hereto with respect to claims, liabilities, losses, suits, damages and costs
arising in connection with actions by the past, present and future limited
partners of Xxxxxx-4 or the past, present and future shareholders of the REIT
relating to the transactions pursuant to Sections 1(a), 2 and 8(a) of this
Settlement Agreement, and (ii) Bond Purchase, the REIT and Xxxxxx-4 shall
deliver, at the Closing, agreements in the form of Exhibit 5(c)-2, committing to
continue in effect indemnification of the persons listed on Exhibit l(d) under
existing agreements or arrangements, copies of which are attached hereto as
Exhibit 5(c)-3.
6. Representations And Warranties Of Bond Purchase Concerning
The Change Of Control of the REIT.
----------------------------------------------------------
(a) Bond Purchase hereby represents and warrants to the CGS Parties and each
of the persons listed on Exhibit 1(d) hereto:
(i) that neither it nor any of its controlling persons nor any of the persons
listed on Exhibit 2-3 has ever been convicted of a crime (including felonies and
misdemeanors, but excluding violations and offenses);
(ii) that neither it nor any of its controlling persons nor any of the
parties listed on Exhibit 2-3 has ever been the subject or target of an
investigation by the SEC, or any federal or state law enforcement agency, the
NASD or any self-regulatory organization in the securities business;
(iii) that neither it nor any of its controlling persons nor any of the
parties listed on Exhibit 2-3 has ever been found to have breached his, its or
her fiduciary duty to another person; and
6
(iv) that neither it nor any of its controlling persons nor any of the
parties listed on Exhibit 2-3 has any present intention of committing a breach
of his, her or its fiduciary duty to the REIT or the shareholders of the REIT
once such person becomes a director of the REIT.
(b) On or before the Closing Date, each person listed on Exhibit 2-3 shall
deliver to the Escrow Agent a certificate, in the form of Exhibit 6(b) hereto,
confirming and certifying that the representations set forth in (a) (i) through
(a) (iv) are true and correct as to such person.
7. Sale By The Bond Purchase Parties Of Their Limited Partnership Interests
In the Xxxxxx/Sierra Partnership Parties Other Than Xxxxxx Real Property
Investors-Four, L.P. ("Xxxxxx-4").
-------------------------------------------------------------------------
(a) Delivery of Units. On or before the Closing Date, each of the parties
listed on Exhibit 7(a)-1 hereto shall deliver to the Escrow Agent duly executed
assignments, in the form of Exhibit 7(a)-2, of the number of limited partnership
interests reflected on Exhibit 7(a)-1 hereto, with signature guaranteed, as
provided in Exhibit 7(a)-2.
(b) Payment For The-Xxxxxx/Sierra Limited Partnership Interests. On or before
the Closing Date, CGS shall deliver to the Escrow Agent by check or by wire
transfer, the total sum indicated on Exhibit 7(a)-1 as the purchase price for
the aggregate number of limited partnership interests identified therein.
(c) Representations Of The Selling Limited Partners. Each of the parties
listed on Exhibit 7(a)-1 hereby represents and warrants to the CGS Parties that
on the date hereof and on the Closing Date (i) he, she or it is the sole owner
of the limited partnership interests listed next to their name on Exhibit 7(a)-1
free and clear of any liens, claims or encumbrances; (ii) he, she or it has not
assigned, pledged, transferred, hypothecated, margined or otherwise encumbered
the limited partnership interests listed next to their name on Exhibit 7(a)-1;
(iii) he, she or it has full power and authority to transfer title to the
limited partnership interests and perform its other obligations hereunder
without the consent or
7
approval of any other person or entity; (iv) the transfer of the limited
partnership interests and the execution of the agreements entered into in
connection herewith have been duly authorized by all necessary action on its
part; (v) this Settlement Agreement and each agreement to be entered into in
connection herewith constitutes or will constitute the legal, valid and binding
obligation of such person, enforceable in accordance with its terms; (vi) no
promises concerning the future conduct or business of the Xxxxxx/Sierra
Partnership Parties has been made by any of the CGS Parties; (vii) no reliance
has been placed on any statement by the CGS Parties, and that no statement of
future intentions has been made by, or asked of, any of the CGS Parties in
connection with the sale of the limited partnership interests contemplated in
this Settlement Agreement or about the future business activities of the
Xxxxxx/Sierra Partnership Parties; (viii) set forth on Exhibit 7(a)-1 hereto is
a schedule showing all of the limited partnership interests in the Xxxxxx/Sierra
Partnership Parties (other than Xxxxxx-4 and the REIT) owned beneficially or of
record by Bond Purchase or its Affiliates or any person acting in concert with
or as part of a "Group" (within the meaning of Section 13(d)(3) of the Exchange
Act) with Bond Purchase or any of the officers or directors of any of the
foregoing and all of the limited partnership interests in any of the
Xxxxxx/Sierra Partnership Parties (other than Xxxxxx-4 and the REIT) which any
of the foregoing persons has an option or right to acquire or has entered into
any agreement or understanding with respect to the acquisition thereof; (ix) the
execution and delivery of this Settlement Agreement and all other agreements to
be executed and delivered by each of the parties listed on Exhibit 7(a)-1 and
the consummation of the transactions contemplated hereby and thereby by such
parties, will not violate any provision of, or constitute a default under, any
law, regulation, order or judgment or any contract or other agreement to which
any of such parties is a party or by which any of such parties is bound or
result in the creation or imposition of any lien, claim, charge or encumbrance
of any nature whatsoever upon any of the limited partnership interests listed
next to their name on Exhibit 7(a)-l; and (x) upon delivery to CGS of the
8
assignment by the Escrow Agent pursuant to this Settlement Agreement and the
Escrow Agreement, and for the consideration provided herein, CGS will be vested
with full right and title, free of all liens, claims, charges and encumbrances
of others of every character, to such limited partnership interests, and subject
to no restrictions as to transferability other than compliance with state and
federal securities laws and the limited partnership agreements with respect to
such partnerships.
(d) Closing. Payment to the persons listed on Exhibit 7(a)-1 and delivery of
the assignments to the CGS Parties shall be made pursuant to the terms of the
Escrow Agreement.
8. Sale Of the Capital Stock Of Xxxxxx Capital Corp., a Missouri corporation
("Xxxxxx-4 G.P.").
-------------------------------------------------------------------------
(a) On or before the Closing, the CGS Parties shall deliver to the Escrow
Agent stock certificates, accompanied by executed stock powers, signatures
guaranteed, in favor of Bond Purchase transferring 750 shares of Class A Common
Stock of Xxxxxx-4 G.P. (representing 75% of the issued and outstanding shares of
Common Stock of Xxxxxx-4 G.P.), free and clear of all liens, claims and
encumbrances.
(b) On or before the Closing Date, Bond Purchase shall deliver to the Escrow
Agent by check or wire transfer, the sum of $175,000, as payment in full for all
of the shares of the capital stock of Xxxxxx-4 G.P.
(c) In addition to the representations and warranties set forth above in
Paragraph 6(a), Bond Purchase hereby represents and warrants that neither it nor
any of its Affiliates nor any of its or their officers or directors has any
intention of breaching or causing the Xxxxxx-4 G.P. to breach its fiduciary duty
to the limited partners of Xxxxxx-4.
(d) The parties hereby agree that a Form 8-K, in the form of Exhibit 8(d)
hereto, shall be filed with the SEC by Xxxxxx-4 as soon as possible after the
Closing (but only if the Closing in fact takes place).
9
(e) Closing. Payment by Bond Purchase and delivery of the stock certificates
and stock powers to Bond Purchase shall be made pursuant to the terms of the
Escrow Agreement.
(f) Officers and Directors. CGS represents that set forth on Exhibit 8(f)- 1
is a list of all of the officers and directors of Xxxxxx-4 G.P. On or before the
Closing Date, each of the persons listed on Exhibit 8(f)-1 hereto shall deliver
to the Escrow Agent (a) resignations from all corporate officers and from the
board of directors of Xxxxxx-4 G.P. in the form of Exhibit 8(f)-2 hereto; and
(b) a unanimous written consent of the Board of Directors, in the form of
Exhibit 8(f)-3 hereto, executed by all of the members of the board of directors
of Xxxxxx-4 G.P., which will have the effect, if and when the Closing occurs, of
appointing the initial new member of the board of directors of Xxxxxx-4 G.P.
(g) Representations and Warranties of CGS Parties.
(i) In connection with the sale of the capital stock of Xxxxxx-4 G.P., the
CGS Parties represent and warrant as follows:
A. Corporate Status; Outstanding Stock. Xxxxxx-4 G.P. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Missouri, has the corporate power and authority to own its properties and to
carry on its business as it is now being conducted, and is duly qualified to do
business as a foreign corporation in the jurisdictions specified in Exhibit
8(g)(i)A., which constitute all the jurisdictions in which such qualification is
required, except where the failure to so qualify would not have a material
adverse effect on its business or financial condition. Xxxxxx-4 G.P. has an
authorized capital consisting of 30,000 shares of Common Stock, $1 par value per
share, of which 1,000 shares are outstanding (comprised of 750 shares of Class A
Common Stock and 250 shares of Class B Common Stock) and the 750 shares of Class
A Common Stock are owned by the CGS Parties, all of which outstanding shares are
validly issued, fully paid and non-assessable. The remaining outstanding shares
of Common Stock are owned by Xxxxxx X. Xxxxx & Co. and Xxxxxxx
10
Financial Corp. There are no shares of Xxxxxx-4 G. P.'s capital stock held in
its treasury. There are no options, warrants, rights, shareholder agreements or
other instruments or agreements outstanding giving any person the right to
acquire any shares of capital stock of Xxxxxx-4 G.P., nor are there any
commitments to issue or execute any such options, warrants, rights, shareholder
agreements or other instruments or agreements. There are no outstanding stock
appreciation rights or similar rights measured with respect to any of Xxxxxx-4
G.P.'s capital stock, nor are there any instruments or agreements giving anyone
the right to acquire any such rights. True, correct and complete copies of
Xxxxxx-4 G. P.'s minute books, stock records, Articles of Incorporation and
By-Laws and all amendments to both have been delivered to Bond Purchase Parties.
Xxxxxx-4 G. P. is not in default under or in violation of any provision of its
Articles of Incorporation or its By-Laws.
B. Officers, Directors, Bank Accounts, etc. Exhibit 8(f)- 1 discloses all
directors and officers of Xxxxxx-4 G.P.
C. Subsidiaries and Joint Ventures. Except as disclosed on Exhibit 8(g)(i)C.,
there is no corporation or other entity in which Xxxxxx-4 G.P. owns, directly or
indirectly, a controlling interest or a majority of the outstanding shares or
other equity interest issued by such corporation or entity (a "Subsidiary"), nor
does Xxxxxx-4 G.P. own any other capital stock, security, partnership, interest
of any kind, either direct or indirect, in any corporation, partnership, joint
venture, association or other entity.
D. Financial Statements. The balance sheets of Xxxxxx- 4 G.P. as at November
30, 1998 and the related statements of income (loss) and cash flow, as the case
may be, ended on the dates of such balance sheets, and all related schedules and
notes to the foregoing, copies of all of which constitute Exhibit 8(g)(i)D.,
were prepared in accordance with generally accepted accounting principles and
practices consistently applied throughout the periods and with past periods, and
11
fairly and accurately present the financial position of Xxxxxx-4 G. P. as at the
dates of such balance sheets, and the results of the operations and cash flows
of Xxxxxx-4.G.P. for the periods ended on such dates.
(ii) Xxxxxx-4 G.P. is not party to any leases, subleases or other agreements
for the use and occupancy of any premises. Xxxxxx-4 G.P. has no right, title and
interest in, or any obligation or duty relating to, any real property, except as
general partner of Xxxxxx-4.
(iii) At Closing, Xxxxxx-4 G. P. will have no liabilities, whether related to
tax or non-tax matters, known or unknown, due or not yet due, liquidated,
contingent or otherwise, of a type required to be disclosed in financial
statements under generally accepted accounting principles, except (i) as
disclosed in its financial statements, or arising in the ordinary course of
business subsequent to December 31, 1998 and (ii) liabilities arising out of its
serving as a general partner of Xxxxxx-4.
(iv) At Closing, Xxxxxx-4 G.P. will have no employees, or any obligations for
compensation or benefits relating to past employees.
(v) From July 20, 1999 until Closing, Xxxxxx-4 G.P. will operate in the
normal course of business, will not enter into any contracts or agreements
without the consent of Bond Purchase Parties, which shall not be unreasonably
withheld or delayed, and will make no distributions, dividends, stock options or
similar payments of any kind.
(vi) At Closing, Xxxxxx-4 G.P. will not be a party to any litigation, either
pending or, to the knowledge of CGS, threatened, other than the litigations
being released pursuant to this Settlement Agreement.
(vii) Xxxxxx-4 G.P. has filed all tax returns required to be filed, paid all
taxes due, and no taxing authority has given notice of assessment, audit,
adjustment or deficiency.
(viii) The sole and only business of Xxxxxx-4 G.P. is to act as general
partner of Xxxxxx-4.
12
(ix) No checking accounts are maintained by any of the CGS Parties on behalf
of Xxxxxx-4 G.P. and no monies are held in any bank accounts on behalf of
Xxxxxx-4 G.P.
9. Litigation Settlement Documents.
--------------------------------
(a) By The Bond Purchase Parties. On or before the Closing Date, Bond
Purchase shall cause to be delivered to the Escrow Agent the following
documents:
(i) fully executed stipulations of dismissal with prejudice of each of the
litigations listed on Exhibit D hereto, executed by all counsel of record for
any and all of the Bond Purchase Parties in each such actions, in the form of
Exhibits 9(a)(i)-l, 9(a)(i)-2, 9(a)(i)-3, 9(a)(i)-4 and 9(a)(i)-5 hereto; and
(ii) General Release and Covenant Not to Xxx, in the form of Exhibit 9(a)(ii)
attached hereto executed by each of the Bond Purchase Parties (signatures
notarized).
(b) By the CGS Parties. On or before the Closing Date, CGS shall cause to be
delivered to the Escrow Agent the following documents:
(i) fully executed stipulations of dismissal of the appeal in the litigation
involving the REIT and dismissal with prejudice of each of the other litigations
and the remaining claims in the litigation involving the REIT listed on Exhibit
D hereto, executed by all counsel of record for any and all of the CGS Parties
in each such action, in the form of Exhibits 9(a)(i)-l, 9(a)(i)-2, 9(a)(i)-3,
9(a)(i)-4 and 9(a)(i)-5 hereto;
(ii) General Release and Covenant Not To Xxx, in the form of Exhibit 9(a)(ii)
attached hereto, executed by each of the CGS Parties (signatures notarized).
10. Settlement Amount.
-----------------
13
In exchange for the releases by Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxx of
all rights that might otherwise exist by virtue of their employment agreements
with the REIT, Bond Purchase shall deliver to the Escrow Agent, on or before the
Closing Date, the sum of $450,000, payable by check or wire transfer. Such
amount shall be paid to certain senior executive officers of CGS in settlement
of all claims under their respective employment agreements (except as otherwise
provided herein) pursuant to the terms of the Escrow Agreement.
11. Closing; Closing Date.
---------------------
The "Closing" shall mean the occurrence of all of the conditions to the
release of documents set forth in the Escrow Agreement which shall result in the
consummation of the transactions contemplated herein. The Closing shall take
place on such date (the "Closing Date") as all of the following items have been
delivered to the Escrow Agent:
(a) the stock certificates and stock powers identified in paragraph 1(a) and
8(a);
(b) the resignations from the directors and officers of the REIT identified
in paragraph 2(a);
(c) the unanimous written consents executed by the outgoing board of the
REIT, as identified in paragraph 2(b);
(d) the termination of the management agreements identified in paragraph 3;
(e) the Forms 8-K for the REIT and Xxxxxx-4 identified in paragraphs 4 and
8(d);
(f) the indemnity and the agreement confirming indemnification obligation
identified in paragraph 5(c);
(g) the certification identified in paragraph 6(b);
14
(h) the executed assignment identified in paragraph 7(a);
(i) the payments identified in paragraphs l(b), 7(b), 8(b) and 10;
(j) the resignations of the officers and directors of Xxxxxx-4 G.P.
identified in Section 8(f);
(k) the stipulations of dismissal identified in paragraphs 9(a)(i) and
9(b)(i);
(l) the Releases and Covenants Not to Xxx identified in paragraphs 9(a)(ii)
and 9(b)(ii);
(m) the Agreements and Payments identified in paragraph 12;
(n) the certification identified in paragraph 14(d)(iii); and
(o) the balance of any fees or costs due to the Escrow Agent.
If fewer than all of the foregoing documents and payments have been
received by the Escrow Agent by 5 P.M. C. S. T. on November 2, 1999, then this
Settlement Agreement shall be null and void and of no further force or effect.
As provided in the Escrow Agreement, if fewer than all such documents have been
received by the Escrow Agent by 5 P.M. C.S.T. November 2, 1999, all documents
and payments previously received shall be returned to the delivering party. If
all such documents and payments have been received by the Escrow Agent prior to
5:00 P.M. C.S.T. on November 2, 1999, then the Escrow Agent shall distribute the
documents and payments in accordance with the terms and conditions of the Escrow
Agreement.
12. Everest Indemnity/Assumption. On or prior to the Closing, CGS or an
----------------------------
affiliate thereof shall have purchased all of the limited partnership interests
owned by Everest or its affiliates (collectively, "Everest") in Xxxxxx Income
Fund Ltd., Xxxxxx Income Fund Ltd. II, L.P. and Xxxxxx Real Property
Investors-Two, L.P. and shall have delivered a certificate to the Escrow Agent,
executed by a senior executive officer of CGS, indicating that such purchase has
been completed. Consummation
15
of this transaction, and Closing of this transaction, is expressly contingent
upon the completion of the transaction described herein between CGS and Everest
(the "Everest Transaction") and the delivery of the certificate to the Escrow
Agent indicating that the Everest Transaction has been consummated. In the event
the Everest Transaction has not been consummated by November 2, 1999, either
party may terminate this Settlement Agreement without any liability or
obligation hereunder.
13. Withdrawal of Proxy Solicitation and Standstill.
-----------------------------------------------
(a) Effective on the Closing Date, each of the parties hereby agrees to
terminate any pending proxy solicitations and withdraw all pending proxy
materials, preliminary or otherwise, from the SEC which have been filed with
respect to any of the Xxxxxx/Sierra Partnership Parties and any requests for
information or inspection of the books and records made with respect to the
Xxxxxx/Sierra Partnership Parties.
(b) The Bond Purchase Parties agree that, if the Closing occurs, prior to the
fifth anniversary of the Closing of the transactions contemplated by this
Settlement Agreement, neither they nor any person who is their Affiliate (as
defined under Rule 405 of the Securities Act) will, without the prior written
consent of the general partner of any of the Xxxxxx/Sierra Partnership Parties
(other than Xxxxxx-4 and the REIT), which consent may be withheld for any
reason, directly or indirectly, (i) in any manner including, without limitation,
by tender offer (whether or not pursuant to a filing made with the SEC),
acquire, attempt to acquire or make a proposal to acquire, directly or
indirectly, any of the outstanding partnership interests in any of the
Xxxxxx/Sierra Partnership Parties (other than Xxxxxx-4 and the REIT) from the
holders of limited partnership interests therein or otherwise, (ii) seek or
propose to enter into, directly or indirectly, any merger, consolidation,
business combination, sale or acquisition of assets, liquidation, dissolution or
other similar transaction involving any of the Xxxxxx/Sierra Partnership Parties
(other then Xxxxxx-4 and the REIT), (iii) make, or in any way participate,
directly or indirectly,
16
in any "solicitation" of "proxies" or "consents" (as such terms are used in the
proxy rules of the SEC) to vote any voting securities of any of the
Xxxxxx/Sierra Partnership Parties (other than Xxxxxx-4 and the REIT, (iv) form,
join or otherwise participate in a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) with respect to any voting securities of any of
the Xxxxxx/Sierra Partnership Parties (other than Xxxxxx-4 and the REIT), (v)
make any request for information from or inspection of the books and records of
any of the Xxxxxx/Sierra Partnership Parties (other than Xxxxxx-4 and the REIT),
(vi) disclose in writing to any third party any intention, plan or arrangement
inconsistent with the terms of this Settlement Agreement, (vii) loan money to,
advise, assist or encourage any person in connection with any action
inconsistent with the terms of this Settlement Agreement or (viii) make any
statements disparaging any of the Xxxxxx/Sierra Partnership Parties (other than
Xxxxxx-4 and the REIT), the CGS Parties or their Affiliates in connection with
the Xxxxxx/Sierra Partnership Parties, or any proposal or offer made by any of
the CGS Parties or their Affiliates to the Xxxxxx/Sierra Partnership Parties
(other than Xxxxxx-4 and the REIT) or the limited partners thereof.
(c) The CGS Parties agree that, if the Closing occurs, prior to the fifth
anniversary of the Closing of the transactions contemplated by this Settlement
Agreement, neither they nor any person who is their Affiliate (as defined under
Rule 405 of the Securities Act) will, without the prior written consent of the
Board of Directors of the REIT or the general partner of Xxxxxx-4, which consent
may be withheld for any reason, directly or indirectly, (i) in any manner
including, without limitation, by tender offer (whether or not pursuant to a
filing made with the SEC), acquire, attempt to acquire or make a proposal to
acquire, directly or indirectly, any of the securities of Xxxxxx-4 or the REIT
from the holders of securities therein or otherwise, (ii) seek or propose to
enter into, directly or indirectly, any merger, consolidation, business
combination, sale or acquisition of assets, liquidation, dissolution or other
similar transaction involving Xxxxxx-4 or the REIT, (iii) make, or in any way
participate, directly or
17
indirectly, in any "solicitation" of "proxies" or "consents" (as such terms are
used in the proxy rules of the SEC) to vote any voting securities of Xxxxxx-4 or
the REIT, (iv) form, join or otherwise participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any voting
securities of Xxxxxx-4 or the REIT, (v) make any request for information from or
inspection of the books and records of Xxxxxx-4 or the REIT, (vi) disclose in
writing to any third party any intention, plan or arrangement inconsistent with
the terms of this Settlement Agreement, (vii) loan money to, advise, assist or
encourage any person in connection with any action inconsistent with the terms
of this Settlement Agreement or (viii) make any statements disparaging Xxxxxx-4
or the REIT, any of the Bond Purchase Parties or their Affiliates in connection
with Xxxxxx-4 or the REIT, or any proposal or offer made by any of the Bond
Purchase Parties or their Affiliates to Xxxxxx-4 or the REIT or the limited
partners or shareholders thereof.
14. Other Covenants and Agreements.
------------------------------
(a) Xxxxxxx X. Xxxxxx and Xxxxxx Xxxxxxx shall resign as officers and
employees of the REIT effective on the Closing Date (subject to the Closing
actually taking place) and the term of their employment agreements shall
terminate on such date and the REIT shall have no further obligations to them
thereunder or otherwise, except as set forth in this Settlement Agreement.
(b) CGS agrees that, effective upon the Closing, it will cause all options
and incentive awards issued by the REIT to officers or directors of CGS or its
Affiliates to be cancelled without exercise.
(c) As soon as reasonably practicable after the Closing, Bond Purchase shall
change the organizational names of the REIT, Xxxxxx-4 and Xxxxxx-4 G. P. and
shall not thereafter use "Xxxxxx" or any derivation thereof in their
organizational names.
(d) The CGS Parties agree as follows:
18
(i) All of the contracts, commitments, leases, files, books (including
corporate seals if any, minute books and stock ledgers), records, financial
statements, bank accounts and other data relating to the business of the REIT
and/or Xxxxxx- 4 shall be delivered or made available to the Bond Purchase
Parties promptly following Closing, and simultaneously, the CGS Parties will
take such other steps as may be reasonably requested by Xxxxxx-4 G.P. or the new
officers of and directors of the REIT to enable them to continue the control of
the business and assets of the REIT and Xxxxxx-4 as conducted prior to the
Closing.
(ii) Since July 20, 1999 the REIT or Xxxxxx-4 have not, and pending Closing,
CGS Parties shall not permit the REIT or Xxxxxx-4, without the prior written
consent of Bond Purchase except to the extent the Board of Directors of the REIT
or Xxxxxx-4 G. P. determines that such action is required by its fiduciary duty
in which event the CGS Parties will provide Bond Purchase with prior written
notice of the action to be taken:
A. to discharge or satisfy any lien or encumbrance, or pay or satisfy any
obligation or liability (absolute, accrued, contingent or otherwise) outside of
the ordinary course of business;
B. to mortgage, pledge or xxxxx x xxxx, charge or other encumbrance on any of
its assets, tangible or intangible;
C. to sell or transfer any of its assets, other than in the ordinary course
of business, or cancel any debts or claims, or waive any rights of value;
D. to increase the compensation payable to or to become payable to any
officer or employee;
E. to pay or otherwise grant any bonuses or special remuneration to any
officer or employee except for bonuses payable to on-site employees in
accordance
19
with existing policies and the payment in the aggregate of $100,000 to Xx.
Xxxxxx and Xx. Xxxxxxx in satisfaction of the deferred compensation payable to
them pursuant to their respective employment agreements;
F. to make, or make any commitment for, any expenditure in excess of $50,000
except for expenditures in the ordinary course of business pursuant to the
existing commitments;
G. to make any declaration or payment to its shareholders, or limited
partners respectively, of any dividend or other distribution in respect of its
stock or partnership interest or redeem or purchase or otherwise acquire any of
its stock or partnership interest or agree to take any such action;
H. to make any material changes in its mode of operation, including its
leasing, service, credit or collection policies;
I. to enter into any transaction other than in the ordinary course of
business;
J. to issue any stock, bonds, convertible securities or other securities, or
become obligated on or in respect of any such securities or grant stock options,
warrants or rights;
K. to borrow or agree to borrow any funds;
L. to make any loans or advances to any person; or
M. to alter, amend, terminate or discharge any written or oral contract,
lease, plan, commitment or agreement to which it is currently a party, or permit
or consent to any such alteration, amendment, termination or discharge, or
commit a breach or default in any of the provisions thereof, except as
contemplated by this Settlement Agreement.
20
(iii) At Closing, the applicable CGS Parties shall deliver to the Escrow
Agent a certificate, in the form of Exhibit 14(d)(iii) hereto, representing and
warranting to the Bond Purchase Parties that the respective CGS Parties have
complied in all material respects with the covenants set forth in paragraph
14(d)(ii).
(iv) At Closing, all investment advisory agreements, commercial listing
agreements and property management agreements with CGS or its Affiliates for the
REIT and Xxxxxx-4 will be terminated with no contingent liability or obligation
remaining thereunder, except for fees and expenses accrued in the ordinary
course of business consistent with past practice under such agreements.
(v) The benefits owed to Xx. Xxxxxx or Xx. Xxxxxxx (other than the $100,000
of deferred compensation payable in the aggregate to Xx. Xxxxxx and Xx. Xxxxxxx
pursuant to paragraph 14(d)(ii)E. of this Settlement Agreement) shall be
released, forgiven and written off and the REIT shall have no liability for any
payments therefore.
(vi) At or prior to the Closing, the CGS Parties will cause Xxxxxx, Inc. to
assign to the REIT and Xxxxxx-4 all vendor and service contracts which Xxxxxx
Inc. is a party to for purpose of providing goods or, services to the REIT or
Xxxxxx-4, and the REIT or Xxxxxx-4, as the case may be, shall assume all
liabilities under such agreements.
(vii) As soon as practicable after the Bond Purchase Parties have executed
this Settlement Agreement and have delivered to the Escrow Agent all of the
items which they are required to deliver under paragraph 11 hereof, the CGS
Parties shall provide the Bond Purchase Parties with reasonable access to the
books and records of the REIT, Xxxxxx-4 and Xxxxxx-4 G.P. so that the Bond
Purchase Parties may perform a due diligence review thereof. If, based on their
due diligence review, the Bond Purchase Parties reasonably determine that there
has been a material adverse change from the information currently set forth in
the public filings of either the REIT or Xxxxxx-4 or the
21
representations set forth in this Settlement Agreement, the Bond Purchase
Parties shall have the right to terminate this Settlement Agreement and the
respective rights and obligations of the parties hereunder by providing written
notice of their election to terminate to CGS in accordance with paragraph 15(a)
hereof no later than 10 days after the Bond Purchase Parties have been granted
access to the books and records of the REIT, Xxxxxx-4 and Xxxxxx-4 G.P.
15. Miscellaneous.
-------------
(a) Notices. At the time of execution of this Settlement Agreement, each
party shall designate an address next to its name on Exhibits A and B hereto at
which it shall be entitled to receive notice in accordance with this Settlement
Agreement or Exhibits A and B hereto. Notices shall be deemed given when
personally delivered, or when sent by telephonic facsimile, with a facsimile
confirmation, or prepaid registered mail to any party at the address or
telephone number selected herein in Exhibits A and B. Any other method of
delivery of notice shall be deemed given when actually received. Any party may
change its address for the purposes of this Settlement Agreement by notice to
all other parties at the addresses or telephone numbers selected in Exhibits A
and B hereto.
(b) Entire Agreement. This Settlement Agreement, together with the exhibits
annexed hereto, constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and all earlier drafts of this Settlement
Agreement or any exhibit hereto and all negotiations, conversations,
correspondence or other communications relating to the settlement contemplated
by this Settlement Agreement are hereby merged with and into this Settlement
Agreement in such a way as to prevent any party to this Settlement Agreement
from referring to such drafts, negotiations, conversations, correspondence or
other communications in any subsequent dispute between any of the parties
hereto. The representations and warranties herein provided shall survive Closing
for a period of twelve months
22
and in no event shall the CGS Parties' liabilities for breaches of
representations, warranties or covenants exceed One Million ($1,000,000)
Dollars.
(c) Confidentiality. If for any reason the Closing does not occur, no party
to this Settlement Agreement may refer to this Settlement Agreement, to any term
or provision of this Settlement Agreement, or to the existence of this
Settlement Agreement, under any circumstances or for any purpose and, in such
event, the parties expressly agree that this Settlement Agreement constitutes an
offer of compromise within the meaning of F.R.E. 408 and may not be referred to
in any litigation, arbitration, mediation or other proceeding involving any of
the parties hereto. If the transactions contemplated by this Settlement
Agreement are closed, each of the parties agrees to keep the terms of this
Settlement Agreement strictly confidential and not disclose the terms of this
Settlement Agreement to any person, except to the extent either party determines
in good faith that disclosure is required by law, including in connection with
any filing with the SEC.
(d) No Amendment/ Waiver Except in Writing. This Settlement Agreement may not
be amended, modified or abridged, and no provision set forth in this Settlement
Agreement may be waived, by any party to this Settlement Agreement, except by an
instrument in writing executed by the party against whom such amendment,
modification, abridgement or waiver is sought to be enforced.
(e) Governing Law. This Settlement Agreement shall be governed in all
respects by the internal laws of the State of Missouri without regard to any
conflicts of law principles, or the choice of law principles of any jurisdiction
(including Missouri) and without the need on the part of any party to establish
the reasonableness of the relationship between the laws of the State of Missouri
and the subject matter of this Settlement Agreement.
(f) Arbitration. Any dispute arising under, relating to, or having any
connection with, this Settlement Agreement, the Escrow Agreement or any of the
exhibits attached hereto
23
shall be submitted to binding arbitration before the American Arbitration
Association ("AAA") in St. Louis, Missouri in accordance with the rules of the
AAA in effect at the time the arbitration takes place. The arbitrator is
instructed to award the prevailing party in any such arbitration its reasonable
attorney's fees and arbitration costs and expenses. Any award in any such
arbitration may be entered in any court of competent jurisdiction in the United
States of America.
(g) Each Party Bears Own Costs. Each party hereby agrees that it will bear
all of its, his or her expenses in connection with negotiating, executing and
performing under this Settlement Agreement and all of the exhibits hereto, and
each party shall also bear its own costs in connection with the litigations
referred to in Exhibit D hereto.
(h) Counterparts. This Settlement Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Settlement Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.
24
IN WITNESS WHEREOF, the parties hereto have executed this Settlement
Agreement effective on the day and year first above written.
BOND PURCHASE PARTIES:
BOND PURCHASE, L.L.C.
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx,
Member
BOND G.P., L.L.C.
By:/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx,
Member
MAXUS PROPERTIES, INC.
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Chairman
KELCOR, INC.
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Vice President
XXXXXXXX FOODS, INC.
By: /s/ Xxxxxxx XxXxxxxx
Xxxxxxx XxXxxxxx
Secretary/Treasurer
25
/s/Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
/s/Xxxxxx X. Casterrer
Xxxxxx X. Casterrer
/s/Xxxx X. Xxxxx
Xxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
/s/ Xxxxxxxxx Xxxxxxxx
Xxxxxxxxx Xxxxxxxx
CGS PARTIES:
CGS REAL ESTATE COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
President
XXXXXX REALTY TRUST
By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Chief Executive Officer
XXXXXX CAPITAL CORP.
By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Chief Executive Officer
26
XXXXXX INVESTORS, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
President
XXXXXX INCOME INVESTMENTS, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
President
XXXXXX INCOME INVESTMENTS TWO, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
President
XXXXXX INCOME FUND LTD., L.P.
By: Xxxxxx Income Investments, Inc.
its general partner
By: /s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
President
XXXXXX INCOME FUND LTD, II, L.P.
By: Xxxxxx Income Investments Two,
Inc., its general partner
By: /s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
President
27
XXXXXX REAL PROPERTY INVESTORS-TWO,
L.P.
By: Xxxxxx Investors, Inc.,
its general partner
By: /s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
President
XXXXXX REAL PROPERTY INVESTORS-FOUR
L.P.
By: Xxxxxx Capital Corp.,
its general partner
By: /s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
President
XXXXXX LTD.
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
General Partner
/s/ Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
28
[EXHIBITS OMITTED]
