EXHIBIT 10.02
AGREEMENT
THIS AGREEMENT (the "Agreement") is effective as of the _______ day of
July, 1998 (the "Effective Date"), by and among Capital Source, L.P., a Delaware
limited partnership ("Cap Source I"), Capital Source II, L.P.-A, a Delaware
limited partnership ("Cap Source II" and together with Cap Source I, the
"Partnerships"), America First Real Estate Investment Company, Inc., a Delaware
corporation (the "Company") and Continental American Properties, Ltd., a
California limited partnership ("ConAm").
WITNESSETH
WHEREAS, the Partnerships are in the business of providing debt and equity
investments for multifamily rental complexes; and
WHEREAS, ConAm is in the business of making investments in real estate and
is able to identify multifamily redevelopment projects for investment; and
WHEREAS, pursuant to a proposed Agreement and Plan of Merger, the
Partnerships intend to merge into the Company; and
WHEREAS, after completion of the transaction contemplated pursuant to the
Agreement and Plan of Merger, the Company desires to invest in the certain
multifamily rental projects, and ConAm desires to identify potential multifamily
rental projects, present them to the Company and participate in such projects in
a partnership or joint venture or other similar arrangement with the Company on
the terms and subject to the conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the promises and mutual covenants
herein, and for Ten Dollars and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
The defined terms used in this Agreement and not otherwise parenthetically
defined shall have the following meanings:
"CAPITAL" shall mean the amount of cash and the net fair market value of
any property contributed to each Redevelopment Project, as determined in
accordance with generally accepted accounting principles.
"CRITERIA" shall have the meaning specified in Section 3.4 of this
Agreement.
"EVALUATION" shall mean the work product to be prepared by ConAm for the
evaluation of a real estate project which shall include, without
limitation, proposed cost and renovation analysis and budgets, anticipated
financing, proposed operating budgets and financial
projections, market analysis (including without limitation, regional
employment data, metropolitan area data and neighborhood data), known
environmental problems and required remediation (but not requiring an
environmental assessment report) and such other information that would
allow a reasonable person to evaluate with reasonable certainty all
material aspects of a multifamily real estate project for investment
purposes and, with respect to the Redevelopment Projects, compliance with
the Criteria.
"GOVERNING AGREEMENT" shall have the meaning specified in Section 5.1 of
this Agreement for the acquisition, development, redevelopment and
management of a Redevelopment Project.
"MERGER TRANSACTION" means the transaction whereby the Partnerships shall
be merged into the Company and the Company will become the successor to the
interests of the Partnerships as contemplated by that certain Agreement and
Plan of Merger among the Partnerships and the Company.
"REDEVELOPMENT PROJECTS" means a multifamily real estate rental project
identified by ConAm pursuant to this Agreement for redevelopment and
possible investment by the Company. A Redevelopment Project does not
include (i) the Specified Projects identified on Exhibit A attached hereto
or (ii) any real estate project in which either the Company or ConAm or any
of their affiliated entities owns all, a portion or an equity interest on
the Effective Date.
"SPECIFIED PROJECTS" means those real estate projects identified on Exhibit
A attached hereto in which the Partnerships own an interest as of the
Effective Date. A Specified Project is not a Redevelopment Project under
Articles III, IV and V of this Agreement.
"TOTAL COMPANY CAPITAL CONTRIBUTION" means the total Capital contribution
made to a Venture by the Company.
"VENTURE" means the joint venture, partnership or other legally recognized
form of entity or arrangement entered into by ConAm and the Company after
the Merger Transaction to be formed for the purpose of acquiring,
renovating, developing and managing a Redevelopment Projects pursuant to
this Agreement.
ARTICLE II
ENGAGEMENT FOR EXISTING SPECIFIED PROJECTS
2.1 ENGAGEMENT FOR EXISTING SPECIFIED PROJECTS. The Partnerships hereby
engage ConAm to prepare an Evaluation of the Specified Projects. Such
Evaluation shall be delivered to the Partnerships on or before One Hundred
Twenty (120) days after the Effective Date. With respect to any Specified
Project, the Partnerships may request that the Evaluation for such Specified
Project be in such form and contain such additional information as is reasonably
required by the Partnerships in order for the Partnerships to reasonably
determine whether the Partnerships are interested in proceeding with more
detailed due diligence regarding the Specified Projects.
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2.2 EVALUATION FEE. For each Evaluation delivered to the Partnerships for
a Specified Project pursuant to Section 2.1, the Partnerships shall pay to ConAm
a fee of Fifty Thousand Dollars ($50,000.00) ("Specified Project Evaluation
Fee"). The Partnerships' obligation to pay the Specified Project Evaluation Fee
shall survive the cancellation or termination of this Agreement and shall not be
affected by the occurrence or non-occurrence of the Commencement Date pursuant
to Section 3.1 or the Company's obligations under this Agreement.
2.3 SPECIFIED PROJECT VENTURE. Should the Partnerships determine to
proceed with ConAm in the redevelopment of any of the Specified Projects, the
Partnerships shall give written notice thereof to ConAm (outlining any
additional due diligence required to be supplied to the Partnerships, if any)
whereupon the Partnerships and ConAm shall proceed to enter into an agreement in
form and content and containing such terms as may be acceptable to the
Partnerships and ConAm for the acquisition, development and management of the
applicable Specified Project; provided, however, that any such Venture agreement
shall provide that one-half (1/2) the Specified Project Evaluation Fee paid to
ConAm pursuant to Section 2.2 shall be credited to any development fees payable
to ConAm in connection with any such acquisition, development and management of
the Specified Projects contemplated hereby.
2.4 COMPANY AS SUCCESSOR TO PARTNERSHIPS AFTER THE MERGER TRANSACTION.
Upon completion of the Merger Transaction, the Company shall be successor to the
Partnerships and shall succeed to the rights and benefits of the Partnerships
under this Article II of this Agreement.
ARTICLE III
ENGAGEMENT FOR REDEVELOPMENT PROJECTS
3.1 ENGAGEMENT FOR REDEVELOPMENT PROJECTS; CONDITION PRECEDENT. ConAm
hereby agrees to provide the services set forth in Section 3.2 beginning on the
earlier of (i) December 15, 1998 or (ii) such earlier date as may be elected in
writing by the Company after consummation of the Merger Transaction (the
"Commencement Date"); provided, however, it shall be a condition precedent to
the obligations of the Company and ConAm that the Merger Transaction be
consummated prior to the Commencement Date. The term (the "Term") of ConAm's
and the Company's obligations under this Agreement shall begin on the
Commencement Date and, unless terminated sooner as provided in Section 3.5 or by
the mutual written consent of the parties, will terminate on the earlier of (A)
two (2) years after the Commencement Date, or (B) the date following the day
upon which the Company completes a Venture transaction with ConAm that results
in the Company having invested a total of Twenty Million Dollars ($20,000,000)
in Redevelopment Projects pursuant to this Agreement. Notwithstanding any
provision contained herein, in the event that the Merger Transaction is not
consummated on or before December 15, 1998, this Agreement shall be terminated
and shall be of no further force or effect on December 15, 1998. It is the
express understanding and agreement of the Parties that, with the exception of
the obligations of the Partnerships pursuant to Article II of this Agreement,
the Partnerships shall have no obligation to complete the Redevelopment Project
transactions contemplated hereby and that only the Company, after completion of
the Merger Transaction, shall be obligated to complete the Redevelopment Project
transactions contemplated hereby.
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3.2 OBLIGATIONS OF CONAM. ConAm shall perform the following services for
the benefit of the Company during the Term:
(a) IDENTIFICATION/FIRST TRANSACTION AFTER COMMENCEMENT DATE. ConAm shall
have the obligation to use its good faith best efforts to (i) locate,
identify, perform an Evaluation for and present to the Company
Redevelopment Projects that meet the Criteria and that would allow the
Company to invest a total of Twenty Million Dollars ($20,000,000) in
Redevelopment Projects during the Term of this Agreement, and (ii) if such
Redevelopment Projects are approved by the Company as provided herein, to
invest Capital in the Ventures for the acquisition, development and
management of the Redevelopment Projects in accordance with Section 3.2(b).
ConAm shall have the obligation to identify, perform an Evaluation for and
present to the Company the first Redevelopment Project that would
reasonably meet the Criteria that ConAm locates (or has located and which
is not committed by agreement to a different investor) after the
Commencement Date.
(b) INVESTMENT. For any Redevelopment Project that is approved for
investment by the Company pursuant to Section 4.2, ConAm shall contribute
to the Venture formed pursuant to Article V, Capital equal to 11.11% of the
Total Company Capital Contribution in such Venture on a pari passu basis.
(c) BROKERAGE ARRANGEMENTS. Notwithstanding any provision contained
herein, in the event that ConAm employs the services of any third person or
entity as a contract or sub-broker for the purpose of locating potential
Redevelopment Projects, ConAm shall be solely responsible for any fees or
costs associated therewith. The parties acknowledge and agree, however,
that any commissions paid to any broker retained by the seller of any
Redevelopment Project shall be paid as a cost of the Venture. ConAm shall
not enter into any brokerage arrangements with any third parties in the
name of, or that may be binding upon the Company or any Venture without the
express written consent of the Company or Venture.
3.3 INVESTMENT COMMITMENT OF THE COMPANY. The Company agrees to invest in
Ventures with ConAm in a total amount not to exceed Twenty Million Dollars
($20,000,000.00) for Redevelopment Projects that meet the Criteria and that
otherwise comply with and are acquired into Ventures pursuant to the provisions
of this Agreement.
3.4 CRITERIA. The Redevelopment Projects shall be of the type and nature
and shall meet each of the following criteria and conditions (collectively, the
"Criteria"), any of which may be waived in writing by the Company:
(a) TERRITORIES. The Redevelopment Projects shall be located within the
continental United States, excluding the following states: New York,
Connecticut and Nebraska.
(b) CAPITAL. For each Redevelopment Project, the Evaluation and
subsequent due diligence shall support projections that the Redevelopment
Project can be acquired, renovated, developed and managed by the
to-be-formed Venture under proposed budgets that would limit the Total
Company Capital Contribution in such Venture for such
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Redevelopment Project to an amount not greater than Five Million Dollars
($5,000,000.00).
(c) TARGET INTERNAL RATE OF RETURN. For each Redevelopment Project, the
Evaluation and subsequent due diligence shall support projections that the
Redevelopment Project can be acquired, renovated, developed and managed by
the to-be-formed Venture under proposed budgets and financial projections
that would result in a target internal rate of return ("Target IRR") of the
Company for each Redevelopment Project equal to or greater than twenty
percent (20%) per annum of the Total Company Capital Contribution.
3.5 DEFAULT AND RIGHT TO TERMINATE. If at any time after the Commencement
Date the Company reasonably determines that ConAm is not complying with its
obligations to the Company under Section 3.2(a) or if, within any consecutive
120 day period, ConAm has failed to deliver a Notice presenting to the Company a
Redevelopment Project, then the Company shall have the right, but not the
obligation, to notify ConAm that the Company deems ConAm to be in default under
this Agreement and specifying the reasons therefor (the "Default Notice").
ConAm shall have a period of sixty (60) days from the date of the Default Notice
(the "Cure Period") within which to cure the default specified in the Default
Notice to the satisfaction of the Company. If the Company reasonably determines
that ConAm has failed to cure the default during the Cure Period, then the
Company shall deliver written notice to ConAm confirming (i) that the default
has not been cured to the satisfaction of the Company and (ii) that the Company
has elected to terminate the Agreement effective as of the date of such notice,
subject to the provisions of Section 6.1. The right to terminate is the sole
remedy of the Company for failure of ConAm to comply with Section 3.2(a).
ARTICLE IV
NOTICE, DUE DILIGENCE, ACCEPTANCE AND FEES
4.1 NOTICE TO COMPANY. ConAm shall use its best efforts to locate
proposed Redevelopment Projects that meet the Criteria and shall propose such
Redevelopment Projects to the Company by giving written notice ("Notice") to the
Company of a proposed Redevelopment Project, which Notice shall include an
Evaluation of the proposed Redevelopment Project together with such additional
information as may be reasonably necessary for the Company to determine
compliance with the Criteria.
4.2 REVIEW OF REDEVELOPMENT PROJECTS. Following receipt by the Company of
the Notice and information pursuant to Section 4.1:
(a) RESPONSE/ADDITIONAL DUE DILIGENCE. The Company shall have a period of
five (5) business days after receipt from ConAm of the Notice and
accompanying information contemplated to be delivered pursuant to Section
4.1 to deliver to ConAm in writing a rejection or approval of the proposed
Redevelopment Project and setting forth therein (i) the reasons for
rejection, if rejected, including the reasons that the Redevelopment
Project does not meet the Criteria (the "Rejection Notice"), or (ii) if
approved what, if any, additional information may be required by the
Company prior to the Company entering into a Venture with ConAm for the
purposes of moving forward with the proposed Redevelopment Project (the
"Approval Notice"). If any additional information is
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required by the Company in the Approval Notice, such information shall be
supplied to the Company within fifteen (15) days following ConAm's receipt
of the Approval Notice. Within three (3) business days after receipt of
such additional information from ConAm, the Company shall deliver a written
Rejection Notice or Approval Notice to ConAm rejecting or approving the
proposed Redevelopment Project. If the Company reasonably concludes that
the Redevelopment Project does not meet the Criteria after reviewing such
additional information, the Company shall specify in the Rejection Notice
to ConAm the reasons for such rejection. The failure by the Company to
deliver a written notice to ConAm within the specified time frame shall be
deemed to be a rejection of the proposed Redevelopment Project.
(b) FORMATION OF VENTURE UPON APPROVAL. If a proposed Redevelopment
Project is approved as provided in Section 4.2(a) above, then the Company
and ConAm shall proceed to enter into a Venture in form and content
acceptable to ConAm and the Company and containing the terms set forth in
Article V below and such additional terms as may be acceptable to the
parties.
(c) DUE DILIGENCE. Prior to closing upon and acquiring into the newly
formed Venture any proposed Redevelopment Project approved by the Company
as provided above, and prior to the payment by the parties of their
respective Capital relating to such Redevelopment Project, the newly formed
Venture for each Redevelopment Project shall conduct such additional due
diligence as may be reasonably necessary and appropriate including, without
limitation, appraisals, surveys, environmental assessments, engineering
studies, soils tests, title review and other such due diligence and studies
as may be necessary to confirm that there are no environmental problems
affecting the subject property or the improvements thereon, that all
improvements are structurally sound, that all zoning matters have been
complied with and that the Redevelopment Project, in all other material
respects, meets the Criteria and is capable of being owned by the Venture
and developed and/or rehabilitated in accordance with the budgets and in
the manner contemplated in the Evaluation delivered to the Company pursuant
to Section 4.1. The cost of such due diligence shall be paid for by the
Venture. If the due diligence information obtained pursuant to this
Section 4.2(c) reveals that the proposed Redevelopment Project does not
meet the Criteria or is materially different than the information supplied
in the Evaluation (due, among other things, to market changes,
environmental problems, regional employment changes or the like), as the
same may be reasonably determined by the Company, then the Company shall
have the right to terminate the Venture by written notice to ConAm. If the
Venture is so terminated, all costs for obtaining the due diligence and
studies pursuant to this Section 4.2(c) shall be paid for by the Venture
with the Company and ConAm contributing the following amounts: the Company
shall pay ninety percent (90%) thereof to the Venture and ConAm shall pay
ten percent (10%) thereof to the Venture.
ARTICLE V
FORMATION OF VENTURE
5.1 FORMATION OF VENTURE. The Company and ConAm, or their respective
affiliates, shall enter into a Venture in the form of and pursuant to a joint
venture, partnership, limited
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liability company or other legally recognized entity formation agreement, the
legal form of which entity shall be agreed upon by the parties (the "Governing
Agreement") for the acquisition, development, renovation and management of the
Redevelopment Project. Each Governing Agreement shall contain such terms as may
be agreed upon by the parties; provided, however, the following terms contained
in this Article V shall be included in each Governing Agreement:
5.2 DEVELOPER'S FEE. For each Redevelopment Project, the Governing
Agreement for each Venture shall provide that ConAm shall be entitled to a
developer's fee equal to the following (for each Redevelopment Project, the
"Developer's Fee"):
(a) Ten percent (10%) of the Total Company Capital Contribution in the
applicable Venture, if the Total Company Capital Contribution is Two
Million Five Hundred Thousand Dollars ($2,500,000.00) or less;
(b) Seven and one-half percent (7.5%) of the Total Company Capital
Contribution in the applicable Venture if the Total Company Capital
Contribution is in excess of Two Million Five Hundred Thousand Dollars
($2,500,000.00), up to and including Five Million Dollars ($5,000,000.00);
and
(c) If for any reason the Company agrees in writing that the Total Company
Capital Contribution in the applicable Venture may exceed Five Million
Dollars ($5,000,000.00), the Developer's Fee shall be determined by mutual
agreement between the Company and ConAm.
5.3 OTHER VENTURE FEES. The Governing Agreement for each Venture shall
provide for payment of the following fees:
(a) SALES FEE. Unless the Company, in its reasonable judgement,
determines that a third party would be better qualified to act as the sales
broker on behalf of the Venture, ConAm or an affiliate shall have the right
to act as the sales broker for the Venture in connection with any of the
Redevelopment Projects. If ConAm is acting as the sales broker for the
transaction, ConAm shall be paid a sales brokerage fee to ConAm in an
amount not to exceed one and three quarters percent (1.75%) of the gross
sales price of the Redevelopment Project. In the event that ConAm or an
affiliate acts as the sales broker for the Venture, any co-brokerage fee or
similar cost will be paid for exclusively by ConAm.
(b) PROPERTY MANAGEMENT FEE. Unless the Company, in its reasonable
judgment, determines that a third party would be better qualified to act as
the manager of a Redevelopment Project, ConAm or an affiliate shall act as
the property manager for the Redevelopment Project and, as consideration
therefor, shall be paid a property management fee to ConAm of three and
one-half percent (3.5%) of the gross property revenue for such
Redevelopment Project.
(c) OTHER FEES. The Governing Agreement for each Venture shall contain a
provision which permits either party to provide services to the Venture,
provided the Venture will not be required to pay for services in an amount
which is greater than the
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competitive fair market price for similar services paid to other unrelated
persons in the geographic area.
5.4 DISTRIBUTIONS. The Governing Agreement for each Venture shall provide
for the distribution to the Company and ConAm as follows with respect to the
Redevelopment Project owned by such Venture:
(a) DISBURSABLE CASH FOR OPERATIONS. The Venture shall distribute the
amount of Disbursable Cash (as defined below) to the Company and ConAm for
each fiscal quarter within twenty (20) days after the end of each such
fiscal quarter. Distributions of Disbursable Cash will be distributed to
the Company and to ConAm pro rata until each shall have received a priority
return (the "Priority Return") equal to a fifteen percent (15%) per annum
cumulative, compounded on their respective Capital contributions to the
Venture from Disbursable Cash pursuant to this Section 5.4(a), and the
balance if any will be distributed pursuant to Section 5.4(c) below.
Disbursable Cash will be distributed and will not be reinvested. For
purposes of this Agreement, the term "Disbursable Cash" means receipts from
operations after deducting cash used to pay operating expenses, debt
service, capital expenditures and amounts used for the creation or
restoration of reserves, but without deduction for depreciation and
amortization.
(b) SALES PROCEEDS. The Venture shall distribute the Sales Proceeds (as
defined below) to the Company and to ConAm for each fiscal quarter within
twenty (20) days after receipt thereof. Sales Proceeds shall be
distributed (i) to the Company and ConAm until the Company and ConAm have
each received the balance of the Priority Return due and owing to each and
not paid out of Disbursable Cash pursuant to Section 5.4(a) above, then
(ii) the balance of Sales Proceeds, if any, will be distributed pro rata
until the Company and ConAm have received one hundred percent (100%) of
their respective Capital contribution to the Venture, then (iii) the
balance, if any, will be distributed to the Partnerships and ConAm
according to Section 5.4(c) below. Sales Proceeds will be distributed and
will not be reinvested. For purposes of this Agreement, the term "Sales
Proceeds" means the net proceeds from the disposition (including
refinancing proceeds, if any) of land, buildings and equipment related to
the Redevelopment Project owned by such Venture.
(c) SHARING RATIO OF REMAINING DISBURSABLE CASH AND SALES PROCEEDS. The
Venture shall, following the distributions of Disbursable Cash and Sales
Proceeds set forth in Sections (a) and (b) above and subject to adjustments
which may be necessary for federal income tax purposes, allocate and
distribute all remaining Disbursable Cash and Sales Proceeds pro rata as
follows:
The Company 80%
ConAm 20%
5.5 SALE OF REDEVELOPMENT PROJECTS. At any time after the earlier of (i)
six (6) months after the completion of a Redevelopment Project and the issuance
of a certificate of occupancy therefor, or (ii) 30 months after the Company
makes its Total Company Capital Contribution to the Venture, either the Company
or ConAm may, by written notice to the other
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party, require the Venture to initiate a sale of a Redevelopment Project,
pursuant to terms and conditions mutually acceptable to both the Company and
ConAm. Upon such sale, the Sale Proceeds shall be distributed as set forth in
Sections 5.4 above.
ARTICLE VI
TERMINATION
6.1 CONTINUING OBLIGATIONS UPON TERMINATION. Upon the expiration of the
Term or the earlier termination of this Agreement pursuant to Section 3.5 or by
written agreement of the parties (the "Termination Date") the following
obligations shall be deemed to continue and shall survive such Termination Date:
(a) The obligation to pay fees and amounts as set forth herein;
(b) The indemnities contained in Article VIII; and
(c) The obligations of the parties pursuant to the applicable Governing
Agreements, if any, which shall continue until terminated as provided
therein.
ARTICLE VII
OTHER COVENANTS AND AGREEMENTS/NON-EXCLUSIVITY
7.1 OTHER ACTIVITIES. This Agreement is non-exclusive and no provision of
this Agreement shall be construed so as to prohibit the Company or ConAm or
their respective affiliates from participating in the ownership, development,
redevelopment or management of other multifamily rental projects. The Company
acknowledges ConAm's right to acquire properties comparable to the Redevelopment
Projects on behalf of or in partnership with other capital sources. Except as
provided in Section 3.2(a) with respect to the first Redevelopment Project
meeting the Criteria identified by ConAm after the Commencement Date, nothing in
this Agreement is intended to grant the Company a first right of refusal for
projects identified by ConAm which meet the Criteria found in Section 3.4
hereof; provided, however, ConAm shall not acquire or redevelop any multifamily
rental project that competes directly with any Redevelopment Project or Existing
Specified Projects. Further, nothing in this Section 7.1 shall be deemed or
construed to prevent ConAm from acquiring, brokering or otherwise working with
any proposed Redevelopment Project that has been presented to the Company and
rejected by the Company in writing pursuant to the provisions of this Agreement.
7.2 OTHER ACTIVITIES. Nothing in this Agreement shall prevent the Company
from locating, evaluating and entering into joint venture, partnership or other
arrangements for the ownership, development, renovation or management of any
real estate project of whatever nature that the Company locates on its own or
through any third party; provided, however, the Company covenants and agrees
that it will not acquire or redevelop any multifamily rental project that
competes directly with any of the Redevelopment Projects.
ARTICLE VIII
INDEMNIFICATION
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8.1 INDEMNIFICATION. Each party hereto (each an "Indemnitor") agrees to
indemnify and hold each other party hereto harmless from and against all claims,
losses, damages, liabilities, demands, judgments, settlements, costs and
expenses of any nature whatsoever (including attorneys' fees) arising out of,
resulting from or related to the Indemnitor's actions, inactions or omissions
with respect to the performance of its duties under this Agreement. The
indemnification provisions relating to any particular Redevelopment Project
shall be governed by the Venture Agreement entered into with respect to such
Redevelopment Project.
ARTICLE IX
CONFIDENTIAL INFORMATION
9.1 ACKNOWLEDGEMENT OF CONFIDENTIALITY. Each party to this Agreement
agrees and acknowledges that in the course of performing its respective
obligations hereunder, it may have access to and become acquainted with
confidential information about the professional, business and financial affairs
of the other parties (collectively, the "Confidential Information") and that
each party to this Agreement is engaged in a highly competitive business and
that the success of each such in the marketplace depends upon their goodwill and
reputation for quality and dependability. Each party agrees and acknowledges
that reasonable limits on its ability to engage in activities competitive with
the other parties are warranted to protect each of the other party's substantial
investment in developing their status, reputation and goodwill in the
marketplace. Accordingly, each party agrees to keep confidential all
Confidential Information that is marked "confidential" or that is delivered to
such party in a manner so as to imply with reasonable certainty the
confidentiality of such information. ConAm also agrees to keep confidential the
terms of this Agreement unless the Company otherwise agrees in writing. Nothing
in this Article IX is intended or shall be deemed to limit the ability of any
party to (i) comply with its obligations under this Agreement, (ii) comply with
the requirements of any court order requiring disclosure of Confidential
Information, or (iii) comply with any filing or other disclosure requirements
mandated by any state or federal laws governing securities.
9.2 PROPRIETARY INFORMATION. Except as provided above in Section 9.1,
trade secrets and proprietary information of either party shall be deemed
Confidential Information and shall be kept confidential by the party receiving
such information as follows:
(a) TRADE SECRETS. At no time during or after the Effective Date, shall
any either party disclose to any third party any trade secrets of the other
party except as may be reasonably necessary to perform its obligations
under this Agreement.
(b) PROPRIETARY INFORMATION. In addition to the prohibition of Section
9.2(a) and all common law prohibitions against the disclosure of trade
secrets, each party agrees, at all times for a period of twelve (12)
consecutive months subsequent to the Termination Date, not to disclose to
any third person, corporation or other entity without the written
permission of the affected party any Proprietary Information (as defined
below) regardless of whether such Proprietary Information would be deemed a
"trade secret" at common law. For purposes of this Agreement, the term
"Proprietary Information" includes, but is not limited to: (i) any
documents or information relating to the products, research and plans of
the affected party; (ii) all financial data relating to the affected party
and their officers, directors, members, employees, representatives and
shareholders; or
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(iii) any confidential documents or information concerning the affected
party (or any business entity affiliated with such party).
9.3 RETURN OF INFORMATION/RECORDS. All information and materials
delivered to either party by the other in the course of this Agreement are and
shall remain the sole property of the delivering party and upon termination of
this Agreement, each party shall, upon the written request of the other, return
to the delivering party all records, notes, data, memorandum, models and
equipment of any nature that are in its possession or under its control. Any
Evaluation or to other information delivered to the Company by ConAm pursuant to
this Agreement shall remain the property of ConAm unless and until the Company
approves the Redevelopment Project to which such information and Evaluation
relates, whereupon such Evaluation and other information relating to such
Redevelopment Project shall be deemed to be owned by both parties until the
Venture is formed, whereupon the Evaluation and other information shall be
deemed to be owned by such Venture.
9.4 EQUITABLE RELIEF. Each party acknowledges that the restrictions
contained in Article IX are reasonable and necessary in order to protect the
legitimate interests of the parties to this Agreement and that any violation
thereof would likely result in irreparable injury to the affected party. Each
party, therefore, further acknowledges and agrees that any aggrieved party under
this Article IX shall be entitled to obtain from any court of competent
jurisdiction, without the posting of any bond or other security, preliminary and
permanent injunctive relief as well as damages and an equitable accounting of
all earnings, profits and other benefits arising from such violation, which
rights shall be cumulative and in addition to any other rights or remedies in
law or equity to which such aggrieved party may be entitled.
ARTICLE X
MISCELLANEOUS
10.1 RELATIONSHIP OF THE PARTIES. The Partnerships and ConAm with respect
to the Specified Projects and the Company and ConAm with respect to the
Redevelopment Projects intend to negotiate in good faith and to enter into
separate agreements governing their relationship, rights and obligations for
each such project, consistent with the terms of this Agreement. ConAm shall not
be authorized or empowered to enter into any agreements or understandings with
any person or entity on behalf of the Partnerships, the Company or any Venture
without the prior written consent of the Partnerships, the Company or the
Venture as evidenced by their signature on said agreement.
10.2 SURVIVAL OF PROVISIONS. Notwithstanding any provision contained
herein, the indemnities contained in Article VIII and the confidentiality
provisions contained in Article IX shall survive the expiration or termination
of this Agreement for any reason whatsoever.
10.3 ASSIGNMENT. ConAm's rights, duties and obligations under this
Agreement may not be assigned or transferred to any other person, firm,
corporation or other entity without the prior written consent of the
Partnerships with respect to the Specified Projects or the Company with respect
to the Redevelopment Projects. The parties hereto may assign their rights under
this Agreement to any entity that is affiliated by common ownership or control.
11
10.4 ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties hereto and there are no other promises or conditions in any other
agreement whether oral or written regarding the subject matter hereof. This
Agreement supersedes any prior written or oral agreements between the parties
hereto regarding the subject matter hereof.
10.5 AMENDMENT. This Agreement may be modified or amended only by
amendment or modification made in writing and is signed by all parties hereto.
10.6 SEVERABILITY. If any provision of this Agreement shall be held to be
invalid or unenforceable for any reason, the remaining provisions shall continue
to be valid and enforceable. If a court finds that any provision of this
Agreement is invalid or unenforceable, but that by limiting such provision it
would become valid and enforceable, then such provision shall be deemed to be
written, construed, and enforced as so limited.
10.7 COMMUNICATION. ConAm shall report to Mr. Xxxx Xxxxxx on all matters
relating to the Partnerships or the Company under this Agreement and ConAm's
performance of its obligations hereunder to either party.
10.8 NOTICES. All notices required or permitted under this Agreement shall
be in writing and shall be deemed delivered when (a) delivered in person; (b)
deposited in the United States mail, postage prepaid, by certified mail, return
receipt requested; (c) upon transmission by facsimile; or (d) delivered by
reputable overnight courier, addressed as follows:
The Partnerships: Capital Source
Capital Source II A
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
The Company: America First Real Estate Investment Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
ConAm: Continental American Properties, Ltd.
0000 Xxx Xxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: J. Xxxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
Such addresses may be changed from time to time by any party by providing
written notice in the manner set forth above.
10.9 WAIVER. The failure of any party to enforce any provision of this
Agreement shall not be construed as a waiver or limitation of that party's right
to subsequently enforce and compel strict compliance with every provision of
this Agreement.
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10.10 ARBITRATION OF ALL DISPUTES. Except as provided in Article IX
and without limiting the right of the Company to terminate this Agreement
pursuant to the provisions of Section 3.5, if any disputes or controversies
arise between the parties in connection with this Agreement or their acts or
duties hereunder, such disputes or controversies shall be submitted to and
resolved by binding arbitration in accordance with the laws of the State of New
York and the rules of the American Arbitration Association. Each party shall
select one arbitrator, and the arbitrators so selected shall select a third
arbitrator, which three arbitrators shall constitute the arbitration panel for
the dispute. All arbitration proceedings shall be conducted in New York, New
York. The decision or award of the arbitration panel shall be final and
binding, and judgment thereon may be entered in a state or federal court with
jurisdiction over the parties. It is understood that the arbitration panel
shall have no authority to add to, subtract from, or modify any provision of
this Agreement. The cost of any arbitration proceeding hereunder shall be borne
equally by the parties, subject to the arbitrators awarding such costs
otherwise. A party shall only be entitled to be awarded damages for actual
losses suffered by the injured party plus reasonable costs (including reasonable
attorney's fees and costs).
10.11 FACSIMILE TRANSMISSION; COUNTERPARTS. This Agreement may be
executed in counterpart and by facsimile signature transmission and shall be
binding upon the parties transmitting the same. Counterparts with original
signatures shall be provided to the other parties within seven (7) days of the
applicable facsimile transmission, provided, however, that the failure to
provide the original counterpart shall have no effect on the validity or the
binding nature of the Agreement. If executed in counterparts, the Agreement
shall be effective as if simultaneously executed.
10.12 JURISDICTION. Subject to the provisions of Section 10.10, the
parties hereby agree that any legal action or proceeding with respect to this
Agreement and any action or proceeding to execute or otherwise enforce any
judgment obtained in connection therewith, will be instituted in the courts of
the State of New York, or in the U.S. District Court for the District of New
York, and by execution and delivery of this Agreement each of the parties hereto
irrevocably and unconditionally submits to the jurisdiction of each such court
and waives any objection which it may now or hereafter have to the laying of
venue of any such action or proceeding brought in any such court and any claim
that any such action or proceeding has been brought in an inconvenient forum.
10.13 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and shall be binding upon the parties and their respective successors
and assigns. The parties expressly agree that, upon completion of the Merger
Transaction, the Company shall succeed to the rights, remedies, obligations or
liabilities of the Partnerships under this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any other person or
entity any rights, remedies, obligations or liabilities.
10.14 SECTION HEADINGS. The section and other headings contained in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
13
10.15 GOVERNING LAW. This Agreement is made and entered into, and
shall be governed by and construed in accordance with, the laws of the State of
New York, without regard to the conflict of laws provisions of such state.
10.16 FURTHER ASSURANCES. The parties agree to execute, acknowledge,
seal and deliver, such further assurances, instruments and documents, and to
take such further actions, as any other party may reasonably request in order to
fulfill the intent of this Agreement and the transactions contemplated
hereunder.
10.17 ATTORNEY FEES. In the event of litigation or arbitration arising
out of this Agreement, the court or the arbitrators, as the case may be, shall
award to the prevailing party all reasonable costs and expenses, including
without limitation, attorneys' fees.
10.18 LIMITATION OF LIABILITY. Notwithstanding any provision hereof or
by operation of law to the contrary, the liability, if any, of Xxxxxx X.
Xxxxxxx, the individual general partner of ConAm, shall be limited to his
interest in ConAm and shall not affect his other assets.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
The Partnerships:
CAPITAL SOURCE L.P., a Delaware limited partnership
By Insured Mortgage Equities, Inc., a General Partner
By /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx
-------------------------------------
Title: President
-------------------------------------
CAPITAL SOURCE II L.P.-A, a Delaware limited
partnership
By Insured Mortgage Equities II, L.P., a General
Partner
By CS Housing II, Inc.,
its General Partner
By /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
--------------------------------
Title: President
--------------------------------
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ConAm:
CONTINENTAL AMERICAN PROPERTIES, LTD., a California
limited partnership
By: D.J.E. FINANCIAL CORPORATION, its
General Partner
By /s/ J. Xxxxxxx Xxxxxxxxx
--------------------------------------
Name: J. Xxxxxxx Xxxxxxxxx
--------------------------------------
Title:
--------------------------------------
THE COMPANY:
AMERICA FIRST REAL ESTATE
INVESTMENT COMPANY, INC., a Delaware
corporation
By /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
--------------------------------------
Title: President
--------------------------------------
16
EXHIBIT A
SPECIFIED PROJECTS
1. XXXXXXXX'X CROSSING, LEGALLY DESCRIBED AS FOLLOWS:
All that certain piece or parcel of land, situate, lying and being in the City
of Newport News, Virginia, as shown on that certain plat entitled "Plat of the
Property to be conveyed to Xxxxxxx & Xxxx, 19.8607 Acres, City of Newport News,
Virginia," made by Xxxxxx & Associates, Inc., Engineers-Planners-Surveyors,
dated June 16, 1983, revised April 13, 1984 containing 19.8607 acres, and more
particularly described as follows:
Beginning at a pipe located on the westerly right-of-way line of Xxxxxxx Drive
at the northerly end of the aforesaid Xxxxxxx Drive, and thence from the point
of beginning thus established, along the arc of a curve to the left, having
radius of 920.00 feet, a distance of 14.27 feet to a pipe, thence continuing
along the arc of a curve to the left, having a radius of 220.00 feet a distance
of 161.27 feet to a pipe, thence continuing along the arc of a curve to the
left, having a radius of 520.00 feet, a distance of 268.89 feet to a pipe,
thence N. 2DEG. 52' 20" W, a distance of 311.73 feet to a pipe, thence
N. 87DEG. 07' 40" E, a distance of 393.44 feet to a pipe, thence N. 2DEG.
52' 20" W, a distance of 547.85 feet to a pipe, thence N. 19DEG. 00' W, a
distance of 138.00 feet to a pipe, thence N 25DEG. 09' 00" W, a distance of
493.32 feet to a pipe, thence N 64DEG. 51' 00" E, a distance of 248.53 feet to
a pipe, thence S 25DEG. 09' 00" E, a distance of 318.63 feet to an axle, thence
continuing S 25DEG. 09' 00" E, a distance of 1,092.38 feet to a monument,
thence S 87DEG. 02' 30" E, a distance of 300.98 feet to a point, thence S 3DEG.
24' 10" W, a distance of 388.97 feet to a pipe, thence N 84DEG. 29' 10" W, a
distance of 705.35 feet to a pipe, thence along the arc of a curve to the left,
having a radius of 125.50 feet, a distance of 78.89 feet to a pipe, thence
S. 30DEG. 59' 04" E, a distance of 50.01 feet to a pipe, thence along the arc
of a curve to the left, having a radius of 25.00 feet, a distance of 36.18 feet
to a pipe, thence S 66DEG. 53' 20" W, a distance of 60.00 feet to the point of
beginning.
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2. FOX HOLLOW, LEGALLY DESCRIBED AS FOLLOWS:
BEGINNING at a point in the Southern right of way line of Xxxxxxx Avenue said
point being located South 56 degrees 25 minutes 20 seconds West, 644.00 feet
from the Southwest intersection of Xxxxxxx Avenue and North Main Street, said
point also being the Northwest corner of the property of X. X. Xxxx Trustees as
recorded in Plat Book 57, Page 124 in the Guilford County Register of Deeds,
thence line of said X. X. Xxxx Trustees, Xxxxx Xxxxx and Brunswick Corporation,
South 33 degrees 39 minutes 47 seconds East, 970.62 feet to a point in the
Northern line of Greenwood Hills Subdivision as recorded in Plat Book 27,
Page 23 of the said Guilford County Register of Deeds, thence with a North line
of Greenwood Hills, South 80 degrees 33 minutes 42 seconds West, 339.23 feet to
a point, thence continuing with said North line, North 85 degrees 56 minutes 58
seconds West, 687.00 feet to a point, said point being the Southeast corner of
the property of Xxxx Xxx Xxxxxxxxx, thence along Xxxxxxxxx'x Eastern line, North
14 degrees 11 minutes 07 seconds West, 534.35 feet to a point in the Southern
right of way line of Xxxxxxx Avenue, Xxxxxxxxx'x Northeast corner, thence along
the Southern line of Xxxxxxx Avenue, in a Northeasterly direction with a curve
to the left an arc distance of 600.00 feet to a point in said right of way,
thence continuing with said Xxxxxxx Xxxxxx, Xxxxx 00 degrees 25 minutes 20
seconds East, 84.21 feet to the point and place of beginning.
Being all of Lot "A" of the Fox Hollow, Ltd., Subdivision, Plat of which is duly
recorded in Plat Book 77 at Page 133, in the Office of the Register of Deeds for
Guilford County, North Carolina.
3. XXXXX SPRINGS, LEGALLY DESCRIBED AS FOLLOWS:
Xxx 0, Xxxxxxxxxx Xxxx XXX, Xxxxx XX, as per map in Map Book 41, page 94 of the
Public Records of Volusia County, Florida.
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