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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-K
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-10093
RAMCO-GERSHENSON PROPERTIES TRUST
(Exact Name of Registrant as Specified in its Charter)
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MARYLAND 13-6908486
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporated or Organization)
27600 NORTHWESTERN HIGHWAY 48034
SOUTHFIELD, MICHIGAN (Zip Code)
(Address of Principal Executive Offices)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 248-350-9900
SECURITIES REGISTERED PURSUANT TO SECTION 12 (B) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Shares of Beneficial Interest, New York Stock Exchange
$0.01 Par Value Per Share
Share Purchase Rights New York Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12 (G) OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements to this Form 10-K. [X]
Aggregate market value of the voting shares held by non-affiliates of the
registrant as of March 3, 1998: approximately $138,157,000.
Approximately 7,123,355 Common Shares of Beneficial Interest of the
registrant were outstanding as of March 3, 1998.
DOCUMENT INCORPORATED BY REFERENCE: Portions of the 1998 Ramco-Gershenson
Properties Trust Proxy Statement to be filed with the Securities and Exchange
Commission within 120 days after the year covered by this Annual Report on Form
10-K with respect to the annual meeting of shareholders to be held on June 10,
1998 are incorporated by reference into Part III.
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TABLE OF CONTENTS
NOTE:Ramco-Gershenson Properties Trust is sometimes referred to in this Annual
Report on Form 10-K as "Registrant", or the "Company".
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ITEM PAGE
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PART I 1. Business.................................................... 2
2. Properties.................................................. 9
3. Legal Proceedings........................................... 14
4. Submission of Matters to a Vote of Security Holders......... 14
PART II 5. Market for Registrant's Common Equity and Related
Stockholder Matters......................................... 15
6. Selected Financial Data..................................... 17
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 19
8. Financial Statements and Supplementary Data................. 29
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 29
PART III 10. Directors and Executive Officers of the Registrant.......... 30
11. Executive Compensation...................................... 30
12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 30
13. Certain Relationships and Related Transactions.............. 30
PART IV 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K......................................................... 31
35
SIGNATURES.....................................................................
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PART I
ITEM 1. BUSINESS
GENERAL
Ramco-Gershenson Properties Trust (the "Company") is a Maryland trust
organized pursuant to Articles of Amendment and Restatement of Declaration of
Trust dated October 2, 1997. The Company is the successor entity of
Ramco-Gershenson Properties Trust (the "Massachusetts Trust"), a Massachusetts
business trust. In December 1997, with the approval of its shareholders, the
Company changed its state of organization from Massachusetts to Maryland through
the termination of the Massachusetts Trust's Amended and Restated Declaration of
Trust by amending such Amended and Restated Declaration of Trust to provide for
the termination of the Trust, the merger (the "Change of Venue Merger") of the
Massachusetts Trust into the Company and the conversion of each outstanding
share of beneficial interest in the Massachusetts Trust into a common share of
beneficial interest of the Company. The term the "Company" refers to Ramco-
Gershenson Properties Trust and/or its predecessors.
The principal office of the Company is located at 27600 Northwestern
Highway, Suite 200, Southfield, Michigan 48034.
RPS Realty Trust, a Massachusetts business trust, was formed on June 21,
1988 to be a diversified, growth oriented real estate investment trust ("REIT").
From 1988 until April 30, 1996, RPS Realty Trust was primarily engaged in the
business of owning and managing a participating mortgage loan portfolio, and,
through its wholly-owned subsidiaries, owning and operating eight real estate
properties.
In May 1996, the Company (i) acquired substantially all of the shopping
center and retail properties as well as the management organization and business
operations, of Ramco-Gershenson, Inc. and certain of its affiliates (the "Ramco
Acquisition"), (ii) changed the Company's name from RPS Realty Trust to Ramco-
Gershenson Properties Trust, (iii) combined the outstanding shares of the
Company by way of a one-for-four reverse split, and, (iv) spun-off eight
mortgage loans and two real properties (the "RPS Mortgage Assets") to Atlantic
Realty Trust , a newly formed real estate investment trust ("Atlantic"). The
Ramco Acquisition was accomplished by the transfer by the Company to
Ramco-Gershenson Properties, L.P. (the "Operating Partnership"), a Delaware
limited partnership of which the Company is the general partner, of six
properties containing approximately 931,000 square feet of gross leasable area
("GLA") and of $68,000,000 in cash, and by the transfer to the Operating
Partnership by the principals of Ramco-Gershenson, Inc. (the "Ramco Principals")
and by their affiliates (collectively the "Ramco Group"), of, (a) 20 properties
containing approximately 4,826,000 square feet of gross leasable area (the
"Ramco Properties"), (b) 100% of the non-voting stock and 5% of the voting stock
(representing in excess of 95% of the economic interest) in Ramco-Gershenson,
Inc. ("Ramco") (c) 50% general partner interests in two partnerships which each
own a shopping center comprising a total of approximately 288,000 square feet of
GLA (d) rights in and/or options to acquire certain development land totaling
approximately 155 acres, (e) options to acquire interests in six shopping center
properties and (f) five outparcels totaling 7.1 acres. In return for its
transfers, the Ramco Group received 2,377,492 Units ("Units") of the Operating
Partnership (representing an approximate 25% limited partnership interest in the
Operating Partnership). The acquisition was accounted for using the purchase
method. The purchase price was allocated to the assets acquired and liabilities
assumed based upon their estimated fair market value. Units were valued at
approximately $16.50 per share representing the average trading price of the
Company's stock immediately preceding and following the Ramco Acquisition. In
addition, the Ramco Group received 279,181 Units as a partial earnout relative
to Jackson Crossing Shopping Center (representing an approximate 2% limited
partnership interest in the Operating Partnership). The Ramco Group's aggregate
Units of 2,656,673 represented an approximate 27% limited partnership interest
in the Operating Partnership. The Company assumed approximately $176,556,000 of
secured indebtedness on the Ramco Properties. The aggregate interest in the
Operating Partnership to be received by the Ramco Group may be increased to a
maximum of approximately 29% if certain leasing objectives with respect to
Jackson Crossing were fulfilled by March 31, 1997. The Company is in the process
of evaluating the Jackson Crossing earnout and determining appropriate due
diligence procedures to be performed relative to the
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proposed calculation. The potential impact of additional units is not expected
to be material. Subject to certain limitations, the Units in the Operating
Partnership are exchangeable into common shares of the Company on a one-for-one
basis. No Units have been exchanged to date. In connection with the Ramco
Acquisition, the Company entered into three-year employment agreements with Joel
D. Gershenson (the Chairman and a Director of the Company), Dennis E. Gershenson
(the President and a Director of the Company), Richard D. Gershenson (an
Executive Vice President and the Secretary of the Company), Bruce A. Gershenson
(an Executive Vice President and the Treasurer of the Company) and Michael A.
Ward (an Executive Vice President and the Chief Operating Officer of the
Company). The Ramco Acquisition permitted the Company to become a
self-administered, self-managed and fully integrated real estate investment
trust.
The Company was organized for the purpose of qualifying as a real estate
investment trust ("REIT") under Section 856-860 of the Internal Revenue Code of
1986, as amended (the "Code").
Operations of the Company. The Company is engaged in the business of
owning, developing, acquiring, managing and leasing community shopping centers,
regional malls and single tenant retail properties, nationally. At December 31,
1997, the Company had a portfolio of 50 shopping centers, with more than
9,700,000 square feet of gross leasable area, located in Michigan, Ohio,
Florida, New York, New Jersey, Maryland, North Carolina, South Carolina,
Tennessee, Alabama, Wisconsin and Georgia.
The Company's properties consist of 2 regional enclosed malls, 39 community
centers, 6 power centers, and 3 single tenant retail properties. Regional
enclosed malls are larger retail properties (containing 400,000 to more than
1,000,000 square feet of GLA) with two or more department stores as anchors and
a wide variety of stores along enclosed, climate controlled malls connecting the
anchors.
Community shopping centers generally range in size up to 400,000 square
feet of GLA and are located in developed retail and commercial areas in which
other similar centers may be nearby. In addition, with respect to some of these
centers, there may be one or more regional enclosed malls nearby. Community
shopping centers generally fall into two types: traditional community centers
and power centers. Traditional community centers typically are convenient to
their trade areas and focus primarily on value-oriented and convenience goods
and services. They are designed to service a neighborhood area, and are usually
anchored by a supermarket, drugstore or discount retailer providing basic
necessities, although certain community centers are free standing single-user
buildings. Power centers are different from traditional community centers
because they are designed to service a larger trade area and they contain at
least two anchors which occupy a substantial portion of the GLA in the center.
These anchors are often national retailers which are leaders in their market or
"category killers" i.e., larger stores which offer a complete selection of a
category of items (e.g., toys, office supplies, home improvement products,
electronics, etc.) at low prices, and often in a warehouse format.
The Company conducts substantially all of its business through the
Operating Partnership. The Company is the sole general partner of, and has
exclusive power to manage and conduct the business of, the Operating
Partnership. The Operating Partnership holds substantially all of the Company's
interest in its properties, either directly or indirectly through subsidiaries
(including subsidiary property partnerships). The Operating Partnership also
owns 100% of the non-voting common stock and 5% of the voting common stock of
Ramco; such stock ownership enables the Company to receive in excess of 95% of
the dividend and liquidating distributions of Ramco. The Company's property
management operations are conducted through Ramco to facilitate compliance with
certain REIT requirements under the Code. The income attributable to the
ownership of the Ramco stock is accounted for under the equity method.
The Company's business objective and operating strategy is to increase
funds from operations and cash available for distribution per share. The Company
expects to achieve internal growth and to enhance the value of the properties by
increasing their rental income over time through (i) contractual rent increases,
(ii) the leasing and re-leasing of available space at higher rental levels, and
(iii) the selective renovation of the properties. The Company intends to achieve
external growth through the selective development of new shopping center
properties, the acquisition of shopping center properties and through the
expansion and redevelopment of existing properties.
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Ramco performs all property management functions for the properties. At
December 31, 1997, Ramco had 129 full-time employees devoted exclusively to
property management, including on-site personnel. Property management efforts
are directed toward improving tenant sales and rents by continually
repositioning the centers. Ramco strives to meet the needs of its tenants in the
areas of promotion, marketing and ongoing management of its properties and seeks
to bring together a sufficient critical mass of complementary tenants. As part
of its property management efforts, Ramco monitors tenant mix, store size, sales
results and store locations, and works closely with tenants to improve the
overall performance of their stores. Ramco seeks to anticipate trends in the
retailing industry and introduce new retail names and concepts into its shopping
center properties in response to these trends.
As part of its ongoing business strategy, the Company seeks to expand and
redevelop existing properties in its shopping center portfolio, as well as newly
acquired properties, depending on tenant demands and market conditions. The
Company plans to take advantage of attractive purchase opportunities by
acquiring additional shopping center properties in underserved, attractive
and/or expanding markets. The Company also seeks to acquire strategically
located, quality shopping centers that (i) have leases at rental rates below
market rates, (ii) have potential for rental and/or occupancy increases or (iii)
offer cash flow growth or capital appreciation potential where the Company's
financial strength, relationships with retail companies or expansion or
redevelopment capabilities can enhance value, and provide anticipated total
returns that will increase the Company's cash available for distribution per
share. The Company believes that its in-house redevelopment and expansion
capabilities provide it with opportunities to acquire shopping center properties
that may not necessarily be attractive to other owners.
DEVELOPMENTS IN 1997
In May 1997 the Company acquired Madison Center in Madison Heights,
Michigan for approximately $7,400,000. The shopping center is an approximately
186,000 square foot community center anchored by Kmart (87,000 square feet),
Dunhams (25,000 square feet), and Oakridge Market (20,000 square feet). The
Madison Center is well located in a densely populated trade area with
opportunities including the potential expansion of several anchor stores,
reconfiguration of existing retail space and development of pad sites on the
property.
Pelican Plaza, located in Sarasota, Florida, was acquired in July 1997 for
$7,200,000. The shopping center is an approximately 106,000 square foot
community shopping center/office development anchored by Linens 'N Things
(36,000 square feet). The shopping center is strategically located directly
across the street from Sarasota Square, the largest regional enclosed mall in
Sarasota County.
On October 30, 1997, the Company completed the acquisition of 15 shopping
center properties (the "Southeast Portfolio") which contain approximately 2.5
million square feet of GLA. Approximately 539,000 square feet of GLA at seven of
the Southeast Portfolio shopping centers is leased to Wal-Mart, but not
currently occupied by Wal-Mart, although Wal-Mart remains obligated under the
respective lease agreements. Wal-Mart has entered into various subleases with
sub-tenants currently covering approximately 277,000 square feet of GLA.
Wal-Mart remains obligated under the terms of the respective lease agreements
for varying time periods.
The properties were acquired for approximately $124,500,000. The Southeast
Portfolio is comprised of the following:
Athens Town Center is a 210,000 square foot community center located in
Athens, Alabama. The center is anchored by Wal-Mart (86,000 square feet) and
Bruno's (43,000 square feet). Wal-Mart has subleased its space to Goody's Family
Clothing, Tractor Supply Co. and Big Lots.
Cox Creek Plaza is a 139,000 square foot community center located in
Florence, Alabama. The center is anchored by Wal-Mart (99,000 square feet).
Wal-Mart has subleased its space to Goody's Family Clothing and Toys R Us.
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Crestview Corners is a 112,000 square foot community center located in
Crestview, Florida. The center is anchored by Wal-Mart (51,000 square feet) and
Fleming Foods (29,000 square feet). Wal-Mart currently is not occupying its
leased premises but remains obligated to pay rent under the lease agreement.
Cumberland Gallery is a 98,000 square foot community center located in New
Tazewell, Tennessee. The center is anchored by Wal-Mart (41,000 square feet) and
Ingles Grocery (32,000 square feet).
Edgewood Square is a 217,000 square foot community center located in North
Augusta, South Carolina. The center is anchored by Wal-Mart (123,000 square
feet), Goody's Family Clothing (35,000 square feet), and Bi-Lo Grocery (32,000
square feet).
Hickory Corners is a 147,000 square foot community center located in
Hickory, North Carolina. The center is anchored by Wal-Mart (82,000 square feet)
and Food Lion Grocery (25,000 square feet). Construction of a 23,500 square foot
OfficeMax store was completed and the store opened in January 1998. Wal-Mart has
subleased its space to Media Play and Toys R Us.
Highland Square is a 172,000 square foot community center located in
Crossville, Tennessee. The center is anchored by Wal-Mart (82,000 square feet)
and Kroger (49,000 square feet). Wal-Mart currently is not occupying its leased
premises but remains obligated to pay rent under the lease agreement.
Holly Springs is a 156,000 square foot community center located in
Franklin, North Carolina. The center is anchored by Wal-Mart (92,000 square
feet) and Ingles Grocery (32,000 square feet).
Indian Hills is a 129,000 square foot community center located in Calhoun,
Georgia. The center is anchored by Wal-Mart (66,000 square feet) and Ingles
Grocery (32,000 square feet). Wal-Mart currently is not occupying its leased
premises but remains obligated to pay rent under the lease agreement.
Mays Crossing is a 137,000 square foot community center located in
Stockbridge, Georgia. The center is anchored by Wal-Mart (73,000 square feet)
and Ingles Grocery (27,000 square feet). Wal-Mart has subleased its space to Old
America Stores and Big Lots.
Northwest Crossing is a 262,000 square foot community center located in
Knoxville, Tennessee. The center is anchored by Wal-Mart (139,000 square feet),
Ingles Grocery (44,000 square feet), and Goody's Family Clothing (35,000 square
feet).
Ridgeview Crossing is a 212,000 square foot community center located in
Elkin, North Carolina. The center is anchored by Wal-Mart (110,000 square feet),
Ingles Grocery (32,000 square feet), and Belk Department Store (35,000 square
feet).
Stonegate Plaza is a 138,000 square foot community center located in
Kingsport, Tennessee. The center is anchored by Wal-Mart (102,000 square feet)
and Food Lion Grocery (25,000 square feet).
Taylors Square is a 243,000 square foot community center located in
Greenville, South Carolina. The center is anchored by Wal-Mart (134,000 square
feet), Belk Department Store (41,000 square feet), and Goody's Family Clothing
(35,000 square feet).
Tellico Plaza is a 114,000 square foot community center located in Lenoir
City, Tennessee. The center is anchored by Wal-Mart (66,000 square feet) and
Bi-Lo Grocery (29,000 square feet).
In December 1997, the Company acquired Village Lakes Shopping Center in
Land O' Lakes, Florida for approximately $8,600,000. The shopping center is an
approximately 186,000 square foot community center. Village Lakes is anchored by
Wal-Mart (85,000 square feet) and Kash 'N Karry Food Store (40,000 square feet).
COMPETITION
Numerous shopping center properties compete with the Company's properties
in attracting tenants to lease space. Some of these competing properties may be
newer, better located, better capitalized or better tenanted than some of the
Company's properties. Furthermore, the Company believes that it is likely that
major national or regional commercial property developers will continue to seek
development opportunities in
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markets where the Company's properties are located. These developers may have
greater financial resources than the Company. The number of competitive
commercial properties in a particular area could have a material effect on the
Company's ability to lease space in its properties or at newly developed or
acquired properties and on the rents charged. In addition, the Company may face
competition from alternate forms of retailing, including home shopping networks,
mail order catalogues and on-line based shopping services which may limit the
number of retail tenants that desire to seek space in shopping center properties
generally, all of which may affect the Company's ability to make expected
distributions.
The Company is subject to the risks that upon expiration of leases for
space located in its properties, the leases may not be renewed, the space may
not be relet or the terms of renewal or reletting (including the cost of
required renovations) may be less favorable than current lease terms. Leases on
a total of approximately 6.97% of the Company owned GLA will expire in 1998. If
the Company was unable to promptly relet or renew the leases for all or a
substantial portion of this space and, if the rental rates upon such renewal or
reletting were significantly lower than expected rates, then the Company's cash
flow and ability to make distributions to Shareholders may be adversely
affected. If the Company was unable to maintain its current occupancy levels
then the Company's cash flow and ability to make expected distributions to
Shareholders may be adversely affected.
The shopping center industry is seasonal in nature. Tenant sales and
occupancy are higher in the fourth quarter due to the Christmas selling season.
Back-to-school and Easter events also result in sales fluctuations.
TAX MATTERS
Qualification as a REIT. The Company first elected to qualify as a REIT for
the year ended December 31, 1988. The Company's policy is to qualify as a REIT
for federal income tax purposes. If the Company so qualifies, amounts paid by
the Company as distributions to its shareholders will not be subject to
corporate income taxes. For any year in which the Company does not meet the
requirements for electing to be taxed as a REIT, it will be taxed as a
corporation.
The requirements for qualification as a REIT are contained in sections
856-860 of the Code and the regulations issued thereunder. The following
discussion is a brief summary of some of those requirements. Such requirements
include certain provisions relating to the nature of a REIT's assets, the
sources of its income, the ownership of its stock, and the distribution of its
income. Among other things, at the end of each fiscal quarter, at least 75% of
the value of the total assets of the Company must consist of real estate assets
(including interests in mortgage loans secured by real property and interests in
other REIT's) as well as cash, cash items and government securities (the "75%
Asset Test"). There are also certain limitations on the amount of other types of
securities which can be held by a REIT. Additionally, at least 75% of the gross
income of the Company for the taxable year must be derived from certain sources,
which include "rents from real property," and interest secured by mortgages on
real property. An additional 20% of the gross income of the Company must be
derived from these same sources or from dividends, interest from any source, or
gains from the sale or other disposition of stock or securities or any
combination of the foregoing. There are also restrictions on the percentage of
gross income derived from the sale or disposition of certain assets within
certain time periods. A REIT is also required to distribute annually at least
95% of its REIT Taxable Income (as defined in the Code) to its shareholders.
During the third quarter of 1994, the Company held more than 25% of its
value of its gross assets in overnight Treasury Bill reverse repurchase
transactions which the United States Internal Revenue Service (the "IRS") may
view as non-qualifying assets for the purposes of satisfying an asset
qualification test applicable to REITs, based on a Revenue Ruling published in
1977 (the "Asset Issue"). The Company has requested that the IRS enter into a
closing agreement with the Company that the Asset Issue will not impact the
Company's status as a REIT. The IRS has deferred any action relating to the
Asset Issue pending the further examination of the Company's 1991-1995 tax
returns (the "Tax Audit"). Based on developments in the law which have occurred
since 1977, the Company's Tax Counsel, Battle Fowler LLP, has rendered an
opinion that the Company's investment in Treasury Bill repurchase obligations
would not adversely affect its REIT status. However, such opinion is not binding
upon the IRS.
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In connection with the spin-off of Atlantic, Atlantic has assumed all
liability arising out of the Tax Audit and the Asset Issue, including
liabilities for interest and penalties and attorneys fees relating thereto. In
connection with the assumption of such potential liabilities, Atlantic and the
Company have entered into a tax agreement which provides that the Company (under
the direction of its Continuing Trustees), and not Atlantic, will control,
conduct and effect the settlement of any tax claims against the Company relating
to the Tax Audit and the Asset Issue. Accordingly, Atlantic will not have any
control as to the timing of the resolution or disposition of any such claims.
The Company and Atlantic also received an opinion from Special Tax Counsel,
Wolf, Block, Schorr and Solis-Cohen LLP, that, to the extent there is a
deficiency in the Company's taxable income arising out of the IRS examination
and provided the Company timely makes a deficiency dividend (i.e., declares and
pays a distribution which is permitted to relate back to the year for which each
deficiency was determined to satisfy the requirement that the REIT distribute 95
percent of its taxable income), the classification of the Company as a REIT for
the taxable years under examination would not be affected. Under the tax
agreement referred to above, Atlantic has agreed to reimburse the Company for
the amount of any deficiency dividend so made. If notwithstanding the
above-described opinions of legal counsel, the IRS successfully challenged the
status of the Company as a REIT, its status could be adversely affected. If the
Company lost its status as a REIT, the Company believes that it will be able to
re-elect REIT status for the taxable year beginning January 1, 1999.
Although the IRS agent conducting the examination has not issued his final
examination report with respect to the tax issues raised in the Tax Audit,
including the Asset Issue (collectively, the "Tax Issues"), the Company has
received a preliminary draft of the examining agent's report. The draft report
sets forth a number of positions which the examining agent has taken with
respect to the Company's taxes for the years that are subject to the Tax Audit,
which the Company believes are not consistent with applicable law and
regulations of the IRS. If the final report were issued in its current form, the
liability of Atlantic to indemnify the Company may be substantial. The
Continuing Trustees of the Company are engaged in ongoing discussions with the
examining agent and his supervisors with regard to the positions set forth in
the draft report. There can be no assurance that, after conclusion of
discussions with such agent and his supervisors regarding the draft report, the
examining agent will not issue the proposed report in the form previously
delivered to the Company (or another form). Issuance of the revenue agent's
report constitutes only the first step in the IRS administrative process for
determining whether there is any deficiency in the Company's tax liability for
the years at issue and any adverse determination by the examining agent is
subject to administrative appeal within the IRS and, thereafter, to judicial
review. As noted above, pursuant to the tax agreement between Atlantic and the
Company, Atlantic has assumed all liability arising out of the Tax Audit and the
Tax Issues. Based on the amount of Atlantic's assets, as disclosed in its Annual
Report on Form 10-K for the year ended December 31, 1997, the Company does not
believe that the ultimate resolution of the Tax Issues will have a material
adverse effect on the financial position, results of operations or cash flows of
the Company.
Environmental Matters. Under various Federal, state and local laws,
ordinances and regulations relating to the protection of the environment
("Environmental Laws"), a current or previous owner or operator of real estate
may be liable for the costs of removal or remediation of certain hazardous or
toxic substances disposed, stored, released, generated, manufactured or
discharged from, on, at, onto, under or in such property. Environmental Laws
often impose such liability without regard to whether the owner or operator knew
of, or was responsible for, the presence or release of such hazardous or toxic
substance. The presence of such substances, or the failure to properly remediate
such substances when present, released or discharged, may adversely affect the
owner's ability to sell or rent such property or to borrow using such property
as collateral. The cost of any required remediation and the liability of the
owner or operator therefore as to any property is generally not limited under
such Environmental Laws and could exceed the value of the property and/or the
aggregate assets of the owner or operator. Persons who arrange for the disposal
or treatment of hazardous or toxic substances may also be liable for the cost of
removal or remediation of such substances at a disposal or treatment facility,
whether or not such facility is owned or operated by such persons. In addition
to any action required by Federal, state or local authorities, the presence or
release of hazardous or toxic substances on or from any property could result in
private plaintiffs bringing claims for personal injury or other causes of
action.
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In connection with the ownership (direct or indirect), operation,
management and development of real properties, the Company may be potentially
liable for remediation, releases or injury. In addition, Environmental Laws
impose on owners or operators the requirement of on-going compliance with rules
and regulations regarding business-related activities that may affect the
environment. Such activities include, for example, the ownership or use of
transformers or underground tanks, the treatment or discharge of waste waters or
other materials, the removal or abatement of asbestos-containing materials
("ACMs") or lead-containing paint during renovations or otherwise, or
notification to various parties concerning the potential presence of regulated
matter, including ACMs. Failure to comply with such requirements could result in
difficulty in the lease or sale of any affected property and/or the imposition
of monetary penalties, fines or other sanctions in addition to the costs
required to attain compliance. Various of the Company's properties have or may
contain ACMs or underground storage tanks ("USTs"); however, except as set forth
below, the Company is not aware of any potential environmental liability which
could reasonably be expected to have a material impact on the Company's business
or operations. No assurance can be given that future laws, ordinances or
regulations will not impose any material environmental requirement or liability,
or that a material adverse environmental condition does not otherwise exist.
There was a release of approximately 2,300 gallons of gasoline from a
product line break in August 1986 and a release of approximately 1,200 gallons
of gasoline from a delivery line break in October 1991 at a gasoline station
located at Jackson Crossing. A release of gasoline was also discovered in 1987
at the time of removal of USTs from a gasoline station located adjacent to Lake
Orion Plaza. Subsequent investigations indicated that levels of contamination
exist in the ground water under such properties. The Ramco Principals, jointly
and severally, have agreed to indemnify the Company, the Operating Partnership
and their respective subsidiaries and affiliates for any and all damages arising
from or in connection with such environmental conditions at the Jackson Crossing
and Lake Orion Plaza properties.
Year 2000 Compliance. The Company has assessed the exposure of its computer
systems presented by the upcoming change in the millenium. Based on the
assessment, the Company believes that all of the Company's material computer
systems are currently year 2000 compliant. The Company does not believe that any
material expenditures will be required to be fully year 2000 compliant.
8
<PAGE> 10
ITEM 2. PROPERTIES
The Company's properties are located in twelve states primarily throughout
the Midwest, East and the Southeast United States as follows:
<TABLE>
<CAPTION>
ANNUALIZED BASE
NUMBER OF COMPANY RENTAL
STATE PROPERTIES OWNED GLA AT DECEMBER 31, 1997
----- ---------- --------- --------------------
<S> <C> <C> <C>
Michigan.............................. 20 3,551,501 $24,097,503
Florida............................... 7 1,059,582 4,914,136
Tennessee............................. 5 784,090 4,221,113
Georgia............................... 3 372,856 2,347,412
North Carolina........................ 3 514,044 2,845,401
Ohio.................................. 3 378,218 3,521,262
Alabama............................... 2 348,790 1,499,133
New York.............................. 2 98,635 442,338
South Carolina........................ 2 460,803 2,761,808
Maryland.............................. 1 250,016 1,380,245
New Jersey............................ 1 224,249 2,262,672
Wisconsin............................. 1 329,407 2,196,088
-- --------- -----------
Total............................ 50 8,372,191 $52,489,111
== ========= ===========
</TABLE>
- -------------------------
(1) Annualized Base Rental Revenue is December 1997 base rental revenues
multiplied by 12.
With the exception of Kentwood Towne Centre and Southfield Plaza Expansion
in which the Company owns a 50% interest in the partnerships that own such
properties, all of the properties are 100% owned by the Operating Partnership or
its subsidiaries.
Additional information regarding the Properties is included in the Property
Schedule on the following pages.
9
<PAGE> 11
RAMCO-GERSHENSON PROPERTIES TRUST
PROPERTY SCHEDULE
<TABLE>
<CAPTION>
YEAR OPENED OR
ACQUIRED/YEAR COMPANY
OF LATEST ANCHOR OWNED
RENOVATION OR OWNED ANCHOR
PROPERTY LOCATION TYPE OF PROPERTY EXPANSION(3) GLA GLA
-------- -------- ---------------- -------------- ------ -------
<S> <C> <C> <C> <C> <C>
ALABAMA
Athens Town Center............ Athens, AL Community Center 1997/NA 128,747
Cox Creek Plaza............... Florence, AL Community Center 1997/NA 99,428
FLORIDA
Crestview Corners............. Crestview, FL Community Center 1997/1993 79,603
Shoppes of Lakeland........... Lakeland, FL Power Center 1996/NA 216,792
Lantana Plaza................. Lantana, FL Community Center 1993/NA 40,275
Naples Towne Center........... Naples, FL Community Center 1983/NA 104,577 21,000
Sunshine Plaza................ Tamarac, FL Community Center 1991/NA 146,342
Pelican Plaza................. Sarasota, FL Community Center 1997/NA 35,768
Village Lakes Shopping
Center....................... Land O' Lakes, FL Community Center 1997/NA 125,141
GEORGIA
Holcomb Center................ Alpharetta, GA Community Center 1996/NA 39,668
Indian Hills.................. Calhoun, GA Community Center 1997/NA 97,930
Mays Crossing................. Stockbridge, GA Community Center 1997/1986 100,183
MARYLAND
Crofton Plaza................. Crofton, MD Community Center 1991/NA 181,039
MICHIGAN
Clinton Valley Mall........... Sterling Heights, MI Community Center 1979/1993 108,680
Clinton Valley Strip.......... Sterling Heights, MI Community Center 1979/NA 50,000 0
Eastridge Commons............. Flint, MI Community Center 1990/1997 101,909 123,869
Edgewood Towne Center......... Lansing, MI Power Center 1990/1992 209,272 23,524
Ferndale Plaza................ Ferndale, MI Community Center 1984/NA 0
Fraser Shopping Center........ Fraser, MI Community Center 1983/NA 52,784
Jackson Crossing.............. Jackson, MI Regional Mall 1990/1996 254,243 112,967
Jackson West.................. Jackson, MI Community Center 1996/NA 153,997
Kentwood Towne Centre[2]...... Kentwood, MI Power Center 1989/NA 101,909 122,390
<CAPTION>
% OF TOTAL
COMPANY
COMPANY TOTAL TOTAL COMPANY OWNED
OWNED SHOPPING COMPANY % OF TOTAL OWNED GLA GLA LEASED
TENANT CENTER OWNED COMPANY LEASED AS AS OF
PROPERTY GLA GLA GLA OWNED GLA OF 12/31/97 12/31/97
-------- ------- -------- ------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
ALABAMA
Athens Town Center............ 80,815 209,562 209,562 2.5% 185,087 88.3%
Cox Creek Plaza............... 39,800 139,228 139,228 1.7% 127,528 91.6%
FLORIDA
Crestview Corners............. 32,050 111,653 111,653 1.3% 110,453 98.9%
Shoppes of Lakeland........... 32,000 248,792 248,792 3.0% 245,592 98.7%
Lantana Plaza................. 76,022 116,297 116,297 1.4% 99,497 85.6%
Naples Towne Center........... 23,152 148,729 44,152 0.5% 14,578 33.0%
Sunshine Plaza................ 99,729 246,071 246,071 2.9% 75,149 30.5%
Pelican Plaza................. 70,373 106,141 106,141 1.3% 93,801 88.4%
Village Lakes Shopping
Center....................... 61,335 186,476 186,476 2.2% 186,476 100.0%
GEORGIA
Holcomb Center................ 66,835 106,503 106,503 1.3% 91,235 85.7%
Indian Hills.................. 31,200 129,130 129,130 1.5% 126,730 98.1%
Mays Crossing................. 37,040 137,223 137,223 1.6% 136,023 99.1%
MARYLAND
Crofton Plaza................. 68,977 250,016 250,016 3.0% 248,927 99.6%
MICHIGAN
Clinton Valley Mall........... 48,333 157,013 157,013 1.9% 156,868 99.9%
Clinton Valley Strip.......... 44,360 94,360 44,360 0.5% 44,360 100.0%
Eastridge Commons............. 45,637 271,415 169,506 2.0% 169,506 100.0%
Edgewood Towne Center......... 62,233 295,029 85,757 1.0% 85,757 100.0%
Ferndale Plaza................ 30,916 30,916 30,916 0.4% 30,916 100.0%
Fraser Shopping Center........ 23,800 76,584 76,584 0.9% 74,584 97.4%
Jackson Crossing.............. 267,292 634,502 380,259 4.5% 314,939 82.8%
Jackson West.................. 35,320 189,317 189,317 2.3% 189,317 100.0%
Kentwood Towne Centre[2]...... 61,265 285,564 183,655 2.2% 183,655 100.0%
<CAPTION>
PROPERTY ANCHORS
-------- -------
<S> <C>
ALABAMA
Athens Town Center............ Wal-Mart(4)
Bruno's Food World
Cox Creek Plaza............... Wal-Mart(4)
FLORIDA
Crestview Corners............. Wal-Mart(4)
Fleming Foods
Shoppes of Lakeland........... Builder's Square
Montgomery Ward
Service Merchandise
Lantana Plaza................. Publix
Naples Towne Center........... Florida Food & Drug(1)
Kmart(1)
Sunshine Plaza................ Publix
Pelican Plaza................. Linens 'N Things
Village Lakes Shopping
Center....................... Wal-Mart
Kash 'N Karry Food Store
GEORGIA
Holcomb Center................ A & P
Indian Hills.................. Wal-Mart(4)
Ingles Grocery
Mays Crossing................. Wal-Mart(4)
Ingles Grocery
MARYLAND
Crofton Plaza................. Basic's Supermarket
Drug Emporium
Kmart
MICHIGAN
Clinton Valley Mall........... Montgomery Ward
Clinton Valley Strip.......... Service Merchandise(1)
Eastridge Commons............. T.J. Maxx
Farmer Jack
Staples
Target(1)
Edgewood Towne Center......... OfficeMax
Sam's Club(1)
Target(1)
Ferndale Plaza................ None
Fraser Shopping Center........ Oakridge Market
Rite-Aid
Jackson Crossing.............. Kohl's Department Store
Sears(1)
Target(1)
Toys R Us
Jackson West.................. Lowe's
OfficeMax
Kentwood Towne Centre[2]...... Builder's Square
OfficeMax
Target(1)
</TABLE>
10
<PAGE> 12
<TABLE>
<CAPTION>
YEAR OPENED OR
ACQUIRED/YEAR COMPANY
OF LATEST ANCHOR OWNED
RENOVATION OR OWNED ANCHOR
PROPERTY LOCATION TYPE OF PROPERTY EXPANSION(3) GLA GLA
-------- -------- ---------------- -------------- ------ -------
<S> <C> <C> <C> <C> <C>
Lake Orion Plaza.............. Lake Orion, MI Community Center 1977/NA 114,574
Madison Center................ Madison Heights, MI Community Center 1997/NA 132,360
New Towne Plaza............... Canton, MI Community Center 1976/1993 95,810
Oak Brook Square.............. Flint, MI Community Center 1989/NA 57,160
Roseville Plaza............... Roseville, MI Community Center 1983/1994 114,507
Southfield Plaza.............. Southfield, MI Community Center 1983/1983 128,192
Southfield Plaza
Expansion(2)................. Southfield, MI Community Center 1985/NA 0
Taylor Plaza.................. Taylor, MI Single Tenant Retail 1996/NA 122,374
Tel-Twelve Mall............... Southfield, MI Regional Mall 1983/1997 504,448
West Oaks I................... Novi, MI Power Center 1981/1997 207,833
West Oaks II.................. Novi, MI Power Center 1987/NA 220,097 25,000
NEW JERSEY
Chester Springs............... Chester, NJ Community Center 1994/NA 81,760
NEW YORK
Toys R Us..................... Commack, NY Single Tenant Retail 1992/NA 47,500
Trinity Corners............... Pound Ridge, NY Community Center 1992/NA 28,515
NORTH CAROLINA
Hickory Corners............... Hickory, NC Community Center 1997/1987 106,922
Holly Springs Plaza........... Franklin, NC Community Center 1997/1992 124,484
Ridgeview Crossing............ Elkin, NC Community Center 1997/1995 168,659
OHIO
OfficeMax Center.............. Toledo, OH Single Tenant Retail 1994/NA 22,930
<CAPTION>
% OF TOTAL
COMPANY
COMPANY TOTAL TOTAL COMPANY OWNED
OWNED SHOPPING COMPANY % OF TOTAL OWNED GLA GLA LEASED
TENANT CENTER OWNED COMPANY LEASED AS AS OF
PROPERTY GLA GLA GLA OWNED GLA OF 12/31/97 12/31/97
-------- ------- -------- ------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Lake Orion Plaza.............. 14,878 129,452 129,452 1.5% 129,452 100.0%
Madison Center................ 60,384 192,744 192,744 2.3% 176,006 91.3%
New Towne Plaza............... 67,594 163,404 163,404 1.9% 163,404 100.0%
Oak Brook Square.............. 83,122 140,282 140,282 1.7% 136,382 97.2%
Roseville Plaza............... 116,824 265,531 265,531 3.2% 244,455 92.1%
Southfield Plaza.............. 37,168 165,360 165,360 2.0% 165,360 100.0%
Southfield Plaza
Expansion(2)................. 19,410 19,410 19,410 0.2% 15,800 81.4%
Taylor Plaza.................. 0 122,374 122,374 1.5% 122,374 100.0%
Tel-Twelve Mall............... 168,022 672,470 672,470 8.0% 656,719 97.7%
West Oaks I................... 34,330 242,163 242,163 2.9% 201,482 83.2%
West Oaks II.................. 95,944 341,041 120,944 1.4% 116,489 96.3%
NEW JERSEY
Chester Springs............... 142,489 224,249 224,249 2.7% 214,194 95.5%
NEW YORK
Toys R Us..................... 0 47,500 47,500 0.6% 47,500 100.0%
Trinity Corners............... 22,620 51,135 51,135 0.6% 35,134 68.7%
NORTH CAROLINA
Hickory Corners............... 40,014 146,936 146,936 1.8% 144,136 98.1%
Holly Springs Plaza........... 31,100 155,584 155,584 1.9% 154,084 99.0%
Ridgeview Crossing............ 42,865 211,524 211,524 2.5% 210,024 99.3%
OHIO
OfficeMax Center.............. 0 22,930 22,930 0.3% 22,930 100.0%
<CAPTION>
PROPERTY ANCHORS
-------- -------
<S> <C>
Lake Orion Plaza.............. Kmart
Farmer Jack (A&P)
Madison Center................ Kmart
Oakridge Market
Dunham's
New Towne Plaza............... Kmart
Oak Brook Square.............. Kids R Us
T.J. Maxx
Roseville Plaza............... A & P
Marshall's
Service Merchandise
Southfield Plaza.............. Burlington Coat Factory
Marshall's
Service Merchandise
Southfield Plaza
Expansion(2)................. None
Taylor Plaza.................. Kmart
Tel-Twelve Mall............... Kmart
Montgomery Ward
Office Depot
Crowley's
Circuit City
Media Play
Chrysler (land lease)
Crowley's (land lease)
West Oaks I................... Circuit City
Kmart (land lease)
Service Merchandise
West Oaks II.................. Builder's Square(1)
Kids R Us(1)
Kohl's Department
Store(1)
Marshall's
Toys R Us(1)
NEW JERSEY
Chester Springs............... Shop-Rite Supermarket
Rickel Home Centers
NEW YORK
Toys R Us..................... Toys R Us
Trinity Corners............... Scott's Corner Market
NORTH CAROLINA
Hickory Corners............... Food Lion Grocery
Wal-Mart(4)
Holly Springs Plaza........... Ingles Grocery
Wal-Mart
Ridgeview Crossing............ Belk Department Store
Ingles Grocery
Wal-Mart
OHIO
OfficeMax Center.............. OfficeMax
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
YEAR OPENED OR
ACQUIRED/YEAR COMPANY
OF LATEST ANCHOR OWNED
RENOVATION OR OWNED ANCHOR
PROPERTY LOCATION TYPE OF PROPERTY EXPANSION(3) GLA GLA
-------- -------- ---------------- -------------- ------ -------
<S> <C> <C> <C> <C> <C>
Spring Meadows Place.......... Holland, OH Power Center 1987/1997 275,372 81,125
Troy Towne Center............. Troy, OH Community Center 1990/1996 90,921 85,000
SOUTH CAROLINA
Edgewood Square............... North Augusta, SC Community Center 1997/1995 189,544
Taylors Square................ Greenville, SC Community Center 1997/1995 209,724
TENNESSEE
Cumberland Gallery............ New Tazewell, TN Community Center 1997/NA 73,304
Highland Square............... Crossville, TN Community Center 1997/NA 131,126
Northwest Crossing............ Knoxville, TN Community Center 1997/1995 218,443
Stonegate Plaza............... Kingsport, TN Community Center 1997/1993 127,042
Tellico Plaza................. Lenoir City, TN Community Center 1997/NA 94,805
WISCONSIN
West Allis Town Centre........ West Allis, WI Community Center 1987/NA 0 216,474
--------- ---------
Total...................... 1,408,300 5,519,742
========= =========
<CAPTION>
% OF TOTAL
COMPANY
COMPANY TOTAL TOTAL COMPANY OWNED
OWNED SHOPPING COMPANY % OF TOTAL OWNED GLA GLA LEASED
TENANT CENTER OWNED COMPANY LEASED AS AS OF
PROPERTY GLA GLA GLA OWNED GLA OF 12/31/97 12/31/97
-------- ------- -------- ------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Spring Meadows Place.......... 117,366 473,863 198,491 2.4% 191,277 96.4%
Troy Towne Center............. 71,797 247,718 156,797 1.9% 149,200 95.2%
SOUTH CAROLINA
Edgewood Square............... 27,775 217,319 217,319 2.6% 209,619 96.5%
Taylors Square................ 33,760 243,484 243,484 2.9% 243,484 100.0%
TENNESSEE
Cumberland Gallery............ 24,851 98,155 98,155 1.2% 91,255 93.0%
Highland Square............... 40,420 171,546 171,546 2.0% 168,296 98.1%
Northwest Crossing............ 43,264 261,707 261,707 3.1% 260,212 99.4%
Stonegate Plaza............... 11,448 138,490 138,490 1.7% 138,490 100.0%
Tellico Plaza................. 19,387 114,192 114,192 1.4% 114,192 100.0%
WISCONSIN
West Allis Town Centre........ 112,933 329,407 329,407 3.9% 321,745 97.7%
--------- --------- --------- ----- --------- ------
Total...................... 2,818,249 9,780,491 8,372,191 100.0% 7,834,673 93.6%
========= ========= ========= ===== ========= ======
<CAPTION>
PROPERTY ANCHORS
-------- -------
<S> <C>
Spring Meadows Place.......... Dick's Sporting Goods(1)
OfficeMax
SuperPetz
Target(1)
T.J. Maxx
Service Merchandise(1)
Kroger(1)
Troy Towne Center............. County Market
Sears Hardware
Stage Department Store
Wal-Mart(1)
SOUTH CAROLINA
Edgewood Square............... Bi-Lo Grocery
Goody's Family Clothing
Wal-Mart
Taylors Square................ Wal-Mart
Belk Department Store
Goody's Family Clothing
TENNESSEE
Cumberland Gallery............ Wal-Mart
Ingles Grocery
Highland Square............... Wal-Mart(4)
Kroger
Northwest Crossing............ Wal-Mart
Ingles Grocery
Goody's Family Clothing
Stonegate Plaza............... Wal-Mart
Food Lion Grocery
Tellico Plaza................. Wal-Mart
Bi-Lo Grocery
WISCONSIN
West Allis Town Centre........ Builder's Square
Kmart
Kohls Supermarket (A&P)
Total......................
</TABLE>
- -------------------------
(1) Anchor-owned store.
(2) 50% general partner interest.
(3) Represents year opened or acquired/year of latest renovation or expansion by
either the Company or the former Ramco Group, as applicable.
(4) Wal-Mart currently is not occupying its leased premises in this shopping
center but remains obligated to pay under the terms of their respective lease
agreement.
12
<PAGE> 14
TENANT INFORMATION
The following table sets forth, as of December 31, 1997 information
regarding space leased to tenants which in each case, individually account for
more than 2% of total annualized base rental revenue from the Company's
properties.
<TABLE>
<CAPTION>
TOTAL AGGREGATE % OF TOTAL ANNUALIZED % OF ANNUALIZED
NUMBER OF GLA LEASED COMPANY BASE RENTAL BASE RENTAL
TENANT STORES BY TENANT OWNED GLA REVENUE(1) REVENUE
------ --------- ---------- ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Wal-Mart.......................... 16 1,431,499 17.10% $ 6,239,653 11.89%
Kmart............................. 8 780,361 9.32 2,167,276 4.13
A&P/Farmer Jack................... 5 231,257 2.76 1,886,191 3.59
Montgomery Ward................... 5 358,130 4.28 1,458,494 2.78
Builder's Square.................. 3 249,440 2.98 1,345,086 2.56
OfficeMax......................... 5 116,823 1.40 1,138,244 2.17
Circuit City...................... 3 100,439 1.20 1,418,639 2.70
--------- ----- ----------- -----
3,267,949 39.03% $15,653,583 29.82%
========= ===== =========== =====
</TABLE>
- -------------------------
(1) Annualized Base Rental Revenue is December 1997 base rental revenue
multiplied by 12.
Approximately 539,000 square feet of GLA at seven of the Southeast
Portfolio shopping centers is leased to Wal-Mart, but not currently occupied by
Wal-Mart, although Wal-Mart remains obligated under the respective lease
agreements. Wal-Mart has entered into various subleases with sub-tenants
currently covering approximately 277,000 square feet of GLA.
During July 1997 Montgomery Ward ("Wards"), a tenant at three of the
Company's properties (Tel-Twelve Mall, Clinton Valley Mall and Shoppes of
Lakeland), filed for protection under Chapter 11 of the Bankruptcy Code. In
October 1997, Wards issued a list of anticipated store closings which included
the stores at the Company's Clinton Valley Mall. This location consists of a
101,200 square foot department store and a 7,480 square foot TBA store (Tires,
Batteries and Automotive). The Company was notified in March 1998 that Wards
intends to reject the lease. The Company is pursuing replacement tenants to
lease the space. On an annual basis, Wards pays approximately $1,000,000 in base
rent, operating and real estate tax expense reimbursements for the Clinton
Valley Mall.
The following table sets forth, as of December 31, 1997, the total GLA
leased to anchors, retail tenants, and available space, in the aggregate, of the
Company's properties.
<TABLE>
<CAPTION>
AGGREGATE % OF TOTAL ANNUALIZED % OF ANNUALIZED
GLA LEASED COMPANY BASE RENTAL BASE RENTAL
TYPE OF TENANT BY TENANT OWNED GLA REVENUE(1) REVENUE
-------------- ---------- ---------- ----------- ---------------
<S> <C> <C> <C> <C>
Anchor...................................... 5,364,325 64.07% $27,745,123 52.86%
Retail (non-anchor)......................... 2,470,348 29.51 24,743,988 47.14
Available................................... 537,518 6.42 -- --
--------- ------ ----------- ------
Total.................................. 8,372,191 100.00% $52,489,111 100.00%
========= ====== =========== ======
</TABLE>
- -------------------------
(1) Annualized Base Rental Revenue is December 1997 base rental revenue
multiplied by 12.
The following table sets forth as of December 31, 1997, the total GLA
leased to national, regional and local tenants, in the aggregate, of the
Company's properties.
<TABLE>
<CAPTION>
AGGREGATE % OF TOTAL ANNUALIZED % OF ANNUALIZED
GLA LEASED COMPANY BASE RENTAL BASE RENTAL
TYPE OF TENANT BY TENANT OWNED GLA REVENUE(1) REVENUE
-------------- ---------- ---------- ----------- ---------------
<S> <C> <C> <C> <C>
National.................................... 6,565,335 78.42% $39,980,053 76.17%
Regional.................................... 337,671 4.03 3,036,540 5.78
Local....................................... 931,667 11.13 9,472,518 18.05
Vacant...................................... 537,518 6.42 -- --
--------- ------ ----------- ------
Total.................................. 8,372,191 100.00% $52,489,111 100.00%
========= ====== =========== ======
</TABLE>
- -------------------------
(1) Annualized Base Rental Revenue is December 1997 base rental revenue
multiplied by 12.
13
<PAGE> 15
The following table sets forth lease expirations for the next five years at
the Company's properties assuming that no renewal options are exercised.
<TABLE>
<CAPTION>
AVERAGE BASE % OF ANNUALIZED
% OF TOTAL ANNUALIZED RENTAL REVENUE BASE RENTAL
LEASED COMPANY COMPANY BASE RENTAL PER SQ. FT. AS OF REVENUE AS OF
NO. OF OWNED GLA OWNED GLA REVENUE AS OF 12/31/97 12/31/97
LEASE LEASES EXPIRING (IN REPRESENTED BY 12/31/97 UNDER UNDER REPRESENTED BY
EXPIRATION EXPIRING SQUARE FEET) EXPIRING LEASES EXPIRING LEASES(1) EXPIRING LEASES EXPIRING LEASES
---------- -------- -------------- --------------- ------------------ ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1998................. 129 583,577 6.97% $4,336,168 $7.43 8.26%
1999................. 161 550,901 6.58 5,002,247 9.08 9.53
2000................. 149 656,275 7.84 5,409,598 8.24 10.31
2001................. 103 528,913 6.32 3,587,791 6.78 6.84
2002................. 88 577,118 6.89 3,830,428 6.64 7.30
</TABLE>
- -------------------------
(1) Annualized Base Rental Revenue is December 1997 base rental revenue
multiplied by 12.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business against or involving the Company
or its properties.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Special Meeting of Shareholders of the Company was held on December 18,
1997 to consider and vote upon the following matters:
(1) A proposal to consider and vote upon the changing of the Company's
state of organization from Massachusetts to Maryland through the
termination of the Massachusetts Trust's current Amended and Restated
Declaration of Trust by amending such Amended and Restated Declaration of
Trust to provide for the termination of the Massachusetts Trust, the merger
(the "Change of Venue Merger") of the Massachusetts Trust into a
newly-formed Maryland real estate investment trust subsidiary and the
conversion of each outstanding share of beneficial interest of the
Massachusetts Trust into a common share of beneficial interest of the
surviving Maryland trust.
(2) A proposal to consider and vote upon the issuance of Series A
Convertible Preferred Shares of the Company and common shares of beneficial
interest of the Company to holders of Series A Convertible Preferred Shares
issued by the Company upon the conversion or redemption of such Series A
Convertible Preferred Shares.
The following table shows the number of votes for and against each
proposal and the number of votes abstaining with respect to each proposal:
<TABLE>
<CAPTION>
PROPOSAL FOR AGAINST ABSTAIN
- -------- --- ------- -------
<S> <C> <C> <C>
First................................. 3,604,254 374,470 62,618
Second................................ 3,557,683 403,738 79,921
</TABLE>
There were no broker non-votes with respect to any of the proposals at the
Special Meeting.
14
<PAGE> 16
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION -- The Company's Common Shares have been listed and
traded on the New York Stock Exchange ("NYSE") under the symbol "RPT" since May
13, 1996. The Common Shares were previously listed on the NYSE under the name of
RPS Realty Trust, symbol "RPS", from December 28, 1988 until May 10, 1996.
The following table shows high and low closing prices per share for each
quarter in 1996 and 1997. The closing prices have been adjusted to reflect the
effect of the one-for-four reverse split effective May 1, 1996. On May 10, 1996
the Company spun-off the RPS Mortgage Assets to Atlantic Realty Trust and
effected a stock dividend of shares of Atlantic Realty Trust to shareholders of
the Company; trading price information for subsequent periods does not include
any adjustment for the spin-off transaction.
<TABLE>
<CAPTION>
SHARE PRICE
-----------------
QUARTER ENDED HIGH LOW
- ------------- ---- ---
<S> <C> <C>
March 31, 1996............................................. $19.500 $18.000
June 30, 1996.............................................. 19.000 15.000
September 30, 1996......................................... 17.000 15.375
December 31, 1996.......................................... 17.750 16.250
March 31, 1997............................................. 18.125 16.750
June 30, 1997.............................................. 18.250 16.625
September 30, 1997......................................... 19.938 17.875
December 31, 1997.......................................... 20.063 18.063
</TABLE>
HOLDERS -- The approximate number of holders of record of the Company's
Common Shares was 4,406 as of March 3, 1998.
DIVIDENDS -- Under the Code, a REIT must meet certain requirements,
including a requirement that it distribute annually to its shareholders at least
95 percent of its taxable income. Dividend distributions per common share for
the years ended December 31, 1997 and 1996, as adjusted for the one-for-four
reverse split effective May 1, 1996 are summarized as follows.
The Company declared the following cash distributions per share to common
shareholders for the year ended December 31, 1996. The distribution paid April
29, 1996 has been adjusted to reflect the effect of the one-for-four reverse
split.
<TABLE>
<CAPTION>
DIVIDEND
RECORD DATE DISTRIBUTION PAYMENT DATE
- ----------- ------------ ------------
<S> <C> <C>
April 7, 1996..................................... $.32 April 29, 1996
July 8, 1996...................................... $.28 July 23, 1996
September 30, 1996................................ $.42 October 15, 1996
December 31, 1996................................. $.42 January 21, 1997
</TABLE>
The Company declared the following cash distributions per common share to
shareholders for the year ended December 31, 1997:
<TABLE>
<CAPTION>
DIVIDEND
RECORD DATE DISTRIBUTION PAYMENT DATE
- ----------- ------------ ------------
<S> <C> <C>
March 31, 1997.................................... $.42 April 15, 1997
June 30, 1997..................................... $.42 July 15, 1997
September 30, 1997................................ $.42 October 21, 1997
December 31, 1997................................. $.42 January 20, 1998
</TABLE>
15
<PAGE> 17
Effective May 1, 1996, the shareholders of RPS, as part of the spin-off of
Atlantic, received one share of beneficial interest of Atlantic Realty Trust for
every two shares of RPS that they held, subsequent to the one-for-four reverse
split of RPS.
Distributions paid by the Company are at the discretion of the Board of
Trustees and depend on a number of factors, including cash flow of the Company,
its financial condition and capital requirements, the annual distribution
requirements necessary to maintain its status as a REIT under the Code, and such
other factors as the Board of Trustees deems relevant.
The Company has an Automatic Dividend Reinvestment Plan (the "DRP Plan")
which allows shareholders to acquire additional Common Shares by automatically
reinvesting cash dividends. Shares are acquired pursuant to the DRP Plan at a
price equal to the prevailing market price of such Shares, without payment of
any brokerage commission or service charge. Shareholders who do not participate
in the Plan continue to receive cash distributions, as declared.
Upon consummation of the Change of Venue Merger, on December 31, 1997 the
Company issued an aggregate of 466,667 Series A Preferred Shares in exchange for
a like number of Preferred Units that had been issued by the Operating
Partnership to certain clients advised by Morgan Stanley Asset Management, Inc.
("MSAM") and Kimco Realty Corporation ("Kimco"). The Preferred Units were sold
pursuant to a Preferred Units and Stock Purchase Agreement dated as of September
30, 1997 among the Company, the Operating Partnership, certain clients advised
by MSAM and Special Situations RG REIT, Inc. (the entity the investors used to
effect their investment). The Preferred Units were sold for an aggregate
consideration of $11,667,000 or $25.00 per Preferred Unit. The sale and issuance
of the Preferred Units and Series A Preferred Shares was not registered under
the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon
Section 4(2) of the Securities Act. The purchasers of the Preferred Units and
the Series A Preferred Shares were limited to six institutional investors
consisting of insurance companies, pension funds and other sophisticated
institutional investors each of whom made representations to the Company and the
Operating Partnership with respect to its intention to purchase the securities
for investment only, and not with a view to or for sale in connection with any
distribution. Each investor also represented to the Company and the Operating
Partnership that such investor was sophisticated and was able to bear the
economic risk of its investment in the Operating Partnership and the Company. No
underwriter was involved in the transaction and there were no underwriting
discounts or commissions paid in connection therewith.
Under certain circumstances, the Series A Preferred Shares are convertible
into Common Shares. Each Series A Preferred Share may be converted into Common
Shares at the Stated Value (equal to $25.00) plus any unpaid dividends, if any,
for each Series A Preferred Share so converted, for Common Shares issued on
conversion priced at $17.50 per Common Share, subject to adjustment under
certain circumstances to prevent the dilution of the Series A Preferred Shares,
including certain issues of Common Shares by the Company at prices less than
$17.50.
16
<PAGE> 18
ITEM 6. SELECTED FINANCIAL DATA (DOLLARS, EXCEPT PER SHARE DATA, WEIGHTED
AVERAGE SHARES AND EQUIVALENT SHARES OUTSTANDING, AND COMPANY OWNED GLA
IN THOUSANDS)
The following table sets forth selected consolidated financial data for the
Company and should be read in conjunction with the consolidated financial
statements and notes thereto included elsewhere in this report:
<TABLE>
<CAPTION>
PRO FORMA
YEAR ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31,(1)
---------------------------------------------------- -----------------
1997 1996(2) 1995 1994 1993 1997 1996
---- ------- ---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues
Rental revenues............. $ 58,492 $ 37,598 $ 8,936 $ 6,764 $ 4,087 $73,128 $71,628
Interest and other income... 752 2,915 7,781 19,642 22,881 855 767
-------- -------- -------- -------- -------- ------- -------
Total Revenues......... 59,244 40,513 16,717 26,406 26,968 73,983 72,395
-------- -------- -------- -------- -------- ------- -------
Expenses:
Real estate taxes........... 6,230 4,643 1,271 1,236 704 7,426 8,037
Recoverable operating
expenses.................. 11,462 8,230 1,934 1,530 1,206 12,346 12,549
Depreciation and
amortization.............. 8,216 4,798 1,214 947 748 10,949 10,160
Other operating............. 974 791 183 227 1,119 1,205
General and
administrative............ 4,753 4,683 4,127 3,898 3,636 5,085 4,769
Interest expense............ 14,753 6,725 426 2,623 24,183 23,240
Spin-off and other
expenses.................. 7,976 7,976
Allowance for loan losses... 4,450 2,500 15,000
-------- -------- -------- -------- -------- ------- -------
Total Expenses......... 46,388 37,846 13,179 10,764 23,917 61,108 67,936
-------- -------- -------- -------- -------- ------- -------
Operating Income................. 12,856 2,667 3,538 15,642 3,051 12,875 4,459
Loss From Unconsolidated
Entities....................... 314 216 314 314
-------- -------- -------- -------- -------- ------- -------
Income Before Minority
Interest....................... 12,542 2,451 3,538 15,642 3,051 12,561 4,145
Minority Interest................ 3,344 2,159 3,350 3,209
-------- -------- -------- -------- -------- ------- -------
Net Income............. $ 9,198 $ 292 $ 3,538 $ 15,642 $ 3,051 $ 9,211 $ 936
======== ======== ======== ======== ======== ======= =======
Net Income Available to Common
Shareholders................... $ 8,920 $ 292 $ 3,538 $ 15,642 $ 3,051 $ 8,933 $ 936
======== ======== ======== ======== ======== ======= =======
Earnings Per Common Share:
Basic.......................... $1.25 $0.04 $0.50 $2.20 $0.43 $1.25 $0.13
======== ======== ======== ======== ======== ======= =======
Diluted........................ $1.25 $0.04 $0.50 $2.20 $0.43 $1.25 $0.13
======== ======== ======== ======== ======== ======= =======
Weighted Average Shares
Outstanding:
Basic.......................... 7,123 7,123 7,123 7,123 7,146 7,123 7,123
======== ======== ======== ======== ======== ======= =======
Diluted........................ 7,148 7,123 7,123 7,123 7,146 7,148 7,123
======== ======== ======== ======== ======== ======= =======
OTHER DATA:
Funds from Operations(3)....... $ 20,500 $ 15,225 $23,260 $22,310
Cash flow provided by (used
in):
Operating activities........ 17,026 15,495 2,335 14,452 9,934
Investing activities........ (153,183) 18,976 (56,335) 37,184 21,706
Financing activities........ 137,649 (42,397) (9,117) (15,852) (30,488)
Number of Properties at Year
End......................... 50 32 8 8 7 50 50
Company owned GLA.............. 8,372 5,297 1,189 1,189 885 8,372 8,372
Cash Distributions Declared Per
Share....................... $1.68 $1.44 $1.28 $1.28 $1.28
Weighted Average Equivalent
Shares Outstanding(4).......... 9,713 8,894 9,713 9,687
</TABLE>
17
<PAGE> 19
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............... $ 5,033 $ 3,541 $ 11,467 $ 74,584 $ 38,800
REMIC Investments....................... 58,099
Interest and accounts receivable........ 6,035 3,901 7,748 8,608 9,978
Mortgage loans receivable -- net........ 36,023 41,892 100,692
Investment in real estate (before
accumulated depreciation)............ 473,213 314,854 58,046 57,841 36,332
Total Assets............................ 484,682 323,627 180,581 186,171 186,420
Mortgages and Notes Payable............. 295,618 143,410 5,027
Total Liabilities....................... 314,436 159,056 3,561 3,572 10,107
Minority Interest....................... 42,282 44,706
Shareholders' Equity.................... 127,964 119,865 177,020 182,599 176,313
</TABLE>
- -------------------------
(1) Pro forma information has been presented as if the Ramco Acquisition, the
acquisitions of shopping center properties during 1996 and 1997, and the
spin-off of Atlantic Realty Trust had occurred on January 1, 1996.
(2) Effective May 1, 1996, the Company completed the acquisition of
substantially all of the shopping center and retail properties, as well as
the management organization and business operations of Ramco and its
affiliates and the spin-off of its wholly owned subsidiary, Atlantic, a
Maryland real estate investment trust. In connection with the Ramco
Acquisition, the Company's name was changed to Ramco-Gershenson Properties
Trust and a one-for-four reverse stock split was effectuated as of the close
of business on May 1, 1996.
(3) Management generally considers Funds From Operations ("FFO") to be one
measure of financial performance of an equity REIT. The Company has adopted
the most recent National Association of Real Estate Investment Trusts
("NAREIT") definition of FFO, which was effective on January 1, 1996. Under
the definition, FFO represents income (loss) before minority interest
(computed in accordance with generally accepted accounting principles
("GAAP")), excluding gains (losses) from debt restructuring and sales of
property, plus real estate related depreciation and amortization (excluding
amortization of financing costs), and after adjustment for unconsolidated
partnerships and joint ventures. Therefore, FFO does not represent cash
generated from operating activities in accordance with GAAP and should not
be considered an alternative to net income as an indication of the Company's
performance or to cash flows from operating activities as a measure of
liquidity or the ability to pay distributions. Furthermore, while net income
and cash generated from operating, investing and financing activities,
determined in accordance with GAAP, consider capital expenditures which have
been and will be incurred in the future, the calculations of FFO does not.
(4) Represents the weighted average total shares outstanding, assuming the
redemption of all Operating Partnership Units for Common Shares.
18
<PAGE> 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT AMOUNTS)
The following discussion and analysis of the financial condition and
results of operations should be read in conjunction with Ramco-Gershenson
Properties Trust Consolidated Financial Statements, the notes thereto, and the
comparative summary of selected financial data appearing elsewhere in this
report.
RPS Realty Trust, a Massachusetts business trust, was formed on June 21,
1988 to be a diversified, growth oriented real estate investment trust ("REIT").
From 1988 until April 30, 1996, RPS Realty Trust was primarily engaged in the
business of owning and managing a participating mortgage loan portfolio, and,
through its wholly-owned subsidiaries, owning and operating eight real estate
properties. In May 1996, in connection with the closing of the Ramco Acquisition
and the consummation of the spin-off of Atlantic Realty Trust, discussed below,
RPS Realty Trust successfully completed its plan to transform itself into an
equity REIT.
Effective May 1, 1996, RPS Realty Trust completed the acquisition of
substantially all of the shopping center and retail properties, as well as the
management organization and business operations of Ramco-Gershenson, Inc. and
its affiliates (the "Ramco Acquisition") and the spin-off of its wholly owned
subsidiary, Atlantic Realty Trust ("Atlantic"), a Maryland real estate
investment trust. In connection with the Ramco Acquisition, RPS Realty Trust's
name was changed to Ramco-Gershenson Properties Trust and a one-for-four reverse
stock split was effectuated as of the close of business on May 1, 1996.
Ramco-Gershenson Properties Trust is referred to herein as the "Company".
Concurrent with the Ramco Acquisition, the former owners of the Ramco
Properties (as defined below) and the shareholders of Ramco-Gershenson, Inc.
("Ramco") (collectively, the "Ramco Group") contributed to Ramco-Gershenson
Properties, L.P. (the "Operating Partnership") (i) their interests in 20
shopping center and retail properties (the "Ramco Properties") containing an
aggregate of approximately 4,826,000 square feet of total gross leasable area
("GLA"), of which approximately 3,520,000 square feet is owned by the Operating
Partnership, and the balance is owned by certain anchor tenants, (ii) 100% of
the non-voting common stock and 5% of the voting common stock in Ramco
(representing in excess of a 95% economic interest in Ramco), (iii) 50% general
partner interests in two partnerships which each own a shopping center
comprising a total of approximately 288,000 square feet of GLA, (iv) rights in
and/or options to acquire certain development land, (v) options to acquire the
Ramco Group's interest in six shopping center properties and (vi) five
outparcels.
In return for these transfers, the Ramco Group received 2,377,492 Units
("Units") of the Operating Partnership (representing an approximate 25% limited
partnership interest in the Operating Partnership). The acquisition was
accounted for using the purchase method. The purchase price was allocated to the
assets acquired and liabilities assumed based upon their estimated fair market
value. Units, which are convertible into common shares of beneficial interest in
the Company, as described below, were valued at approximately $16.50 per Unit
representing the average trading price of the Company's shares immediately
preceding and following the Ramco Acquisition. In addition, the Ramco Group
received 279,181 Units as a partial earnout relative to Jackson Crossing
Shopping Center (representing an approximate 2% limited partnership interest in
the Operating Partnership). The Ramco Group's 2,656,673 aggregate Units
represented an approximate 27% limited partnership interest in the Operating
Partnership. In connection with the transfer of the Ramco Properties, the
Company assumed approximately $176,556 of secured indebtedness on the Ramco
Properties. The aggregate interest in the Operating Partnership to be received
by the Ramco Group may be increased to a maximum of approximately 29% if certain
leasing objectives with respect to Jackson Crossing were fulfilled by March 31,
1997. The Company is in the process of evaluating the Jackson Crossing earnout
and determining appropriate due diligence procedures to be performed relative to
the proposed calculation. The potential impact of additional units is not
expected to be material. Subject to certain limitations, the interests in the
Operating Partnership are exchangeable into common shares of the Company on a
one-for-one basis. No Units have been exchanged to date.
19
<PAGE> 21
Pursuant to the Ramco Acquisition, the Company transferred to the Operating
Partnership six properties containing an aggregate of approximately 931,000
square feet of GLA and $68,000 in cash in exchange for 7,123,105 Units of the
Operating Partnership (representing a 1% General Partnership interest, and a 72%
limited partnership interest after giving effect for the reduction of 2% for the
Ramco Group's earnout).
The transfer of the Company's net assets in exchange for Units was
accounted for as a reorganization of entities under common control. As such,
these assets and liabilities were transferred and accounted for at historical
cost in a manner similar to that of a pooling of interests.
Concurrently with the closing of the Ramco Acquisition, the Company's
former mortgage loan portfolio as well as certain of its former real estate
assets were transferred to Atlantic and the shares of Atlantic were distributed
to the Company's shareholders.
In December 1997, through a special meeting of its shareholders, the
Company changed its state of organization from Massachusetts to Maryland by
means of a merger of the Massachusetts Trust into the Company and the conversion
of each outstanding share of beneficial interest in the Trust into a common
share of beneficial interest of the Company.
CAPITAL RESOURCES AND LIQUIDITY
The Company generated $17,026 in cash flows from operating activities and
$137,649 in cash flows from financing activities for the year ended December 31,
1997. These combined cash flows of $154,675 were used to fund $153,183 of
investing activities which were primarily the acquisition of real estate assets.
In order to provide the funds necessary to support the Company's
acquisition, development and capital improvement plans, the Company modified its
$50,000 credit facility during May and June 1997, to provide for an increase in
the borrowings available under the credit facility to $75,000. The Company used
proceeds from borrowings under the credit facility to pay for the acquisition of
the Madison Center, Pelican Plaza, and Village Lakes shopping centers and for
other capital expenditures. During May 1997, the Company acquired the Madison
Center, in Madison Heights, Michigan, an approximately 186,000 square foot
community shopping center, for approximately $7,400. During July 1997, the
Company acquired Pelican Plaza in Sarasota, Florida, an approximately 106,000
square foot shopping center/office development, for approximately $7,200. During
December 1997, the Company acquired the Village Lakes Shopping Center, in Land O
'Lakes, Florida, an approximately 186,000 square foot shopping center, for
approximately $8,600.
On October 30, 1997, the Company acquired a portfolio of 15 community
shopping centers (the "Southeast Portfolio"), comprised of approximately 2.5
million square feet, located in the Southeast United States. The Southeast
Portfolio properties are located in Alabama, Florida, Georgia, North Carolina,
South Carolina, and Tennessee. The properties were acquired for a purchase price
of approximately $124,500.
Financing for the Southeast Portfolio acquisition was obtained by
increasing the Company's existing credit facility from $75,000 to $160,000, the
assumption of an existing $5,900 mortgage on one of the acquired properties and
by the addition of a $45,000 unsecured term loan. The interest rate payable
under the revolving credit facility has been reduced from 175 basis points over
LIBOR, to between 137.5 and 162.5 basis points over LIBOR, depending on certain
debt ratios set forth in the loan agreement. The interest rate payable on the
unsecured term loan is between 250 and 275 basis points over LIBOR, which rate
is also dependent on certain debt ratios. The Credit Facility and the unsecured
term loan mature on May 1, 1999, and the maturity date of each may, under
certain circumstances, be extended to October 2000 at the election of the
Operating Partnership. The credit facility continues to have, and the term loan
has, various financial covenants relating to debt to market capitalization,
minimum operating coverage ratios and minimum equity value.
During November 1997, the Company closed on a $50,000 permanent mortgage
loan. The net proceeds were utilized to pay down the credit facility, and the
availability of the credit facility was reduced to $110,000. At December 31,
1997, $110,000 of the Credit Facility was available for borrowing, of which
$81,588 was outstanding. At December 31, 1997, outstanding letters of credit
issued under the credit facility total approximately $836. The $50,000 mortgage
loan matures December 2007, bears a 6.83% fixed interest rate and is secured by
seven shopping center properties.
20
<PAGE> 22
During December 1997, the Company closed on a $8,500 mortgage loan secured
by the Jackson West Shopping Center. The loan matures January 2006 and has a
fixed interest rate of 7.17%. The Company has provided a $500 letter of credit
to the lender to provide additional collateral for the leaseup of an anchor pad
at the shopping center. The Company has one year to sign a lease with an
acceptable tenant or the letter of credit proceeds will be utilized to partially
prepay the mortgage without prepayment penalty.
At December 31, 1997 the Company was in the process of repositioning the
West Oaks I shopping center by constructing spaces for OfficeMax and Designer
Shoe Warehouse. The costs relative to the repositioning amount to approximately
$3,600, of which $1,400 had been spent in 1997. At the New Towne Plaza, the
Company replaced a former Kmart store with a nationally recognized retailer. The
projected cost is approximately $2,400, with $417 spent as of December 31, 1997.
The Company is in the process of renovating the exterior of the Chester Springs
shopping center and remerchandising the center. The cost is expected to be
approximately $2,000, of which $411 was spent as of December 31, 1997.
In October 1997, the Company entered into an agreement with certain clients
advised by Morgan Stanley Asset Management, Inc. ("MSAM"), and Kimco Realty
Corporation ("Kimco") pursuant to which such entities agreed to invest up to an
aggregate of $35,000 in the Operating Partnership. The MSAM clients and Kimco
initially purchased Operating Partnership Preferred Units which, after
shareholder approval in December 1997, were converted into the Company's Series
A Convertible Preferred Shares ("Series A Preferred Shares") and, ultimately,
may be converted into its Common Shares. The initial investments of $11,667 were
made in October 1997.
The equity investment involves the issuance of up to 1.4 million Series A
Preferred Shares at a price of $25.00 per share. The remaining commitment of
$23,333 may be drawn by the Company over a one-year period and may be used to
help fund strategic acquisitions, retenanting or redevelopment activities, or to
reduce outstanding debt. The dividend rate on the Series A Preferred Shares is
expected to equal that presently being paid to the Company's shareholders.
After the closing of this transaction, the MSAM clients are required to
purchase 19.4% of the first $50,000 in a follow-on public offering of the
Company's common shares at the offering price less the underwriter's fees,
commissions, and discounts per share. Upon consummation of such public offering,
all outstanding Series A Preferred Shares will be exchanged into common shares
of the Company, at a conversion price of $17.50 per share, which conversion
price is subject to adjustment in certain circumstances.
The Company's mortgage debt, secured by certain properties, amounted to
$295,618 at December 31, 1997, with a weighted average interest rate of 7.88%.
The mortgage debt consists of nine loans secured by various properties, one
unsecured term loan, and the Credit Facility which is secured by various
properties. Eight of the mortgage loans amounting to $162,030 have maturities
ranging from 1998 to 2007, monthly payments which include regularly scheduled
amortization, and have fixed interest rates ranging between 6.83% to 8.75%. One
of the mortgage loans, evidenced by tax free bonds, amounting to $7,000 secured
by Oak Brook Square Shopping Center is non-amortizing, matures in 2010, and
carries a floating interest rate equal to 75% of the new issue long-term Capital
A rated utility bonds, plus interest to the lender sufficient to cause the
lender's overall yield on its investment in the bonds to be equal to 200 basis
points over their applicable LIBOR rate (7.325% at December 31, 1997).
Variable rate debt accounted for $133,588 of outstanding debt with a
weighted average interest rate of 8.01%. Variable rate debt accounted for
approximately 45.2% of the Company's total debt and 26.7% of its total
capitalization.
In July 1997, the Company executed an interest rate protection agreement,
at a cost of $29, to limit the Company's exposure to increases in interest rates
on its floating rate debt. The notional amount of the agreement was $75,000.
Based on rates currently in effect under the Company's Credit Facility, the
agreement caps the Company's interest rate on $75,000 of floating rate debt to
8.375%, through May 1, 1999, with a floor of 7.125%.
In December 1997, the Company executed an interest rate protection
agreement at no cost to limit the Company's exposure to increases in interest
rates on its floating rate debt. The notional amount of the
21
<PAGE> 23
agreement was $50,000. Based on rates currently in effect under the Company's
Credit Facility, the agreement caps the Company's interest rate on $50,000 of
floating rate debt to 8.375% with a floor of 7.225%, for the period May 1999 to
October 2000.
The Company's interest coverage ratio for 1997 was 2.43 and the debt
service coverage ratio (which includes the impact of scheduled principal
amortization) was 2.15. Based on the debt and the market value of equity, the
Company's debt to total market capitalization (debt plus market value equity)
ratio was 59.2% at December 31, 1997. On a pro forma basis, if the full
MSAM/Kimco equity investment were infused, the debt to total market
capitalization would be 56.2% at December 31, 1997.
The two properties in which the Operating Partnership owns an interest and
are accounted for on the equity method of accounting are subject to non-recourse
mortgage indebtedness. At December 31, 1997, the pro rata share of non-recourse
mortgage debt on the unconsolidated properties (accounted for on the equity
method) was $6,271 with a weighted average interest rate of 9.14%.
The Company's current capital structure includes property specific
mortgages, the unsecured term loan, the Credit Facility, Series A Preferred
Shares, Common Shares and a minority interest in the Operating Partnership. At
March 31, 1997, the minority interest represented the approximate 27% ownership
in the Operating Partnership held by the Ramco Group. On April 1, 1997, the
Operating Partnership redeemed 88,530 Units at $16.00 per Unit. The redemption
reduced the minority interest from approximately 27% to approximately 26.5%.
Currently, the minority interest in the Operating Partnership represents the
26.5% ownership in the Operating Partnership held by the Ramco Group which may,
under certain conditions, be exchanged for approximately 2,568,143 Common
Shares.
The Units owned by the Ramco Principals are subject to lock-up agreements
which provide that the Units cannot be transferred, except under certain
conditions, for a period of 30 months after the closing of the Ramco Acquisition
(November 1998). In addition, the Units issued to the Ramco Group are
exchangeable for shares of the Company on a one-for-one basis. The Company, as
sole general partner of the Operating Partnership, has the option to exchange
such Units for cash based on the current trading price of the common shares.
Assuming the exchange of all limited partnership interests in the Operating
Partnership, there would be outstanding approximately 9,691,248 Common Shares
with a market value of approximately $190,796 at December 31, 1997 (based on the
closing price of $19.6875 per share on December 31, 1997).
The principal uses of the Company's liquidity and capital resources are for
acquisitions, development, including expansion and renovation programs, and debt
repayment. To maintain its qualification as a real estate investment trust under
the Internal Revenue Code, the Company is required to distribute to its
shareholders at least 95% of its "Real Estate Investment Trust Taxable Income"
as defined in the Internal Revenue Code of 1986, as amended (the "Code").
During July 1997 Montgomery Ward, ("Wards") a tenant at three of the
Company's properties, Tel-Twelve Mall, Clinton Valley Mall and Shoppes of
Lakeland, filed for protection under Chapter 11 of the Bankruptcy Code. In
October 1997, Wards issued a list of anticipated store closings which included
the stores at the Company's Clinton Valley Mall. This location consists of a
101,200 square foot department store and a 7,480 square foot TBA store (Tires,
Batteries and Automotive). The Company was notified in March 1998 that Wards
intends to reject the lease. The Company is pursuing replacement tenants to
lease the space. On an annual basis, Wards pays approximately $1,000 in base
rent, operating and real estate tax expense reimbursements for the Clinton
Valley Mall.
The Company anticipates that the combination of the availability under the
Credit Facility, potential new borrowings relative to the acquired properties
and development properties, construction loans, the remaining MSAM/Kimco equity
commitment, and other potential equity offerings will provide adequate liquidity
for the foreseeable future to fund future acquisitions, developments,
expansions, repositionings, and to continue its currently planned capital
programs and to make distributions to its shareholders in accordance with the
Code's requirements applicable to REIT's. Although the Company believes that the
combination of factors discussed above will provide sufficient liquidity, no
such assurance can be given.
22
<PAGE> 24
In 1997, the Company began a program to repurchase shares of beneficial
interest in the open market to be used as compensation for the Board of
Trustees. The Company expects to purchase approximately 5,600 shares annually.
Year 2000 Compliance. The Company has assessed the exposure of its computer
systems presented by the upcoming change in the millenium. Based on the
assessment, the Company believes that all of the Company's material computer
systems are currently year 2000 compliant. The Company does not believe that any
material expenditures will be required to be fully year 2000 compliant.
Inflation. Substantially all of the leases at the Company's properties
provide for tenants to pay their pro rata share of operating expenses, including
common area maintenance and real estate taxes, thereby reducing the Company's
exposure to increases in operating expenses resulting from inflation. Many of
the tenants' leases contain provisions designed to lessen the impact of
inflation. Such provisions include the ability to receive percentage rentals
based on a tenant's gross sales, which generally increase as prices rise, and or
escalation clauses, which generally increase rental rates during the terms of
the leases. In addition, many of the leases are for terms of less than ten
years, which may enable the Operating Partnership to replace existing leases
with new leases at a higher base and/or percentage rentals if rents of the
existing leases are below the then existing market rate.
RESULTS OF OPERATIONS
Comparison of year ended December 31, 1997 to year ended December 31, 1996
Total revenues for the year ended December 31, 1997 increased by 46.2%, or
$18,731, to $59,244 as compared to $40,513 for the year ended December 31, 1996.
The increase was a result of a $15,322 increase in minimum rents, a $277
increase in percentage rents, and a $5,295 increase in recoveries from tenants
offset in part by a $2,163 decrease in interest and other income.
Minimum rents increased 64.6%, or $15,322, to $39,035 for the year ended
December 31, 1997 as compared to $23,713 for the year ended December 31, 1996.
Percentage rents increased 23.3%, or $277, to $1,467 in 1997 as compared to
$1,190 for the year ended December 31, 1996. Recoveries from tenants increased
41.7%, or $5,295, to $17,990 as compared to $12,695 for the year ended December
31, 1996. The $15,322 increase in minimum rents is due to the partial year
impact of 1997 acquisitions of $3,196, the full impact of 1996 property
acquisitions of $2,430, the full year impact of the Ramco Acquisition of
$10,080, and a decrease of $348 related to the former RPS shopping centers. The
$10,080 increase related to the full year impact of the Ramco Acquisition
consisted of a $9,132 increase for the first four months of 1997 for which the
Company did not own the properties in 1996, and a $948 increase during the last
eight months for which the Company owned the properties in both 1996 and 1997.
The $948 increase in minimum rents at the Ramco Properties was primarily due to
the impact of anchor tenant openings at the Tel-Twelve Mall, Jackson West,
Jackson Crossing, Troy Towne Center and Spring Meadows Place shopping centers,
amounting to $1,052, offset in part by reductions in minimum rents of $111 at
the West Oaks I shopping center during its repositioning. The $348 decrease in
the minimum rents from the former RPS properties was primarily due to lower
occupancy at the Sunshine Plaza shopping center as a result of the vacancy of
anchor stores. The increase in recoveries from tenants was due to a higher level
of recoverable operating expenses and real estate taxes due to the increase in
the number of shopping centers owned in 1997 as compared to 1996, combined with
an increase in the overall recovery ratio in 1997 to 101.7% as compared to 98.6%
in 1996. The increase in percentage rents was primarily due to the impact of the
Ramco Acquisition and the other 1996 acquisitions.
Interest and other income decreased 74.2%, or $2,163, to $752 in 1997 as
compared to $2,915 in 1996. The decrease of $2,163 in interest and other income
is primarily due to the impact of the spin-off of Atlantic including the
transfer of the mortgage loan portfolio to Atlantic effective May 1, 1996.
Approximately $183 of the $752 recognized in 1997 was attributable to
non-recurring tenant lease obligations.
Total expenses for the year ended December 31, 1997 increased 22.6%, or
$8,542, to $46,388 as compared to $37,846 for the year ended December 31, 1996.
The increase was due to a $4,819 increase in operating expenses, including
recoverable operating expenses and real estate taxes, a $3,418 increase in
depreciation and
23
<PAGE> 25
amortization, a $183 increase in other operating expenses, a $70 increase in
general and administrative expenses, and a $8,028 increase in interest expense,
offset in part, by a $7,976 decrease in spin-off and other expenses.
Total recoverable expenses, including recoverable operating expenses and
real estate taxes, increased $4,819, or 37.4% to $17,692 for the year ended
December 31, 1997 from $12,873 for the year ended December 31, 1996. Other
operating expenses increased 23.1%, or $183, to $974 in 1997 from $791 in 1996.
General and administrative expenses increased $70, or 1.5% from $4,683 in 1996
to $4,753 in 1997. Interest expense increased 119.4%, or $8,028, to $14,753 in
1997 as compared to $6,725 in 1996. Depreciation and amortization increased
$3,418, or 71.2%, to $8,216 in 1997 as compared to $4,798 in 1996. The increases
in recoverable expenses, other operating expenses, general and administrative
expenses, interest expense and depreciation and amortization expense are
primarily attributable to the impact of the acquisition of the Ramco Properties
effective May 1, 1996 and the impact of shopping center acquisitions during 1996
and 1997. The operating results for the year ended December 31, 1997, included
the impact of the acquisition of the Ramco Properties and the shopping centers
acquired during 1996 for the full twelve months in 1997, while the results for
the year ended December 31, 1996 include the results of the Ramco Properties for
only eight months and include the impact of the subsequent 1996 acquisitions
only from the date of acquisition. The impact of shopping centers acquired in
1997 is reflected only from the acquisition date until December 31, 1997. In
addition, two properties which were part of the Company's portfolio at December
31, 1995 were spun-off to Atlantic effective May 1, 1996.
For the year ended December 31, 1996, the Company incurred $7,976 of
spin-off and other expenses for which there were no corresponding costs for the
year ended December 31, 1997. These non-recurring costs were primarily a result
of the employee severance and bonus expenses, the cost of run-off directors' and
officers' liability insurance and the write-off of deferred acquisition costs
related to the spin-off of Atlantic.
The loss from unconsolidated entities of $314 in 1997 as compared to $216
in 1996 is due to the impact of the Ramco Acquisition on May 1, 1996.
The minority interest during 1997 was $3,344 as compared to $2,159 in 1996.
The minority interest represents the portion of the Operating Partnership that
is not owned by the Company. The minority interest for 1997 represents the
impact of a full year while in 1996 it represents the impact only from the Ramco
Acquisition effective May 1996 until the end of 1996.
Comparison of Pro forma year ended December 31, 1997 to Pro forma year ended
December 31, 1996
The Pro Forma Consolidated Statements of Operations which are included in
Note 12 to the Consolidated Financial Statements are presented as if the Ramco
Acquisition, the Taylor, Holcomb, Lakeland, Madison, Pelican, the Southeast
Portfolio, and Village Lakes shopping center acquisitions and the spin-off of
Atlantic had occurred on January 1, 1996, and the Company had qualified as a
REIT.
Total revenues for the year ended December 31, 1997 increased by 2.2%, or
$1,588, to $73,983 as compared to $72,395 for the year ended December 31, 1996.
The increase was due to a $1,775 increase in minimum rents, a $351 increase in
percentage rents, a $626 decrease in recoveries from tenants, and an increase of
$88 in interest and other income.
Minimum rents increased 3.6%, or $1,775, to $51,714 in 1997 as compared to
$49,939 for the year ended December 31, 1996. Percentage rents increased 27.7%,
or $351, to $1,620 as compared to $1,269 for the year ended December 31, 1996.
Recoveries from tenants decreased 3.1%, or $626, to $19,794 in 1997 as compared
to $20,420 in 1996. Interest and other income increased 11.5%, or $88, to $855
as compared to $767 in 1996. The $1,775 increase in minimum rents was primarily
attributable to initial anchor tenant openings at Jackson West Shopping Center
and new anchors at Tel-Twelve Mall, Eastridge Commons, Jackson Crossing and Troy
Towne Center amounting to $1,725, offset by decreases in minimum rents of $416
related to Sunshine Plaza and West Oaks I tenant vacancies and/or repositioning
efforts. The decrease in recoveries from tenants was due to a corresponding
decrease in real estate taxes and recoverable operating expenses. The Company's
24
<PAGE> 26
overall recovery ratio for 1997 and 1996 remained relatively consistent at
100.1% and 99.2%, respectively. The increase in interest and other income
included approximately $183 of non-recurring tenant lease obligations.
Total expenses decreased 10.1%, or $6,828 for the year ended December 31,
1997, to $61,108 from $67,936 for the year ended December 31, 1996. The decrease
was primarily due to the non-recurring charge of $7,976 in spin-off and other
expenses, a $814 decrease in recoverable operating and real estate tax expense,
a $789 increase in depreciation and amortization, a $86 decrease in other
operating expenses, a $316 increase in general and administrative expenses, and
a $943 increase in interest expense.
For the year ended December 31, 1996 the Company incurred $7,976 of
spin-off and other expenses for which there were no corresponding costs for the
year ended December 31, 1997. These non-recurring costs were primarily a result
of the employee severance and bonus expenses, the cost of run-off directors' and
officers' liability insurance, and the write-off of deferred acquisition costs
related to the spin-off of Atlantic.
Recoverable operating and real estate tax expenses decreased 4.0%, or $814,
to $19,772 for the year ended December 31, 1997 from $20,586 for the year ended
December 31, 1996 due to a reduction in real estate taxes and recoverable
operating expenses. As noted above, the Company's recovery ratio for the year
ended December 31, 1997 remained relatively consistent with the corresponding
1996 period at 100.1%, and 99.2%, respectively.
The increase of 7.8%, or $789, in depreciation and amortization to $10,949
in 1997 from $10,160 in 1996 was attributable to the Jackson West shopping
center which opened in June, 1996 and the impact of capital expenditures during
1996 and 1997.
Interest expense increased 4.1% or $943 to $24,183 in 1997 from $23,240 in
1996. The increase was attributable to the impact of borrowings relative to the
Jackson West shopping center which opened in June, 1996, development cost
reimbursements and other capital expenditures.
General and administrative expenses increased 6.6%, or $316, to $5,085 in
1997 from $4,769 in 1996. The level of general and administrative expenses is
impacted by several factors, including the cost reimbursement relationship
between the Operating Partnership and Ramco, the capitalization of costs
relative to leasing and development at the centers owned by the Operating
Partnership and the cost of the Company's administrative activities. Ramco also
provides third party management, leasing, brokerage and development services to
entities not controlled by the Company. These third party leasing and
development fees earned under management contracts are not necessarily earned
consistently over time since these fees are based on measurements related to
specific transactions and are dependent on the availability of space to lease or
develop at the centers. The operating expenses of Ramco include employee
expenses, such as salaries and benefits, and office and other expenses. Some of
these costs are fixed in nature. The net cost reimbursement to be charged as
general and administrative expense to the Operating Partnership is dependent on
the ability of Ramco to continue to charge leasing, brokerage and development
fees to third party entities, while continuing to generate third party
management business. It is also dependent on Ramco's ability to control
expenses, the majority of which are employee-related expenses. Some of the
expenses of Ramco, those which are directly attributable to revenues to be
earned in the future, are charged to the Operating Partnership and capitalized
in order to be amortized over the related revenue. The Company's administrative
expenses include officers' salaries and benefits, trustee fees, directors' and
officers' liability insurance, transfer agent and shareholders' relations
expenses, and professional fees including legal, audit and tax.
25
<PAGE> 27
Following is a breakdown of the general and administrative expenses shown
in the Pro forma financial statements:
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------- -----------------
<S> <C> <C>
RAMCO
Management Fees............................................. $1,063 $1,077
Leasing, Brokerage and Development Fees..................... 393 152
Other Revenues.............................................. 470 293
Leasing/Development Cost Reimbursements..................... 1,473 836
------ ------
Total Revenues............................................ 3,399 2,358
------ ------
Employee Expenses........................................... 4,356 3,555
Office and Other Expenses................................... 1,221 1,012
Depreciation and Amortization............................... 221 56
------ ------
Total Expenses............................................ 5,798 4,623
------ ------
OPERATING PARTNERSHIP COST REIMBURSEMENT EXPENSES........... 2,399 2,265
------ ------
OPERATING PARTNERSHIP ADMINISTRATIVE EXPENSES............... 2,194 2,142
------ ------
SHOPPING CENTER LEVEL GENERAL AND ADMINISTRATIVE EXPENSES... 492 362
------ ------
TOTAL PRO FORMA GENERAL AND ADMINISTRATIVE EXPENSES......... $5,085 $4,769
====== ======
</TABLE>
The increase in general and administrative expenses of $316 was due to an
increase of $52 in the Operating Partnership administrative expenses, an
increase of $134 in cost reimbursement expenses between the Operating
Partnership and Ramco, and an increase of $130 in Shopping Center Level general
and administrative expenses.
Comparison of year ended December 31, 1996 to year ended December 31, 1995
Total revenues for the year ended December 31, 1996 increased by 142.3%, or
$23,796, to $40,513 as compared to $16,717 for the year ended December 31, 1995.
The increase was a result of a $17,242 increase in minimum rents, a $424
increase in percentage rents, and a $10,996 increase in recoveries from tenants
offset in part by a $4,866 decrease in interest and other income.
Minimum rents increased 266.5%, or $17,242, to $23,713 for the year ended
December 31, 1996 as compared to $6,471 for the year ended December 31, 1995.
Percentage rents increased 55.4%, or $424, to $1,190 in 1996 as compared to $766
for the year ended December 31, 1995. Recoveries from tenants increased 647.2%,
or $10,996, to $12,695 as compared to $1,699 for the year ended December 31,
1995. The increases in minimum rents, percentage rents, and recoveries from
tenants are primarily attributable to the acquisition of the Ramco Properties
effective May 1, 1996 and the acquisitions of the Taylor, Lakeland and Holcomb
shopping centers effective August 14, November 22, and December 13, 1996,
respectively. The operating results have included the impact of eight months of
the Ramco Properties in 1996 as compared to none in 1995. In addition, two
properties which were part of the Company's portfolio at December 31, 1995 were
spun-off to Atlantic effective May 1, 1996 and thus the revenues in 1996 include
only four months of their activity as compared to twelve months in 1995. The
decrease of $4,866 in interest and other income is due to the impact of the
spin-off of Atlantic, including the transfer of the mortgage loan portfolio to
Atlantic. The operating results of the Company represents four months of
mortgage loan portfolio activity in 1996 as compared to twelve months in 1995.
Total expenses for the year ended December 31, 1996 increased by 187.2%, or
$24,667, to $37,846, as compared to $13,179 for the year ended December 31,
1995. The increase was due to a $9,668 increase in
26
<PAGE> 28
operating expenses, including recoverable operating expenses and real estate
taxes, a $3,584 increase in depreciation and amortization, a $608 increase in
other operating expenses, a $556 increase in general and administrative
expenses, a $6,725 increase in interest expense, and a $7,976 increase in
spin-off and other expenses, offset in part by a decrease of $4,450 in the
allowance for loan losses.
Total recoverable expenses, including real estate taxes and recoverable
operating expenses, increased by 301.7%, or $9,668, to $12,873 as compared to
$3,205 for the year ended December 31, 1995. Other operating expenses increased
by 332.2%, or $608, to $791 as compared to $183 in 1995. General and
administrative expenses increased 13.5%, or $556, to $4,683 as compared to
$4,127 in 1995. Depreciation and amortization increased 295.2%, or $3,584, to
$4,798 in 1996 as compared to $1,214 in 1995. The increases in recoverable
expenses of $9,668, other operating expenses of $608, general and administrative
expenses of $556, and depreciation and amortization of $3,584 reflect the impact
for the partial year on expenses that are principally attributable to the
increase in the size of the real estate shopping portfolio due to the
acquisition of the Ramco Properties in May 1996.
Spin-off and other expenses were $7,976 in 1996 as compared to zero in
1995. These non-recurring costs were primarily a result of the employee
severance and bonus expenses, the cost of run-off directors' and officers'
liability insurance and the write-off of the Company's deferred acquisition
costs related to the spin-off of Atlantic. The allowance for loan losses was
zero in 1996 as compared to $4,450 in 1995. Total expenses for the year ended
December 31, 1995 included an addition for loan losses of $4,450, no such
addition to the allowance was required in 1996.
Interest expense was $6,725 in 1996 as compared to zero in 1995. The
increase of $6,725 was due to the partial year effect of the debt assumed in
connection with the Ramco Acquisition and additional borrowings for subsequent
acquisitions and development cost reimbursements. Interest expense for the year
ended December 31, 1996 included approximately $140 in additional costs for the
period May 1 to May 10, 1996 due to the closing of the Ramco Acquisition being
effective May 1, 1996 while the Company contributed the RPS cash on May 10, 1996
thus incurring additional interest expense on the assumed debt.
The loss from unconsolidated entities of $216 in 1996 as compared to zero
in 1995 is due to the impact of the Ramco Acquisition during May 1996, and the
50% general partner interests in two partnerships which each own a shopping
center.
The minority interest of $2,159 in 1996 represents the 27% share of income
of the Operating Partnership relative to the period May 1, 1996 to December 31,
1996 allocable to the Ramco Group.
FUNDS FROM OPERATIONS
Management generally considers funds from operations ("FFO") to be one
measure of financial performance of an equity REIT. It has been presented to
assist investors in analyzing the performance of the Company and to provide a
relevant basis for comparison to other REITs.
The Company has adopted the most recent National Association of Real Estate
Investment Trusts ("NAREIT") definition of FFO, which was effective on January
1, 1996. Under the NAREIT definition, FFO represents income (loss) before
minority interest (computed in accordance with generally accepted accounting
principles), excluding gains (losses) from debt restructuring and sales of
property, plus real estate related depreciation and amortization (excluding
amortization of financing costs), and after adjustments for unconsolidated
partnerships and joint ventures.
Therefore, FFO does not represent cash generated from operating activities
in accordance with generally accepted accounting principles and should not be
considered an alternative to net income as an indication of the Company's
performance or to cash flows from operating activities as a measure of liquidity
or of the ability to pay distributions. Furthermore, while net income and cash
generated from operating, investing and financing activities determined in
accordance with generally accepted accounting principles consider capital
expenditures which have been and will be incurred in the future, the calculation
of FFO does not.
27
<PAGE> 29
The following pro forma FFO are presented as if the Ramco Acquisition, and
the acquisitions of each shopping center acquired in 1996 and 1997, and the
spin-off of Atlantic had occurred January 1, 1996.
The following table illustrates the calculation of actual FFO for the year
ended December 31, 1997 and pro forma FFO for the years ended December 31, 1997
and 1996:
<TABLE>
<CAPTION>
PRO FORMA YEARS ENDED
ACTUAL DECEMBER 31,
------- ----------------------
1997 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net Income....................................... $ 9,198 $ 9,211 $ 936
Add: Depreciation and amortization............. 8,236 10,977 10,189
Add: Minority interest in partnership.......... 3,344 3,350 3,209
Add: Non-recurring spin-off and other
expenses.................................... 7,976
------- ------- -------
Funds from operations -- diluted................. 20,778 23,538 22,310
Less: Preferred share dividends................ (278) (278) --
------- ------- -------
Funds from operations -- basic................... $20,500 $23,260 $22,310
======= ======= =======
Weighted average equivalent shares outstanding(1)
Basic.......................................... 9,713 9,713 9,687
======= ======= =======
Diluted........................................ 9,905 9,905 9,687
======= ======= =======
Supplemental disclosure:
Straight-line rental income.................... $ 1,627 $ 1,627 $ 1,517
======= ======= =======
Amortization of management contracts and
covenants not to compete.................... $ 494 $ 494 $ 494
======= ======= =======
</TABLE>
- -------------------------
(1) For basic, represents the weighted average total shares outstanding,
assuming the redemption of all Operating Partnership Units for Common
Shares. For diluted, represents the weighted average total shares
outstanding, assuming the redemption of all Operating Partnership Units for
Common Shares, the Series A Preferred Shares converted to Common Shares, and
the common shares issuable under the treasury stock method upon exercise of
stock options.
CAPITAL EXPENDITURES
During 1997, the Company spent approximately $3,391 on revenue generating
capital expenditures including tenant allowances, leasing commissions paid to
third-party brokers, legal costs relative to lease documents, and capitalized
leasing and construction costs. These types of costs generate a return through
rents from tenants over the term of their leases. Revenue enhancing capital
expenditures, including expansions, renovations or repositionings were
approximately $8,095. Revenue neutral capital expenditures, such as roof and
parking lot repairs which are anticipated to be recovered from tenants, amounted
to approximately $1,080.
During 1997, the Company spent approximately $149,573 on the acquisition of
the Madison Center, Pelican Plaza, the Southeast Portfolio, and the Village
Lakes shopping centers.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings per Share." This Statement establishes standards for
computing and presenting earnings per share ("EPS") and applies to all entities
with publicly held common shares or potential common shares. This Statement
replaces the presentation of primary EPS and fully diluted EPS with a
presentation of basic EPS and diluted EPS, respectively. Basic EPS excludes
dilution and is computed by dividing earnings available to common shareholders
by the weighted-average number of common shares outstanding for the period.
Similar to fully diluted EPS, diluted EPS reflects the potential dilution of
securities that could share in the earnings.
28
<PAGE> 30
The provisions of the Statement were adopted as of December 31, 1997 and the
adoption of this Statement did not have an impact on the Company's previously
reported EPS amounts.
In February 1997, the FASB issued SFAS No. 129, "Disclosure of Information
about Capital Structure" which establishes standards for disclosing information
about an entity's capital structure. The Statement was adopted as of December
31, 1997 and did not have a material effect on the Company's financial statement
presentation.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" which establishes standards for reporting and displaying comprehensive
income and its components in a full set of financial statements. The Statement
requires that all items that are required to be recognized under accounting
standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. The Statement is effective for the Company's financial statements
for the year ending December 31, 1998. The adoption of the Statement is not
expected to have a material effect on the Company's financial statement
presentation.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" which establishes standards for reporting
information about operating segments in financial statements. It also
establishes standards for disclosure about products and services, geographical
areas, and major customers. The Statement is effective for the Company's
financial statements for the year ending December 31, 1998. Management has not
determined the impact of the Statement on the Company's financial statements.
This Form 10-K contains forward-looking statements with respect to the
operation of certain of the Company's properties. Management of the Company
believes the expectations reflected in the forward-looking statements made in
this document are based on reasonable assumptions. Certain factors could occur
that might cause actual results to vary. These include general economic
conditions, the strength of key industries in the cities in which the Company's
properties are located, the performance of the Company's tenants at the
Company's properties and elsewhere, and other factors discussed in the Company's
report filed with the Securities and Exchange Commission.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See pages F-1 to F-23, which are included herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
29
<PAGE> 31
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference to Ramco-Gershenson Properties Trust
definitive proxy statement to be filed with the Securities and Exchange
Commission within 120 days after the year covered by this Annual Report on Form
10-K with respect to its Annual Meeting of Shareholders to be held on June 10,
1998.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference to Ramco-Gershenson Properties Trust
definitive proxy statement to be filed with the Securities and Exchange
Commission within 120 days after the year covered by this Annual Report on Form
10-K with respect to its Annual Meeting of Shareholders to be held on June 10,
1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference to Ramco-Gershenson Properties Trust
definitive proxy statement to be filed with the Securities and Exchange
Commission within 120 days after the year covered by this Annual Report on Form
10-K with respect to its Annual Meeting of Shareholders to be held on June 10,
1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference to Ramco-Gershenson Properties Trust
definitive proxy statement to be filed with the Securities and Exchange
Commission within 120 days after the year covered by this Annual Report on Form
10-K with respect to its Annual Meeting of Shareholders to be held on June 10,
1998.
30
<PAGE> 32
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
(A)(1) FINANCIAL STATEMENTS
See pages F-1 to F-23, which are included herein.
(A)(3) EXHIBITS
<TABLE>
<S> <C>
3.1 Amended and Restated Declaration of Trust of the Company,
dated October 2, 1997.
3.2 Articles Supplementary to Amended and Restated Declaration
of Trust, dated October 2, 1997.
3.3 By-Laws of the Company adopted October 2, 1997.
4 Rights Agreement dated as of December 6, 1989 between the
Company and American Stock Transfer & Trust Company,
incorporated by reference to Exhibit 1 to the Company's
Registration Statement on Form 8-A, File No. 1-10093, for
the registration of Share Purchase Rights.
10.1 Pledge Agreement, dated as of May 10, 1996, among the
Company, Dennis Gershenson, Joel Gershenson, Bruce
Gershenson, Richard Gershenson, Michael A. Ward, Michael A.
Ward U/T/A dated 2/22/88, as amended, and the holders of
interest in Ramco-Gershenson Properties, L.P., a Delaware
limited partnership, incorporated by reference to Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 1996.
10.2 Registration Rights Agreement, dated as of May 10, 1996,
among the Company, Dennis Gershenson, Joel Gershenson, Bruce
Gershenson, Richard Gershenson, Michael A. Ward, Michael A.
Ward U/T/A dated 2/22/77, as amended, and each of the
Persons set forth on Exhibit A attached thereto,
incorporated by reference to Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1996.
10.3 Exchange Rights Agreement, dated as of May 10, 1996, by and
among the Company and each of the Persons whose names are
set forth on Exhibit A attached thereto, incorporated by
reference to Exhibit 10.3 to the Company' Quarterly Report
on Form 10-Q of the period ended June 30, 1996.
10.4 1996 Share Option Plan of the Company, incorporated by
reference to Exhibit 10.4 to the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1996.
10.5 Letter Agreement, dated May 10, 1996, among the Persons and
Entities party to the Amended and Restated Master Agreement,
dated as of December 27, 1995, as amended, incorporated by
reference to Exhibit 10.5 to the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1996.
10.6 Promissory Note payable by Atlantic Realty Trust in favor of
the Company in the principal face amount of $5,500,000 due
November 9, 1997, incorporated by reference to Exhibit 10.6
to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 1996.
10.7 Letter Agreement, dated as of May 10, 1996, by and between
Atlantic Realty Trust ("Atlantic") and the Company
concerning the assumption of certain liabilities by
Atlantic, incorporated by reference to Exhibit 10.7 to the
Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1996.
10.8 Employment Agreement, dated as of May 10, 1996, between the
Company and Joel Gershenson, incorporated by reference to
Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1996.
10.9 Employment Agreement, dated as of May 10, 1996, between the
Company and Dennis Gershenson, incorporated by reference to
Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1996.
10.10 Employment Agreement, dated as of May 10, 1996, between the
Company and Michael A. Ward, incorporated by reference to
Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1996.
</TABLE>
31
<PAGE> 33
<TABLE>
<S> <C>
10.11 Employment Agreement, dated as of May 10, 1996, between the
Company and Richard Gershenson, incorporated by reference to
Exhibit 10.11 to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1996.
10.12 Employment Agreement, dated as of May 10, 1996, between the
Company and Bruce Gershenson, incorporated by reference to
Exhibit 10.12 to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1996.
10.13 Noncompetition Agreement, dated as of May 10, 1996, between
Joel Gershenson and the Company, incorporated by reference
to Exhibit 10.13 to the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1996.
10.14 Noncompetition Agreement, dated as of May 10, 1996, between
Dennis Gershenson and the Company, incorporated by reference
to Exhibit 10.14 to the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1996.
10.15 Noncompetition Agreement, dated as of May 10, 1996, between
Michael A. Ward and the Company, incorporated by reference
to Exhibit 10.15 to the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1996.
10.16 Noncompetition Agreement, dated as of May 10, 1996, between
Richard Gershenson and the Company, incorporated by
reference to Exhibit 10.16 to the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1996.
10.17 Noncompetition Agreement, dated as of May 10, 1996, between
Bruce Gershenson and the Company, incorporated by reference
to Exhibit 10.17 to the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1996.
10.18 Letter Agreement, dated April 15, 1996, among the Company
and Richard Smith concerning Mr. Smith's employment by the
Company, incorporated by reference to Exhibit 10.18 to the
Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1996.
10.19 Loan Agreement dated May 1, 1996 by and between
Ramco-Gershenson Properties, L.P. and The Lincoln National
Life Insurance Company relating to a $77,585,524.73 loan,
incorporated by reference to Exhibit 10.22 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1996.
10.20 Note dated May 1, 1996 in the aggregate principal amount of
$77,585,524.73 made by Ramco-Gershenson Properties, L.P. in
favor of The Lincoln National Life Insurance Company,
incorporated by reference to Exhibit 10.23 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1996.
10.21 Loan Agreement dated May 1, 1996 by and between
Ramco-Gershenson Properties, L.P. and The Lincoln National
Life Insurance Company relating to a $4,346,778.73 loan,
incorporated by reference to Exhibit 10.24 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1996.
10.22 Note dated May 1, 1996 in the aggregate principal amount of
$4,346,778.73 made by Ramco-Gershenson Properties, L.P. in
favor of The Lincoln National Life Insurance Company,
incorporated by reference to Exhibit 10.25 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1996.
10.23 Preferred Units and Stock Purchase Agreement dated as of
September 30, 1997 by and among the Company, Special
Situations RG REIT, Inc., and the Advancing Party named
therein, incorporated by reference to Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1997.
10.24 Agreement Regarding Exercise of Registration Rights dated as
of September 30, 1997 among the Company, the Ramco
Principals (as defined therein), the Other Holders (as
defined therein), Special Situations RG REIT, Inc., and the
Advancing Party, incorporated by reference to Exhibit 10.2
to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1997.
</TABLE>
32
<PAGE> 34
<TABLE>
<S> <C>
10.25 Registration Rights Agreement dated as of September 30, 1997
by and among the Company, Special Situations RG REIT, Inc.,
and the Advancing Party named therein, incorporated by
reference to Exhibit 10.3 to the Company's Quarterly Report
on Form 10-Q for the period ended September 30, 1997.
10.26 Second Amended and Restated Master Revolving Credit
Agreement dated as of October 30, 1997 among
Ramco-Gershenson Properties, L.P., as Borrower, the Company,
as Guarantor, and BankBoston, N.A., and the other Banks
which may become parties to the loan agreement, and
BankBoston, N.A., as Agent, incorporated by reference to
Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1997.
10.27 Second Amended and Restated Noted dated October 30, 1997 in
the principal amount of $160,000,000 made by
Ramco-Gershenson Properties, L.P. in favor of BankBoston,
N.A., incorporated by reference to Exhibit 10.5 to the
Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1997.
10.28 Second Amended and Restated Unconditional Guaranty of
Payment and Performance dated as of October 30, 1997 by the
Company in favor of BankBoston, N.A., incorporated by
reference to Exhibit 10.6 to the Company's Quarterly Report
on Form 10-Q for the period ended September 30, 1997.
10.29 Unsecured Term Loan Agreement dated as of October 30, 1997
among Ramco-Gershenson Properties, L.P., as Borrower, the
Company, as Guarantor, BankBoston, N.A., the other Banks
which may become parties to the agreement, and BankBoston,
N.A., as Agent, incorporated by reference to Exhibit 10.7 to
the Company's Quarterly Report on Form 10-Q for the period
ended September 30, 1997.
10.30 Note dated as of October 30, 1997 in the principal amount of
$45,000,000 made by Ramco-Gershenson Properties, L.P. in
favor of BankBoston, N.A., incorporated by reference to
Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1997.
10.31 Unconditional Guaranty of Payment and Performance dated as
of October 30, 1997 by the Company in favor of BankBoston,
N.A., incorporated by reference to Exhibit 10.9 to the
Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1997.
10.32 Form of Contract of Sale dated July 7, 1997 relating to the
acquisition of the Southeast Portfolio (Form #1),
incorporated by reference to Exhibit 10.10 to the Company's
Quarterly Report on Form 10-Q for the period ended September
30, 1997.
10.33 Form of Contract of Sale dated July 7, 1997 relating to the
acquisition of the Southeast Portfolio (Form #2),
incorporated by reference to Exhibit 10.11 to the Company's
Quarterly Report on Form 10-Q for the period ended September
30, 1997.
10.34 Form of Contract of Sale dated July 7, 1997 relating to the
acquisition of the Southeast Portfolio (Form #3),
incorporated by reference to Exhibit 10.12 to the Company's
Quarterly Report on Form 10-Q for the period ended September
30, 1997.
10.35 Agreement dated July 7, 1997 by and between Seller (as
defined therein) and Ramco-Gershenson Properties, L.P.,
which agreement amends certain Contracts of Sale relating to
the Acquisition of the Southeast Portfolio, incorporated by
reference to Exhibit 10.13 to the Company's Quarterly Report
on Form 10-Q for the period ended September 30, 1997.
10.36 Loan Agreement dated as of November 26, 1997 between Ramco
Properties Associates Limited Partnership and Secore
Financial Corporation relating to a $50,000,000 loan.
10.37 Promissory Note dated November 26, 1997 in the aggregate
principal amount of $50,000,000 made by Ramco Properties
Associates Limited Partnership in favor of Secore Financial
Corporation.
10.38 Loan Agreement dated December 17, 1997 by and between
Ramco-Gershenson Properties, L.P. and The Lincoln National
Life Insurance Company relating to a $8,500,000 loan.
10.39 Note dated December 17, 1997 in the aggregate principal
amount of $8,500,000 made by Ramco-Gershenson Properties,
L.P., in favor of The Lincoln National Life Insurance
Company.
</TABLE>
33
<PAGE> 35
<TABLE>
<S> <C>
10.40 1997 Non-Employee Trustee Stock Option Plan of the Company.
10.41 Change of Venue Merger Agreement dated as of October 2, 1997
between the Company (formerly known as RGPT Trust, a
Maryland real estate investment trust), and Ramco-Gershenson
Properties Trust, a Massachusetts business trust.
21.1 Subsidiaries.
23.1 Consent of Deloitte & Touche LLP.
27.1 Financial Data Schedule.
</TABLE>
(B) REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K dated November 14, 1997. The
company reported under Item 2, the acquisition of the Southeast Portfolio
on October 30, 1997 and the related financing.
The Company filed a Current Report on Form 8-K/A dated January 13, 1998.
The Company reported under Item 2, the acquisition of the Southeast
Portfolio on October 30, 1997. Included in the filing were the following
financial statements:
INDEPENDENT AUDITORS' REPORT
Ramco-Gershenson Southeast Portfolio, Combined Historical Summary of
Revenues and Direct Operating Expenses for the Year Ended December 31, 1996
and the Nine Months Ended September 30, 1997 (Unaudited)
Notes to Combined Historical Summary of Revenues and Direct Operating
Expenses for the Year Ended December 31, 1996, and the Nine Months Ended
September 30, 1997 (Unaudited)
Ramco-Gershenson Properties Trust Pro Forma Condensed Consolidated Balance
Sheet as of September 30, 1997 (Unaudited)
Ramco-Gershenson Properties Trust Pro Forma Consolidated Statements of
Operations for the Year Ended December 31, 1996 (Unaudited) and the Nine
Months Ended September 30, 1997 (Unaudited)
Ramco-Gershenson Properties Trust Statement of Estimated Taxable Operating
Results of the Southeast Portfolio and Estimated Cash to be Made Available
by the Operations of the Southeast Portfolio for the Twelve Month Period
Ended September 30, 1997 (Unaudited)
34
<PAGE> 36
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C>
Ramco-Gershenson Properties Trust
Dated: April 9, 1998 By: /s/ JOEL D. GERSHENSON
----------------------------------------------------
Joel D. Gershenson,
Chairman
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of registrant and in
the capacities and on the dates indicated.
<TABLE>
<S> <C>
Dated: April 9, 1998 By: /s/ JOEL D. GERSHENSON
----------------------------------------------------
Joel D. Gershenson,
Trustee and Chairman
Dated: April 9, 1998 By: /s/ DENNIS E. GERSHENSON
----------------------------------------------------
Dennis E. Gershenson,
Trustee and President
(Principal Executive Officer)
Dated: April 9, 1998 By: /s/ STEPHEN R. BLANK
----------------------------------------------------
Stephen R. Blank,
Trustee
Dated: April 9, 1998 By: /s/ ARTHUR H. GOLDBERG
----------------------------------------------------
Arthur H. Goldberg,
Trustee
Dated: By:
----------------------------------------------------
Herbert Liechtung,
Trustee
Dated: April 9, 1998 By: /s/ ROBERT A. MEISTER
----------------------------------------------------
Robert A. Meister,
Trustee
Dated: April 9, 1998 By: /s/ JOEL M. PASHCOW
----------------------------------------------------
Joel M. Pashcow,
Trustee
Dated: April 9, 1998 By: /s/ MARK K. ROSENFELD
----------------------------------------------------
Mark K. Rosenfeld,
Trustee
Dated: April 9, 1998 By: /s/ SELWYN ISAKOW
----------------------------------------------------
Selwyn Isakow,
Trustee
Dated: April 9, 1998 By: /s/ RICHARD J. SMITH
----------------------------------------------------
Richard J. Smith,
Chief Financial Officer
(Principal Financial and Accounting Officer)
</TABLE>
35
<PAGE> 37
RAMCO-GERSHENSON PROPERTIES TRUST
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of
Ramco-Gershenson Properties Trust:
We have audited the accompanying consolidated balance sheets of
Ramco-Gershenson Properties Trust and subsidiaries as of December 31, 1997 and
1996, and the related consolidated statements of income, shareholders' equity
and cash flows for each of the three years in the period ended December 31,
1997. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Ramco-Gershenson Properties
Trust and subsidiaries as of December 31, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1997 in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
Detroit, Michigan
February 17, 1998
F-1
<PAGE> 38
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Investment in real estate -- net (Notes 3, 5 and 14)........ $458,294 $307,752
Accounts receivable -- net.................................. 6,035 3,901
Equity investments in and advances to unconsolidated
entities (Note 7)......................................... 6,421 6,044
Cash and cash equivalents................................... 5,033 3,541
Other assets -- net (Note 4)................................ 8,899 2,389
-------- --------
TOTAL ASSETS........................................... $484,682 $323,627
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgages and notes payable (Note 5)........................ $295,618 $143,410
Distributions payable....................................... 4,348 4,108
Accounts payable and accrued expenses....................... 13,145 10,485
Due to related entities (Note 1)............................ 1,325 1,053
-------- --------
Total liabilities...................................... 314,436 159,056
MINORITY INTEREST........................................... 42,282 44,706
COMMITMENTS AND CONTINGENCIES (Note 8)......................
SHAREHOLDERS' EQUITY
Series A convertible preferred shares, par value $.01,
10,000 shares authorized, 467 issued and outstanding,
$11,666 liquidation value (Note 9)..................... 11,147
Common Shares of Beneficial Interest, par value (1997 --
$.01, 1996 -- $.10) shares authorized (1997 -- 30,000;
1996 -- unlimited), issued and outstanding (1997 and
1996 -- 7,123) (Note 9)................................ 71 712
Additional paid-in capital................................ 150,513 149,872
Cumulative distributions in excess of net income.......... (33,767) (30,719)
-------- --------
TOTAL SHAREHOLDERS' EQUITY.................................. 127,964 119,865
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............. $484,682 $323,627
======== ========
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE> 39
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996(*) 1995(*)
---- ------- -------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C> <C>
REVENUES
Minimum rents............................................. $39,035 $23,713 $ 6,471
Percentage rents.......................................... 1,467 1,190 766
Recoveries from tenants................................... 17,990 12,695 1,699
Interest and other income................................. 752 2,915 7,781
------- ------- -------
TOTAL REVENUES......................................... 59,244 40,513 16,717
------- ------- -------
EXPENSES
Real estate taxes......................................... 6,230 4,643 1,271
Recoverable operating expenses............................ 11,462 8,230 1,934
Depreciation and amortization............................. 8,216 4,798 1,214
Other operating........................................... 974 791 183
General and administrative................................ 4,753 4,683 4,127
Interest expense.......................................... 14,753 6,725
Spin-off and other expenses (Note 1)...................... 7,976
Allowance for loan losses................................. 4,450
------- ------- -------
TOTAL EXPENSES......................................... 46,388 37,846 13,179
------- ------- -------
OPERATING INCOME............................................ 12,856 2,667 3,538
LOSS FROM UNCONSOLIDATED ENTITIES (NOTE 7).................. 314 216
------- ------- -------
INCOME BEFORE MINORITY INTEREST............................. 12,542 2,451 3,538
MINORITY INTEREST........................................... 3,344 2,159
------- ------- -------
NET INCOME.................................................. $ 9,198 $ 292 $ 3,538
======= ======= =======
BASIC EARNINGS PER SHARE (NOTE 2)........................... $1.25 $0.04 $0.50
======= ======= =======
DILUTED EARNINGS PER SHARE (NOTE 2)......................... $1.25 $0.04 $0.50
======= ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC..................................................... 7,123 7,123 7,123
======= ======= =======
DILUTED................................................... 7,148 7,123 7,123
======= ======= =======
</TABLE>
- -------------------------
(*) The 1996 and 1995 historical results consist of the operations of RPS Realty
Trust prior to the Spin-Off Transaction and the Ramco Acquisition, which was
effective on May 1, 1996 (Note 1).
See notes to consolidated financial statements.
F-3
<PAGE> 40
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES COMMON
PREFERRED PREFERRED COMMON STOCK
STOCK STOCK STOCK PAR VALUE
--------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995....................... 7,123 $ 712
Net income...................................
Cash distributions declared..................
----- -----
BALANCE, DECEMBER 31, 1995..................... 7,123 712
Assets transferred in Spin-Off Transaction...
Minority interests' equity...................
Cash distributions declared..................
Net income...................................
----- -----
BALANCE, DECEMBER 31, 1996..................... 7,123 712
Cash distributions declared
Conversion to $.01 par value Common Stock.... (641)
Series A Preferred stock issuance............ 467 $11,147
Net income...................................
--- ------- ----- -----
BALANCE, DECEMBER 31, 1997..................... 467 $11,147 7,123 $ 71
=== ======= ===== =====
</TABLE>
<TABLE>
<CAPTION>
ADDITIONAL CUMULATIVE TOTAL
PAID-IN EARNINGS/ SHAREHOLDERS'
CAPITAL DISTRIBUTION EQUITY
---------- ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE, JANUARY 1, 1995.............................. $197,061 $(15,174) 182,599
Net income.......................................... 3,538 3,538
Cash distributions declared......................... (9,117) (9,117)
-------- -------- --------
BALANCE, DECEMBER 31, 1995............................ 197,061 (20,753) 177,020
Assets transferred in Spin-Off Transaction.......... (45,483) (45,483)
Minority interests' equity.......................... (1,706) (1,706)
Cash distributions declared......................... (10,258) (10,258)
Net income.......................................... 292 292
-------- -------- --------
BALANCE, DECEMBER 31, 1996............................ 149,872 (30,719) 119,865
Cash distributions declared......................... (12,246) (12,246)
Conversion to $.01 par value Common Stock........... 641 --
Series A Preferred stock issuance................... 11,147
Net income.......................................... 9,198 9,198
-------- -------- --------
BALANCE, DECEMBER 31, 1997............................ $150,513 $(33,767) $127,964
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 41
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996(*) 1995(*)
---- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income................................................ $ 9,198 $ 292 $ 3,538
Adjustments to reconcile net income to net cash flows
provided by operating activities:
Depreciation and amortization........................... 8,216 4,705 1,214
Amortization of deferred financing costs................ 335 93
Loss from unconsolidated entities....................... 314 216
Minority interest....................................... 3,344 2,159
Provision for possible loan losses...................... 129 4,450
Write-off of deferred acquisition expenses.............. 2,154
Loss on disposition of real estate/loans................ 183
Loss on disposal of REMIC's............................. 91
Changes in assets/liabilities that provided (used) cash:
Interest and accounts receivable...................... (2,134) (2,987) 125
Other assets.......................................... (4,907) (1,431) (7,165)
Transaction advances.................................. 2,471
Accounts payable and accrued expenses................. 2,660 7,603 (10)
--------- -------- --------
Total adjustments......................................... 7,828 15,203 (1,203)
--------- -------- --------
Cash Flows Provided By Operating Activities................. 17,026 15,495 2,335
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquired...................................... (152,492) (41,727) (1,006)
Advances to unconsolidated entities....................... (691) (773)
Satisfaction of mortgage loans receivable................. 3,468 3,025
Investment in mortgage loans receivable................... (256)
Amortization of REMIC's................................... 1,100
Investment of REMIC's..................................... (58,098)
Proceeds from REMIC's..................................... 56,908
--------- -------- --------
Cash Flow (Used In) Provided By Investing Activities........ (153,183) 18,976 (56,335)
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to shareholders........................ (11,967) (9,545) (9,117)
Cash distributions to operating partnership unit
holders................................................. (4,389) (1,860)
Payments of deferred financing costs...................... (2,335) (471)
Purchase of operating partnership units................... (1,417)
Principal repayments on mortgage debt..................... (1,915) (74,852)
Principal repayments on credit facility................... (58,594)
Net proceeds from preferred shares........................ 11,147
Net advances from affiliated entities..................... 272 2,625
Borrowings on debt........................................ 206,847 41,706
--------- -------- --------
Cash Flows Provided By (Used In) Financing Activities....... 137,649 (42,397) (9,117)
--------- -------- --------
Net Increase (Decrease) in Cash and Cash Equivalents........ 1,492 (7,926) (63,117)
Cash and Cash Equivalents, Beginning of Period.............. 3,541 11,467 74,584
--------- -------- --------
Cash and Cash Equivalents, End of Period.................... $ 5,033 $ 3,541 $ 11,467
========= ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash Paid for Interest During the Period.................. $ 13,358 $ 6,100
========= ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCIAL
ACTIVITIES:
Spin-off of net assets to Atlantic........................ $ 45,483
Acquisition of Ramco and other property acquisitions:
Debt assumed............................................ $ 5,867 176,478
Value of OP units issued................................ 43,835
Other liabilities assumed............................... 1,600
Interest and accounts receivable.......................... $ (733)
Allowance for possible loan losses........................ 5,076
Net mortgages receivable sold............................. (4,343)
</TABLE>
- -------------------------
(*) The 1996 and 1995 historical results consist of the operations of RPS Realty
Trust prior to the Spin-Off Transaction and the Ramco Acquisition, which was
effective on May 1, 1996 (Note 1).
See notes to consolidated financial statements.
F-5
<PAGE> 42
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT AMOUNTS)
1. RAMCO ACQUISITION AND SPIN-OFF TRANSACTION
RPS Realty Trust, a Massachusetts business trust, was formed on June 21,
1988 to be a diversified, growth-oriented real estate investment trust.
Effective May 1, 1996, RPS Realty Trust completed the acquisition of
substantially all of the shopping center and retail properties, as well as the
management organization and business operations of Ramco-Gershenson, Inc. and
its affiliates (the "Ramco Acquisition") and the spin-off of its wholly owned
subsidiary, Atlantic Realty Trust ("Atlantic"), a Maryland real estate
investment trust. In connection with the Ramco Acquisition, RPS Realty Trust's
name was changed to Ramco-Gershenson Properties Trust and a one-for-four reverse
stock split was effectuated as of the close of business on May 1, 1996.
Ramco-Gershenson Properties Trust is referred to herein as the "Company".
Concurrent with the Ramco Acquisition, the former owners of the Ramco
Properties (as defined below) and the shareholders of Ramco-Gershenson, Inc.
("Ramco") (collectively, the "Ramco Group") transferred to Ramco-Gershenson
Properties, L.P. (the "Operating Partnership") (i) their interests in 20
shopping center and retail properties (the "Ramco Properties") containing an
aggregate of approximately 4,826,000 square feet of total gross leasable area
("GLA"), of which approximately 3,520,000 square feet is owned by the Operating
Partnership, and the balance is owned by certain anchor tenants, (ii) 100% of
the non-voting common stock and 5% of the voting common stock in Ramco
(representing in excess of a 95% economic interest in Ramco), (iii) 50% general
partner interests in two partnerships which each own a shopping center, (iv)
rights in and/or options to acquire certain development land, (v) options to
acquire the Ramco Group's interest in six shopping center properties and (vi)
five outparcels.
In return for these transfers, the Ramco Group received 2,377,492 Units
("Units") of the Operating Partnership (representing an approximate 25% limited
partnership interest in the Operating Partnership). The acquisition was
accounted for using the purchase method. The purchase price was allocated to the
assets acquired and liabilities assumed based upon their estimated fair market
value. Units, which are convertible into common shares of beneficial interest in
the Company, as described below, were valued at approximately $16.50 per Unit
representing the average trading price of the Company's shares immediately
preceding and following the Ramco Acquisition. In addition, the Ramco Group
received 279,181 Units as a partial earnout relative to Jackson Crossing
Shopping Center (representing an approximate 2% limited partnership interest in
the Operating Partnership). The Ramco Group's 2,656,673 aggregate Units
represented an approximate 27% limited partnership interest in the Operating
Partnership. In connection with the transfer of the Ramco Properties, the
Company assumed approximately $176,556 of secured indebtedness on the Ramco
Properties. The aggregate interest in the Operating Partnership to be received
by the Ramco Group may be increased to a maximum of approximately 29% if certain
leasing objectives with respect to Jackson Crossing were fulfilled by March 31,
1997. The Company is in the process of evaluating the Jackson Crossing earnout
and determining appropriate due diligence procedures to be performed relative to
the proposed calculation. The potential impact of additional units is not
expected to be material. Subject to certain limitations, the interests in the
Operating Partnership are exchangeable into common shares of the Company on a
one-for-one basis. No Units have been exchanged to date.
Pursuant to the Ramco Acquisition, the Company transferred to the Operating
Partnership six properties containing an aggregate of approximately 931,000
square feet of GLA and $68,000 in cash in exchange for 7,123,105 Units of the
Operating Partnership (representing a 1% General Partnership interest, and a 72%
limited partnership interest after giving effect to the reduction of 2% for the
Ramco Group's earnout).
F-6
<PAGE> 43
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The transfer of the Company's net assets in exchange for Units was
accounted for as a reorganization of entities under common control. As such,
these assets and liabilities were transferred and accounted for at historical
cost in a manner similar to that of a pooling of interests.
Concurrently with the closing of the Ramco Acquisition, the Company's
former mortgage loan portfolio as well as certain of its former real estate
assets were transferred to Atlantic and the shares of Atlantic were distributed
to the Company's shareholders.
For the year ended December 31, 1996 non-recurring expenses, including
expenses related to the spin-off of Atlantic, have been charged to operations as
follows:
<TABLE>
<S> <C>
Severance and other termination costs....................... $4,672
Directors' and officers' insurance.......................... 1,150
Write-off of deferred acquisition expense................... 2,154
------
$7,976
======
</TABLE>
At December 31, 1996, the Company had a payable to its former Chairman and
President of $1,600, plus interest, representing the final installment of his
severance package. The final installment was paid in December 1997 under the
terms of an amended agreement.
In connection with the Ramco Acquisition, the due to related entities of
$1,325 and $1,053 at December 31, 1997 and 1996, respectively, represents
unreimbursed development costs of $565 and $568, respectively, and funds
collected on behalf of the Ramco Group relating to receivables prior to the
closing of $760 and $485, respectively.
In December 1997, with the approval of its shareholders, the Company
changed its state of organization from Massachusetts to Maryland by means of a
merger of the Massachusetts Trust into the Company and the conversion of each
outstanding share of beneficial interest in the Trust into a common share of
beneficial interest of the surviving Company. The par value of the common shares
was reduced from $.10 per share in 1996 to $.01 per share in 1997.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements for
the year ended December 31, 1997, and 1996 include the accounts of the Company
and its majority owned subsidiary, the Operating Partnership (73.5% owned by the
Company at December 31, 1997) and its wholly owned subsidiary, Ramco Properties
Associates Limited Partnership, a financing subsidiary. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The consolidated financial statements of the Company include the effects of
the Ramco Acquisition and the spin-off of Atlantic as well as the operations of
the Operating Partnership commencing May 1, 1996.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION -- Shopping center space is generally leased to retail
tenants under leases which are accounted for as operating leases. Minimum rents
are recognized on the straight-line method over the terms of the leases.
Percentage rents are recognized as earned on an accrual basis over the terms of
the leases. The leases also typically provide for tenant recoveries of common
area maintenance, real estate taxes and other operating expenses. These
recoveries are recognized as revenue in the period the applicable costs are
incurred.
F-7
<PAGE> 44
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
An allowance for doubtful accounts has been provided against the portion of
tenant accounts receivable which is estimated to be uncollectible. Accounts
receivable in the accompanying balance sheet is shown net of an allowance for
doubtful accounts of approximately $910 and $417 as of December 31, 1997 and
1996, respectively.
Until May 1, 1996, interest income on mortgage loans was recognized on the
accrual method during the periods in which the mortgage loans were outstanding.
Deferred interest, due at the maturity of the mortgage loan, was recognized as
income based on the interest method using the implicit rate of interest on the
mortgage loan. Contingent and additional contingent income, extension fee income
and prepayment premium income was recognized as cash was received.
Mortgage loans receivable at December 31, 1995 was $36,023. Payments of
$3,468 were received during 1996. Effective May 1, 1996 $32,555 of mortgage
loans receivable was spun-off to Atlantic Realty Trust (Note 1).
CASH AND CASH EQUIVALENTS -- The Company considers all highly liquid
investments with an original maturity of three months or less to be cash and
cash equivalents.
INCOME TAX STATUS -- The Company conducts its operations with the intent of
meeting the requirements applicable to a real estate investment trust ("REIT")
under Sections 856 through 860 of the Internal Revenue Code of 1986 as amended
(the "Code"). In order to maintain qualification as a real estate investment
trust, the REIT is required to distribute at least 95% of its taxable income to
shareholders and meet certain other asset and income tests as well as other
requirements. As a real estate investment trust, the REIT will generally not be
liable for federal corporate income taxes. Thus, no provision for federal income
taxes has been included in the accompanying financial statements.
REAL ESTATE -- Real estate assets are stated at cost. Costs incurred for
the acquisition, development, construction, and improvement of properties are
capitalized, including direct costs incurred by Ramco. Depreciation is computed
using the straight-line method over estimated useful lives. Expenditures for
improvements and construction allowances paid to tenants are capitalized and
amortized over the remaining life of the initial terms of each lease.
Maintenance and repairs are charged to expense when incurred.
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and Assets
to be Disposed of" which requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes indicate that the carrying amount of an
asset may not be recoverable. The provisions of this Statement were adopted as
of January 1, 1996 and the adoption of this Statement did not have an impact on
the carrying value of the real estate. The Company periodically evaluates the
carrying value of its long-lived assets.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS -- In February 1997, the FASB
issued SFAS No. 129, "Disclosure of Information about Capital Structure" which
establishes standards for disclosing information about an entity's capital
structure. This Statement was adopted as of December 31, 1997 and did not have a
material effect on the Company's financial statement presentation.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" which establishes standards for reporting and displaying comprehensive
income and its components in a full set of financial statements. The Statement
requires that all items that are required to be recognized under accounting
standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. The Statement is effective for the Company's financial statements
for the year ended December 31, 1998. The adoption of the Statement is not
expected to have a material effect on the Company's financial statement
presentation.
F-8
<PAGE> 45
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" which establishes standards for reporting
information about operating segments in financial statements. It also
establishes standards for disclosure about products and services, geographical
areas, and major customers. The Statement is effective for the Company's
financial statements for the year ending December 31, 1998. Management has not
determined the impact of the Statement on the Company's financial statements.
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED ENTITIES -- Consist of 50%
general partner interests in Kentwood Town Center ("Kentwood") and the
Southfield Plaza Expansion ("Southfield Plaza") and the Company's 100% interest
in the non-voting and 5% interest in the voting common stock of Ramco. These
investments are not unilaterally controlled and are therefore accounted for on
the equity method.
OTHER ASSETS -- Consist primarily of financing costs and leasing costs
which are amortized using the straight-line method over the terms of the
respective agreements.
MINORITY INTEREST -- Represents the Ramco Group's interest as a limited
partner in the Operating Partnership. Such interest is held in the form of Units
of the Operating Partnership which are exchangeable on an equivalent basis with
Common Shares of the Company. During the year ended December 31, 1997, the
Operating Partnership redeemed 88,530 Operating Partnership Units at $16.00 per
Unit. This redemption reduced the minority interest from approximately 27% to
26.5%.
DERIVATIVE FINANCIAL INSTRUMENTS -- In managing interest rate exposure on
certain floating rate debt, the Company at times enters into interest rate
protection agreements. When interest rates change, the differential to be paid
or received is accrued to interest expense and is recognized over the life of
the agreements. The costs of these transactions are deferred and amortized over
the contract period. The amortized costs of these transactions and interest
income and interest expense on these interest rate protection agreements are
included in interest expense.
EARNINGS PER COMMON SHARE -- In February 1997, the FASB issued SFAS No.
128, "Earnings per Share." This statement establishes standards for computing
and presenting earnings per share ("EPS") and applies to all entities with
publicly held common shares or potential common shares. This statement replaces
the presentation of primary EPS and fully diluted EPS with a presentation of
basic EPS and diluted EPS, respectively. Basic EPS excludes dilution and is
computed by dividing earnings available to common shareholders by the weighted
average number of common shares outstanding for the period. Similar to fully
diluted EPS, diluted EPS reflects the potential dilution of securities that
could share in the earnings. The provisions of this Statement were adopted as of
December 31, 1997 and the adoption of this Statement did not have an impact on
the Company's previously reported EPS amounts.
Basic earnings per share is computed based on income available to common
shareholders divided by the weighted average number of common shares outstanding
during the period. Net income has been reduced by $278 in 1997 for Preferred
Share dividends declared in order to determine income available to common
shareholders. Diluted earnings per share is computed based upon income available
to common shareholders while adding back the preferred share dividends, divided
by the weighted average number of dilutive potential shares. The dilutive
potential common shares include shares issuable under the treasury stock method
upon exercise of stock options amounting to 25,000 in 1997.
In 1997, conversion of the Series A Preferred Shares and the Operating
Partnership Units would have been anti-dilutive and, therefore, were not
considered in the computation of diluted earnings per share.
Earnings per common share and the weighted average number of shares
outstanding for 1995 have been adjusted to reflect the one-for-four reverse
stock split which occurred on May 1, 1996 (Note 1).
RECLASSIFICATIONS -- Certain reclassifications have been made to the 1996
and 1995 financial statements in order to conform with the 1997 presentation.
F-9
<PAGE> 46
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. REAL ESTATE
The Company's real estate at December 31, 1997 and December 31, 1996
consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
---- ----
<S> <C> <C>
Land..................................................... $ 57,075 $ 42,681
Buildings and improvements............................... 414,115 270,544
Construction in progress................................. 2,023 1,629
-------- --------
473,213 314,854
Less: accumulated depreciation........................... (14,919) (7,102)
-------- --------
Investment in real estate -- net......................... $458,294 $307,752
======== ========
</TABLE>
REAL ESTATE ACQUISITIONS
The Company has made the following property acquisitions (the "Property
Acquisitions") during the years ended December 31, 1997 and 1996 and the
consolidated financial statements include the effects of the Property
Acquisitions commencing with the date of acquisition (Note 12). All acquisitions
have been accounted for using the purchase method of accounting. The purchase
prices were allocated to the assets acquired and liabilities assumed based upon
their estimated fair market value.
<TABLE>
<CAPTION>
ACQUISITION DATE PROPERTY NAME PROPERTY LOCATION PURCHASE PRICE
- ---------------- ------------- ----------------- --------------
<S> <C> <C> <C>
August 1996 Taylor Plaza Taylor, Michigan $ 2,300
November 1996 Shoppes of Lakeland Lakeland, Florida $ 12,700
December 1996 Holcomb Center Alpharetta, Georgia $ 6,700
May 1997 Madison Center Madison Heights, Michigan $ 7,400
July 1997 Pelican Plaza Sarasota, Florida $ 7,200
October 1997 Southeast Portfolio Southeastern United States $124,500
December 1997 Village Lakes Land O' Lakes, Florida $ 8,600
</TABLE>
4. OTHER ASSETS
Other assets at December 31, 1997 and December 31, 1996 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1997 1996
---- ----
<S> <C> <C>
Leasing costs and other..................................... $5,845 $1,945
Deferred financing costs.................................... 2,806 471
Proposed development and acquisition costs.................. 1,214 205
------ ------
9,865 2,621
Less: accumulated amortization.............................. (966) (232)
------ ------
Other assets -- net....................................... $8,899 $2,389
====== ======
</TABLE>
F-10
<PAGE> 47
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. MORTGAGES AND NOTES PAYABLE
Mortgages and notes payable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1997 1996
---- ----
<S> <C> <C>
Fixed rate mortgages with interest rates ranging from 6.83%
to 8.75% due at various dates through 2007................ $162,030 $ 99,579
Floating rate mortgages at 75% of the rate of long-term
Capital A rated utility bonds, due January 1, 2010, plus
supplemental interest to equal LIBOR plus 200 basis
points. The effective rate at December 31, 1997 and 1996
was 7.325% and 7.59%, respectively........................ 7,000 7,000
Unsecured term loan, with an interest rate at LIBOR plus 275
basis points, due May 1, 1999. The effective rate at
December 31, 1997 was 8.75%............................... 45,000
Credit Facility, with an interest rate at LIBOR plus 162.5
basis points at December 31, 1997 and 175 basis points at
December 31, 1996, due May 1999, maximum available
borrowings of $110,000. The effective rate at December 31,
1997 and 1996, was 7.66% and 7.37%, respectively.......... 81,588 36,831
-------- --------
$295,618 $143,410
======== ========
</TABLE>
The mortgage notes are secured by mortgages on properties that have an
approximate net book value of $276,619 as of December 31, 1997. The Credit
Facility is secured by mortgages on various properties that have an approximate
net book value of $101,179 as of December 31, 1997.
During 1997, the Company modified its $50,000 Credit Facility in stages up
to $160,000 in order to provide funds for acquisitions and capital projects.
During November 1997, the Company closed on a $50,000 permanent mortgage loan.
The net proceeds were utilized to pay down the Credit Facility, and the
availability of the Credit Facility was reduced to $110,000. At December 31,
1997, $110,000 of the Credit Facility was available for borrowing, of which
$81,588 was outstanding. The interest rate payable under the Credit Facility and
the unsecured term loan, is between 137.5 and 162.5 basis points over LIBOR, and
between 250 and 275 basis points over LIBOR, respectively, depending on certain
debt ratios set forth in the agreements. At December 31, 1997, outstanding
letters of credit issued under the Credit Facility, not reflected in the
accompanying consolidated balance sheet, total approximately $836.
The Credit Facility contains financial covenants relating to debt to market
capitalization, minimum operating coverage ratios, and a minimum equity value.
As of December 31, 1997 the Company was in compliance with the covenant terms.
In July 1997, the Company executed an interest rate protection agreement,
at a cost of $29, to limit the Company's exposure to increases in interest rates
on its floating rate debt. The notional amount of the agreement was $75,000.
Based on rates currently in effect under the Company's Credit Facility, the
agreement caps the Company's interest rate on $75,000 of floating rate debt to
8.375%, with a floor of 7.125%, through May 1, 1999.
In December 1997, the Company executed an interest rate protection
agreement at no cost to limit the Company's exposure to increases in interest
rates on its floating rate debt. The notional amount of the agreement was
$50,000. Based on rates currently in effect under the Company's Credit Facility,
the agreement caps the Company's interest rate on $50,000 of floating rate debt
to 8.375%, with a floor of 7.225%, for the period May 1999 to October 2000. The
Company is exposed to credit loss in the event of non-performance by the other
parties to the interest rate swap agreements. However, the Company does not
anticipate non-performance by the counterparty.
F-11
<PAGE> 48
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table presents scheduled principal payments on mortgages and
notes payable as of December 31, 1997:
<TABLE>
<S> <C>
Year End December 31,
1998...................................................... $ 4,764
1999...................................................... 129,669
2000...................................................... 8,243
2001...................................................... 3,131
2002...................................................... 3,317
Thereafter................................................ 146,494
--------
Total..................................................... $295,618
========
</TABLE>
6. LEASES
Approximate future minimum rentals under noncancelable operating leases in
effect at December 31, 1997, assuming no new or renegotiated leases nor option
extensions on lease agreements, is as follows:
<TABLE>
<S> <C>
Year ended December 31,
1998...................................................... $ 47,245
1999...................................................... 42,218
2000...................................................... 37,722
2001...................................................... 33,800
2002...................................................... 30,267
Thereafter................................................ 208,001
--------
Total..................................................... $399,253
========
</TABLE>
F-12
<PAGE> 49
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. UNCONSOLIDATED ENTITIES
Condensed financial statement information of Ramco, Kentwood and Southfield
Plaza Expansion as of December 31, 1997 and 1996, and for the year ended
December 31, 1997 and the eight months ended December 31, 1996 are presented as
follows:
<TABLE>
<CAPTION>
1997
----------------------------------------
SOUTHFIELD 1996
RAMCO KENTWOOD PLAZA TOTAL TOTAL
----- -------- ---------- ----- -----
<S> <C> <C> <C> <C> <C>
ASSETS
Net Real Estate Assets......................... $ 1,860 $ 566 $ 2,426 $ 2,551
Other Assets................................... $4,588 514 122 5,224 5,480
------ ------- ------ ------- -------
Total Assets.............................. $4,588 $ 2,374 $ 688 $ 7,650 $ 8,031
====== ======= ====== ======= =======
LIABILITIES
Mortgage Notes Payable......................... $10,949 $1,593 $12,542 $12,682
Other Liabilities.............................. $1,399 266 46 1,711 1,730
------ ------- ------ ------- -------
Total Liabilities......................... 1,399 11,215 1,639 14,253 14,412
------ ------- ------ ------- -------
Owners' equity (deficit)....................... 3,189 (8,841) (951) (6,603) (6,381)
------ ------- ------ ------- -------
Total Liabilities and Owners' Equity
(Deficit).................................... $4,588 $ 2,374 $ 688 $ 7,650 $ 8,031
====== ======= ====== ======= =======
Company's Equity Investments in Unconsolidated
Entities..................................... $3,453 $ 956 $ 548 $ 4,957 $ 5,271
Advances to Unconsolidated Entities............ 1,464 1,464 773
------ ------- ------ ------- -------
Total Equity Investments in and Advances to
Unconsolidated Entities...................... $4,917 $ 956 $ 548 $ 6,421 $ 6,044
====== ======= ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
1997
-----------------------------------------
SOUTHFIELD 1996
RAMCO KENTWOOD PLAZA TOTAL TOTAL
----- -------- ---------- ----- -----
<S> <C> <C> <C> <C> <C>
REVENUES
Management Fees............................. $ 1,063 $ 1,063 $ 711
Leasing and Development Fees................ 392 392 131
Property Revenues........................... $1,805 $272 2,077 1,571
Other Revenues.............................. 496 496 417
Leasing/Development Cost Reimbursements..... 1,321 1,321
------- ------ ---- ------- -------
Total Revenues........................... 3,272 1,805 272 5,349 2,830
------- ------ ---- ------- -------
EXPENSES
Employee Expenses........................... 4,079 4,079 2,187
Office and Other Expenses................... 1,190 1,190 630
Property Expenses........................... 1,463 199 1,662 1,307
Depreciation and amortization............... 221 221 45
------- ------ ---- ------- -------
Total Expenses........................... 5,490 1,463 199 7,152 4,169
------- ------ ---- ------- -------
Excess Revenues Over Expenses................. (2,218) 342 73 (1,803) (1,339)
Cost Reimbursement From Operating
Partnership................................. 2,218 2,218 1,603
------- ------ ---- ------- -------
Income........................................ $ 0 $ 342 $ 73 $ 415 $ 264
======= ====== ==== ======= =======
Company's Share of Income..................... $ 0 $ 171 $ 37 $ 208 $ 132
======= ====== ==== ======= =======
</TABLE>
F-13
<PAGE> 50
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company's share of the unconsolidated entities' income of $208 and
$132, for the year ended December 31, 1997 and the eight months ended December
31, 1996, respectively, was reduced by $522 and $348, respectively, which
represents depreciation and amortization adjustments arising from the Company's
net basis adjustments in the unconsolidated entities' assets. These adjustments
result in a net loss of $314 and $216 from unconsolidated entities for the year
ended December 31, 1997 and the eight months ended December 31, 1996.
8. COMMITMENTS AND CONTINGENCIES
Substantially all of the properties have been subjected to Phase I
environmental audits. Such audits have not revealed nor is management aware of
any environmental liability that management believes would have a material
adverse impact on the Company's financial position or results of operations.
Management is unaware of any instances in which it would incur significant
environmental costs if any or all properties were sold, disposed of or
abandoned.
During the third quarter of 1994, the Company held more than 25% of the
value of its gross assets in overnight Treasury Bill reverse repurchase
transactions which the United States Internal Revenue Service (the "IRS") may
view as non-qualifying assets for the purposes of satisfying an asset
qualification test applicable to REITs, based on a Revenue Ruling published in
1977 (the "Asset Issue"). The Company has requested that the IRS enter into a
closing agreement with the Company that the Asset Issue will not impact the
Company's status as a REIT. The IRS has deferred any action relating to the
Asset Issue pending the further examination of the Company's 1991-1995 tax
returns (the "Tax Audit"). Based on developments in the law which have occurred
since 1977, the Company's Tax Counsel, Battle Fowler LLP, has rendered an
opinion that the Company's investment in Treasury Bill repurchase obligations
would not adversely affect its REIT status. However, such opinion is not binding
upon the IRS.
In connection with the spin-off of Atlantic, Atlantic has assumed all
liability arising out of the Tax Audit and the Asset Issue, including
liabilities for interest and penalties and attorney fees relating thereto. In
connection with the assumption of such potential liabilities, Atlantic and the
Company have entered into a tax agreement which provides that the Company (under
the direction of its Continuing Trustees), and not Atlantic, will control,
conduct and effect the settlement of any tax claims against the Company relating
to the Tax Audit and the Asset Issue. Accordingly, Atlantic will not have any
control as to the timing of the resolution or disposition of any such claims.
The Company and Atlantic also received an opinion from Special Tax Counsel,
Wolf, Block, Schorr and Solis-Cohen LLP, that, to the extent there is a
deficiency in the Company's taxable income arising out of the IRS examination
and provided the Company timely makes a deficiency dividend (i.e, declares and
pays a distribution which is permitted to relate back to the year for which each
deficiency was determined to satisfy the requirement that the REIT distribute 95
percent of its taxable income), the classification of the Company as a REIT for
the taxable years under examination would not be affected. Under the tax
agreement referred to above, Atlantic has agreed to reimburse the Company for
the amount of any deficiency dividend so made. If notwithstanding the
above-described opinions of legal counsel, the IRS successfully challenged the
status of the Company as a REIT, its status could be adversely affected. If the
Company lost its status as a REIT, the Company believes that it will be able to
re-elect REIT status for the taxable year beginning January 1, 1999.
Although the IRS agent conducting the examination has not issued his final
examination report with respect to the tax issues raised in the Tax Audit,
including the Asset Issue (collectively, the "Tax Issues"), the Company has
received a preliminary draft of the examining agent's report. The draft report
sets forth a number of positions which the examining agent has taken with
respect to the Company's taxes for the years that are subject to the Tax Audit,
which the Company believes are not consistent with applicable law and
regulations of the IRS. If the final report were issued in its current form, the
liability of Atlantic to indemnify the Company may be substantial. The
Continuing Trustees of the Company are engaged in ongoing
F-14
<PAGE> 51
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
discussions with the examining agent and his supervisors with regard to the
positions set forth in the draft report. There can be no assurance that, after
conclusion of discussions with such agent and his supervisors regarding the
draft report, the examining agent will not issue the proposed report in the form
previously delivered to the Company (or another form). Issuance of the revenue
agent's report constitutes only the first step in the IRS administrative process
for determining whether there is any deficiency in the Company's tax liability
for the years at issue and any adverse determination by the examining agent is
subject to administrative appeal within the IRS and, thereafter, to judicial
review. As noted above, pursuant to the tax agreement between Atlantic and the
Company, Atlantic has assumed all liability arising out of the Tax Audit and the
Tax Issues. Based on the amount of Atlantic's assets, as disclosed in its Annual
Report on Form 10-K for the year ended December 31, 1997, the Company does not
believe that the ultimate resolution of the Tax Issues will have a material
adverse effect on the financial position, results of operations or cash flows of
the Company.
During July 1997 Montgomery Ward ("Wards") a tenant at three of the
Company's properties (Tel-Twelve Mall, Clinton Valley Mall and Shoppes of
Lakeland), filed for protection under Chapter 11 of the Bankruptcy Code. In
October 1997, Wards issued a list of anticipated store closings which included
the stores at the Company's Clinton Valley Mall. This location consists of a
101,200 square foot department store and a 7,480 square foot TBA store (Tires,
Batteries and Automotive). The Company was notified in March 1998 that Wards
intends to reject the lease. The Company is pursuing replacement tenants to
lease the space. On an annual basis, Wards pays approximately $1,000 in base
rent, operating and real estate tax expense reimbursements for the Clinton
Valley Mall.
9. SHAREHOLDERS' EQUITY
Series A Convertible Preferred Shares -- In October 1997, the Company
entered into an agreement with certain clients advised by Morgan Stanley Asset
Management, Inc. ("MSAM"), and Kimco Realty Corporation ("Kimco") pursuant to
which such entities agreed to invest up to an aggregate of $35,000 in the
Operating Partnership. The MSAM clients and Kimco initially purchased Operating
Partnership Preferred Units which, after shareholder approval in December 1997,
were converted into the Company's Series A Convertible Preferred Shares ("Series
A Preferred Series") and, ultimately, may be converted into Common Shares. The
initial investments of $11,667 were made in October 1997.
The equity investment involves the issuance of up to 1.4 million Series A
Preferred Shares at a price of $25.00 per share. The remaining commitment of
$23,333 may be drawn by the Company over a one-year period and may be used to
help fund strategic acquisitions, retenanting or redevelopment activities, or to
reduce outstanding debt. The dividend rate on the Series A Preferred Shares is
expected to equal that presently being paid to the Company's common
shareholders.
After the closing of this transaction, the MSAM clients are required to
purchase 19.4% of the first $50,000 in a follow-on public offering of the
Company's Shares at the offering price less the underwriter's fees, commissions,
and discounts per share. Upon consummation of such public offering, all
outstanding Series A Preferred Shares will be exchanged into Common Shares of
the Company, at a conversion price of $17.50 per share, which conversion price
is subject to adjustment in certain circumstances.
The Series A Preferred Shares were issued on December 31, 1997. The Series
A Preferred Shares rank senior to the Common Shares with respect to dividends
and upon liquidation, dissolution or winding up of the Company. The Series A
Preferred Shares are entitled to receive cumulative dividends, payable quarterly
in arrears, at an annual rate equal to the greater of (i) 9.60% of the stated
value ($25.00 per share) and (ii) the dividend rate expressed as an annual rate
which is implicit in the amount of dividends actually paid with respect to
Common Shares, based on a $17.50 per share price for the Common Shares,
determined as of each quarterly dividend payment date (the "Payable Component").
F-15
<PAGE> 52
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Payable Component will be increased by an amount equal to an annual
rate of 3% under certain circumstances. The holders of Series A Preferred Shares
have the right to vote on all matters which holders of Common Shares are
entitled to vote upon on an as converted basis, as though such holders own
Common Shares. In addition, the Trust will not be permitted to engage in or
effect certain types of transactions or actions without the approval of holders
of at least 51% of the outstanding Series A Preferred Shares voting separately
as a class. The conversion price for Common Shares of $17.50 contain
anti-dilution rights and will be adjusted to reflect the effects of stock
dividends, distributions, subdivisions or combination.
The Series A Preferred Shares are subject to mandatory conversion on the
date which is the earlier of a qualified underwritten offering or the maturity
date which is on October 3, 2002. At the option of the holders, the Series A
Preferred Shares will be convertible in whole or in part into Common Shares at
the stated value plus unpaid dividends prior to the maturity date or qualified
underwritten offering date. The maturity date will be accelerated and all Series
A Preferred Shares will be redeemed in cash at the stated value plus unpaid
dividends in the event that it is determined by the IRS that it will, for any
period, deny to the Company the tax benefits associated with REIT qualification
and either or both of the following circumstances arise: (i) the Company does
not receive (within a period of 60 days of the date established by the IRS as
the date of which the deficiency dividend or other additional taxes are required
to be paid) the full indemnity payment for such loss of tax benefits that the
Company is entitled to receive from Atlantic pursuant to the Tax Agreement with
Atlantic, or (ii) counsel reasonably satisfactory to MSAM is unable to provide
to the holders of the Series A Preferred Shares affirmative advice that,
commencing not later than with the taxable year ending December 31, 1999, the
Company will, notwithstanding such determination by the IRS, be able to elect to
be qualified and taxed as a REIT under the Code, and its proposed method of
operation will enable it so to qualify for following years.
Shareholder Rights Plan -- On December 6, 1989, the Company's Board of
Trustees (the "Board") declared a dividend distribution of one share purchase
right to each outstanding share of beneficial interest, $.10 par value per
share, to shareholders of record at the close of business on December 18, 1989.
These rights may be exercised to purchase one share of beneficial interest at a
price of $80 per share, subject to adjustment, under certain specified
conditions at the Board's option. These rights are not exercisable or
transferable apart from the shares of beneficial interest until the distribution
date, which is the earlier of (i) 10 days following a public announcement that
any person or group has acquired beneficial ownership of 20 percent or more of
the outstanding shares (the "Share Acquisition Date"), (ii) 10 days following
the commencement of a tender offer or exchange offer that would result in a
person or group beneficially owning 20 percent or more of the outstanding shares
or (iii) the day the Board determines that any person or group has become the
beneficial owner of an amount of shares the Board determines to be substantial
(which amount shall in no event be less than 10 percent of the shares
outstanding) and the Board shall determine that such beneficial ownership is
intended to cause the Company to repurchase the shares owned by such person or
group or is reasonably likely to cause a material adverse impact on the
Company's business. The rights, which do not have voting rights, expire on
December 6, 1999 and may be redeemed by the Company at a price of $.01 per right
at any time until rights expire or, if earlier, 10 days following the Share
Acquisition Date.
Upon the occurrence of certain events following the distribution date, the
holder of each right will have the right to receive, upon exercise, shares (or,
in certain circumstances, cash, property or other securities of the Company)
having a value equal to two times the exercise price of the right. In certain
events in which the Company is not a surviving entity or has transferred 50
percent or more of its assets or earnings power, the rights will entitle the
holder, upon exercise, to receive equity securities of the acquiring company
having a value equal to two times the exercise price of the right.
Dividend Reinvestment Plan -- The Company has a dividend reinvestment plan
that allows for participating shareholders to have their dividend distributions
automatically invested in additional shares of beneficial interest in the
Company based on the average price of the shares acquired for the distribution.
F-16
<PAGE> 53
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. STOCK OPTION PLANS
1989 Trustees' Stock Option Plan -- On April 4, 1989, the Board approved
the establishment of the 1989 Trustees' Stock Option Plan (the "Former Trustees'
Plan") which permitted the Company to grant options to purchase up to 350,000
shares of beneficial interest in the Company at the fair market value at the
date of grant. The Company had 350,000 options outstanding under the Former
Trustees' Plan at December 31, 1995. In connection with the Ramco Acquisition
and Spin-off Transaction, all Trustees who had been granted options under the
Former Trustees' Plan surrendered their options to the Company without
consideration.
1989 Employee's Stock Option Plan -- On June 21, 1989, the Board approved
the establishment of the 1989 Employee Stock Option Plan which permitted the
Company to grant options to purchase up to 1,550,000 shares of beneficial
interest in the Company at the fair market value at the date of grant. On
December 6, 1989, 1,355,000 options were granted. Option shares in the amount of
125,000 were purchased from certain employees prior to the closing of the Ramco
Acquisition and Spin-off Transaction for $.50 per share and the balance of the
options were canceled.
1996 Share Option Plan -- Concurrent with the Ramco Acquisition, the
Company adopted the 1996 Share Option Plan (the "Plan") to enable its employees
to participate in the ownership of the Company. The Plan is designed to attract
and retain executive officers and other key employees of the Company, to
encourage a proprietary interest in the Company, and to provide incentives to
employees.
Under the Plan, executive officers and employees of the Company may be
granted options to acquire shares of beneficial interest of the Company
("Options"). The Plan is administered by the independent trustee members of the
Compensation Committee of the Board of Trustees, who are authorized to select
the executive officers and other employees to whom Options are to be granted. No
member of the compensation committee is eligible to participate in the Plan.
The compensation committee, at its discretion, determines the number of
Options to be granted. At June 30, 1996, the Plan provided for Options to
purchase up to 855,000 shares of beneficial interest of the Company. However, no
more than 50,000 share options may be granted to any one individual in any
calendar year. Share options issued under the Plan allow for the purchase of
shares of beneficial interest at the fair market value of the shares at the date
of grant. Stock options granted to officers and employees under the Plan vest
and become exercisable in installments on each of the first three anniversaries
of the date of grant and expire ten years after the date of grant.
In connection with the Ramco Acquisition and the spin-off of Atlantic, the
Company granted certain principals of the Ramco Group, options to purchase
120,000 shares at an exercise price of $16.00 per share.
1997 Non-Employee Trustee Stock Option Plan -- On April 27, 1997, the Board
approved the establishment of the 1997 Non-Employee Trustee Stock Option Plan
(the "Trustees' Plan") which permits the Company to grant non-qualified options
to purchase up to 100,000 common shares of beneficial interest in the Company at
the fair market value at the date of grant. Each Non-Employee Trustee will be
granted an option to purchase 2,000 shares on the Company's annual meeting date.
There were 14,000 options issued effective June 10, 1997. The Trustees' Plan is
designed to provide Company participants with an increased incentive to make
contributions to the long-term performance and growth of the Company and its
subsidiaries, to join the interests of participants with the interest of
shareholders of the Company, and to facilitate attracting qualified independent
trustees. Stock options granted to participants vest and become exercisable in
installments on each of the first two anniversaries of the date of grant and
expire ten years after the date of grant.
F-17
<PAGE> 54
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Information relating to the 1996 Share Option Plan and the 1997
Non-Employee Trustee Stock Option Plan (the "Plans") from inception through
December 31, 1997 is as follows:
<TABLE>
<CAPTION>
NUMBER WEIGHTED AVERAGE
OF SHARES EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Granted since inception............................... 183,200 $16.04
Exercised............................................. -- --
Cancelled or forfeited................................ -- --
------- ------
Outstanding at December 31, 1996...................... 183,200 $16.04
Granted............................................... 92,813 $17.69
Exercised............................................. -- --
Cancelled or forfeited................................ (3,051) $16.56
------- ------
Outstanding at December 31, 1997...................... 272,962 $16.60
======= ======
Shares exercisable at December 31, 1996............... -- --
======= ======
Shares exercisable at December 31, 1997............... 60,050 $16.03
======= ======
</TABLE>
At December 31, 1997, the range of exercise prices and weighted average
remaining contractual life of outstanding options was $15.44 - $17.87 and 8.8
years, respectively.
The fair value of options granted during 1997 and 1996 was estimated to be
negligible on the date of grant. All options granted were non-qualified share
options. This was determined using the Black-Scholes option pricing model with
the following weighted average assumptions used:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Risk-free interest rate.................................... 6.38% 6.53%
Dividend Yield............................................. 9.16% 10.21%
Volatility................................................. 15.80% 10.00%
Weighted Average expected life............................. 5.00 6.00
</TABLE>
The Company measures compensation in accordance with Accounting Principles
Board Opinion No. 25 under which no compensation cost has been recognized for
stock option awards. There is no material difference if compensation cost had
been calculated consistent with the provisions of Statement of Financial
Standards No. 123, "Accounting for Stock Based Compensation". Therefore, there
would be no change in the Company's pro forma net income and earnings per share
for 1997 and 1996 (Note 12).
11. FINANCIAL INSTRUMENTS
Statements of Financial Accounting Standards No. 107 requires disclosure
about fair value of all financial instruments. The carrying values of cash and
cash equivalents, receivables, accounts payable and accrued expenses are
reasonable estimates of their fair values because of the short maturity of these
financial instruments. As of December 31, 1997 and 1996 the mortgages and notes
payable amounts are also a reasonable estimate of their fair value because their
interest rates approximate the current borrowing rates available to the Company.
The fair values of the Company's interest rate protection agreements
represent the estimated amount the Company would receive or pay to terminate the
financial instruments at December 31, 1997. At December 31, 1997 the fair value
of the cap agreements was $187 and the fair value of the floor agreements was
($296).
F-18
<PAGE> 55
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following pro forma consolidated statements of operations have been
presented as if (i) the Ramco Acquisition, the Property Acquisitions, and the
spin-off of Atlantic had occurred on January 1, 1996, and (ii) the Company had
qualified as a REIT, distributed all of its taxable income and, therefore had
incurred no tax expense during the periods. In management's opinion, all
adjustments necessary to reflect the Ramco Acquisition, the Property
Acquisitions and the spin-off of Atlantic have been made. The pro forma
consolidated statements of operations are not necessarily indicative of what the
actual results of operations of the Company would have been had such
transactions actually occurred as of January 1, 1996, nor do they purport to
represent the results of the Company for future periods.
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
REVENUES
Minimum rents............................................. $51,714 $49,939
Percentage rents.......................................... 1,620 1,269
Recoveries from tenants................................... 19,794 20,420
Interest and other income................................. 855 767
------- -------
Total revenues.............................................. 73,983 72,395
EXPENSES
Real estate taxes......................................... 7,426 8,037
Recoverable operating expenses............................ 12,346 12,549
Depreciation and amortization............................. 10,949 10,160
Other operating........................................... 1,119 1,205
General and administrative................................ 5,085 4,769
Interest expense.......................................... 24,183 23,240
Spin-off and other expenses............................... -- 7,976
------- -------
Total expenses.............................................. 61,108 67,936
------- -------
Operating income............................................ 12,875 4,459
Loss from unconsolidated entities........................... 314 314
------- -------
Income before minority interest............................. 12,561 4,145
Minority interest........................................... 3,350 3,209
------- -------
Net income.................................................. $ 9,211 $ 936
======= =======
Basic earnings per share.................................... $1.25 $.13
======= =======
Diluted earnings per share.................................. $1.25 $.13
======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic..................................................... 7,123 7,123
======= =======
Diluted................................................... 7,148 7,123
======= =======
</TABLE>
F-19
<PAGE> 56
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
BASIC EARNINGS
REVENUES NET INCOME PER SHARE:
-------- ---------- --------------
<S> <C> <C> <C>
1997
Quarter ended:
March 31 $13,819 $ 2,344 $ 0.33
June 30 $13,931 $ 2,251 $ 0.32
September 30 $14,461 $ 2,287 $ 0.32
December 31 $17,033 $ 2,316 $ 0.29
</TABLE>
<TABLE>
<CAPTION>
NET INCOME BASIC EARNINGS(LOSS)
REVENUES (LOSS) PER SHARE:
-------- ---------- --------------------
<S> <C> <C> <C>
1996
Quarter ended:
March 31 $ 4,262 $ 536 $ 0.08
June 30 $ 9,676 $(4,691) $(0.66)
September 30 $12,737 $ 2,281 $ 0.32
December 31 $13,838 $ 2,166 $ 0.30
</TABLE>
During 1996, the Company recorded spin-off and other related expenses of
$1,657, $6,276, and $43 in the first, second and third quarters respectively.
These non-recurring costs were primarily a result of the employee severance and
bonus expenses, the cost of run-off directors' and officers' liability
insurance, and the write-off of deferred acquisition costs related to the
spin-off of Atlantic. There were no corresponding costs for 1997.
F-20
<PAGE> 57
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. REAL ESTATE ASSETS
Net investment in real estate assets at December 31, 1997 consisted of the
following:
<TABLE>
<CAPTION>
INITIAL COST
TO COMPANY
-----------------------
YEAR YEAR YEAR BUILDING &
DESCRIPTION AND LOCATION OF THE PROPERTY CONSTRUCTED(A) ACQUIRED RENOVATED LAND IMPROVEMENTS
- ---------------------------------------- -------------- -------- --------- ---- ------------
<S> <C> <C> <C> <C> <C> <C>
Athens Town Center......................... Athens, Alabama 1997 $ 854 $ 7,695
Cox Creek Plaza............................ Florence, Alabama 1997 589 5,336
Crestview Corners.......................... Crestview, Florida 1997 400 3,602
Shoppes of Lakeland........................ Lakeland, Florida 1996 1,279 11,543
Lantana Plaza.............................. Lantana, Florida 1993 2,590 2,600
Naples Towne Center........................ Naples, Florida 1983 1996 218 1,964
Pelican Plaza.............................. Sarasota, Florida 1997 710 6,404
Sunshine Plaza............................. Tamarac, Florida 1991 1,748 7,452
Village Lakes.............................. Land O' Lakes, Florida 1997 862 7,768
Holcomb Center............................. Alpharetta, Georgia 1996 658 5,953
Indian Hills............................... Calhoun, Georgia 1997 706 6,355
Mays Crossing.............................. Stockbridge, Georgia 1997 725 6,532
Crofton Plaza.............................. Crofton, Maryland 1991 3,201 6,499
Clinton Valley Mall........................ Sterling Heights,
Michigan 1979 1996 1993 1,101 9,910
Clinton Valley Strip Center................ Sterling Heights,
Michigan 1979 1996 399 3,588
Eastridge Commons.......................... Flint, Michigan 1990 1996 1997 1,086 9,775
Edgewood Towne Center...................... Lansing, Michigan 1990 1996 1992 665 5,981
Ferndale Plaza............................. Ferndale, Michigan 1984 1996 265 2,388
Fraser Shopping Center..................... Fraser, Michigan 1996 363 3,263
Jackson Crossing........................... Jackson, Michigan 1996 1996 2,249 20,237
Jackson West............................... Jackson, Michigan 1996 1996 1997 2,806 6,270
Lake Orion Plaza........................... Lake Orion, Michigan 1977 1996 470 4,234
Madison Center............................. Madison Heights,
Michigan 1997 817 7,366
New Towne Plaza............................ Canton, Michigan 1976 1996 1993 817 7,354
Oak Brook Square........................... Flint, Michigan 1996 955 8,591
Roseville Plaza............................ Roseville, Michigan 1996 1994 1,466 13,195
Southfield Plaza........................... Southfield, Michigan 1996 1983 1,121 10,090
Taylor Plaza............................... Taylor, Michigan 1996 400 1,930
Tel-Twelve Mall............................ Southfield, Michigan 1968 1996 1996 4,777 43,181
West Oaks I................................ Novi, Michigan 1981 1996 1997-98 0 6,304
West Oaks II............................... Novi, Michigan 1987 1996 1,391 12,519
<CAPTION>
GROSS COST AT
END OF PERIOD(B)
SUBSEQUENT ----------------
CAPITALIZED BUILDING & ACCUMULATED
DESCRIPTION AND LOCATION OF THE PROPERTY COSTS LAND IMPROVEMENTS TOTAL DEPRECIATION(C) ENCUMBRANCES
- ---------------------------------------- ----------- ---- ------------ ----- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Athens Town Center......................... $ 0 $ 854 $ 7,695 $ 8,549 $ 32 (d)
Cox Creek Plaza............................ 0 589 5,336 5,925 22 (d)
Crestview Corners.......................... 0 400 3,602 4,002 15 (d)
Shoppes of Lakeland........................ 108 1,279 11,651 12,930 336 (d)
Lantana Plaza.............................. 503 2,590 3,103 5,693 370 (d)
Naples Towne Center........................ 6 218 1,970 2,188 83 (d)
Pelican Plaza.............................. 5 710 6,409 7,119 73 (d)
Sunshine Plaza............................. 784 1,748 8,236 9,984 1,196 (d)
Village Lakes.............................. 0 862 7,768 8,630 0
Holcomb Center............................. 31 658 5,984 6,642 158 (d)
Indian Hills............................... 0 706 6,355 7,061 26 (d)
Mays Crossing.............................. 0 725 6,532 7,257 27 (d)
Crofton Plaza.............................. 1,054 3,201 7,553 10,754 1,190 (d)
Clinton Valley Mall........................
123 1,101 10,033 11,134 417 (e)
Clinton Valley Strip Center................
50 399 3,638 4,037 153 (d)
Eastridge Commons.......................... 2,052 1,086 11,827 12,913 488 (e)
Edgewood Towne Center...................... 4 665 5,985 6,650 250 (d)
Ferndale Plaza............................. 11 265 2,399 2,664 102 (d)
Fraser Shopping Center..................... 74 363 3,337 3,700 143 (e)
Jackson Crossing........................... 391 2,249 20,628 22,877 893 (e)
Jackson West............................... 4,879 2,806 11,149 13,955 405 $8,500
Lake Orion Plaza........................... 73 470 4,307 4,777 181 (e)
Madison Center.............................
2 817 7,368 8,185 112 (d)
New Towne Plaza............................ 170 817 7,524 8,341 309 (e)
Oak Brook Square........................... 3 955 8,594 9,549 358 7,000
Roseville Plaza............................ 290 1,466 13,485 14,951 560 (e)
Southfield Plaza........................... 93 1,121 10,183 11,304 424 (e)
Taylor Plaza............................... 12 400 1,942 2,342 67 (d)
Tel-Twelve Mall............................ 2,089 4,777 45,270 50,047 1,876 (e)
West Oaks I................................ 1,314 0 7,618 7,618 260 4,288
West Oaks II............................... 69 1,391 12,588 13,979 530 7,976
</TABLE>
F-21
<PAGE> 58
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
INITIAL COST
TO COMPANY
-----------------------
YEAR YEAR YEAR BUILDING &
DESCRIPTION AND LOCATION OF THE PROPERTY CONSTRUCTED(A) ACQUIRED RENOVATED LAND IMPROVEMENTS
- ---------------------------------------- -------------- -------- --------- ---- ------------
<S> <C> <C> <C> <C> <C> <C>
Chester Springs............................ Chester, New Jersey 1994 1997-98 4,931 13,331
Toys 'R' Us................................ Commack, New York 1992 1,160 1,740
Trinity Corners............................ Pound Ridge, New York 1992 1,250 1,250
Hickory Corners............................ Hickory, North Carolina 1997 798 7,192
Holly Springs Plaza........................ Franklin, North
Carolina 1997 829 7,470
Ridgeview Crossing......................... Elkin, North Carolina 1997 1,054 9,494
OfficeMax Center........................... Toledo, Ohio 1994 1996 227 2,042
Spring Meadows Place....................... Springfield Twp, Ohio 1987 1996 1997 1,662 14,959
Troy Towne Center.......................... Troy, Ohio 1990 1996 1996 930 8,372
Edgewood Square............................ North Augusta, South
Carolina 1997 1,358 12,229
Taylors Square............................. Greenville, South
Carolina 1997 1,581 14,237
Cumberland Gallery......................... New Tazewell, Tennessee 1997 327 2,944
Highland Square............................ Crossville, Tennessee 1997 913 8,189
Northwest Crossing......................... Knoxville, Tennessee 1997 1,284 11,566
Stonegate Plaza............................ Kingsport, Tennessee 1997 606 5,454
Tellico Plaza.............................. Lenoir City, Tennessee 1997 611 5,510
West Allis Towne Centre.................... West Allis, Wisconsin 1987 1996 1,866 16,789
-------- --------
Totals $ 57,075 $398,647
======== ========
<CAPTION>
GROSS COST AT
END OF PERIOD(B)
SUBSEQUENT ----------------
CAPITALIZED BUILDING & ACCUMULATED
DESCRIPTION AND LOCATION OF THE PROPERTY COSTS LAND IMPROVEMENTS TOTAL DEPRECIATION(C) ENCUMBRANCES
- ---------------------------------------- ----------- ---- ------------ ----- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Chester Springs............................ 1,416 4,931 14,747 19,678 1,263 (d)
Toys 'R' Us................................ 2 1,160 1,742 2,902 219 (d)
Trinity Corners............................ 514 1,250 1,764 3,014 215 (d)
Hickory Corners............................ 0 798 7,192 7,990 30 (d)
Holly Springs Plaza........................
0 829 7,470 8,299 31 (d)
Ridgeview Crossing......................... 0 1,054 9,494 10,548 40 (e)
OfficeMax Center........................... 0 227 2,042 2,269 85 (d)
Spring Meadows Place....................... 486 1,662 15,445 17,107 645 8,827
Troy Towne Center.......................... 881 930 9,253 10,183 385 (e)
Edgewood Square............................
0 1,358 12,229 13,587 51 (d)
Taylors Square.............................
0 1,581 14,237 15,818 59 (e)
Cumberland Gallery......................... 0 327 2,944 3,271 12 (d)
Highland Square............................ 0 913 8,189 9,102 34 5,826
Northwest Crossing......................... 0 1,284 11,566 12,850 48 (e)
Stonegate Plaza............................ 0 606 5,454 6,060 23 (e)
Tellico Plaza.............................. 0 611 5,510 6,121 23 (d)
West Allis Towne Centre.................... 2 1,866 16,791 18,657 700 (e)
------- ------- -------- -------- -------
$17,491 $57,075 $416,138 $473,213 $14,919
======= ======= ======== ======== =======
</TABLE>
- -------------------------
(a) If constructed by a predecessor of the Company.
(b) The aggregate cost of land and buildings and improvements for federal income
tax purposes is approximately $445 million.
(c) Depreciation for all properties is computed over the useful life which is
generally forty years.
(d) The property is pledged as collateral on the secured line of credit.
(e) The property is pledged as collateral on secured mortgages.
F-22
<PAGE> 59
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The changes in real estate assets and accumulated depreciation for the
years ended December 31, 1997, and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
REAL ESTATE ASSETS
Balance at beginning of period.............................. $314,854 $ 58,046
Acquisitions................................................ 150,368 257,605
Capital Improvements........................................ 7,991 6,252
Spin-off of Assets to Atlantic.............................. (7,049)
-------- --------
Balance at end of period.................................... $473,213 $314,854
======== ========
ACCUMULATED DEPRECIATION
Balance at beginning of period.............................. $ 7,102 $ 2,747
Depreciation................................................ 7,817 4,567
Spin-off of assets to Atlantic.............................. (212)
-------- --------
Balance at end of period.................................... $ 14,919 $ 7,102
======== ========
</TABLE>
F-23
<PAGE> 60
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
3.1 Amended and Restated Declaration of Trust of the Company,
dated October 2, 1997.
3.2 Articles Supplementary to Amended and Restated Declaration
of Trust, dated October 2, 1997.
3.3 By-Laws of the Company adopted October 2, 1997.
4 Rights Agreement dated as of December 6, 1989 between the
Company and American Stock Transfer & Trust Company,
incorporated by reference to Exhibit 1 to the Company's
Registration Statement on Form 8-A, File No. 1-10093, for
the registration of Share Purchase Rights.
10.1 Pledge Agreement, dated as of May 10, 1996, among the
Company, Dennis Gershenson, Joel Gershenson, Bruce
Gershenson, Richard Gershenson, Michael A. Ward, Michael A.
Ward U/T/A dated 2/22/88, as amended, and the holders of
interest in Ramco-Gershenson Properties, L.P., a Delaware
limited partnership, incorporated by reference to Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 1996.
10.2 Registration Rights Agreement, dated as of May 10, 1996,
among the Company, Dennis Gershenson, Joel Gershenson, Bruce
Gershenson, Richard Gershenson, Michael A. Ward, Michael A.
Ward U/T/A dated 2/22/77, as amended, and each of the
Persons set forth on Exhibit A attached thereto,
incorporated by reference to Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1996.
10.3 Exchange Rights Agreement, dated as of May 10, 1996, by and
among the Company and each of the Persons whose names are
set forth on Exhibit A attached thereto, incorporated by
reference to Exhibit 10.3 to the Company' Quarterly Report
on Form 10-Q of the period ended June 30, 1996.
10.4 1996 Share Option Plan of the Company, incorporated by
reference to Exhibit 10.4 to the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1996.
10.5 Letter Agreement, dated May 10, 1996, among the Persons and
Entities party to the Amended and Restated Master Agreement,
dated as of December 27, 1995, as amended, incorporated by
reference to Exhibit 10.5 to the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1996.
10.6 Promissory Note payable by Atlantic Realty Trust in favor of
the Company in the principal face amount of $5,500,000 due
November 9, 1997, incorporated by reference to Exhibit 10.6
to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 1996.
10.7 Letter Agreement, dated as of May 10, 1996, by and between
Atlantic Realty Trust ("Atlantic") and the Company
concerning the assumption of certain liabilities by
Atlantic, incorporated by reference to Exhibit 10.7 to the
Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1996.
10.8 Employment Agreement, dated as of May 10, 1996, between the
Company and Joel Gershenson, incorporated by reference to
Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1996.
10.9 Employment Agreement, dated as of May 10, 1996, between the
Company and Dennis Gershenson, incorporated by reference to
Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1996.
10.10 Employment Agreement, dated as of May 10, 1996, between the
Company and Michael A. Ward, incorporated by reference to
Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1996.
10.11 Employment Agreement, dated as of May 10, 1996, between the
Company and Richard Gershenson, incorporated by reference to
Exhibit 10.11 to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1996.
</TABLE>
<PAGE> 61
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.12 Employment Agreement, dated as of May 10, 1996, between the
Company and Bruce Gershenson, incorporated by reference to
Exhibit 10.12 to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1996.
10.13 Noncompetition Agreement, dated as of May 10, 1996, between
Joel Gershenson and the Company, incorporated by reference
to Exhibit 10.13 to the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1996.
10.14 Noncompetition Agreement, dated as of May 10, 1996, between
Dennis Gershenson and the Company, incorporated by reference
to Exhibit 10.14 to the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1996.
10.15 Noncompetition Agreement, dated as of May 10, 1996, between
Michael A. Ward and the Company, incorporated by reference
to Exhibit 10.15 to the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1996.
10.16 Noncompetition Agreement, dated as of May 10, 1996, between
Richard Gershenson and the Company, incorporated by
reference to Exhibit 10.16 to the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1996.
10.17 Noncompetition Agreement, dated as of May 10, 1996, between
Bruce Gershenson and the Company, incorporated by reference
to Exhibit 10.17 to the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1996.
10.18 Letter Agreement, dated April 15, 1996, among the Company
and Richard Smith concerning Mr. Smith's employment by the
Company, incorporated by reference to Exhibit 10.18 to the
Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1996.
10.19 Loan Agreement dated May 1, 1996 by and between
Ramco-Gershenson Properties, L.P. and The Lincoln National
Life Insurance Company relating to a $77,585,524.73 loan,
incorporated by reference to Exhibit 10.22 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1996.
10.20 Note dated May 1, 1996 in the aggregate principal amount of
$77,585,524.73 made by Ramco-Gershenson Properties, L.P. in
favor of The Lincoln National Life Insurance Company,
incorporated by reference to Exhibit 10.23 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1996.
10.21 Loan Agreement dated May 1, 1996 by and between
Ramco-Gershenson Properties, L.P. and The Lincoln National
Life Insurance Company relating to a $4,346,778.73 loan,
incorporated by reference to Exhibit 10.24 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1996.
10.22 Note dated May 1, 1996 in the aggregate principal amount of
$4,346,778.73 made by Ramco-Gershenson Properties, L.P. in
favor of The Lincoln National Life Insurance Company,
incorporated by reference to Exhibit 10.25 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1996.
10.23 Preferred Units and Stock Purchase Agreement dated as of
September 30, 1997 by and among the Company, Special
Situations RG REIT, Inc., and the Advancing Party named
therein, incorporated by reference to Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1997.
10.24 Agreement Regarding Exercise of Registration Rights dated as
of September 30, 1997 among the Company, the Ramco
Principals (as defined therein), the Other Holders (as
defined therein), Special Situations RG REIT, Inc., and the
Advancing Party, incorporated by reference to Exhibit 10.2
to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1997.
</TABLE>
<PAGE> 62
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.25 Registration Rights Agreement dated as of September 30, 1997
by and among the Company, Special Situations RG REIT, Inc.,
and the Advancing Party named therein, incorporated by
reference to Exhibit 10.3 to the Company's Quarterly Report
on Form 10-Q for the period ended September 30, 1997.
10.26 Second Amended and Restated Master Revolving Credit
Agreement dated as of October 30, 1997 among
Ramco-Gershenson Properties, L.P., as Borrower, the Company,
as Guarantor, and BankBoston, N.A., and the other Banks
which may become parties to the loan agreement, and
BankBoston, N.A., as Agent, incorporated by reference to
Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1997.
10.27 Second Amended and Restated Noted dated October 30, 1997 in
the principal amount of $160,000,000 made by
Ramco-Gershenson Properties, L.P. in favor of BankBoston,
N.A., incorporated by reference to Exhibit 10.5 to the
Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1997.
10.28 Second Amended and Restated Unconditional Guaranty of
Payment and Performance dated as of October 30, 1997 by the
Company in favor of BankBoston, N.A., incorporated by
reference to Exhibit 10.6 to the Company's Quarterly Report
on Form 10-Q for the period ended September 30, 1997.
10.29 Unsecured Term Loan Agreement dated as of October 30, 1997
among Ramco-Gershenson Properties, L.P., as Borrower, the
Company, as Guarantor, BankBoston, N.A., the other Banks
which may become parties to the agreement, and BankBoston,
N.A., as Agent, incorporated by reference to Exhibit 10.7 to
the Company's Quarterly Report on Form 10-Q for the period
ended September 30, 1997.
10.30 Note dated as of October 30, 1997 in the principal amount of
$45,000,000 made by Ramco-Gershenson Properties, L.P. in
favor of BankBoston, N.A., incorporated by reference to
Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1997.
10.31 Unconditional Guaranty of Payment and Performance dated as
of October 30, 1997 by the Company in favor of BankBoston,
N.A., incorporated by reference to Exhibit 10.9 to the
Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1997.
10.32 Form of Contract of Sale dated July 7, 1997 relating to the
acquisition of the Southeast Portfolio (Form #1),
incorporated by reference to Exhibit 10.10 to the Company's
Quarterly Report on Form 10-Q for the period ended September
30, 1997.
10.33 Form of Contract of Sale dated July 7, 1997 relating to the
acquisition of the Southeast Portfolio (Form #2),
incorporated by reference to Exhibit 10.11 to the Company's
Quarterly Report on Form 10-Q for the period ended September
30, 1997.
10.34 Form of Contract of Sale dated July 7, 1997 relating to the
acquisition of the Southeast Portfolio (Form #3),
incorporated by reference to Exhibit 10.12 to the Company's
Quarterly Report on Form 10-Q for the period ended September
30, 1997.
10.35 Agreement dated July 7, 1997 by and between Seller (as
defined therein) and Ramco-Gershenson Properties, L.P.,
which agreement amends certain Contracts of Sale relating to
the Acquisition of the Southeast Portfolio, incorporated by
reference to Exhibit 10.13 to the Company's Quarterly Report
on Form 10-Q for the period ended September 30, 1997.
10.36 Loan Agreement dated as of November 26, 1997 between Ramco
Properties Associates Limited Partnership and Secore
Financial Corporation relating to a $50,000,000 loan.
10.37 Promissory Note dated November 26, 1997 in the aggregate
principal amount of $50,000,000 made by Ramco Properties
Associates Limited Partnership in favor of Secore Financial
Corporation.
10.38 Loan Agreement dated December 17, 1997 by and between
Ramco-Gershenson Properties, L.P. and The Lincoln National
Life Insurance Company relating to a $8,500,000 loan.
</TABLE>
<PAGE> 63
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.39 Note dated December 17, 1997 in the aggregate principal
amount of $8,500,000 made by Ramco-Gershenson Properties,
L.P., in favor of The Lincoln National Life Insurance
Company.
10.40 1997 Non-Employee Trustee Stock Option Plan of the Company.
10.41 Change of Venue Merger Agreement dated as of October 2, 1997
between the Company (formerly known as RGPT Trust, a
Maryland real estate investment trust), and Ramco-Gershenson
Properties Trust, a Massachusetts business trust.
21.1 Subsidiaries.
23.1 Consent of Deloitte & Touche LLP.
27.1 Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 3.1
RAMCO-GERSHENSON PROPERTIES TRUST
ARTICLES OF AMENDMENT AND
RESTATEMENT OF DECLARATION OF TRUST
RAMCO-GERSHENSON PROPERTIES TRUST, a Maryland real estate investment
trust (the "Trust") formed under Title 8 of the Corporations and Associations
Article of the Annotated Code of Maryland, hereby certifies to the Maryland
State Department of Assessments and Taxation (the "Department") that:
FIRST: The Trust desires to and does hereby amend and restate its
Declaration of Trust as currently in effect, as hereinafter provided. The
provisions set forth in these Articles of Amendment and Restatement of
Declaration of Trust are all of the provisions of the Declaration of Trust
currently in effect, and as hereinafter amended.
SECOND: The Declaration of Trust of the Trust is hereby amended by
striking, in their entirety, Articles I through XI of the Declaration of Trust
and by substituting in lieu thereof the following:
ARTICLE I
FORMATION
The Trust is a real estate investment trust within the meaning of Title
8. The Trust shall not be deemed to be a general partnership, limited
partnership, joint venture, joint stock company or a corporation (but nothing
herein shall preclude the Trust from being treated for tax purposes as an
association under the Internal Revenue Code of 1986, as amended from time to
time (the "Code")).
ARTICLE II
NAME
The name of the Trust is:
Ramco-Gershenson Properties Trust
Under circumstances in which the Board of Trustees of the Trust (the
"Board of Trustees" or "Board") determines that the use of the name of the Trust
is not practicable, the Trust may use any other designation or name for the
Trust.
ARTICLE III
PURPOSES AND POWERS
SECTION 3.1 Purposes. The purposes for which the Trust is formed are to
invest in and to acquire, hold, manage, administer, control and dispose of
property, including, without limitation or obligation, engaging in business as a
real estate investment trust under the Code.
<PAGE> 2
SECTION 3.2 Powers. The Trust shall have all of the powers granted to
real estate investment trusts by Title 8 and all other powers set forth in this
Declaration of Trust which are not inconsistent with law and are appropriate to
promote and attain the purposes set forth in this Declaration of Trust.
ARTICLE IV
RESIDENT AGENT
The name of the resident in the State of Maryland is Charles R. Moran,
whose post office address is c/o Ballard Spahr Andrews & Ingersoll, 300 East
Lombard Street, Baltimore, Maryland 21202. The resident agent is a citizen of
and resides in the State of Maryland. The Trust may have such offices or places
of business within or outside the State of Maryland as the Board of Trustees may
from time to time determine.
ARTICLE V
BOARD OF TRUSTEES
SECTION 5.1 Powers. Subject to any express limitations contained in the
Declaration of Trust or in the Bylaws, (i) the business and affairs of the Trust
shall be managed under the direction of the Board of Trustees and (ii) the Board
shall have full, exclusive and absolute power, control and authority over any
and all property of the Trust. The Board may take any action that in its sole
judgment and discretion is necessary or appropriate to conduct the business and
affairs of the Trust. This Declaration of Trust shall be construed with a
presumption in favor of the grant of power and authority to the Board. Any
construction of this Declaration of Trust or determination made in good faith by
the Board concerning its powers and authority hereunder shall be conclusive. The
enumeration and definition of particular powers of the Trustees included in this
Declaration of Trust or the Bylaws shall in no way be limited or restricted by
reference to or inference from the terms of this or any other provision of the
Declaration of Trust or the Bylaws or construed or deemed by inference or
otherwise in any manner to exclude or limit the powers conferred upon the Board
or the Trustees under the general laws of the State of Maryland or any other
applicable laws.
The Board, without any action by the shareholders of the Trust, shall
have and may exercise, on behalf of the Trust, without limitation, the power to
determine that compliance with any restriction or limitation on ownership and
transfers of shares of the Trust's beneficial interest set forth in Article VII
of this Declaration of Trust is no longer required in order for the trust to
qualify as a real estate investment trust ("REIT") under the Code; to adopt,
amend and repeal (but subject to the provisions of the Bylaws limiting adoption
of provisions inconsistent with, or the amendment or repeal of, certain
specified provisions of the Bylaws) the Bylaws; to elect officers in the manner
prescribed in the Bylaws; to solicit proxies from holders of shares of
beneficial interest of the Trust; and to do any other acts and execute and
deliver any other documents necessary or appropriate to the foregoing powers.
2
<PAGE> 3
SECTION 5.2 Number and Classification. The number of Trustees initially
shall be nine (9), which number may thereafter be increased or decreased
pursuant to the Bylaws of the Trust. Notwithstanding the foregoing, if for any
reason any or all of the Trustees cease to be Trustees, such event shall not
terminate the Trust or affect the Declaration of Trust or the powers of the
remaining Trustees. The Trustees shall be divided into three classes (other than
any Trustee elected solely by holders of one or more classes or series of
Preferred Shares) as nearly equal in number as possible designated Class I,
Class II, and Class III, with a term of three (3) years each, and the term of
one class shall expire each year. The Trustees shall be elected by the
shareholders at every third annual meeting thereof in the manner provided in the
Bylaws or, in order to fill any vacancy on the Board of Trustees, in the manner
provided in the Bylaws. The names and addresses of the initial nine (9) Trustees
(who shall serve until the annual meeting of shareholders to be held in the year
in which their respective classes shall expire, and until their successors are
duly elected and qualify), the class to which such Trustees are designated and
the year in which the current term of such class shall expire are:
<TABLE>
<CAPTION>
Year of
Name Address Class Expiration
- ---- ------- ----- ----------
<S> <C> <C> <C>
Joel D. Gershenson c/o Ramco-Gershenson Properties Trust I 1998
27600 Northwestern Highway, Suite 200
Southfield, MI 48034
Dennis E. Gershenson c/o Ramco-Gershenson Properties Trust I 1998
27600 Northwestern Highway, Suite 200
Southfield, MI 48034
Robert A. Meister c/o AON Risk Services Company I 1998
Two World Trade Center, 105th Floor
New York, NY 10048
Selwyn Isakow c/o The Oxford Investment Group, Inc. II 1999
2000 North Woodward Ave., Suite 130
Bloomfield Hills, MI 48304
Arthur H. Goldberg c/o Manhattan Associates, LLC II 1999
375 Park Avenue, Suite 1606
New York, NY 10152
Mark K. Rosenfeld c/o KMR, Inc. II 1999
404 South Higby
Jackson, MI 49203
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
Stephen R. Blank c/o Oppenheimer & Co., Inc. III 2000
Oppenheimer Tower, 39th Floor
World Financial Center
New York, NY 10281
Herbert Liechtung 5500 Collins Avenue, #302 III 2000
Miami Beach, FL 33140
Joel M. Paschow c/o Atlantic Realty Trust III 2000
747 Third Avenue, 10th Floor
New York, NY 10017
</TABLE>
If the number of Trustees is changed, any increase or decrease in the
number of Trustees shall be apportioned among the classes so as to maintain the
number of Trustees in each class as nearly equal in number as possible. At each
annual meeting of shareholders, the successors to the class of Trustees whose
term expires at such meeting shall be elected to hold office for a term expiring
at the annual meeting of shareholders held in the third year following the year
of their election. Election of Trustees by shareholders shall require the vote
and be in accordance with the procedures set forth in the Bylaws.
It shall not be necessary to list in the Declaration of Trust the names
and addresses of any Trustees hereinafter elected.
SECTION 5.3 Resignation or Removal. Any Trustee may resign by written
notice to the Board of Trustees, effective upon execution and delivery to the
Trust of such written notice or upon any future date specified in the notice.
Subject to any rights of holders of one or more classes or series of preferred
shares to elect one or more Trustees, a Trustee may be removed at any time, with
or without cause, at a meeting of the shareholders, by the affirmative vote of
the holders of not less than two-thirds of the shares then outstanding and
entitled to vote generally in the election of Trustees.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
SECTION 6.1 Authorized Shares. The beneficial interest of the Trust
shall be divided into shares of beneficial interest (the "Shares"). The Trust
has the authority to issue 30,000,000 common shares of beneficial interest, par
value $.0l per share ("Common Shares"), and 10,000,000 preferred shares of
beneficial interest, par value $.0l per share ("Preferred Shares").
The Board of Trustees, without the approval of the shareholders of the
Trust, may amend the Declaration of Trust from time to time to increase or
decrease the aggregate number of Shares or the number of Shares of any class
that the Trust has authority to issue.
SECTION 6.2 Common Shares. Subject to the provisions of Article VIII,
each Common
4
<PAGE> 5
Share shall entitle the holder thereof to one vote on each matter upon which the
holders of Common Shares are entitled to vote. The Board of Trustees may
reclassify any unissued Common Shares from time to time in one or more classes
or series of Shares.
SECTION 6.3 Preferred Shares. The Board of Trustees may classify any
unissued Preferred Shares, and reclassify any previously classified but unissued
Preferred Shares of any class or series, from time to time, in one or more
classes or series of Shares.
SECTION 6.4 Classified or Reclassified Shares. Prior to issuance of
classified or reclassified Shares of any class or series, the Board of Trustees
by resolution shall (a) designate that class or series to distinguish it from
all other classes and series of Shares; (b) specify the number of Shares to be
included in the class or series; (c) set, subject to the provisions of Article
VII and subject to the express terms of any class or series of Shares
outstanding at the time, the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or other distributions,
qualifications and terms and conditions of redemption for each class or series;
and (d) cause the Trust to file articles supplementary with the State Department
of Assessments and Taxation of Maryland (the "SDAT"). Any of the terms of any
class or series of Shares set pursuant to clause (c) of this Section 6.4 may be
made dependent upon facts or events ascertainable outside the Declaration of
Trust (including the occurrence of any event, including a determination or
action by the Trust or any other person or body) and may vary among holders
thereof, provided that the manner in which such facts, events or variations
shall operate upon the terms of such class or series of Shares is clearly and
expressly set forth in the articles supplementary filed with the SDAT.
SECTION 6.5 Authorization by Board of Share Issuance. The Board of
Trustees may authorize the issuance from time to time of Shares of any class or
series, whether now or hereafter authorized, or securities or rights convertible
into Shares of any class or series, whether now or hereafter authorized, for
such consideration (whether in cash, property, past or future services,
obligations for future payment or otherwise) as the Board of Trustees may deem
advisable (or without consideration in the case of a Share split or Share
dividend), subject to such restrictions or limitations, if any, as may be set
forth in the Declaration of Trust or Bylaws of the Trust.
SECTION 6.6 Dividends and Distributions. The Board of Trustees may from
time to time authorize and declare to shareholders such dividends or
distributions, in cash, property or other assets of the Trust or in securities
of the Trust or from any other source, as the Board of Trustees in its
discretion shall determine. The Board of Trustees shall endeavor to declare and
pay such dividends and distributions as shall be necessary for the Trust to
qualify as a real estate investment trust under the Code; however, shareholders
shall have no right to any dividend or distribution unless or until authorized
and declared by the Board. The exercise of the powers and rights of the Board of
Trustees pursuant to this Section shall be subject to the provisions of any
class or series of Shares at the time outstanding. Notwithstanding any other
provision in the Declaration of Trust, no determination shall be made by the
Board of Trustees nor shall any transaction be entered into by the Trust which
would cause any Shares or other
5
<PAGE> 6
beneficial interest in the Trust not to constitute "transferable shares" or
"transferable certificates of beneficial interest" under Section 856(a)(2) of
the Code or which would cause any distribution to constitute a preferential
dividend as described in Section 562(c) of the Code. The receipt by any Person
in whose name any Shares are registered on the records of the Trust or by his
duly authorized agent shall be a sufficient discharge for all dividends or
distributions payable or deliverable in respect of such Shares and from all
liability to see to the application thereof.
SECTION 6.7 General Nature of Shares. All Shares shall be personal
property entitling the shareholders only to those rights provided in this
Declaration of Trust. The shareholders shall have no interest in the property of
the Trust and shall have no right to compel any partition, division, dividend or
distribution of the Trust or of the property of the Trust. The death of a
shareholder shall not terminate the Trust. The Trust is entitled to treat as
shareholders only those persons in whose names Shares are registered as holders
of Shares on the beneficial interest ledger of the Trust.
SECTION 6.8 Fractional Shares. The Trust may, without the consent or
approval of any shareholder, issue fractional Shares, eliminate a fraction of a
Share by rounding up or down to a full Share, arrange for the disposition of a
fraction of a Share by the person entitled to it, or pay cash for the fair value
of a fraction of a Share.
SECTION 6.9 Declaration and Bylaws. All shareholders are subject to the
provisions of the Declaration of Trust and the Bylaws of the Trust.
SECTION 6.10 Divisions and Combinations of Shares. Subject to an
express provision to the contrary in the terms of any class or series of
beneficial interest hereafter authorized, the Board of Trustees shall have the
power to divide or combine the outstanding shares of any class or series of
beneficial interest, without a vote of shareholders.
ARTICLE VII
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES
SECTION 7.1 Definitions. For the purpose of this Article VII, the
following terms shall have the following meanings:
Beneficial Ownership. The term "Beneficial Ownership" shall mean
ownership of Shares by a Person, whether the interest in Shares is held directly
or indirectly (including by a nominee), and shall include interests that would
be treated as owned through the application of Section 544 of the Code, as
modified by Section 856(h)(1)(B) of the Code. The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
Business Day. The term "Business Day" shall mean any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which banking
institutions in New York
6
<PAGE> 7
City are authorized or required by law, regulation or executive order to close.
Charitable Beneficiary. The term "Charitable Beneficiary" shall mean
one or more beneficiaries of the Charitable Trust as determined pursuant to
Section 7.3.6, provided that each such organization must be described in Section
501(c)(3) of the Code and contributions to each such organization must be
eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the
Code.
Charitable Trust. The term "Charitable Trust" shall mean any trust
provided for in Section 7.3.1.
Charitable Trustee. The term "Charitable Trustee" shall mean the Person
unaffiliated with the Trust and a Prohibited Owner, that is appointed by the
Trust to serve as trustee of the Charitable Trust.
Code. The term "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
Constructive Ownership. The term "Constructive Ownership" shall mean
ownership of Shares by a Person, whether the interest in Shares is held directly
or indirectly (including by a nominee), and shall include interests that would
be treated as owned through the application of Section 318(a) of the Code, as
modified by Section 856(d)(5) of the Code. The terms "Constructive Owner,"
"Constructively Owns" and "Constructively Owned" shall have the correlative
meanings.
Declaration of Trust. The term "Declaration of Trust" shall mean this
Declaration of Trust as filed for record with the SDAT, and any amendments
thereto.
Excepted Holder. The term "Excepted Holder" shall mean a shareholder of
the Trust for whom an Excepted Holder Limit is created by this Article VII or by
the Board of Trustees pursuant to Section 7.2.7.
Excepted Holder Limit. The term "Excepted Holder Limit" shall mean,
provided that the affected Excepted Holder agrees to comply with the
requirements established by the Board of Trustees pursuant to Section 7.2.7, and
subject to adjustment pursuant to Section 7.2.8, the percentage limit
established by the Board of Trustees pursuant to Section 7.2.7 upon the
affirmative vote of 75% of the Trustees entitled to vote thereon.
Initial Date. The term "Initial Date" shall mean the date upon which
this Declaration of Trust containing this Article VII is filed for record with
the SDAT.
Market Price. The term "Market Price" on any date shall mean, with
respect to any class or series of outstanding Shares, the Closing Price for such
Shares on such date. The "Closing Price" on any date shall mean the last sale
price for such Shares, regular way, or, in case no
7
<PAGE> 8
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, for such Shares, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the NYSE or, if such Shares are not listed or
admitted to trading on the NYSE, as reported on the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which such Shares are listed or admitted to
trading or, if such Shares are not listed or admitted to trading on any national
securities exchange, the last quoted price, or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
or, if such system is no longer in use, the principal other automated quotation
system that may then be in use or, if such Shares are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such Shares selected by the Board
of Trustees or, in the event that no trading price is available for such Shares,
the fair market value of Shares, as determined in good faith by the Board of
Trustees.
NYSE. The term "NYSE" shall mean the New York Stock Exchange.
Ownership Limit. The term "Ownership Limit" shall mean (i) with respect
to the Common Shares, 9.8% (in value or number of shares, whichever is more
restrictive) of the outstanding Common Shares of the Trust; and (ii) with
respect to any class or series of Preferred Shares, 9.8% (in value or number of
shares, whichever is more restrictive) of the outstanding shares of such class
or series of Preferred Shares of the Trust.
Person. The term "Person" shall mean an individual, corporation,
partnership, estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside for or to be
used exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity and also includes a group as that term
is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, and a group to which an Excepted Holder Limit applies.
Prohibited Owner. The term "Prohibited Owner" shall mean, with respect
to any purported Transfer, any Person who, but for the provisions of Section
7.2.1, would Beneficially Own or Constructively Own Shares, and if appropriate
in the context, shall also mean any Person who would have been the record owner
of Shares that the Prohibited Owner would have so owned.
REIT. The term "REIT" shall mean a real estate investment trust within
the meaning of Section 856 of the Code.
8
<PAGE> 9
Restriction Termination Date. The term "Restriction Termination Date"
shall mean the first day after the Initial Date on which the Board determines
(i) that it is no longer in the best interests of the Trust to attempt to, or
continue to qualify as, a REIT or (ii) that compliance with the restrictions and
limitations on Beneficial Ownership, Constructive Ownership and Transfers of
Shares set forth herein is no longer required in order for the Trust to qualify
as a REIT.
SDAT. The term "SDAT" shall mean the State Department of Assessments
and Taxation of Maryland.
Transfer. The term "Transfer" shall mean any issuance, sale, transfer,
gift, assignment, devise or other disposition, as well as any other event that
causes any Person to acquire Beneficial Ownership or Constructive Ownership, or
any agreement to take any such actions or cause any such events, of Shares or
the right to vote or receive dividends on Shares, including (a) a change in the
capital structure of the Trust, (b) a change in the relationship between two or
more Persons which causes a change in ownership of Shares by application of
Section 544 of the Code, as modified by Section 856(h) of the Code, (c) the
granting or exercise of any option or warrant (or any disposition of any option
or warrant), pledge, security interest or similar right to acquire Shares (d)
any disposition of any securities or rights convertible into or exchangeable for
Shares or any interest in Shares or any exercise of any such conversion or
exchange right and (e) Transfers of interests in other entities that result in
changes in Beneficial or Constructive Ownership of Shares; in each case, whether
voluntary or involuntary, whether owned of record, Constructively Owned or
Beneficially Owned and whether by operation of law or otherwise. For purposes of
this Article VII, the right of a limited partner in Ramco- Gershenson
Properties, L.P., a Delaware limited partnership (the "Partnership"), to require
the Partnership to redeem such limited partner's units of Partnership interest
pursuant to Section ___ (or any successor section thereto) of the Amended and
Restated Agreement of Limited Partnership of Ramco-Gershenson Properties, L.P.,
as amended, shall not be considered to be an option or similar right to acquire
Shares of the Trust. The terms "Transferring" and "Transferred" shall have the
correlative meanings.
SECTION 7.2 Shares.
SECTION 7.2.1 Ownership Limitations. During the period commencing on
the Initial Date and prior to the Restriction Termination Date:
(a) Basic Restrictions.
(i) (1) No Person, other than an Excepted Holder, shall
Beneficially Own or Constructively Own Shares in excess of the Ownership Limit
and (2) no Excepted Holder shall Beneficially Own or Constructively Own Shares
in excess of the Excepted Holder Limit for such Excepted Holder.
(ii) No Person shall Beneficially or Constructively own Shares
to the
9
<PAGE> 10
extent that such Beneficial or Constructive Ownership of Shares would result in
the Trust (A) being "closely held" within the meaning of Section 856(h) of the
Code (without regard to whether the ownership interest is held during the last
half of a taxable year), or (B) otherwise failing to qualify as a REIT
(including, but not limited to, Beneficial or Constructive Ownership that would
result in the Trust owning (actually or Constructively) an interest in a tenant
that is described in Section 856(d)(2)(B) of the Code if the income derived by
the Trust from such tenant would cause the Trust to fail to satisfy any of the
gross income requirements of Section 856(c) of the Code).
(iii) No person shall Transfer any Shares if, as a result of the
Transfer, the Shares would be beneficially owned by less than 100 Persons
(determined without reference to the rules of attribution under Section 544 of
the Code). Notwithstanding any other provisions contained herein, any Transfer
of Shares (whether or not such Transfer is the result of a transaction entered
into through the facilities of the NYSE or any other national securities
exchange or automated inter-dealer quotation system) that, if effective, would
result in Shares being beneficially owned by less than 100 Persons (determined
under the principles of Section 856(a)(5) of the Code) shall be void ab initio,
and the intended transferee shall acquire no rights in such Shares.
(b) Transfer in Trust. If any Transfer of Shares (whether or not
such Transfer is the result of a transaction entered into through the facilities
of the NYSE or any other national securities exchange or automated inter-dealer
quotation system) occurs which, if effective, would result in any Person
Beneficially Owning or Constructively Owning Shares in violation of Section
7.2.1(a)(i) or (ii);
(i) then that number of Shares the Beneficial or Constructive
Ownership of which otherwise would cause such Person to violate Section
7.2.1(a)(i) or (ii) (rounded to the nearest whole share so that such violation
is not in existence) shall be automatically transferred to a Charitable Trust
for the benefit of a Charitable Beneficiary, as described in Section 7.3,
effective as of the close of business on the Business Day prior to the date of
such Transfer, and such Person shall acquire no rights in such Shares; or
(ii) if the transfer to the Charitable Trust described in clause
(i) of this sentence would not be effective for any reason to prevent the
violation of Section 7.2.1(a)(i) or (ii), then the Transfer of that number of
Shares that otherwise would cause any Person to violate Section 7.2.1(a)(i) or
(ii) shall be void ab initio, and the intended transferee shall acquire no
rights in such Shares.
SECTION 7.2.2 Remedies for Breach. If the Board of Trustees or any duly
authorized committee thereof shall at any time determine in good faith that a
Transfer or other event has taken place that results in a violation of Section
7.2.1 or that a Person intends to acquire or has attempted to acquire Beneficial
or Constructive Ownership of any Shares in violation of Section 7.2.1 (whether
or not such violation is intended), the Board of Trustees or a committee thereof
shall take such action as it deems advisable to refuse to give effect to or
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to prevent such Transfer or other event, including, without limitation, causing
the Trust to redeem Shares, refusing to give effect to such Transfer on the
books of the Trust or instituting proceedings to enjoin such Transfer or other
event; provided, however, that any Transfers or attempted Transfers or other
events in violation of Section 7.2.1 shall automatically result in the transfer
to the Charitable Trust described above, and, where applicable, such Transfer
(or other event) shall be void ab initio as provided above irrespective of any
action (or non-action) by the Board of Trustees or a committee thereof.
SECTION 7.2.3 Notice of Restricted Transfer. Any Person who acquires or
attempts or intends to acquire Beneficial ownership or Constructive Ownership of
Shares that will or may violate Section 7.2.1(a), or any Person who would have
owned Shares that resulted in a transfer to the Charitable Trust pursuant to the
provisions of Section 7.2.1(b), shall immediately give written notice to the
Trust of such event, or in the case of such a proposed or attempted transaction,
give at least 15 days prior written notice, and shall provide to the Trust such
other information as the Trust may request in order to determine the effect, if
any, of such Transfer on the Trust's status as a REIT.
SECTION 7.2.4 Owners Required To Provide Information. From the
Initial Date and prior to the Restriction Termination Date:
(a) every owner of more than five percent (or such lower
percentage as required by the Code or the Treasury Regulations promulgated
thereunder) of the outstanding Shares, within 30 days after the end of each
taxable year, shall give written notice to the Trust stating the name and
address of such owner, the number of Shares and other Shares Beneficially Owned
and a description of the manner in which such shares are held; provided that a
shareholder of record who holds outstanding Shares as nominee for another
Person, which other Person is required to include in gross income the dividends
received on such Shares (an "Actual Owner"), shall give written notice to the
Trust stating the name and address of such Actual Owner and the number of Shares
of such Actual Owner with respect to which the shareholder of record is nominee.
Each such owner shall provide to the Trust such additional information as the
Trust may request in order to determine the effect, if any, of such Beneficial
Ownership on the Trust's status as a REIT and to ensure compliance with the
Ownership Limit.
(b) each Person who is a Beneficial or Constructive Owner of
Shares and each Person (including the shareholder of record) who is holding
Shares for a Beneficial or Constructive Owner shall provide to the Trust such
information as the Trust may request, in good faith, in order to determine the
Trust's status as a REIT and to comply with requirements of any taxing authority
or governmental authority or to determine such compliance.
SECTION 7.2.5 Remedies Not Limited. Nothing contained in this
Section 7.2 shall limit the authority of the Board of Trustees to take such
other action as it deems necessary or advisable to protect the Trust and the
interests of its shareholders in preserving the Trust's status as a REIT.
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SECTION 7.2.6 Ambiguity. In the case of an ambiguity in the
application of any of the provisions of this Section 7.2, Section 7.3 or any
definition contained in Section 7.1, the Board of Trustees shall have the power
to determine the application of the provisions of this Section 7.2 or Section
7.3 with respect to any situation based on the facts known to it. In the event
Section 7.2 or 7.3 requires an action by the Board of Trustees and the
Declaration of Trust fails to provide specific guidance with respect to such
action, the Board of Trustees shall have the power to determine the action to be
taken so long as such action is not contrary to the provisions of Sections 7.1,
7.2 or 7.3.
SECTION 7.2.7 Exceptions.
(a) The Board of Trustees, in its sole discretion and upon the
vote of 75% of the members of the Board of Trustees entitled to vote thereon,
may grant to any Person who makes a request therefor an exception to the
Ownership Limit with respect to the ownership of any series or class of
Preferred Shares, subject to the following conditions and limitations: (A) the
Board of Trustees shall have determined that (x) assuming such Person would
Beneficially or Constructively Own the maximum amount of Shares permitted as a
result of the exception to be granted and (y) assuming that all other Persons
who would be treated as "individuals" for purposes of Section 542(a)(2) of the
Code (determined taking into account Section 856(h)(3)(A) of the Code) would
Beneficially or Constructively Own the maximum amount of Common Shares and
Preferred Shares permitted under this Article VII (taking into account any
exception, waiver or exemption granted under this Section 7.2.7 to (or with
respect to) such Persons), the Trust would not be "closely held" within the
meaning of Section 856(h) of the Code (assuming that the ownership of Shares is
determined during the second half of a taxable year) and would not otherwise
fail to qualify as a REIT; and (B) such Person provides to the Board of Trustees
such representations and undertakings, if any, as the Board of Trustees may, in
its reasonable discretion, determine to be necessary in order for the Board of
Trustees to make the determination that the conditions set forth in clause (A)
above of this Section 7.2.7(a) have been and/or will continue to be satisfied
(including, without limitation, an agreement as to a reduced Ownership Limit or
Excepted Holder Limit for such Person with respect to the Beneficial or
Constructive Ownership of one or more other classes of Shares not subject to the
exception), and such Person agrees that any violation of such representations
and undertakings or any attempted violation thereof will result in the
application of the remedies set forth in Section 7.2 with respect to Shares held
in excess of the Ownership Limit or the Excepted Holder Limit (as may be
applicable) with respect to such Person (determined without regard to the
exception granted such Person under this subparagraph (a)). If a member of the
Board of Trustees requests that the Board of Trustees grant an exception
pursuant to this subparagraph (a) with respect to such member or with respect to
any other Person if such Board member would be considered to be the Beneficial
or Constructive Owner of Shares owned by such Person, such member of the Board
shall not participate in the decision of the Board of Trustees as to whether to
grant any such exception.
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(b) In addition to exceptions permitted under subparagraph (a)
above, the Board of Trustees, in its sole discretion and upon the vote of 75% of
the members of the Board of Trustees entitled to vote thereon, may except a
Person from the Ownership Limit and any Excepted Holder Limit if: (i) such
Person submits to the Board of Trustees information satisfactory to the Board of
Trustees, in its reasonable discretion, demonstrating that such Person is not an
individual for purposes of Section 542(a)(2) of the Code (determined taking into
account Section 856(h)(3)(A) of the Code); (ii) such Person submits to the Board
of Trustees information satisfactory to the Board of Trustees, in its reasonable
discretion, demonstrating that no Person who is an individual for purposes of
Section 542(a)(2) of the Code (determined taking into account Section
856(h)(3)(A) of the Code) would be considered to Beneficially Own Shares in
excess of the Ownership Limit by reason of the Excepted Holder's ownership of
Shares in excess of the Ownership Limit pursuant to the exception granted under
this subparagraph (b); (iii) such Person submits to the Board of Trustees
information satisfactory to the Board of Trustees, in its reasonable discretion,
demonstrating that clause (2) of subparagraph (a)(ii) of Section 7.2.1 will not
be violated by reason of the Excepted Holder's ownership of Shares in excess of
the Ownership Limit pursuant to the exception granted under this subparagraph
(b); and (iv) such Person provides to the Board of Trustees such representations
and undertakings, if any, as the Board of Trustees may, in its reasonable
discretion, require to ensure that the conditions in clauses (i), (ii) and (iii)
hereof are satisfied and will continue to be satisfied throughout the period
during which such Person owns Shares in excess of the Ownership Limit pursuant
to any exception thereto granted under this subparagraph (b), and such Person
agrees that any violation of such representations and undertakings or any
attempted violation thereof will result in the application of the remedies set
forth in Section 7.2 with respect to Shares held in excess of the Ownership
Limit with respect to such Person (determined without regard to the exception
granted such Person under this subparagraph (b)).
(c) Prior to granting any exception pursuant to Section 7.2.7(a)
or (b), the Board of Trustees may require a ruling from the Internal Revenue
Service, or an opinion of counsel, in either case in form and substance
satisfactory to the Board of Trustees in its sole discretion, as it may deem
necessary or advisable in order to determine or ensure the Trust's status as a
REIT. Notwithstanding the receipt of any ruling or opinion, the Board of
Trustees may impose such conditions or restrictions as it deems appropriate in
connection with granting such exception as may be necessary or desirable so that
such exception does not adversely affect the Trust's ability to qualify, or to
continue to qualify, as a REIT.
(d) Subject to Section 7.2.1(a)(ii), an underwriter or placement
agent which participates in a public offering or a private placement of Shares
(or securities convertible into or exchangeable for Shares) may Beneficially Own
or Constructively Own Shares (or securities convertible into or exchangeable for
Shares) in excess of the Ownership Limit, but only to the extent necessary to
facilitate such public offering or private placement.
(e) The Board of Trustees may only reduce the Excepted Holder
Limit for an Excepted Holder: (1) with the written consent of such Excepted
Holder at any time, or (2) pursuant to the terms and conditions of the
agreements and undertakings entered into with such
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Excepted Holder in connection with the establishment of the Excepted Holder
Limit for that Excepted Holder. No Excepted Holder Limit shall be reduced to a
percentage that is less than the Ownership Limit.
SECTION 7.2.8 Increase in Ownership Limit. The Board of Trustees
may from time to time increase the Ownership Limit other than as to persons
which are Exempted Holders, subject to the limitations provided in this Section
7.2.8.
(a) The Ownership Limit may not be increased if, after giving
effect to such increase, five Persons who are considered individuals pursuant to
Section 542 of the Code, as modified by Section 856(h)(3) of the Code (taking
into account all of the Excepted Holders), could Beneficially Own, in the
aggregate, more than 49.5% of the value of the outstanding Shares.
(b) Prior to the modification of the Ownership Limit pursuant to
this Section 7.2.8, the Board of Trustees may require such opinions of counsel,
affidavits, undertakings or agreements as it may deem necessary or advisable in
order to determine or ensure the Trust's status as a REIT if the modification in
the Ownership Limit were to be made.
SECTION 7.2.9 Legend. Each certificate for Shares shall bear the
following legend:
The shares represented by this certificate are subject to restrictions
on Beneficial and Constructive Ownership and Transfer for the purpose
of the Trust's maintenance of its status as a real estate investment
trust (a "REIT") under the Internal Revenue Code of 1986, as amended
(the "Code"). Subject to certain further restrictions and except as
expressly provided in the Trust's Declaration of Trust, (i) no Person
may Beneficially or Constructively Own Common Shares of the Trust in
excess of 9.8 percent (in value or number of shares) of the outstanding
Common Shares of the Trust unless such Person is an Excepted Holder (in
which case the Excepted Holder Limit shall be applicable); (ii) no
Person may Beneficially or Constructively Own any class or series of
Preferred Shares of the Trust in excess of 9.8 percent (in value or
number of shares) of the outstanding Shares of such class or series of
Preferred Shares of the Trust, unless such Person is an Excepted Holder
(in which case the Excepted Holder Limit shall be applicable); (iii) no
Person may Beneficially or Constructively Own Shares that would result
in the Trust being "closely held" under Section 856(h) of the Code or
otherwise cause the Trust to fail to qualify as a REIT; and (iv) no
Person may Transfer Shares if such Transfer would result in Shares of
the Trust being owned by fewer than 100 Persons. Any Person who
Beneficially or Constructively Owns or attempts to Beneficially or
Constructively Own Shares which cause or will cause a Person to
Beneficially or Constructively Own Shares in excess or in violation of
the above limitations must immediately notify the Trust. If any of the
restrictions on transfer or ownership are violated, the Shares
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represented hereby will be automatically transferred to a Charitable
Trustee of a Charitable Trust for the benefit of one or more Charitable
Beneficiaries. In addition, upon the occurrence of certain events,
attempted Transfers in violation of the restrictions described above
may be void ab initio. All capitalized terms in this legend have the
meanings defined in the Trust's Declaration of Trust, as the same may
be amended from time to time, a copy of which, including the amended
from restrictions on transfer and ownership, will be furnished to each
holder of Shares of the Trust on request and without charge.
SECTION 7.3 Transfer of Shares in Trust.
SECTION 7.3.1 Ownership in Trust. Upon any purported Transfer or
other event described in Section 7.2.1(b) that would result in a transfer of
Shares to a Charitable Trust, such Shares shall be deemed to have been
transferred to the Charitable Trustee as trustee of a Charitable Trust for the
exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the
Charitable Trustee shall be deemed to be effective as of the close of business
on the Business Day prior to the purported Transfer or other event that results
in the transfer to the Charitable Trust pursuant to Section 7.2.1(b). The
Charitable Trustee shall be appointed by the Trust and shall be a Person
unaffiliated with the Trust and any Prohibited Owner. Each Charitable
Beneficiary shall be designated by the Trust as provided in Section 7.3.6.
SECTION 7.3.2 Status of Shares Held by the Charitable Trustee.
Shares held by the Charitable Trustee shall be issued and outstanding Shares of
the Company. The Prohibited Owner shall have no rights in the shares held by the
Charitable Trustee. The Prohibited Owner shall not benefit economically from
ownership of any shares held in trust by the Charitable Trustee, shall have no
rights to dividends and shall not possess any rights to vote or other rights
attributable to the shares held in the Charitable Trust.
SECTION 7.3.3 Dividend and Voting Rights. The Charitable Trustee
shall have all voting rights and rights to dividends or other distributions with
respect to Shares held in the Charitable Trust, which rights shall be exercised
for the exclusive benefit of the Charitable Beneficiary. Any dividend or other
distribution paid prior to the discovery by the Trust that Shares have been
transferred to the Charitable Trustee shall be paid with respect to such Shares
to the Charitable Trustee upon demand and any dividend or other distribution
authorized but unpaid shall be paid when due to the Charitable Trustee. Any
dividends or distributions so paid over to the Charitable Trustee shall be held
in trust for the Charitable Beneficiary. The Prohibited Owner shall have no
voting rights with respect to shares held in the Charitable Trust and, subject
to Maryland law, effective as of the date that Shares have been transferred to
the Charitable Trustee, the Charitable Trustee shall have the authority (at the
Charitable Trustee's sole discretion) (i) to rescind as void any vote cast by a
Prohibited Owner prior to the discovery by the Trust that Shares have been
transferred to the Charitable Trustee and (ii) to recast such vote in accordance
with the desires of the Charitable Trustee acting for the benefit of the
Charitable Beneficiary. Notwithstanding the provisions of this Article VII,
until the Trust has received notification that Shares have been transferred into
a Charitable Trust, the Trust shall
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be entitled to rely on its share transfer and other shareholder records for
purposes of preparing lists of shareholders entitled to vote at meetings,
determining the validity and authority of proxies and otherwise conducting votes
of shareholders.
SECTION 7.3.4 Rights Upon Liquidation. Upon any voluntary or
involuntary liquidation, dissolution or winding up of or any distribution of the
assets of the Trust, the Charitable Trustee shall be entitled to receive,
ratably with each other holder of Shares of the class or series of Shares that
is held in the Charitable Trust, that portion of the assets of the Trust
available for distribution to holders of such class or series (determined based
upon the ratio that the number of Shares or such class or series of Shares held
by Charitable Trustee bears to the total number of Shares of such class or
series of Shares then outstanding). The Charitable Trustee shall distribute any
such assets received in respect of the Shares held in the Charitable Trust in
any liquidation, dissolution or winding up of, or distribution of the assets of
the Trust, in accordance with Section 7.3.5.
SECTION 7.3.5 Sale of Shares by the Charitable Trustee. Within
20 days of receiving notice from the Trust that Shares have been transferred to
the Charitable Trust, the Charitable Trustee of the Charitable Trust shall sell
the shares held in the Charitable Trust to a person, designated by the
Charitable Trustee, whose ownership of the shares will not violate the ownership
limitations set forth in Section 7.2.1(a). Upon such sale, the interest of the
Charitable Beneficiary in the shares sold shall terminate and the Charitable
Trustee shall distribute the net proceeds of the sale to the Prohibited Owner
and to the Charitable Beneficiary as provided in this Section 7.3.5. The
Prohibited Owner shall receive the lesser of (1) the price paid by the
Prohibited Owner for the shares or, if the Prohibited Owner did not give value
for the shares in connection with the event causing the shares to be held in the
Charitable Trust (e.g., in the case of a gift, devise or other such
transaction), the Market Price of the shares on the day of the event causing the
shares to be held in the Charitable Trust and (2) the price per share received
by the Charitable Trustee from the sale or other disposition of the shares held
in the Charitable Trust. Any net sales proceeds in excess of the amount payable
to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary.
If, prior to the discovery by the Trust that Shares have been transferred to the
Charitable Trustee, such shares are sold by a Prohibited Owner, then (i) such
shares shall be deemed to have been sold on behalf of the Charitable Trust and
(ii) to the extent that the Prohibited Owner received an amount for such shares
that exceeds the amount that such Prohibited Owner was entitled to receive
pursuant to this Section 7.3.5, such excess shall be paid to the Charitable
Trustee upon demand.
SECTION 7.3.6 Purchase Right in Shares Transferred to the
Charitable Trustee. Shares transferred to the Charitable Trustee shall be deemed
to have been offered for sale to the Trust, or its designee, at a price per
share equal to the lesser of (i) the price per share in the transaction that
resulted in such transfer to the Charitable Trust (or, in the case of a devise
or gift, the Market Price at the time of such devise or gift) and (ii) the
Market Price on the date the Trust, or its designee, accepts such offer. The
Trust shall have the right to accept such offer until the Charitable Trustee has
sold the shares held in the Charitable Trust pursuant to Section
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7.3.5. Upon such a sale to the Trust, the interest of the Charitable Beneficiary
in the shares sold shall terminate and the Charitable Trustee shall distribute
the net proceeds of the sale of the Prohibited Owner.
SECTION 7.3.7 Designation of Charitable Beneficiaries. By
written notice to the Charitable Trustee, the Trust shall designate one or more
nonprofit organizations to be the Charitable Beneficiary of the interest in the
Charitable Trust such that (i) Shares held in the Charitable Trust would not
violate the restrictions set forth in Section 7.2.1(a) in the hands of such
Charitable Beneficiary and (ii) each such organization must be described in
Section 501(c)(3) of the Code and contributions to each such organization must
be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of
the Code.
SECTION 7.4 NYSE Transactions. Nothing in this Article VII shall
preclude the settlement of any transaction entered into through the facilities
of the NYSE or any other national securities exchange or automated inter-dealer
quotation system. The fact that the settlement of any transaction is permitted
shall not negate the effect of any other provision of this Article VII and any
transferee in such a transaction shall be subject to all of the provisions and
limitations set forth in this Article VII.
SECTION 7.5 Enforcement. The Trust is authorized specifically to seek
equitable relief, including injunctive relief, to enforce the provisions of this
Article VII.
SECTION 7.6 Non-Waiver. No delay or failure on the part of the Trust or
the Board of Trustees in exercising any right hereunder shall operate as a
waiver of any right of the Trust or the Board of Trustees, as the case may be,
except to the extent specifically waived in writing.
ARTICLE VIII
SHAREHOLDERS
SECTION 8.1 Meetings. There shall be an annual meeting of the
shareholders, to be held on proper notice at such time (after delivery of the
Trust's annual report) and convenient location as shall be determined by or in
the manner prescribed in the Bylaws, for the election of Trustees, if required,
and for the transaction of any other business within the powers of the Trust.
Except as otherwise provided in this Declaration of Trust, special meetings of
shareholders may be called in the manner provided in the Bylaws. If there are no
Trustees, the officers of the Trust shall promptly call a special meeting of the
shareholders entitled to vote for the election of successor Trustees. Any
meeting may be adjourned and reconvened as the Trustees determine or as provided
in the Bylaws.
SECTION 8.2 Voting Rights. Subject to the provisions of any class or
series of Shares then outstanding, the shareholders shall be entitled to vote
only on the following matters: (a) election of Trustees as provided in Section
5.2 and the removal of Trustees as provided in Section 5.3; (b) amendment of
this Declaration of Trust as provided in Article X and amendment of the Bylaws,
to the extent that the Bylaws provide that certain provisions thereof
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may not be amended without the consent of the shareholders; (c) termination of
the Trust as provided in Section 10.3; (d) merger or consolidation of the Trust
or the sale or other disposition of substantially all of the property of the
Trust, as provided in Article XI; (e) such other matters with respect to which
the Board of Trustees has adopted a resolution declaring that a proposed action
is advisable and directing that the matter be submitted to the shareholders for
approval or ratification; and (f) such other matters as may be properly brought
before a meeting by a shareholder pursuant to the Bylaws. Except with respect to
the foregoing matters, no action taken by the shareholders will in any way bind
the Board of Trustees.
SECTION 8.3 Preemptive and Appraisal Rights. Except as may be provided
by the Board of Trustees in setting the terms of classified or reclassified
Shares pursuant to Section 6.4 or by way of contract in connection therewith, no
holder of Shares shall, as such holder, (a) have any preemptive right to
purchase or subscribe for any additional Shares of the Trust or any other
security of the Trust which it may issue or sell or (b), except as expressly
required by Title 8, have any right to require the Trust to pay him the fair
value of his Shares in an appraisal or similar proceeding.
SECTION 8.4 Extraordinary Actions. Except as otherwise specifically
provided in this Declaration of Trust (including without limitation, in those
provisions relating to election and removal of Trustees and as provided in
Article XI), notwithstanding any provision of law permitting or requiring any
action to be taken or authorized by the affirmative vote of the holders of a
greater number of votes, any action shall be effective and valid if taken or
authorized by the affirmative vote of not less than a majority of all the votes
entitled to be cast on the matter, including without limitation any transaction,
approval of which requires by law the affirmative vote of shareholders and
pursuant to which the Trust's business and assets will be combined with those of
one or more other entities (whether by merger, sale or other transfer of assets,
consolidation or share exchange) (a "Business Combination").
ARTICLE IX
LIABILITY LIMITATION, INDEMNIFICATION AND
TRANSACTIONS WITH THE TRUST
SECTION 9.1 Limitation of Shareholder Liability. No shareholder shall
be liable for any debt, claim, demand, judgment or obligation of any kind of,
against or with respect to the Trust by reason of his being a shareholder, nor
shall any shareholder be subject to any personal liability whatsoever, in tort,
contract or otherwise, to any person or entity in connection with the property
or the affairs of the Trust by reason of his being a shareholder.
SECTION 9.2 Limitation of Trustee and Officer Liability. To the maximum
extent that Maryland law in effect from time to time permits limitation of the
liability of trustees and officers of a real estate investment trust, no Trustee
or officer of the Trust shall be liable to the Trust or to any shareholder for
money damages. Neither the amendment nor repeal of this Section 9.2, nor the
adoption or amendment of any other provision of this Declaration of Trust
inconsistent with this Section 9.2, shall apply to or affect in any respect the
applicability of the
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preceding sentence with respect to any act or failure to act which occurred
prior to such amendment, repeal or adoption. In the absence of any Maryland
statute limiting the liability of trustees and officers of a Maryland real
estate investment trust for money damages in a suit by or on behalf of the Trust
or by any shareholder, no Trustee or officer of the Trust shall be liable to the
Trust or to any shareholder for money damages except to the extent that (a) the
Trustee or officer actually received an improper benefit or profit in money,
property, or services, for the amount of the benefit or profit in money,
property, or services actually received, or (b) a judgment or other final
adjudication adverse to the Trustee or officer is entered in a proceeding based
on a finding in the proceeding that the Trustee's or officer's action or failure
to act was the result of active and deliberate dishonesty and was material to
the cause of action adjudicated in the proceeding.
SECTION 9.3 Indemnification. The Trust shall have the power, to the
maximum extent permitted by Maryland law in effect from time to time, to
obligate itself to indemnify, and to pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to, (a) any individual who is a
present or former shareholder, Trustee or officer of the Trust or (b) any
individual who, while a Trustee of the Trust and at the request of the Trust,
serves or has served as a director, officer, partner, trustee, employee or agent
of another corporation, partnership, joint venture, trust, employee benefit plan
or any other enterprise, from and against any claim or liability to which such
person may become subject or which such person may incur by reason of his status
as a present or former shareholder, trustee or officer of the Trust. The Trust
shall have the power, with the approval of its Board of Trustees, to provide
such indemnification and advancement of expenses to a person who served a
predecessor of the Trust in any of the capacities described in (a) or (b) above
and to any employee or agent of the Trust or a predecessor of the Trust.
SECTION 9.4 Transactions Between the Trust and its Trustees, Officers,
Employees and Agents. Subject to any express restrictions in this Declaration of
Trust or adopted by the Trustees in the Bylaws or by resolution, the Trust may
enter into any contract or transaction of any kind with any person, including
any Trustee, officer, employee or agent of the Trust or any person affiliated
with a Trustee, officer, employee or agent of the Trust, whether or not any of
them has a financial interest in such transaction.
SECTION 9.5 Express Exculpatory Clauses in Instruments. The Board of
Trustees shall cause to be inserted in every written agreement, undertaking or
obligation made or issued on behalf of the Trust, an appropriate provision to
the effect that neither the shareholders nor the Trustees, officers, employees
or agents of the Trust shall be liable under any written instrument creating an
obligation of the Trust, and all Persons shall look solely to the property of
the Trust for the payment of any claim under or for the performance of that
instrument. The omission of the foregoing exculpatory language from any
instrument shall not affect the validity or enforceability of such instrument
and shall not render any shareholder, Trustee, officer, employee or agent liable
thereunder to any third party nor shall the Trustees or any officer, employee or
agent of the Trust be liable to anyone for such omission.
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ARTICLE X
AMENDMENTS
SECTION 10.1 General. The Trust reserves the right from time to time to
make any amendment to the Declaration of Trust, now or hereafter authorized by
law, including any amendment altering the terms or contract rights, as expressly
set forth in this Declaration of Trust, of any Shares. All rights and powers
conferred by this Declaration of Trust on shareholders, Trustees and officers
are granted subject to this reservation. An amendment to the Declaration of
Trust (a) shall be signed and acknowledged by at least a majority of the
Trustees, or an officer duly authorized by at least a majority of the Trustees,
(b) shall be filed for record as provided in Section 13.5 and (c) shall become
effective as of the later of the time the SDAT accepts the amendment for record
or the time established in the amendment, not to exceed 30 days after the
amendment is accepted for record. All references to the Declaration of Trust
shall include all amendments thereto.
SECTION 10.2 By Trustees. In addition to the rights of the Trustees to
amend the Declaration of Trust as provided in Section 6.1, the Trustees may
amend the Declaration of Trust from time to time, in the manner provided by
Title 8, without any action by the shareholders, to qualify as a real estate
investment trust under the Code or under Title 8.
SECTION 10.3 By Shareholders. Except as provided in Section 6.1 and
10.2 of this Declaration of Trust, any amendment to the Declaration of Trust,
other than an amendment to Article XI or Section 12.2 of this Declaration of
Trust, shall be valid only if approved by the affirmative vote of not less than
a majority of all the votes entitled to be cast on the matter. Any amendment to
Article XI or to Section 12.2 of this Declaration of Trust shall be valid only
if approved by the affirmative vote of not less than sixty-six and two-thirds
percent (66-2/3%) of all the votes entitled to be cast on such matter.
ARTICLE XI
MERGER, CONSOLIDATION OR SALE OF TRUST PROPERTY
Subject to the provisions of any class or series of Shares at the time
outstanding, the Trust may (a) merge the Trust into another entity, (b)
consolidate the Trust with one or more other entities into a new entity or (c)
sell, lease, exchange or otherwise transfer all or substantially all of the
property of the Trust. Any such action must be approved by the Board of Trustees
and, after notice to all shareholders entitled to vote on the matter, by the
affirmative vote of not less than sixty-six and two thirds percent (66 2/3%) of
all the votes entitled to be cast on the matter.
ARTICLE XII
DURATION AND TERMINATION OF TRUST
SECTION 12.1 Duration of Trust. The Trust shall continue perpetually
unless terminated pursuant to Section 12.2 or pursuant to any applicable
provision of Title 8.
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SECTION 12.2 Termination.
(a) Subject to the provisions of any class or series of Shares at the
time outstanding, the Trust may be terminated at any meeting of shareholders, by
the affirmative vote of not less than sixty-six and two thirds percent (66 2/3%)
of all the votes entitled to be cast on the matter.
Upon the termination of the Trust:
(i) The Trust shall carry on no business except for the purpose
of winding up its affairs;
(ii) The Trustees shall proceed to wind up the affairs of the
Trust and all of the powers of the Trustees under this Declaration of Trust
shall continue, including the powers to fulfill or discharge the Trusts
contracts, collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining property of the Trust to
one or more persons or entities at public or private sale for consideration
which may consist in whole or in part of cash, securities or other property of
any kind, discharge or pay its liabilities and do all other acts appropriate to
liquidate its business; and
(iii) After paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities and agreements
as they deem necessary for their protection, the Trust may distribute the
remaining property of the Trust, among the shareholders so that after payment in
full or the setting apart for payment of such preferential amounts, if any, to
which the holders of any Shares at the time outstanding shall be entitled, the
remaining property of the Trust shall, subject to any participating or similar
rights of Shares at the time outstanding, be distributed ratably among the
holders of Common Shares at the time outstanding.
(b) After termination of the Trust, the liquidation of its business,
and the distribution to the shareholders as herein provided, a majority of the
Trustees shall execute and file with the Trust's records a document certifying
that the Trust has been duly terminated, and the Trustees shall be discharged
from all liabilities and duties hereunder, and the rights and interests of all
shareholders shall cease.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Governing Law. This Declaration of Trust is executed by
the undersigned Trustees and delivered in the State of Maryland with reference
to the laws thereof, and the rights of all parties and the validity,
construction and effect of every provision hereof shall be subject to and
construed according to the laws of the State of Maryland without regard to
conflicts of laws provisions thereof.
SECTION 13.2 Reliance by Third Parties. Any certificate shall be final
and conclusive as to any persons dealing with the Trust if executed by the
President, Secretary or an Assistant
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Secretary of the Trust or a Trustee, and if certifying to: (a) the number or
identity of Trustees, officers of the Trust or shareholders; (b) the due
authorization of the execution of any document; (c) the action or vote taken,
and the existence of a quorum, at a meeting of the Board of Trustees or
shareholders; (d) a copy of this Declaration of Trust or of the Bylaws as a true
and complete copy as then in force; (e) an amendment to this Declaration of
Trust; (f) the termination of the Trust; or (g) the existence of any fact or
facts which relate to the affairs of the Trust. No purchaser, lender, transfer
agent or other person shall be bound to make any inquiry concerning the validity
of any transaction purporting to be made on behalf of the Trust by the Trustees
or by any officer, employee or agent of the Trust.
SECTION 13.3 Severability.
(a) The provisions of this Declaration of Trust are severable, and if
the Board of Trustees shall determine, with the advice of counsel, that any one
or more of such provisions (the "Conflicting Provisions") are in conflict with
the Code, Title 8 or other applicable federal or state laws, the Conflicting
Provisions, to the extent of the conflict, shall be deemed never to have
constituted a part of this Declaration of Trust, even without any amendment of
this Declaration of Trust pursuant to Article X and without affecting or
impairing any of the remaining provisions of this Declaration of Trust or
rendering invalid or improper any action taken or omitted prior to such
determination. No Trustee shall be liable for making or failing to make such a
determination. In the event of any determination by the Board of Trustees, the
Board of Trustees shall amend the Declaration of Trust in the manner provided in
Article X, Section 10.2.
(b) If any provision of this Declaration of Trust shall be held invalid
or unenforceable in any jurisdiction, such holding shall apply only to the
extent of any such invalidity or unenforceability and shall not in any manner
affect, impair or render invalid or unenforceable such provision in any other
jurisdiction or any other provision of this Declaration of Trust in any
jurisdiction.
SECTION 13.4 Construction. In this Declaration of Trust, unless the
context otherwise requires, words used in the singular or plural include both
the plural and singular and words denoting any gender include all genders. The
title and headings of different parts are inserted for convenience and shall not
affect the meaning, construction or effect of this Declaration of Trust. In
defining or interpreting the powers and duties of the Trust and its Trustees and
officers, reference may be made by the Trustees or officers, to the extent
appropriate and not inconsistent with the Code or Title 8, to Titles 1 through 3
of the Corporations and Associations Article of the Annotated Code of Maryland.
In furtherance and not in limitation of the foregoing, in accordance with the
provisions of Title 3, Subtitles 6 and 7, of the Corporations and Associations
Article of the Annotated Code of Maryland, the Trust shall be included within
the definition of "corporation" for purposes of such provisions.
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SECTION 13.5 Recordation. This Declaration of Trust and any amendment
hereto shall be filed for record with the SDAT and may also be filed or recorded
in such other places as the Trustees deem appropriate, but failure to file for
record this Declaration of Trust or any amendment hereto in any office other
than in the State of Maryland shall not affect or impair the validity or
effectiveness of this Declaration of Trust or any amendment hereto. A restated
Declaration of Trust shall, upon filing, be conclusive evidence of all
amendments contained therein and may thereafter be referred to in lieu of the
original Declaration of Trust and the various amendments thereto.
THIRD: These Articles of Amendment and Restatement of Declaration of
Trust were duly adopted by the Board of Trustees of the Trust by unanimous
written consent, and were duly approved by the sole shareholder of the Trust by
written consent, pursuant to and in accordance with the Declaration of Trust and
Bylaws of the Trust and applicable law.
FOURTH: The name and address of the Trust's current resident agent is
set forth in Paragraph SECOND of these Articles of Amendment and Restatement of
Declaration of Trust in Article IV.
FIFTH: Immediately prior to the amendments contained in these Articles
of Amendment and Restatement of Declaration of Trust, the number of trustees of
the Trust was two (2) and the names of those trustees were Dennis Gershenson and
Richard Gershenson. Immediately following the amendments contained in these
Articles of Amendment and Restatement of Declaration of Trust, the number of
trustees of the Trust will be nine (9) and the names of those trustees are set
forth in Paragraph SECOND of these Articles of Amendment and Restatement of
Declaration of Trust in Section 5.2 of Article V. Trustee Richard Gershenson has
resigned as a trustee of the Trust effective as of the date of filing with, and
acceptance by, the Department of these Articles of Amendment and Restatement of
Declaration of Trust.
SIXTH: Immediately prior to the amendments contained in these Articles
of Amendment and Restatement of Declaration of Trust, the Trust had authority to
issue 100,000 common shares of beneficial interest, par value $0.01 per share,
and the aggregate par value of all such authorized common shares of beneficial
interest of the Trust having par value was $1,000. Immediately following the
amendments contained in these Articles of Amendment and Restatement of
Declaration of Trust, the Trust will have authority to issue 40,000,000 shares
of beneficial interest, consisting of 30,000,000 common shares of beneficial
interest, par value $0.01 per share ("Common Shares"), and 10,000,000 preferred
shares of beneficial interest, par value $.01 per share ("Preferred Shares"),
and the aggregate par value of all such authorized shares of beneficial interest
of the Trust having par value will be $400,000.00.
SEVENTH: A description of each class of shares of beneficial interest
of the Trust, including the preferences, conversion and other rights, voting
powers and restrictions, limitations as to dividends, qualifications and terms
and conditions of redemption to the extent said are set forth in paragraph
SECOND of these Articles of Amendment and Restatement of Declaration of Trust in
Article VI entitled "Shares of Beneficial Interest."
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IN WITNESS WHEREOF, Ramco-Gershenson Properties Trust, a Maryland real
estate investment trust, has caused these Articles of Amendment and Restatement
of Declaration of Trust to be signed in its name and on its behalf by its
President on this 2nd day of October, 1997, and each of the undersigned officers
acknowledges that these Articles of Amendment and Restatement of Declaration of
Trust are the trustees' act of said Trust and as to all matters or facts
required to be verified under oath, each of the undersigned officers
acknowledges, under penalties of perjury, to the best of his knowledge,
information and belief such matters and facts are true in all material respects.
ATTEST: RAMCO-GERSHENSON PROPERTIES TRUST,
a Maryland real estate investment trust
/s/ Richard Gershenson By /s/ Dennis Gershenson (SEAL)
- ------------------------- ---------------------------------
Name: Richard Gershenson Name: Dennis Gershenson
Title: Secretary Title: President
<PAGE> 1
EXHIBIT 3.2
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
10/2/97 AT 2:56 p.m.
-------- -----
RGPT TRUST
ARTICLES SUPPLEMENTARY
Classifying 1,400,000 Preferred Shares of
Beneficial Interest as
SERIES A CONVERTIBLE PREFERRED
OF BENEFICIAL INTEREST
RGPT TRUST, a Maryland real estate investment trust ("Trust") formed under
Title 8 of the Corporations and Associations Article of the Annotated Code of
Maryland ("Title 8"), hereby certifies to the Maryland State Department of
Assessments and Taxation ("Department") that:
FIRST: Pursuant to the authority expressly conferred upon the Board of
Trustees by Article VI of its Declaration of Trust (the "Declaration of Trust")
in accordance with Section 8-203 of Title 8, the Board of Trustees by unanimous
written consent in lieu of meeting as permitted by the Bylaws of the Trust duly
adopted resolutions classifying 1,400,000 authorized but unissued Preferred
Shares of the Trust, par value $.01 per share, as a separate series of Preferred
Shares to be known as "Series A Convertible Preferred Shares," setting the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications and terms
and conditions of redemption of the Series A Convertible Preferred Shares, as
set forth in Article Second of these Articles Supplementary, and authorizing the
issuance of up to 1,400,000 Series A Convertible Preferred Shares.
SECOND: The Series of Preferred Shares of the Trust created by the
resolutions duly adopted by the Board of Trustees of the Trust and referred to
in Article FIRST of these Articles Supplementary shall have the following
designation, number of shares, preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption:
Section 1. DESIGNATION, AMOUNT AND PRICE.
A series of Preferred Shares designated as "Series A Convertible Preferred
Shares" (the "Series A Convertible Preferred Shares"_ is hereby established.
The number of Series A Convertible Preferred Shares shall be 1,400,000.
<PAGE> 2
Section 2. MATURITY DATE.
The date on which all Series A Convertible Preferred Shares will be
converted into common shares of beneficial interest of the Trust, par value
$.01 per share ("Common Shares"), by the Trust as provided in Section 6 of
these Articles Supplementary shall be the fifth anniversary of the date on which
shares of Series A Convertible Preferred Shares are first issued to the holders
thereof (the "Stated Maturity Date"), subject to earlier conversion as set
forth in Section 6 and subject to Section 8 of these Articles Supplementary
establishing a date on which all Series A Convertible Preferred Shares will be
redeemed in cash by the Trust (the "Accelerated Maturity Date").
Section 3. DIVIDENDS AND DISTRIBUTIONS.
(a) From and after the date of issuance, holders of Series A Convertible
Preferred Shares will be entitled to receive, when, as and if declared by the
Board of Trustees out of funds legally available for the payment of dividends,
cumulative quarterly cash dividends (rounded to the nearest whole cent, and if
no nearest whole cent, then rounded up to the nearest whole cent) equal to the
greater of (i) 2.40% of $25.00 per share (such $25.00, the "Stated Value"), and
(ii) the Common Shares Dividend Amount payable in arrears on the third Tuesday
of January, April, July and October of each year, commencing on the first such
day after the issuance of a Series A Convertible Preferred Share (each a
"Dividend Payment Date"). The "Common Shares Dividend Amount" applicable as of
any Dividend Payment Date shall mean the amount which is the product of (i) the
dollar amount of the dividend paid per Common Share on the dividend payment
date with respect to the Common Shares which occurs on such Dividend Payment
Date or is the dividend payment date with respect to the Common Shares next
preceding such Dividend Payment Date and (ii) the number of Common Shares into
which each Series A Convertible Preferred Share is entitled to be converted, at
the Conversion Price then in effect and otherwise as set forth in these
Articles Supplementary, as of the record date established for such Dividend
Payment Date (determined, for purposes of this computation, to the fifth
decimal place). Such dividends will accrue daily on the basis of a 365/366 day
year and actual days elapsed, and will, to the extent not paid in full on a
Dividend Payment Date, compound quarterly at a rate of 2.40% per quarter
(commencing on the last day of the month next preceding a Dividend Payment
Date), whether or not the Trust has earnings or surplus. The dividend under
Section 3(a) or 3(b), or both, of these Articles Supplementary payable to a
holder of a Series A Convertible Preferred Share on the first Dividend Payment
Date after the share is issued will be the accrued dividend calculated from the
day the share is issued to such Dividend Payment Date. If any Dividend Payment
Date is not a Business Day, the dividend due on that Dividend Payment Date will
be paid on the Business Day immediately succeeding that Dividend Payment Date.
No payment of quarterly dividends with respect to the Common Shares shall be
made on a date other than Dividend Payment Date or a date not more than five
Business Days prior to a Dividend Payment Date. As used with regard to the
Series A Convertible Preferred Shares, the term "Business Day" means a day on
which both state and federally chartered banks in New York, New York are
required to be open for general banking business, and all accrued and
compounded dividends together with all accrued but not yet due dividends
(whether or not authorized) are referred to as "Accrued Dividends".
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<PAGE> 3
(b) From and after the date of issuance, holders of Series A
Convertible Preferred Shares will be entitled to receive, when, as and if
declared by the Board of Trustees out of funds legally available for the
payment of dividends, in addition to dividends as set forth in Section 3(a),
cumulative quarterly cash dividends (rounded to the nearest whole cent, and if
no nearest whole cent, then rounded up to the nearest whole cent) equal to
0.74171% of Stated Value, payable in arrears on any Dividend Payment Date other
than a Dividend Payment Date on which payment is not required to be made as
provided in this Section 3(b). Such dividends will accrue daily on the basis
of a 365/366 day year and actual days elapsed, and will, to the extent not paid
in full on a Dividend Payment Date, compound quarterly at a rate of 3.14171%
per quarter (commencing on the last day of the month next preceding a Dividend
Payment Date), whether or not the Trust has earnings or surplus.
Notwithstanding the foregoing, dividends which holders of Series A
Convertible Preferred Shares are entitled to receive as set forth in this
Section 3(b) will not be payable as to Series A Convertible Preferred Shares
except as set forth below, but will accrue and compound as set forth above, and
shall be included in Accrued Dividends, on each Dividend Payment Date.
(1) On and after the occurrence of a Rate Event, holders of Series A
Convertible Preferred Shares will be entitled to receive quarterly
cash dividends as set forth in this Section 3(b) on each Dividend
Payment Date, except to the extent of such dividends as shall have
previously been included in Accrued Dividends prior to the occurrence
of a Rate Event (such portion of Accrued Dividends the "Section 3(b)
Suspended Dividends").
(2) On and after the occurrence of a Rate Event, Section 3(b) Suspended
Dividends will be payable as to each Series A Convertible Preferred
Share on the earlier of (i) the Accelerated Maturity Date, and (ii)
the Stated Maturity Date, in cash, or may, in the event of conversion
at the Stated Maturity Date, at the election of the Trust, be added to
Accrued Dividends to determine the aggregate amount of Stated Value
and the per share amount of Accrued Dividends for purposes of
conversion. Upon conversion after the occurrence of a Rate Event and
prior to the Stated Maturity Date, Section 3(b) Suspended Dividends
will be added to Accrued Dividends to determine for each outstanding
Series A Convertible Preferred Share the aggregate of Stated Value and
the per share amount of Accrued Dividends for purposes of conversion;
provided, however, that at the election of the Company, upon
conversion after the occurrence of a Rate Event and prior to the
Stated Maturity Date, the amount of Section 3(b) Suspended Dividends
included in Accrued Dividends may be paid in cash at the effective
time of conversion in lieu of being included in Accrued Dividends for
purposes of conversion.
(3) On and after the occurrence of a Rate Event, Section 3(b) Suspended
Dividends will be payable (and for purposes of interpretation, will
not be included in Accrued Dividends at the time of application or
payment of Accrued Dividends prior to the occurrence of a Rate Event)
(i) as to each Series A Convertible
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Preferred Share (determined at the time of printing of the
initial preliminary or "red herring" prospectus in connection with
the Qualified Underwritten Offering, but as at a time immediately
before conversion), on the Mandatory Conversion Date (as defined in
Section 6(b) which occurs by reason of the Qualified Underwritten
Offering, but only to the extent of the amount of the Per Share IRR
Lookback Amount (defined below), and shall be paid in cash or may,
upon conversion at the election of the Trust, be added to Accrued
Dividends to determine the aggregate amount of Stated Value and the
per share amount of Accrued Dividends for purposes of conversion, and
(ii) as to each Series A Convertible Preferred Share at the time of
payment of any liquidation preference. As used herein, the "Per Share
IRR Lookback Amount" shall be the IRR Lookback Amount (as defined
below) divided by the number of Series A Convertible Preferred Shares
outstanding on the date of such determination. As used herein, the
"IRR Lookback Amount" shall mean, as of the date of such
determination, an amount payable to all holders of Series A
Convertible Preferred Shares which is sufficient for the holders,
considered in the aggregate, to receive an IRR (as defined below)
equal to 3.55581% per calendar quarter, compounded quarterly, over the
period from September 30, 1997 to said Mandatory Conversion Date. As
used herein, "IRR" shall mean, as of said Mandatory Conversion Date,
a rate equal to a compounded quarterly rate which results in (a) the
sum of all (1) dividends paid on Series A Convertible Preferred Shares
outstanding on the date of such determination, (2) distributions paid
on such number of Preferred Units (defined below) which is equal to
the number of Series A Convertible Preferred Shares outstanding on the
date of such determination), and (3) Assumed Common Shares Sales
Proceeds (defined below), discounted on a quarterly basis at such
rate from the Mandatory Conversion Date back to the day on which such
amounts were paid, or, in the case of Assumed Common Shares Sales
Proceeds, assumed received as at the Mandatory Conversion Date, minus
(b) the sum of all amounts paid as "Purchase Price" under that certain
Preferred Units and Stock Purchase Agreement dated as of September 30,
1997, among Ramco-Gershenson Properties, L.P., Ramco-Gershenson
Properties Trust, Special Situations RG REIT, Inc., and the Advancing
Party named therein (as the same may be amended or supplemented, the
"Purchase Agreement"), discounted on a quarterly basis at such rate
from said Mandatory Conversion Date to the date or dates on which such
amounts of Purchase Price were paid, being equal to zero. As used
herein, "Assumed Common Shares Sales Proceeds" means the sale, at the
Current Market Price (as defined in Section 6(e) (vii)), determined on
the date of printing of the initial preliminary or "red herring"
prospectus in connection with the Qualified Underwritten Offering, of
that number of Common Shares into which all outstanding Series A
Convertible Preferred Shares are, as provided herein, convertible if
converted on such date of determination. As used herein, "Preferred
Units" shall mean the Preferred Units of the Operating Partnerships,
as each of such terms is defined in the Purchase Agreement.
As used with regard to the Series A Convertible Preferred Shares, the
term "Rate Event" means each of the following events: (i) the Trust
shall fail to pay in full when due any
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<PAGE> 5
dividend on the Series A Convertible Preferred Shares; (ii) the Trust
shall (A) fail to pay in full when due any principal, premium or interest with
respect to any Indebtedness (defined below) having an outstanding aggregate
principal amount in excess of $15,000,000 (but excluding, for purposes of this
clause (ii)(A), Indebtedness which is without recourse to any Person and the
sole remedy of the lender thereof is the enforcement of a mortgage lien on real
estate, if the amount secured by such lien is in excess of the fair market
value of the real estate so encumbered (with fair market value being determined
without regard to the amount secured by the mortgage lien so to be enforced or
as to any other obligations or Indebtedness encumbering or enabling the holders
thereof to make a claim against such real estate to the extent that such other
obligations or Indebtedness are not secured by a mortgage lien which is senior
and prior to the lien so to be enforced), (B) allow such Indebtedness
(excluding as aforesaid) to be declared due and payable, or to be required to
be repaid (other than by a regularly scheduled required prepayment) prior to
the stated maturity thereof, or (C) fail to observe or perform any agreement or
condition relating to such Indebtedness, or contained in any instrument or
agreement evidencing, securing or relating thereto, and such failure shall
continue beyond any applicable grace period such that it could reasonably be
expected to have a material adverse effect on the financial condition, results
of operations or business of the Trust, together with Ramco-Gershenson
Properties, L.P. (together with any successor thereto, the "Operating
Partnership") and any other Subsidiary (as used herein, "Subsidiary" shall mean
any entity and "Subsidiaries" shall mean more than one of the entities in which
the Trust has a direct or indirect equity interest) taken as a whole; (iii)
there shall have occurred an IRS Termination Determination (as defined in
Section 4(c) below) and the Trust does not receive (within 90 days of the date
established in the IRS Termination Determination as the date on which the
Deficiency Dividend (as defined in Section 3(g) hereof) is required to be
paid), pursuant to the Tax Agreement, full payment by way of indemnity for any
amount paid or to be paid as a Deficiency Dividend; (iv) there shall have not
occurred prior to the Stated Maturity Date an underwritten, Widely Distributed
(defined below) offering of Common Shares, the gross proceeds of which are not
less than $40,300,000 (a "Qualified Underwritten Offering"); (v) the Trust
shall use the proceeds of the sale of the Series A Convertible Preferred Shares
(or the proceeds of the sale of the Preferred Units pursuant to the Purchase
Agreement) other than for the repayment of the principal amount of Indebtedness
or to meet its operating objectives in purchasing or redeveloping retail
properties of the nature operated by Ramco-Gershenson Properties Trust on
September 30, 1997; (vi) there shall occur any event which, under Section 4 of
these Articles Supplementary, requires the approval of holders of Series A
Convertible Preferred Shares, without such approval having been previously
obtained; (vii) there shall have occurred an event as described in Section
4(c)(iv), except as set forth below, regardless of whether or not there shall
have been obtained the approval thereof as established in Section 4 of these
Articles Supplementary; or (viii) neither Dennis Gershenson, nor a replacement
reasonably acceptable to Morgan Stanley Asset Management Inc., shall hold the
office and function in the capacity of president and chief executive officer of
the Trust, other than as a result of the death or a condition of disability
extending for a continuous period of not less than 180 days of Dennis
Gershenson. As used herein, "Widely Distributed" shall mean, in the context of
an underwritten public offering, an offering in which (i) a minimum of 30% of
the Common Shares included in such offering is purchased by retail individual
brokerage customers brought into the transaction by the members of the
underwriting syndicate and (ii) a minimum of eight institutions shall have
purchased Common Shares. With respect to a Rate Event of the nature set forth
in clause (vii)
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<PAGE> 6
of this paragraph, such event shall not result in an increase in dividends as
provided in Section 3(b) with respect to the holder of Series A Convertible
Preferred Shares if and to the extent such holder shall have voted such Series
A Convertible Preferred Shares affirmatively for a matter set forth in the
definition of "Change of Control" set forth below. As used herein,
"Indebtedness" shall mean all obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should
be made by footnotes thereto, but without any double counting, including in any
event and whether or not so classified: (a) all debt and similar monetary
obligations, whether direct or indirect; (b) all liabilities secured by any
Lien on property owned or acquired subject thereto, whether or not the
liability secured thereby shall have been assumed; and (c) all guarantees,
endorsements and other contingent obligations whether direct or indirect in
respect of indebtedness of others, including any obligation to supply funds to
or in any manner to invest directly or indirectly in a Person, to purchase
indebtedness, or to assure the owner of indebtedness against loss through an
agreement to purchase goods, supplies or services for the purpose of enabling
the debtor to make payment of the indebtedness held by such owner or otherwise,
and the obligation to reimburse the issuer in respect of any letter of credit.
As used herein, "Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, security interest, lien
(statutory or other) or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
capitalized lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction in respect of any of the
foregoing). As used herein, "Person" shall mean an individual, partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government or other entity of whatever nature.
(c) Each dividend will be payable to holders of record of the Series A
Convertible Preferred Shares on a date (a "Record Date") selected by the Board
of Trustees which is not less than 10 nor more than 45 days before the Dividend
Payment Date on which the dividend is to be paid. No Record Date will precede
the close of business on the date the Record Date is fixed.
(d) Unless and until all Accrued Dividends on the Series A Convertible
Preferred Shares under Section 3(a) through the last preceding Dividend Payment
Date have been paid, and unless and until all Accrued Dividends on the Series A
Convertible Preferred Shares under Section 3(b) (but excluding Section 3(b)
Suspended Dividends, which shall be paid only as provided in subparagraphs (2)
and (3) of the second paragraph of Section 3(b) through the last Dividend
Payment Date have been paid, the Trust may not (i) declare or pay any dividend,
make any distribution (other than a distribution payable solely in Common
Shares), or set aside any funds or assets for payment or distribution with
regard to any Junior Shares (as herein defined), (ii) redeem for purchase
(directly or through the Operating Partnership or subsidiaries), or set aside
any funds or other assets for the redemption or purchase of, any Junior Shares
or (iii) authorize, take or cause or permit to be taken any action as general
partner of the
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Operating Partnership, that will result in (A) the declaration or payment by
the Operating Partnership of any distribution to its partners (other than
distributions payable to the Trust as general partner that will be used by the
Trust to fund the payment of dividends on the Series A Convertible Preferred
Shares (such distributions to the Trust being referred to as "Authorized GP
Distributions")), or set aside any funds or assets for payment of any
distributions (other than Authorized GP Distributions) or (B) the redemption or
purchase (directly or through the Operating Partnership or subsidiaries), or
the setting aside of any funds or other assets for the redemption or purchase
of, any partnership interests in the Operating Partnership, except for
exchanges of partnership interests in the Operating Partnership in the ordinary
course solely for Common Shares as a result of which the Trust's partnership
interest in the Operating Partnership increases by the amount of such
partnership interest so exchanged. As used with regard to the Series A
Convertible Preferred Shares, the term "Junior Shares" means all Common Shares
and all shares of all other classes or series of the Trust to which the Series
A Convertible Preferred Shares are prior in rank with regard to payment of
dividends or payments upon the liquidation, dissolution or winding-up of the
Trust.
(e) While any Series A Convertible Preferred Shares are outstanding,
the Trust may not pay any dividend, or set aside any funds for the payment of a
dividend, with regard to any shares of any class or series of the Trust which
ranks on a parity with Series A Convertible Preferred Shares as to payment of
dividends unless at least a proportionate payments is made with regard to all
Accrued Dividends on the Series A Convertible Preferred Shares (except that
portion of Accrued Dividends which, as Section 3(b) Suspended Dividends, are
required to be paid only upon the Stated Maturity Date, the Accelerated
Maturity Date, or, as to any Series A Convertible Preferred Shares as to which
a notice of conversion has been furnished by the holder thereof, at the
effective time of conversion). A payment of dividends with regard to the Series
A Convertible Preferred Shares will be proportionate to a payment of a dividend
with regard to another class of series of shares if the dividend per Series A
Convertible Preferred Share is the same percentage of the Accrued Dividends
(except as aforesaid) with regard to a Series A Convertible Preferred Share
that the dividend paid with regard to shares of the other class or series is of
the Accrued Dividends (except as aforesaid) with regard to a share of stock of
that other class of series.
(f) Any dividend paid with regard to Series A Convertible Preferred
Shares will be paid equally with regard to each outstanding Series A
Convertible Preferred Share, except to the extent that the Series A Convertible
Preferred Shares are outstanding for differing amounts of time during the
relevant dividend period.
(g) Except as provided below in this Section 3(g) to the contrary, to
the extent that Federal income tax for the Trust's taxable years ending
December 31, 1991, 1992, 1993 and 1994 may be avoided by the declaration and
distribution of a deficiency dividend as provided in Section 860 of the Code (a
"Deficiency Dividend"), the Trust, if, but only if, the Trust has received all
funds required therefor from Atlantic Realty Trust under the Tax Agreement
(defined below), may distributed such Deficiency Dividend to holders of record
of Common Shares at a record date established in connection therewith, whether
or not all or any Accrued Dividends have been paid on the Series A Convertible
Preferred Shares, and any such distribution of a Deficiency Dividend to holders
of Common Shares shall be disregarded in, and
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any such Deficiency Dividend shall be excluded from, the determination of the
Common Shares Dividend Amount. In the event the Trust determines to make a
distribution of a Deficiency Dividend not all of the funds for which (together
with all of the funds for any previous Deficiency Dividend) have theretofore
been paid to the Trust under the Tax Agreement, then any such Deficiency
Dividend amounts may be paid only in the following order of priority:
first, in the payment of all Accrued Dividends then due,
second, in the payment equally with regard to the holders of
record of Series A Convertible Preferred Shares and the Common
Shares at a record date established in connection
therewith, with the amount so payable with respect to each
Series A Convertible Preferred Share being determined in
accordance with the procedures established with respect to the
Common Shares Dividend Amount.
Section 4. VOTING RIGHTS.
The voting rights of the holders of Series A Convertible Preferred
Shares will be only the following:
(a) The holders of Series A Convertible Preferred Shares will have
the right to vote on all matters in which the holders of Common Shares are
entitled to vote on an "as converted" basis with holders of the Common Shares,
as though part of the same class as holders of Common Shares, with such number
of Common Shares deemed held of record by a holders of Series A Convertible
Preferred Shares on any Record Date as would be the number of Common Shares
into which the Series A Convertible Preferred Shares by such holder would be
entitled to be converted on such Record Date. The holders of Series A
Convertible Preferred Shares shall receive all notices of meetings of the
holders of shares Common Shares, and all other notices and correspondences to
the holders of Common Shares provided by the Trust and shall be entitled to take
such actions, and shall have such rights, as are accorded the holders of Common
Shares in the Declaration of Trust and in the by-laws of the Corporation as are
in effect on the date hereof, in each case with the same effect as would be
taken by holders of such number of Common Shares as determined as aforesaid.
(b) While any Series A Convertible Preferred Shares are
outstanding, the Trust will not, directly or indirectly, including through a
merger or consolidation with any other corporation or otherwise, without
approval of holders of at least 51% of the outstanding Series A Convertible
Preferred Shares, voting separately as a class, (i) issue any Series A
Convertible Preferred Shares except pursuant to the Purchase Agreement or
increase the number of authorized shares of Series A Convertible Preferred
Shares, (ii) combine, split or reclassify the outstanding shares of Series A
Convertible Shares into a smaller or larger number of shares; (iii) exchange or
convert any Series A Convertible Preferred Shares for other securities or the
right to receive cash, or to propose or require an exchange or conversion, or to
require a conversion other than as expressly provided hereby, or to reclassify
any Series A Convertible Preferred Shares, or to authorize, create, classify,
reclassify or issue any class or series of stock ranking prior to or on a parity
with the Series A Convertible Preferred Shares either as to dividends or upon
liquidation, dissolution or winding-up of the Trust, (iv) amend, alter or
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repeal, or permit to be amended, altered or repealed, any of the provisions of
these Articles Supplementary, the By-laws of the Trust, the agreement of
limited partnership of the Operating Partnership or the organizational document
of any Subsidiary in such a manner as would affect adversely the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications and terms and conditions of
redemption of the Series A Convertible Preferred Shares (including, without
limitation, taking any such action the result of which could be to alter the
manner or rate of exchange of partnership interests in the Operating Partnership
for securities of Ramco-Gershenson Properties Trust, a Massachusetts business
trust, as in effect on September 30, 1997) or, in the case of a proposed
amendment to the agreement of limited partnership of the Operating
Partnership, or any organizational document of any Subsidiary, in such a manner
as would affect adversely the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends and other distributions, and
qualifications of the holders of the Common Shares and the Series A Convertible
Preferred Shares, considered as a whole; (v) permit to be amended or waive any
provision of that certain Tax Agreement dated May 10, 1996 between the Trust
and Atlantic Realty Trust (the "Tax Agreement"); or (vi) other than a result of
a Trustee Election (defined below) adopt a plan for or effect a voluntary
liquidation, dissolution or winding up of the Trust, the sale of substantially
all of the assets of the Trust, or the merger, consolidation or
recapitalization of the Trust. As used herein, "Trustee Election" shall mean
an election by the Trustees to liquidate the Operating Partnership and the Trust
as provided in Section 12.7 of the Amended and Restated Master Agreement, dated
as of December 27, 1995 by and among Ramco-Gershenson, Inc., Dennis
Gershenson, Joel Gershenson, Bruce Gershenson, Richard Gershenson, Michael A.
Ward, Michael A. Ward U/T/A dated 2/22/77 as amended, Ramco-Gershenson
Properties,L.P. and each of the Ramco Contributing Parties set forth on
schedule A thereto.
(c) While any Series A Convertible Preferred Shares are outstanding,
the Trust will not, directly or indirectly, including through a merger or
consolidation with any other corporation or otherwise, without the approval of
the holders of 51% of the outstanding the Series A Convertible Preferred
Shares, voting separately as a class, propose, authorize, take, or cause to be
taken or allow to occur any of the following actions: (1) with the exception
of (A) the public market trading of Common Shares in unsolicited transactions
or (B) a Qualified Underwritten Offering, the sale, transfer or assignment, in
a single transaction or series of transactions, of beneficial interests in or
voting rights with respect to assets of the Trust or the Operating Partnership
or any Subsidiary, or any other person (except that with respect to any
subsidiary in which the Trust or the Operating Partnership has a minority
interest such that a sale, transfer or assignment is not within the Trust's or
Operating Partnership's control, this prohibition shall not apply), owned
directly or indirectly by the Trust to the extent of the Trust's attributed
interest in such other person, having a fair market value (based on the value
of the total consideration of each such transaction, including, without
limitation, any debt assumed by any purchaser in connection therewith) in
excess of $50,000,000 within any 90-day period or $150,000,000 within any
360-day period, (ii) the Trust's termination of the election, or the taking of
any action by the Trust which would cause termination other than by election,
of the Trust as a real estate investment trust under the Internal Revenue Code
of 1986, as amended, other than a determination by the Internal Revenue Service
that it will for any period deny the Company the tax benefits associated with
the election as a real estate investment trust due solely
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and directly to the Tax Case (an "IRS Termination Determination"); (iii) any
alteration in the Trust's or the Operating Partnership's business such that the
real estate assets owned directly or indirectly by the Trust are, on a square
foot basis, less than 90% invested in retail properties of the nature of the
predominant real estate assets of the Trust the on date hereof; or (iv) any
Change in Control (as defined below) of the Trust or the Operating Partnership,
or any response to a proposal the effect of which, if consummated, could be a
Change of Control. As used herein, "Tax Case" shall mean the Internal Revenue
Service's tax investigation dealing with the Trust's tax status, as described
in the Trust's SEC Reports to the extent the Trust has incurred or will incur,
directly or indirectly, voluntarily or involuntarily, any liability for which
it is entitled to be reimbursed under the Tax Agreement. As used herein "SEC
Reports" shall mean each registration statement, report, proxy statement or
information statement and all exhibits thereto prepared by the Trust or
relating to its properties filed with the Securities and Exchange Commission.
As used herein, a "Change of Control" of the Trust or the Operating
Partnership shall be deemed to have occurred if any of the following occur (or,
in the case of any proposal, if any of the following could occur as a result
thereof): (i) the Trust takes or fails to take any action such that it ceases
to be required to file reports under Section 13 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or any successor to that Section;
(ii) any "person" (as defined in Sections 13(d) and 14(d) of the Exchange Act)
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of either (a) 25% or more of the outstanding
Common Shares, or (b) 25% (by right to vote or grant or withhold any approval)
of the outstanding securities of any other class or classes which individually
or together have the power to elect a majority of the members of the Board of
Trustees of the Trust (the "Board"); (ii) the Board determines to recommend, or
fails to determine to recommend, the acceptance of any proposal set forth in a
tender offer statement or proxy statement filed by any person with the
Securities and Exchange Commission which indicates the intention on the part of
that person to acquire, or acceptance of which would otherwise have the effect
of that person acquiring, either (a) 25% or more of the outstanding the Common
Shares, or (b) 25% (by right to vote or grant or withhold any approval) of the
outstanding securities of any other class or classes which individually or
together have the power to elect a majority of the members of the Board; (iv)
other than as a result of the death or disability of one or more of the
directors within a three-month period, a majority of the members of the Board
for any period of three consecutive months are not persons who (a) had been
directors of the Trust for at least the preceding 24 consecutive months or (b)
when they initially were elected to the Board, (x) were nominated (if they
were elected by the shareholders) or elected (if they were elected by the
directors) with the affirmative concurrence of 66-2/3% of the directors who
were Continuing Directors at the time of the nomination or election by the
Board and (y) were not elected as a result of an actual or threatened
solicitation of proxies or consents by a person other than the Board or an
agreement intended to avoid or settle such a proxy solicitation (the directors
described in clauses(a) and (b) of this subsection (iv) being "Continuing
Directors"); (v) the Trust ceases to be the sole General Partner of the
Operating Partnership or grants or sells to any person the power to control or
direct the actions of the Operating Partnership as if such person (A) is a
general partner of the Operating Partnership or (B) is a limited partner of the
Operating Partnership with consent or approval rights greater than the consent
or approval right held by the limited partners of the Operating Partnership on
the
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date hereof; or (vi) the Operating Partnership is a party to any entity
conversion or any merger or consolidation in which the Operating Partnership is
not surviving entity in such merger or consolidation or in which the effect is
of the nature set forth in the next preceding clause (v) of this Section 4(c).
(d) Prior to the occurrence after the date hereof a Qualified
Underwritten Offering, the Trust will not, directly or indirectly, without the
approval of the holders of 51% of the outstanding Series A Convertible Preferred
Shares, voting separately as a class, issue any additional Common Shares or
Preferred Shares of the Trust. Notwithstanding the foregoing, the Trust will
be permitted to issue Common Shares as part of an acquisition, or as follows:
(i) issuances of Common Shares to officers, employees or trustees of the Trust
not in excess of that number of shares permitted to be issued pursuant to the
1996 Stock Option Plan and the 1997 Non-Employee Trustee Option Plan, as each
such plan is in effect as at September 30, 1997; (ii) issuances of Common
Shares pursuant to any dividend reinvestment plan maintained by the Trust; and
(iii) issuances of Common Shares with respect to exchanges of partnership
interests in the Operating Partnership in the ordinary course solely for Common
Shares as a result of which the Trust's partnership interest in the Operating
Partnership increases by the amount of such partnership interest so exchanged.
Section 5. LIQUIDATION.
Upon the liquidation, dissolution or winding-up of the Trust, whether
voluntary or involuntary, the holders of the Series A Convertible Preferred
Shares, will be entitled to receive out of the assets of the Trust available
for distribution to its shareholders, whether from capital, surplus or
earnings, before any distributions made to holders of any Junior Shares, an
amount per share (the "Liquidation Preference") equal to the sum of (i) Stated
Value plus (ii) the per share amount of Accrued Dividends with regard to the
Series A Convertible Preferred Shares to the date of final distribution
(whether or not declared). If, upon any liquidation, dissolution or winding-up
of the Trust, the assets of the Trust, or proceeds of those assets, available
for distribution to the holders of Series A Convertible Preferred Shares and of
shares of all other classes or series which are on a parity as to distributions
on liquidation with the Series A Convertible Preferred Shares are not
sufficient to pay in full the Liquidation Preference to the holders of the
Series A Convertible Preferred Shares and any liquidation preference of all
other classes or series which are on a parity as to distributions on
liquidation with the Series A Convertible Preferred Shares, then the assets, or
the proceeds of those assets, which are available for distribution to the
holders of Series A Convertible Preferred Shares and of the shares of all other
classes or series which are on a parity as to distributions on liquidation with
the Series A Convertible Preferred Shares ratably in accordance with the
respective amounts of the liquidation preferences of the share held by each of
them. After payment of the full amount of the Liquidation Preference, the
holders of Series A Convertible Preferred Shares will not be entitled to any
further distribution of assets of the Trust. For the purposes of this Section,
neither a consolidation or merger of the Trust with
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another corporation, nor a sale or transfer of all or any part of the Trust's
assets for cash or securities, will be considered a liquidation, dissolution or
winding-up of the Trust.
Section 6. Conversion Into Common Shares.
(a) Optional Conversion. (i) Each holder of Series A Convertible
Preferred Shares will have the right, at the holder's option, exercised by
notice to such effect (the "Notice of Election to Convert"), to convert all or
any of the Series A Convertible Preferred Shares held of record by the holder
into Common Shares, such that each Series A Convertible Preferred Share will be
entitled to be converted into (A) a number of fully paid and non-assessable
Common Shares (calculated as to each conversion to the nearest 1/100th of a
share) equal to Stated Value plus the amount, if any, of the per share amount of
Accrued Dividends (subject, to the extent of Section 3(b) Suspended Dividends,
to the proviso in the last sentence of subparagraph 2 of the second paragraph
of Section 3(b) hereof) as of the effective time of the conversion, divided by
the Conversion Price, as defined below, then in effect, or (B) such other
securities or assets as the holder is entitled to receive in accordance with
Section 6(e).
(ii) The holder of each Series A Convertible Preferred Share to be
converted must surrender the certificate representing that share to the
conversion agent of the Series A Convertible Preferred Shares appointed by the
Trust (which may be the Trust itself), with the notice of Election to Convert
on the back of that certificate duly completed and signed, at the principal
office of the conversion agent. If the shares issuable on conversion are to be
issued in a name other than the name in which the Series A Convertible
Preferred Shares is registered, each share surrendered for conversion must be
accompanied by an instrument of transfer, in form reasonably satisfactory to
the Trust, duly executed by the holder or the holder's duly authorized and by
funds in an amount sufficient to pay any transfer or similar tax which is
required to be paid in connection with the transfer or evidence that such tax
has been paid or is not payable.
(b) Mandatory Conversion. All, but not less than all, outstanding
Series A Convertible Preferred Shares will be subject to conversion on that
date which is the earlier of the occurrence of a Qualified Underwritten
Offering and the Stated Maturity Date (the earlier of such to occur, the
"Mandatory Conversion Date"), subject to the obligation of the Trust to redeem
the Series A Convertible Preferred Shares for cash on an Accelerated Maturity
Date as provided in Section 8, and subject to earlier conversion at the option
of the holders as set forth in this Section 6. Each Series A Convertible
Preferred Share shall be convertible into a Common Share at Stated Value plus
the per share amount of Accrued Dividends, if any (subject, to the extent of
Section 3(b) Suspended Dividends, to the proviso in the last sentence of
subparagraph 2 of the second paragraph of Section 3(b) hereof), for each Series
A Convertible Preferred Share so converted, for Common Shares issued on
conversion priced at the Conversion Price calculated in accordance with
Section 6(e) of these Articles Supplementary. In order to effect the mandatory
conversion of the Series A Convertible Preferred Shares, the Trust shall mail a
notice (the "Notice of Mandatory Conversion") to all holders of outstanding
Series A Convertible Preferred Shares on a date (the "Mandatory Conversion
Notice Date") at least 60 but not more than 90 days prior to the Mandatory
Conversion Date, except that in the case of the Mandatory Conversion Date which
is occasioned by a Qualified Underwritten Offering, the
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Trust may provide the Notice of Mandatory Conversion which references an
expected date of such occurrence provided that the Trust confirms the Mandatory
Conversion Date in a supplemental notice to all holders of Series A Convertible
Preferred Shares immediately upon the occurrence of a Qualified Underwritten
Offering. If the Trust gives a Notice of Mandatory Conversion, the outstanding
Series A Convertible Preferred Shares will be automatically converted into
Common Shares at the close of business on the Mandatory Conversion Date
regardless of whether the holders of Series A Convertible Preferred Shares
actually surrender the certificates representing their Series A Convertible
Preferred Shares for conversion. At the close of business on the Mandatory
Conversion Date, (i) the certificates representing the Series A Convertible
Preferred Shares will cease to represent anything other than the right to
receive the Common Shares into which the Series A Convertible Preferred Shares
were automatically converted and (ii) the Trust may, at its option (the
exercise of which will be described in the Notice of Mandatory Conversion),
either (A) deliver certificates representing the Common Shares to which the
holders of the Series A Convertible Preferred Shares are entitled without
requiring the surrender of the certificates which formerly represented Series A
Convertible Preferred Shares, or (B) deliver certificates representing the
Common Shares when the holder surrenders the certificates which formerly
represented the Series A Convertible Preferred Shares and complies with the
other requirements of subparagraph 6(a)(ii) (excluding the completion of the
Notice of Election to Convert).
(c) Conversion Procedures. (i) The effective time of the conversion
under Section 6(a) shall be immediately prior to the close of business on the
day when all the conditions in Section 6(a)(ii) have been satisfied. The
effective time of the conversion under Section 6(b) shall, subject to the
rights of holders under Section 6(a) and Section 8, be immediately prior to the
close of business on the mandatory Conversion Date.
(ii) If shares are surrendered between the close of business on a
dividend payment Record Date and the opening of business on the corresponding
Dividend Payment Date ("Ex Record Date Shares"), the dividend with respect to
those shares will be payable on the Dividend Payment Date to the holder of
record of the Ex Record Date Shares on the dividend payment Record Date
notwithstanding the surrender of the Ex Record Date Shares for conversion after
the dividend payment Record Date and prior to the Dividend Payment Date. The
Trust will make no payment or adjustment for Accrued Dividends on Ex Record
Date Shares, whether or not in arrears, or for dividends on the Common Shares
issued upon conversion of the Ex Record Date Shares, other than to make payment
to the holder of record thereof on the Record Date. The provisions of this
Section 6(c)(ii) shall not limit the obligation of the Trust to issue Common
Shares in conversion of Series A Convertible Preferred Shares, including Ex
Record Date Shares, at Stated Value plus Accrued Dividends, as elsewhere
provided in these Articles.
(iii) Except as otherwise permitted in clause (ii)(B) of the last
sentence of Section 6(b), as promptly as practicably after the effect time for
conversion of Series A Convertible Preferred Shares, the Trust will issue and
will deliver to the holder at the office of the holder set forth in the Notice
of Election to Convert, or on the holder's written order, a certificate or
certificates representing the number of full Common Shares issuable upon the
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conversion of the Series A Convertible Preferred Shares. Any fractional
interest in respect of a Common Share arising upon a conversion will be settled
as provided in Section 6(d).
(iv) Each conversion will be deemed to have been effected at the
effective time provided in Section 6(c)(i), and the person in whose name a
certificate for Common Shares is to be issued upon a conversion will be deemed
to have become the holder of record of the Common Shares represented by that
certificate at such effective time. All Common Shares delivered upon conversion
of Series A Convertible Preferred Shares will upon delivery be duly and validly
issued and fully paid and nonassessable, free of all liens and charges and not
subject to any preemptive rights except such preemptive rights as may exist
pursuant to the Purchase Agreement. The Series A Convertible Preferred Shares
so converted will no longer be deemed to be outstanding and all rights of the
holder with respect to those shares will immediately terminate, except the
right to receive the Common Shares or, if applicable, other securities, cash or
other assets to be issued or distributed as a result of the conversion.
(d) Fractional Shares. No fractional Common Shares will be issued upon
conversion of Series A Convertible Preferred Shares. Any fractional interest in
a Common Share resulting from conversion of Series A Convertible Preferred
Shares will be paid in cash (computed to the nearest cent) based on the Current
Market Price (as herein defined) of the Common Shares on the Trading Date next
preceding the date of conversion. If more than one Series A Convertible
Preferred Share is surrendered for conversion at substantially the same time by
the same holder, the number of full shares of Common Shares issuable upon the
conversion will be computed on the basis of all the Series A Convertible
Preferred Shares surrendered at that time by that holder.
(e) Conversion Price. The "Conversion Price" per Series A Convertible
Preferred Share will initially be $17.50, and will be adjusted as follows from
time to time if any of the events described below occurs:
(i) If the Trust (A) pays a dividend or makes a distribution on its
Common Shares in its Common Shares or (B) subdivides, splits or reclassified
its outstanding Common Shares into a greater number of shares, the Conversion
Price in effect immediately prior to that event will be reduced so that the
holder of a Series A Convertible Preferred Share surrendered for conversion
after than event will receive the number of Common Shares which the holder
would have received if the Series A Convertible Preferred Shares had been
converted immediately before the happening of the event (or, if there is more
than one such event, if the Series A Convertible Preferred Shares had been
converted immediately before the first of those events and the holder had
retained all the Common Shares or other securities or assets received after the
conversion). If the Trust combines its outstanding Common Shares into a smaller
number of shares, the Conversion Price in effect immediately prior to that
event will be increased so that the holder of a Series A Convertible Preferred
Shares surrendered for conversion after that event will receive the number of
Common Shares which the holder would have received if the Series A Convertible
Preferred Shares had been converted immediately before the happening of the
event (or, if there is more than one such event, if the Series A Convertible
Preferred Shares had been converted immediately before the first of those
events and the holder had retained all the Common Shares or other securities or
assets received after the
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conversion). An adjustment made pursuant to this Section 6(e)(i) will become
effective immediately after the Record Date in the case of a dividend or
distribution, and will become effective immediately after the effective date in
the case of a subdivision, split, reclassification or combination. If such
dividend or distribution is declared but is not paid or made, the Conversion
Price then in effect will be appropriately readjusted. However, a readjustment
of the Conversion Price will not affect any conversion which takes place before
the readjustment.
(ii) If the Trust issues rights or warrants to the holders of its
Common Shares as a class entitling them to subscribe for or purchase Common
Shares at a price per share less than the Conversion Price at the Record Date
for the determination of shareholders entitled to receive the rights or
warrants, the Conversion Price in effect immediately before the issuance of the
rights or warrants will be reduced in accordance with the equation set forth on
Exhibit A hereto, which is hereby incorporated by reference herein. The
adjustment provided in this Section 6(e)9ii) will be made successively whenever
any rights or warrants are issued, and will become effective immediately after
each Record Date. In determining whether any rights or warrants entitle the
holders of the Common Shares to subscribe for or purchase Common Shares at less
than the Conversion Price, and in determining the aggregate sale price of the
Common Shares issuable on the exercise of rights or warrants and any
consideration to be received by the Trust for the exercise of such right or
warrants, there will be taken into account any consideration received by the
Trust for the rights or warrants, with the value of that consideration, if other
than cash, to be determined by the Board of Trustees of the Trust (whose
determination, if made in good faith, will be conclusive). If any rights or
warrants which lead to an adjustment of the Conversion Price expire or terminate
without having been exercised, the Conversion Price then in effect will be
appropriately readjusted. However, a readjustment of the Conversion Price will
not affect any conversion which takes place before the readjustment.
(iii) If the Trust distributes to the holders of its Common Shares as
a class any shares of stock of the Trust (other than Common Shares) or evidences
of indebtedness or assets (other than cash dividends or distributions) or rights
or warrants (other than those referred to in Section 6(e)(ii)) to subscribe of
or purchase any of its securities, then, in each such case, the Conversion Price
will be reduced so that it will equal the price determined by multiplying the
Conversion Price in effect immediately prior to the Record Date for the
distribution by a fraction of which the numerator is the Current Market Price
of the Common shares on the Record Date for the distribution less the then fair
market value (as determined by the Board of Trustees, whose determination, if
made in good faith, will be conclusive) of the stock, evidences of
indebtedness, assets, rights or warrants which are distributed with respect to
one Common Share, and of which the denominator is the Current Market Price of
the Common Shares on that Record Date. Each adjustment will become effective
immediately after the Record Date for the determination of the shareholders
entitled to receive the distribution. If any distribution is declared but not
made, or if rights or warrants expire or terminate without having been
exercised, effective immediately after the decision is made not to make the
distribution or the rights or warrants expire or terminate, the Conversion
Price then in effect will be appropriately readjusted. However, a readjustment
will not affect any conversion which takes place before the readjustment.
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(iv) If the Trust issues or sells (or the Operating Partnership issues
or sells, other than the issuance of partnership interests in the Operating
Partnership in the ordinary course for the purpose of the acquisition of real
property or real property interests, which partnership interests are
exchangeable solely for Common Shares as a result of which the Trust's
partnership interest in the Operating Partnership increases by the amount of
such partnership interest so exchanged), any equity or debt securities which are
convertible, directly or indirectly into or exchangeable for Common Shares
("Convertible Securities") or any rights, options (other than the issuance or
exercise after the date hereof of stock options covering no more than 286,000
Common Shares, subject to appropriate adjustment to the extent that the Trust
(A) pays a dividend or makes a distribution on its Common Shares in shares of
its Common Shares, (B) subdivides its outstanding Common Shares into a greater
number of shares or (C) combines its outstanding Common Shares into a smaller
number of shares, issued to employees or directors of the Trust or its
Subsidiaries under the Trust's existing employee stock incentive plans) or
warrants to purchase Common Shares at conversion, exchange or exercise price per
share which is less than the Conversion Price, unless the provisions of Section
6(e)(ii) or (iii) are applicable, the Trust will be deemed to have issued or
sold, on the later of the date on which the Convertible Securities, rights,
options or warrants are issued and the date on which they first may be
converted, exchanged or exercised, the maximum number of Common Shares into or
for which the Convertible Securities may then be converted or exchanged or which
are then issuable upon the exercise of the rights, options or warrants
immediately prior to the close of business on the later of the date on which the
Convertible Securities, rights, options or warrants are issued or the date on
which they may first be converted, exchanged or exercised, and the Conversion
Price shall be adjusted downward as if it were an event covered by Section
6(e)(v). However, no further adjustment of the Conversion Price will be made as
a result of the actual issuance of Common Shares upon conversion, exchange or
exercise of the Convertible Securities, rights, options or warrants. If any
Convertible Securities, rights, options or warrants to which this Section
applies are redeemed, retired or otherwise extinguished or expire without any
Common Shares having been issued upon conversion, exchange or exercise thereof,
effective immediately after the Convertible Securities, rights, options or
warrants expire, the Conversion Price then in effect will be readjusted to what
it would have been if those Convertible Securities, rights, options or warrants
had not been issued. However, a readjustment will not affect any conversion
which takes place before the readjustment. For the purposes of this Section
6(e)(iv), (x) the price of Common Shares issued or sold upon conversion or
exchange of Convertible Securities or upon exercise of rights, options or
warrants will be (A) the consideration paid to the Trust for the Convertible
Securities, rights, options or warrants, plus (B) the consideration paid to the
Trust upon conversion, exchange or exercise of the Convertible Securities,
rights, options or warrants, with the value of the consideration, if other than
cash, to be determined by the Board of Trustees of the Trust (whose
determination, if made in good faith, will be conclusive) and (y) any change in
the conversion or exchange price of Convertible Securities or the exercise price
of rights, options or warrants will be treated as an extinguishment, when the
change becomes effective, of the Convertible Securities, rights, options or
warrants which had the old conversion, exchange or exercise price and an
immediate issuance of new Convertible Securities, rights, options or warrants,
with the new conversion, exchange or exercise price.
(v) If the Trust issues or sells any Common Shares (other than (X) on
conversion or exchange of Convertible Securities or exercise of rights, options
or warrants to
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which Section 6(e)(ii), (iii) or (iv) applies, (Y) the exchange of partnership
interests in the Operating Partnership in the ordinary course solely for Common
Stock as a result of which the Trust's partnership interest in the Operating
Partnership increases by the amount of such partnership interest so exchanged
or, (Z) the sale of Common Shares under a dividend reinvestment program if such
Common Shares were purchased on the open market in ordinary brokerage
transactions) for a consideration per share less than the Conversion Price on
the date of the issuance or sale (or on exercise of options or warrants, for
less than the Conversion Price on the date the options or warrants are issued),
upon consummation of the issuance or sale, the Conversion Price in effect
immediately prior to the issuance or sale will be reduced in accordance with
the equation set forth on Exhibit A hereto, which is hereby incorporated by
reference herein.
(vi) If there is a reclassification or change of outstanding Common
Shares (other than a change in par value, or as a result of a subdivision or
combination), or a merger or consolidation of the Trust with any other entity
that results in a reclassification, change, conversion, exchange or
cancellation of outstanding Common Shares, or a sale or transfer of all or
substantially all of the assets of the Trust, upon any subsequent conversion of
Series A Convertible Preferred Shares, each holder of the Series A Convertible
Preferred Shares will be entitled to receive the kind and amount of securities,
cash and other property which the holder would have received if the holder had
converted the Series A Convertible Preferred Shares into Common Shares
immediately before the first of those events and had retained all the
securities, cash and other assets received as a result of all those events. In
the event that a transaction may be viewed as causing this Section 6(e)(vi) to
be applicable and 6(e)(iii) is also applicable, then Section 6(e)(iii) will be
applied and this Section 6(e)(vi) will not be applied.
(vii) For the purpose of any computation under this Section 6(e), the
"Current Market Price" of the Common Shares on any date will be the average
of the last reported sale prices per share of the Common Shares on each of the
twenty consecutive Trading Days (as defined below) preceding the date of the
computation. The last reported sale price of the Common Shares on each day will
be (A) the last reported sale price of the Common Shares on the principal
stock exchange on which the Common Shares are listed, or (B) if the Common
Shares are not listed on a stock exchange, the last reported sale price of the
Common Shares on the principal automated securities price quotation system on
which sale prices of the Common Shares are reported, or (C) if the Common
Shares are not listed on a stock exchange and sale prices of the Common Shares
are not reported on an automated quotation system, the mean of the high bid and
low asked price quotations for the Common Shares as reported by National
Quotation Bureau Incorporated if at least two securities dealers have inserted
both bid and asked quotations for the Common Shares on at least five of the ten
preceding Trading Days. If the Common Shares is not traded or quoted as
described in any of clause (A), (B) or (C), the Current Market Price of the
Common Shares on a day will be the fair market value of the Common Shares on
that day as determined by a member firm of the New York Stock Exchange, Inc.,
selected by the Board of Trustees. As used with regard to the Series A
Convertible Preferred Shares, the term "Trading Day" means (x) if the Common
Shares is listed on at least one stock exchange, a day on which there is
trading on the principal stock exchange on which the Common Shares are listed,
(y) if the Common Shares are not listed on a stock exchange, but sale prices of
the Common Shares are reported on an automated quotation system, a day on
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<PAGE> 18
which trading is reported on the principal automated quotation system on which
sales of the Common Shares are reported, or (z) if the Common Shares are not
listed on a stock exchange and sale prices of the Common Shares are not
reported on an automated quotation system, a day on which quotations are
reported by National Quotation Bureau Incorporated.
(viii) No adjustment in the Conversion Price will be required
unless the adjustment would require a change of at least 1% in the Conversion
Price; provided, however, that any adjustments which are not made because of
this Section 6(e)(viii) will be carried forward and taken into account in any
subsequent adjustment; and provided, further, that any adjustment must be made
in accordance with Section 6 (without regard to this Section 6(e)(viii)) not
later than the time the adjustment may be required in order to preserve the
tax-free nature of a distribution to the holders of Common Shares. All
calculations under this Section 6 will be made to the nearest cent or to the
nearest one hundredth of a share, as the case may be.
(ix) Whenever the Conversion Price is adjusted, the Trust will
promptly send each holder of record of Series A Convertible Preferred Shares a
notice of the adjustment of the Conversion Price setting forth the adjusted
Conversion Price and the date on which the adjustment becomes effective and
containing a brief description of the events which caused the adjustment.
(x) If any one of the events in Sections 6(e)(i) through 6(e)(vi)
occurs then the Trust will mail to the holders of record of the Series A
Convertible Preferred Shares, at least 15 days before the applicable date
specified below, a notice stating the applicable one of (i) the date on which a
record is to be taken for the purpose of the dividend, distribution or grant of
rights or warrants, or, if no record is to be taken, the date as of which the
holders of Common Shares of record who will be entitled to the dividend,
distribution or rights or warrants will be determined, (ii) the date on which it
is expected the Convertible Securities will be issued or the date on which the
change in the conversion, exchange or exercise price of the Convertible
Securities, rights, options or warrants will be effective, (iii) the date on
which the Trust anticipates selling Common Shares for less than the Conversion
Price on the date of the sale (except that no notice need be given of the
anticipated date of sale of Common Shares upon exercise of options or warrants
which have been described in a notice to the holders of record of the Series A
Convertible Preferred Shares given at least 15 days before the options or
warrants are exercised), or (iv) the date on which the reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation
or winding up is expected to become effective, and the date as of which it is
expected that holders of record of Common Shares will be entitled to exchange
their Common Shares for securities or other property deliverable upon the
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up. Failure to give any such notice or any
defect in the notice will not affect the legality or validity of the
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up.
(f) (i) The Trust will at all times reserve and keep available, free
from preemptive right, out of the authorized but unissued Common Shares, for
the purpose of effecting conversion of the Series A Convertible Preferred
Shares, the maximum number of
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Common Shares which the Trust would be required to deliver upon the conversion
of all the outstanding Series A Convertible Preferred Shares. For the purposes
of this Section 6(f)(i), the number of Common Shares which the Trust would be
required to deliver upon the conversion of all the outstanding Series A
Convertible Preferred Shares will be computed as if at the time of the
computation all the outstanding Series A Convertible Preferred Shares were held
by a single holder.
(ii) Before taking any action would cause an adjustment reducing
the Conversion Price below the then par value (if any) of the Common Shares
deliverable upon conversion of the Series A Convertible Preferred Shares, the
Trust will take all corporate action which may, in the opinion of its counsel,
be necessary in order that the Trust may validly and legally issue fully paid
and non-assessable Common Shares at the adjusted Conversion Price.
(iii) The Trust will seek to list the Common Shares required to be
delivered upon conversion of the Series A Convertible Preferred Shares, prior to
the delivery, upon each national securities exchange, if any, upon which the
outstanding Common Shares are listed at the time of delivery.
(g) In connection with the conversion of any Series A Convertible
Preferred Shares into Common Shares pursuant to Section 6(a) or (b), in
determining the number of Common Shares to be issued upon conversion of each
Series A Convertible Preferred Share, there shall be excluded from Accrued
Dividends the amount of any Accrued Dividends (the "Deferred Accrued Dividends")
which were accrued on each such share in respect of the period from the last day
of the month next preceding the last Dividend Payment Date to the effective date
of the conversion (such period being referred to as the "Deferral Period").
Following the end of the Deferral Period, on the next date which would have been
a Dividend Payment Date had such Series A Convertible Preferred Share not been
converted, the Company shall pay in cash to the person or entity that was the
holder of such converted Series A Convertible Preferred Share on the conversion
date, the amount of Deferred Accrued Dividends reduced, but in no event to less
than zero, by the amount of dividends paid on the Common Shares into which such
Series A Preferred Share was converted in respect of the Deferral Period. To the
extent that a dividend is paid on such Common Shares for a period which
includes, but is longer than, the Deferral Period, the amount of dividends paid
in respect of the Deferral Period shall be deemed to be a pro rata portion of
the aggregate amount of accrued dividends paid for such longer period, based on
the number of calendar days in the Deferral Period and the total number of days
in the applicable dividend accrual period.
(h) The Trust will pay any documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of Common Shares on conversion
of Series A Convertible Preferred Shares; provided, however, that the Trust will
not be required to pay any tax which may be payable in respect of any transfer
involved in the issued or delivery of Common Shares in a name other than that of
the holder of record of Series A Convertible Preferred Shares to be converted
and no such issue or delivery will be made unless and until the person
requesting the issue or delivery has paid to the Trust the amount of any such
tax or has established, to the satisfaction of the Trust, that the tax has been
paid or is not payable.
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Section 7. STATUS.
Series A Convertible Preferred Share converted pursuant to the terms hereof
or otherwise acquired by the Trust shall automatically be retired upon such
conversion or other acquisition, as the case may be, shall not be reissued as
Series A Preferred Shares and shall be restored to the status of authorized but
unissued shares of Preferred Shares, undesignated as to series.
Section 8. REDEMPTION AFTER ACCELERATION OF THE MATURITY DATE.
(a) Notwithstanding anything to the contrary contained in Section 6, each
holder of Series A Convertible Preferred Shares will have the right, exercisable
at any time prior to the Mandatory Conversion Date, to require the Trust to
redeem (the date required for such redemption, the "Accelerated Maturity Date")
any and all of the Series A Convertible Preferred Shares owned of record by the
holder at a redemption price per share (the "Redemption Price") equal to the
sum of (i) Stated Value plus (ii) the per share sum of all Accrued Dividends
(including, without limitation, Section 3(b) Suspended Dividends) through the
Redemption Date, as herein deferred, in the event that the Internal Revenue
Service makes an IRS Termination Determination such that the Internal Revenue
Service will for any period deny to the Trust the tax benefits associated with
qualification as a real estate investment trust and either or both of the
following circumstances arise: (i) the Trust does not receive (without 60 days
of the date established in the IRS Termination Determination as the date on
which the Deficiency Dividend or any other amount required to be paid by the
Trust to the IRS is required to be paid) the full indemnity payment as a result
thereof to which the Trust is entitled pursuant to the Tax Agreement, and (ii)
counsel reasonably satisfactory to Morgan Stanley Asset Management Inc. is
unable to provide to the holders of Series A Convertible Preferred Shares
affirmative advice that, commencing not later than with the taxable year ending
December 31, 1999, the Trust will, notwithstanding such IRS Termination
Determination, be able to elect to be qualified and taxed as a real estate
investment trust under the Internal Revenue Code of 1986, as amended, and its
proposed method of operation will enable it so to qualify for following years.
(b) In order to exercise its right of redemption pursuant to this Section
8, the holder must deliver a written request for redemption, accompanied by the
certificates representing the shares to be redeemed, to the Trust at any time
prior to the Mandatory Conversion Date. If, on or before the 180th day after
the date of the IRS Termination Determination, a request for redemption
pursuant to Section 8(a) is given with respect to Series A Convertible
Preferred Shares, promptly (but in no event more than ten Business Days) after
the request for redemption is given to the Trust, the Trust will pay the holder
of such shares cash equal to the Redemption Price of such shares. If, on or
after the 181st day after the date of the IRS Termination Determination, a
request for redemption pursuant to Section 8(a) is given with respect to Series
A Convertible Preferred Shares, not more than 30 Business Days after the
request for redemption is given to the Trust, the Trust will pay the holder of
such shares cash equal to the Redemption Price of such shares. The date of any
such payment is referred to herein as the "Redemption Date."
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(c) If a request for redemption accompanied by the certificates
representing the shares to be redeemed is delivered to the Trust, on the
Redemption Date dividends will cease to accrue with regard to the Series A
Convertible Preferred Shares to be redeemed, and at the close of business on
that date the holders of those shares will cease to be shareholders with
respect to those shares, will have no interest in or claims against the Trust
by virtue of such shares (other than as described in Section 8(c) hereof) and
will have no voting or other rights with respect to such shares.
(d) The dividend with respect to a Series A Convertible Preferred
Share which is the subject of a request for redemption delivered on a day which
falls between the close of business on a dividend payment Record Date and the
opening of business on the corresponding Dividend Payment Date will be payable
on the Dividend Payment Date to the holder of record of the Series A
Convertible Preferred Shares on the dividend payment Record Date
notwithstanding the redemption of the Series A Convertible Preferred Shares
after the dividend payment Record Date and prior to the Dividend Payment Date.
Section 9. RANKING.
Subject to Section 4(b), the Series A Convertible Preferred Shares
will, with respect to the payment of dividends and the distribution of assets
on liquidation, dissolution or winding-up of the Trust, rank prior to any other
series of Preferred Shares, prior to Common Shares and prior to any other class
or series of capital stock of the Trust.
Section 10. MISCELLANEOUS.
(a) Except as otherwise expressly provided in these Articles
Supplementary, whenever a notice or other communication is required or
permitted to be given to holders of Series A Convertible Preferred Shares, the
notice or other communication will be deemed properly given if deposited in the
United States mail, postage prepaid, addressed to the persons shown on the
books of the Trust as the holders of the Series A Convertible Preferred Shares
at the addresses as they appear on the books of the Trust, as of the Record
Date or dates determined in accordance with applicable law and with the
Declaration of Trust and Bylaws, as in effect from time to time, with a copy
sent to Morgan Stanley Asset Management, Inc., 1221 Avenue of the Americas, New
York, New York 10020 by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service.
(b) Series A Convertible Preferred Shares will not have any
designations, preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications or terms and conditions of redemption, other than those
specifically set forth herein, in the Charter, and as may be provided under
applicable law insofar as any such provision does not conflict with the terms
hereof.
(c) The headings of the various subdivisions herein are for
convenience only and will not affect the meaning or interpretation of any of
the provisions herein.
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(d) Notwithstanding Section 4 hereof, and provided that the Trust's
Board of Trustees determines that it is appropriate to submit to a vote of the
holders of Series A Convertible Preferred Shares, the preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends and
other distributions, qualifications and terms and conditions of redemption of
the Series A Convertible Preferred Shares may be waived, and any of such
provisions of the Series A Convertible Preferred Shares may be amended, only
with the approval of holders of at least 60% of the outstanding Series A
Convertible Preferred Shares, voting separately as a class.
(e) Notwithstanding anything to the contrary contained in Section 3,
4, 6 or 8 hereof, each holder of record of Series A Convertible Preferred
Shares hereby agrees (subject to relinquishment by Morgan Stanley Asset
Management Inc. as provided below) that, in determining whether any holder of
Series A Convertible Preferred Shares has (i) approved a replacement to Dennis
Gershenson as contemplated by clause (viii) of the last sentence of Section
3(b), (ii) approved any action by the Trust under Section 4, (iii) elected to
cause the conversion of such holder's Series A Convertible Preferred Shares
into Common Shares or other assets under Section 6, (iv) received any notice of
the Trust required by these Articles Supplementary, including without
limitation notices required by Section 6(e)(ix), Section 6(e)(x) and Section
6(f), or (v) elected to cause the redemption by the Trust of such holder's
Series A Convertible Preferred Shares in the circumstance provided by Section
8, until such holder shall have notified in writing the Trust otherwise, Morgan
Stanley Asset Management Inc. shall have the right to grant or deny such
approvals, make or decline any such elections or receive any such notices with
regard to all the Series A Convertible Preferred Shares held of record by such
holder, and a notice received by Morgan Stanley Asset Management Inc. and a
document executed by Morgan Stanley Asset Management Inc. granting or denying
approval to any action by the Trust under Section 4, or electing or declining
to the Trust to effect the conversion as to any Series A Convertible Preferred
Shares under Section 6, or electing or declining to the Trust to effect the
redemption as to any Series A Convertible Preferred Shares shall determine the
matter for such holders as Morgan Stanley Asset Management Inc. may indicate.
Upon written notice by Morgan Stanley Asset Management Inc. to the Trust,
Morgan Stanley Asset Management Inc. may indicate. Upon written notice by
Morgan Stanley Asset Management Inc. to the Trust, Morgan Stanley Asset
Management Inc. may relinquish such rights and powers of any or all Series A
Convertible Preferred Shares. The foregoing may, but need not, be implemented
by execution by each holder of Series A Convertible Preferred Shares of a proxy
in favor of Morgan Stanley Asset Management Inc.
Section 11. PERMISSIBLE DISTRIBUTIONS.
In determining whether a distribution (other than upon voluntary or
involuntary liquidation), by dividend, redemption or other acquisition of shares
or otherwise, is permitted under the Maryland General Corporation Law, amounts
that would be needed, if the Trust were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of holders of
Series A Convertible Preferred Shares whose preferential rights upon dissolution
are superior to those receiving the distribution shall be added to the Trust's
total liabilities.
Section 12. SEVERABILITY OF PROVISIONS.
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Whenever possible, each provision hereof shall be interpreted in a manner
as to be effective and valid under applicable law, but if any provision hereof
is held to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating or otherwise adversely affecting the remaining provisions
hereof. If a court of competent jurisdiction should determine that a provision
hereof would be valid or enforceable if a period of time were extended or
shortened or a particular percentage were increased or decreased, then such
court may make such change as shall be necessary to render the provision in
question effective and valid under applicable law.
THIRD: The Series A Convertible Preferred Shares have been classified
by the Board of Trustees of the Trust under the authority contained in the
Declaration of Trust.
FOURTH: These Articles Supplementary have been approved by the Board of
Trustees in the manner and by the vote required by law.
FIFTH: The undersigned officers acknowledge these Articles
Supplementary to be the trust act of the Trust and, as to all matters or facts
required to be verified under oath, the undersigned officers each certify,
under penalties of perjury, that to the best of his knowledge and information
and belief these matters and facts are true in all material respects.
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IN WITNESS WHEREOF, RGPT Trust has caused these Articles Supplementary to
be executed under seal in its name and on its behalf by its President and
attested to by its Secretary as of October 2, 1997.
ATTEST: RGPT TRUST
/s/ Richard Gershenson By: /s/ Dennis Gershenson (Seal)
- ----------------------------- -----------------------------
Name: Richard Gershenson Name: Dennis Gershenson
Title: Secretary Title: President
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<PAGE> 1
EXHIBIT 3.3
RAMCO-GERSHENSON PROPERTIES TRUST
BYLAWS
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of Ramco-Gershenson
Properties Trust (the "Trust") shall be located at such place or places as the
Trustees may designate.
Section 2. ADDITIONAL OFFICES. The Trust may have additional offices at
such places as the Trustees may from time to time determine or the business of
the Trust may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE. All meetings of shareholders shall be held at the
principal office of the Trust or at such other place within the United States as
shall be stated in the notice of the meeting.
Section 2. ANNUAL MEETING. An annual meeting of the shareholders for the
election of Trustees and the transaction of any business within the powers of
the Trust shall be held during the month of June of each year, after the
delivery of the annual report, referred to in Section 12 of this Article II, or
in such other month of each year at a convenient location and on proper notice,
on a date and at the time set by the Trustees. Failure to hold an annual meeting
does not invalidate the Trust's existence or affect any otherwise valid acts of
the Trust.
Section 3. SPECIAL MEETINGS. The chairman of the board or the president or
one-third of the Trustees may call special meetings of the shareholders. Special
meetings of shareholders shall also be called by the secretary upon the written
request of the holders of shares entitled to cast not less than 25% of all the
votes entitled to be cast at such meeting. Such request shall state the purpose
of such meeting and the matters proposed to be acted on at such meeting. Within
ten (10) days of the receipt of such request, the secretary shall inform such
shareholders of the reasonably estimated cost of preparing and mailing notice of
the meeting and, upon payment by such shareholders to the Trust of such costs,
the secretary shall, within thirty (30) days of such payment, or such longer
period as may be necessitated by compliance with any applicable statutory or
regulatory requirements, give notice to each shareholder entitled to notice of
the meeting. Unless requested by shareholders entitled to cast a majority of all
the votes entitled to be cast at such meeting, a special meeting need not be
called to consider any matter (other than as to the removal or election of
Trustees) which is substantially the same as a matter voted on at any meeting of
the shareholders held during the preceding twelve months.
<PAGE> 2
Section 4. NOTICE. Not less than ten nor more than 90 days before each
meeting of shareholders, the secretary shall give to each shareholder entitled
to vote at such meeting and to each shareholder not entitled to vote who is
entitled to notice of the meeting written or printed notice stating the time and
place of the meeting and, in the case of a special meeting or as otherwise may
be required by any statute, the purpose for which the meeting is called, either
by mail or by presenting it to such shareholder personally or by leaving it at
his residence or usual place of business. If such notice relates to a special
meeting called at the request of shareholders in accordance with Section 3 of
this Article II, the description of the purpose of such meeting shall comport
with the purpose stated for such meeting in the request therefor referenced in
Section 3 of this Article II. If mailed, such notice shall be deemed to be given
when deposited in the United States mail addressed to the shareholder at his
post office address as it appears on the records of the Trust, with postage
thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the Trust may be transacted at
an annual meeting of shareholders without being specifically designated in the
notice, except such business as is required by any statute to be stated in such
notice. No business shall be transacted at a special meeting of shareholders
except as specifically designated in the notice.
Section 6. ORGANIZATION. At every meeting of the shareholders, the Chairman
of the Board, if there be one, or the President shall conduct the meeting or, in
the case of vacancy in office or absence of the Chairman of the Board and the
President, one of the following officers present shall conduct the meeting in
the order stated: the Vice Chairman of the Board, if there be one, the Vice
Presidents in their order of rank and seniority, or a Chairman chosen by the
shareholders entitled to cast a majority of the votes which all shareholders
present in person or by proxy are entitled to cast, shall act as Chairman, and
the Secretary, or, in his absence, an assistant secretary, or in the absence of
both the Secretary and assistant secretaries, a person appointed by the Chairman
or the President shall act as Secretary.
Section 7. QUORUM. At any meeting of shareholders, the presence in person
or by proxy of shareholders entitled to cast a majority of all the votes
entitled to be cast at such meeting shall constitute a quorum; but this section
shall not affect any requirement under any statute or the Declaration of Trust
for the vote necessary for the adoption of any measure. If, however, such quorum
shall not be present at any meeting of the shareholders, the shareholders
entitled to vote at such meeting, present in person or by proxy, shall have the
power to adjourn the meeting from time to time to a date not more than 120 days
after the original record date without notice other than announcement at the
meeting. At such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 8. VOTING. A plurality of all the votes cast at a meeting of
shareholders duly called and at which a quorum is present shall be sufficient to
elect a Trustee. Each share may be voted for as many individuals as there are
Trustees to be elected and for whose election the share is entitled to be voted.
A majority of the votes cast at a meeting of shareholders duly called and at
which a quorum is present shall be sufficient to approve any other matter which
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may properly come before the meeting, unless more than a majority of the votes
cast is required herein or by statute or by the Declaration of Trust. Unless
otherwise provided in the Declaration of Trust or any amendment thereto, each
outstanding share, regardless of class, shall be entitled to one vote on each
matter submitted to a vote at a meeting of shareholders.
Section 9. PROXIES. A shareholder may vote the shares owned of record by
him either in person or by proxy executed in writing by the shareholder or by
his duly authorized attorney in fact. Such proxy shall be filed with the
secretary of the Trust before or at the time of the meeting. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of the Trust
registered in the name of a corporation, partnership, trust or other entity, if
entitled to be voted, may be voted by the president or a vice president, a
general partner or trustee thereof, as the case may be, or a proxy appointed by
any of the foregoing individuals, unless some other person who has been
appointed to vote such shares pursuant to a bylaw or a resolution of the
governing board of such corporation or other entity or agreement of the partners
of the partnership presents a certified copy of such bylaw, resolution or
agreement, in which case such person may vote such shares. Any trustee or other
fiduciary may vote shares registered in his name as such fiduciary, either in
person or by proxy.
Shares of the Trust directly or indirectly owned by it shall not be voted
at any meeting and shall not be counted in determining the total number of
outstanding shares entitled to be voted at any given time, unless they are held
by it in a fiduciary capacity, in which case they may be voted and shall be
counted in determining the total number of outstanding shares at any given time.
The Trustees may adopt by resolution a procedure by which a shareholder may
certify in writing to the Trust that any shares registered in the name of the
shareholder are held for the account of a specified person other than the
shareholder. The resolution shall set forth the class of shareholders who may
make the certification, the purpose for which the certification may be made, the
form of certification and the information to be contained in it; if the
certification is with respect to a record date or closing of the share transfer
books, the time after the record date or closing of the share transfer books
within which the certification must be received by the Trust; and any other
provisions with respect to the procedure which the Trustees consider necessary
or desirable. On receipt of such certification, the person specified in the
certification shall be regarded as for the purposes set forth in the
certification, the shareholder of record of the specified shares in place of the
shareholder who makes the certification.
Notwithstanding any other provision contained in the Declaration of Trust
or these Bylaws, Title 3, Subtitle 7 of the Corporations and Associations
Article of the Annotated Code of Maryland (or any successor statute of
substantially similar import) shall not apply to any acquisition by any person
of shares of beneficial interest of the Trust. This section may not be repealed
or amended, nor may any provision inconsistent herewith be adopted in these
Bylaws
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or the Declaration of Trust except upon the affirmative vote of the shareholders
of the Trust as provided in the second sentence of Section 8 of Article II and,
if so repealed or amended, shall not as so repealed or amended apply to any
acquisition of control shares which preceded the effective date of repeal or of
such amendment.
Section 11. INSPECTORS. At any meeting of shareholders, the chairman of the
meeting may, or upon the request of any shareholder shall, appoint one or more
persons as inspectors for such meeting. Such inspectors shall ascertain and
report the number of shares represented at the meeting based upon their
determination of the validity and effect of proxies, count all votes, report the
results and perform such other acts as are proper to conduct the election and
voting with impartiality and fairness to all the shareholders.
Each report of an inspector shall be in writing and signed by him or by a
majority of them if there is more than one inspector acting at such meeting. If
there is more than one inspector, the report of a majority shall be the report
of the inspectors. The report of the inspector or inspectors on the number of
shares represented at the meeting and the results of the voting shall be prima
facie evidence thereof.
Section 12. REPORTS TO SHAREHOLDERS.
(a) Not later than 120 days after the close of each fiscal year of the
Trust and in any event at or before the annual meeting of shareholders, the
Trustees shall deliver or cause to be delivered to the shareholders a report of
the business and operations of the Trustees during such fiscal year containing a
balance sheet and a statement of income and surplus of the Trust, accompanied by
the certification of an independent certified public accountant, and such
further information as the Trustees may determine is required pursuant to any
law or regulation to which the Trust is subject. A signed copy of the annual
report and the accountant's certificate shall, simultaneously with such delivery
to the shareholders, be filed by the Trustees with the State Department of
Assessments and Taxation of Maryland, and with such other governmental agencies
as may be required by law and as the Trustees may deem appropriate.
(b) Not later than 90 days after the end of each of the first three
quarterly periods of each fiscal year, the Trustees shall deliver or cause to be
delivered an interim report to the shareholders containing unaudited financial
statements for such quarter and for the period from the beginning of the fiscal
year to the end of such quarter, and such further information as the Trustees
may determine is required pursuant to any law or regulation to which the Trust
is subject.
Section 13. NOMINATIONS AND SHAREHOLDER BUSINESS.
(a) Annual Meetings of Shareholders. (1) Nominations of persons for
election to the Board of Trustees and the proposal of business to be considered
by the shareholders may be made at an annual meeting of shareholders (i)
pursuant to the Trust's notice of meeting, (ii) by or at the direction of the
Trustees or (iii) by any shareholder of the Trust who was a shareholder of
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record both at the time of giving of notice provided for in this Section 13(a)
and at the time of the annual meeting, who is entitled to vote at the meeting
and who complied with the notice procedures set forth in this Section 13(a).
(2) For nominations or other business to be properly brought before an
annual meeting by a shareholder pursuant to clause (iii) of paragraph (a) (1) of
this Section 13, the shareholder must have given timely notice thereof in
writing to the Secretary of the Trust and such other business must otherwise be
a proper matter for action by shareholders. To be timely, a shareholder's notice
shall be delivered to the Secretary at the principal executive offices of the
Trust not later than the close of business on the 60th day nor earlier than the
close of business on the 90th day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced by more than 30 days or delayed by more
than 60 days from such anniversary date or if the Trust has not previously held
an annual meeting, notice by the shareholder to be timely must be so delivered
not earlier than the close of business on the 90th day prior to such annual
meeting and not later than the close of business on the later of the 60th day
prior to such annual meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made by the Trust. In no event
shall the public announcement of a postponement or adjournment of an annual
meeting to a later date or time commence a new time period for the giving of a
shareholder's notice as described above. Such shareholder's notice shall set
forth (i) as to each person whom the shareholder proposes to nominate for
election or reelection as a Trustee all information relating to such person that
is required to be disclosed in solicitations of proxies for election of
Trustees, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a Trustee if elected); (ii) as to any other
business that the shareholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such shareholder and of the beneficial owner, if any, on whose
behalf the proposal is made; and (iii) as to the shareholder giving the notice
and the beneficial owner, if any, on whose behalf the nomination or proposal is
made, (x) the name and address of such shareholder, as they appear on the
Trust's books, and of such beneficial owner and (y) the number of each class of
shares of the Trust which are owned beneficially and of record by such
shareholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph (a)(2) of
this Section 13 to the contrary, in the event that the number of Trustees to be
elected to the Board of Trustees is increased and there is no public
announcement by the Trust naming all of the nominees for Trustee or specifying
the size of the increased Board of Trustees at least 70 days prior to the first
anniversary of the preceding year's annual meeting, a shareholder's notice
required by this Section 13(a) shall also be considered timely, but only with
respect to nominees for any new positions created by such increase, if it shall
be delivered to the Secretary at the principal executive offices of the Trust
not later than the close of business on the tenth day following the day on which
such public announcement is first made by the Trust.
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(b) Special Meetings of Shareholders. Only such business shall be conducted
at a special meeting of shareholders as shall have been brought before the
meeting pursuant to the Trust's notice of meeting. Nominations of persons for
election to the Board of Trustees may be made at a special meeting of
shareholders at which Trustees are to be elected (i) pursuant to the Trust's
notice of meeting (ii) by or at the direction of the Board of Trustees or (iii)
provided that the Board of Trustees has determined that Trustees shall be
elected at such special meeting, by any shareholder of the Trust who was a
shareholder of record both at the time of giving of notice provided for in this
Section 13(b) and at the time of the special meeting, who is entitled to vote at
the meeting and who complied with the notice procedures set forth in this
Section 13(b). In the event the Trust calls a special meeting of shareholders
for the purpose of electing one or more Trustees to the Board of Trustees, any
such shareholder may nominate a person or persons (as the case may be) for
election to such position as specified in the Trust's notice of meeting, if the
shareholder's notice containing the information required by paragraph (a) (2) of
this Section 13 shall be delivered to the Secretary at the principal executive
offices of the Trust not earlier than the close of business on the 90th day
prior to such special meeting and not later than the close of business on the
later of the 60th day prior to such special meeting or the tenth day following
the day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Trustees to be elected at such
meeting. In no event shall the public announcement of a postponement or
adjournment of a special meeting to a later date or time commence a new time
period for the giving of a shareholder's notice as described above.
(c) General. (1) Only such persons who are nominated in accordance with the
procedures set forth in this Section 13 shall be eligible to serve as Trustees
and only such business shall be conducted at a meeting of shareholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this Section 13. The presiding officer of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set forth
this Section 13 and, if any proposed nomination or business is not in compliance
with this Section 13, to declare that such defective nomination or proposal be
disregarded.
(2) For purposes of this Section 13, "public announcement' shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable news service or in a document publicly filed by the Trust
with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d)
of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 13, a
shareholder shall also comply with all applicable requirements of state law and
of the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 13. Nothing in this Section 13 shall be deemed
to affect any rights of shareholders to request inclusion of proposals in the
Trust's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 14. INFORMAL ACTION BY SHAREHOLDERS. Any action required or
permitted to be taken at a meeting of shareholders may be taken without a
meeting if a consent in writing, setting forth such action, is signed by each
shareholder entitled to vote on the matter
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and any other shareholder entitled to notice of a meeting of shareholders (but
not to vote thereat) has waived in writing any right to dissent from such
action, and such consent and waiver are filed with the minutes of proceedings of
the shareholders.
Section 15. VOTING BY BALLOT. Voting on any question or in any election may
be viva voce unless the presiding officer shall order or any shareholder shall
demand that voting be by ballot.
ARTICLE III
TRUSTEES
Section 1. GENERAL POWERS; QUALIFICATIONS; TRUSTEES HOLDING OVER. The
business and affairs of the Trust shall be managed under the direction of its
Board of Trustees. A Trustee shall be an individual at least 21 years of age who
is not under legal disability. In case of failure to elect Trustees at an annual
meeting of the shareholders, the Trustees holding over shall continue to direct
the management of the business and affairs of the Trust until their successors
are elected and qualify.
Section 2. NUMBER. At any regular meeting or at any special meeting called
for that purpose, a majority of the entire Board of Trustees may establish,
increase or decrease the number of Trustees.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Trustees
shall be held immediately after and at the same place as the annual meeting of
shareholders, no notice other than this Bylaw being necessary. The Trustees may
provide, by resolution, the time and place, either within or without the State
of Maryland, for the holding of regular meetings of the Trustees without other
notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Trustees may be called
by or at the request of the chairman of the board or the president or by a
majority of the Trustees then in office. The person or persons authorized to
call special meetings of the Trustees may fix any place, either within or
without the State of Maryland, as the place for holding any special meeting of
the Trustees called by them.
Section 5. NOTICE. Notice of any special meeting shall be given by written
notice delivered personally, telegraphed, facsimile-transmitted or mailed to
each Trustee at his business or residence address. Personally delivered or
telegraphed notices shall be given at least two days prior to the meeting.
Notice by mail shall be given at least five days prior to the meeting. Telephone
or facsimile-transmission notice shall be given at least 24 hours prior to the
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail properly addressed, with postage thereon prepaid. If
given by telegram, such notice shall be deemed to be given when the telegram is
delivered to the telegraph company. Telephone notice shall be deemed given when
the Trustee is personally given such notice in a telephone call to
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which he is a party. Facsimile-transmission notice shall be deemed given upon
completion of the transmission of the message to the number given to the Trust
by the Trustee and receipt of a completed answer-back indicating receipt.
Neither the business to be transacted at, nor the purpose of, any annual,
regular or special meeting of the Trustees need be stated in the notice, unless
specifically required by statute or these Bylaws.
Section 6. QUORUM. The presence of at least a majority of the Board of
Trustees then in office shall constitute a quorum for transaction of business at
any meeting of the Trustees, provided that, if less than a majority of such
Trustees are present at said meeting, a majority of the Trustees present may
adjourn the meeting from time to time without further notice, and provided
further that if, pursuant to the Declaration of Trust or these Bylaws, the vote
of a majority of a particular group of Trustees is required for action, a quorum
must also include a majority of such group.
The Trustees present at a meeting which has been duly called and convened
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough Trustees to leave less than a quorum.
Section 7. VOTING. The action of the majority of the Trustees present at a
meeting at which a quorum is present shall be the action of the Trustees, unless
the concurrence of a greater proportion is required for such action by
applicable statute.
Section 8. TELEPHONE MEETINGS. Trustees may participate in a meeting by
means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means shall constitute presence in person at
the meeting.
Section 9. INFORMAL ACTION BY TRUSTEES. Any action required or permitted to
be taken at any meeting of the Trustees may be taken without a meeting, if a
consent in writing to such action is signed by each Trustee and such written
consent is filed with the minutes of proceedings of the Trustees.
Section 10. VACANCIES. If for any reason any or all the Trustees cease to
be Trustees, such event shall not terminate the Trust or affect these Bylaws or
the powers of the remaining Trustees hereunder (even if fewer than two Trustees
remain). Any vacancy (including a vacancy created by an increase in the number
of Trustees), other than a vacancy created as a result of the removal of any
Trustee by action of the shareholders, shall be filled, at any regular meeting
or at any special meeting called for that purpose, by a majority of the
Trustees. Any individual so elected as Trustee shall hold office for the
unexpired term of the Trustee he is replacing.
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Section 11. COMPENSATION: FINANCIAL ASSISTANCE.
(a) Compensation. Trustees shall not receive any stated salary for their
services as Trustees but, by resolution of the Trustees, may receive fixed sums
per year and/or per meeting and/or per visit to real property owned or to be
acquired by the Trust and for any service or activity they performed or engaged
in as Trustees. Such fixed sums may be paid either in cash or in shares of the
Trust. Trustees may be reimbursed for expenses of attendance, if any, at each
annual, regular or special meeting of the Trustees or of any committee thereof;
and for their expenses, if any, in connection with each property visit and any
other service or activity performed or engaged in as Trustees; but nothing
herein contained shall be construed to preclude any Trustees from serving the
Trust in any other capacity and receiving compensation therefor.
(b) Financial Assistance to Trustees.. The Trust may lend money to,
guarantee an obligation of or otherwise assist a Trustee or a trustee or
director of a direct or indirect subsidiary of the Trust; provided, however,
that such Trustee or other person is also an executive officer of the Trust or
of such subsidiary, or the loan, guarantee or other assistance is in connection
with the purchase of Shares. The loan, guarantee or other assistance may be with
or without interest, unsecured, or secured in any manner that the Board of
Trustees approves, including a pledge of shares.
Section 12. REMOVAL OF TRUSTEES. The shareholders may, at any time, remove
any Trustee in the manner provided in the Declaration of Trust and, if any
Trustee shall be so removed, may take action to fill the vacancy so created. Any
individual so elected as Trustee shall hold office for the unexpired term of the
Trustee, the removal of which created the vacancy.
Section 13. LOSS OF DEPOSITS. No Trustee shall be liable for any loss which
may occur by reason of the failure of the bank, trust company, savings and loan
association, or other institution with whom moneys or shares have been
deposited.
Section 14. SURETY BONDS. Unless required by law, no Trustee shall be
obligated to give any bond or surety or other security for the performance of
any of his duties.
Section 15. RELIANCE. Each Trustee, officer, employee and agent of the
Trust shall, in the performance of his duties with respect to the Trust, be
fully justified and protected with regard to any act or failure to act in
reliance in good faith upon the books of account or other records of the Trust,
upon an opinion of counsel or upon reports made to the Trust by any of its
officers or employees or by the adviser, accountants, appraisers or other
experts or consultants selected by the Trustees or officers of the Trust,
regardless of whether such counsel or expert may also be a Trustee.
Section 16. INTERESTED TRUSTEE TRANSACTIONS. Section 2-419 of the Maryland
General Corporation Law (the "MGCL") shall be available for and apply to any
contract or other transaction between the Trust and any of its Trustees or
between the Trust and any other trust,
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corporation, firm or other entity in which any of its Trustees is a trustee or
director or has a material financial interest.
Section 17. CERTAIN RIGHTS OF TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS. The
Trustees shall have no responsibility to devote their full time to the affairs
of the Trust. Any Trustee or officer, employee or agent of the Trust (other than
a full-time officer, employee or agent of the Trust), in his personal capacity
or in a capacity as an affiliate, employee or agent of any other person, or
otherwise, may have business interests and engage in business activities similar
or in addition to those of or relating to the Trust.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Trustees may appoint from
among its members an Executive Committee, an Audit Committee, a Compensation
Committee and other committees, each comprised of two or more Trustees, to serve
at the pleasure of the Trustees.
Section 2. POWERS. The Trustees may delegate to committees appointed under
Section 1 of this Article any of the powers of the Trustees, except as
prohibited by law.
Section 3. MEETINGS. In the absence of any member of any such committee,
the members thereof present at any meeting, whether or not they constitute a
quorum, may appoint another Trustee to act in the place of such absent member.
Notice of committee meetings shall be given in the same manner as notice for
special meetings of the Board of Trustees.
One-third of the members of any committee shall be present in person at any
meeting of such committee in order to constitute a quorum for the transaction of
business at such meeting, and the act of a majority present shall be the act of
such committee. The Board of Trustees may designate a chairman of any committee,
and such chairman or any two members of any committee may fix the time and place
of its meetings unless the Board shall otherwise provide. In the absence or
disqualification of any member of any such committee, the members thereof
present at any meeting and not disqualified from voting, whether or not they
constitute a quorum, may unanimously appoint another Trustee to act at the
meeting in the place of such absent or disqualified members.
Each committee shall keep minutes of its proceedings and shall report the
same to the Board of Trustees at the next succeeding meeting, and any action by
the committee shall be subject to revision and alteration by the Board of
Trustees, provided that no rights of third persons shall be affected by any such
revision or alteration.
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Section 4. TELEPHONE MEETINGS. Members of a committee of the Trustees may
participate in a meeting by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means shall
constitute presence in person at the meeting.
Section 5. INFORMAL ACTION BY COMMITTEES. Any action required or permitted
to be taken at any meeting of a committee of the Trustees may be taken without a
meeting, if a consent in writing to such action is signed by each member of the
committee and such written consent is filed with the minutes of proceedings of
such committee.
Section 6. VACANCIES. Subject to the provisions hereof, the Board of
Trustees shall have the power at any time to change the membership of any
committee, to fill all vacancies, to designate alternate members to replace any
absent or disqualified member or to dissolve any such committee.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Trust shall include a
president, a secretary and a treasurer and may include a chairman of the board,
a vice chairman of the board, a chief executive officer, a chief operating
officer, a chief financial officer, one or more vice presidents, one or more
assistant secretaries and one or more assistant treasurers. In addition, the
Trustees may from time to time appoint such other officers with such powers and
duties as they shall deem necessary or desirable. The officers of the Trust
shall be elected annually by the Trustees at the first meeting of the Trustees
held after each annual meeting of shareholders. If the election of officers
shall not be held at such meeting, such election shall be held as soon
thereafter as may be convenient. Each officer shall hold office until his
successor is elected and qualifies or until his death, resignation or removal in
the manner hereinafter provided. Any two or more offices except president and
vice president may be held by the same person. In their discretion, the Trustees
may leave unfilled any office except that of president and secretary. Election
of an officer or agent shall not of itself create contract rights between the
Trust and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Trust may
be removed by the Trustees if in their judgment the best interests of the Trust
would be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Any officer of the Trust may
resign at any time by giving written notice of his resignation to the Trustees,
the chairman of the board, the president or the secretary. Any resignation shall
take effect at any time subsequent to the time specified therein or, if the time
when it shall become effective is not specified therein, immediately upon its
receipt. The acceptance of a resignation shall not be necessary to make it
effective unless otherwise stated in the resignation. Such resignation shall be
without prejudice to the contract rights, if any, of the Trust.
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Section 3. VACANCIES. A vacancy in any office may be filled by the Trustees
for the balance of the term.
Section 4. CHIEF EXECUTIVE OFFICER. The Trustees may designate a chief
executive officer from among the elected officers. The chief executive officer
shall have responsibility for implementation of the policies of the Trust, as
determined by the Trustees, and for the administration of the business affairs
of the Trust. In the absence of both the chairman and vice chairman of the
board, the chief executive officer shall preside over the meetings of the
Trustees and of the shareholders at which he shall be present.
Section 5. CHIEF OPERATING OFFICER. The Trustees may designate a chief
operating officer from among the elected officers. Said officer will have the
responsibilities and duties as set forth by the Trustees or the chief executive
officer.
Section 6. CHIEF FINANCIAL OFFICER. The Trustees may designate a chief
financial officer from among the elected officers. Said officer will have the
responsibilities and duties as set forth by the Trustees or the chief executive
officer.
Section 7. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. The chairman of the
board shall preside over the meetings of the Trustees and of the shareholders at
which he shall be present and shall in general oversee all of the business and
affairs of the Trust. In the absence of the chairman of the board, the vice
chairman of the board shall preside at such meetings at which he shall be
present. The chairman and the vice chairman of the board may execute any deed,
mortgage, bond, contract or other instrument, except in cases where the
execution thereof shall be expressly delegated by the Trustees or by these
Bylaws to some other officer or agent of the Trust or shall be required by law
to be otherwise executed. The chairman of the board and the vice chairman of the
board shall perform such other duties as may be assigned to him or them by the
Trustees.
Section 8. PRESIDENT. In the absence of the chairman, the vice chairman of
the board and the chief executive officer, the president shall preside over the
meetings of the Trustees and of the shareholders at which he shall be present.
In the absence of a designation of a chief executive officer by the Trustees,
the president shall be the chief executive officer and shall be ex officio a
member of all committees that may, from time to time, be constituted by the
Trustees. The president may execute any deed, mortgage, bond, contract or other
instrument, except in cases where the execution thereof shall be expressly
delegated by the Trustees or by these Bylaws to some other officer or agent of
the Trust or shall be required by law to be otherwise executed; and in general
shall perform all duties incident to the office of president and such other
duties as may be prescribed by the Trustees from time to time.
Section 9. VICE PRESIDENT. In the absence of the president or in the event
of a vacancy in such office, the vice president (or in the event there be more
than one vice president, the vice presidents in the order designated at the time
of their election or, in the absence of any designation, then in the order of
their election) shall perform the duties of the president and when
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so acting shall have all the powers of and be subject to all the restrictions
upon the president; and shall perform such other duties as from time to time may
be assigned to him by the president or by the Trustees. The Trustees may
designate one or more vice presidents as executive vice president or as vice
president for particular areas of responsibility.
Section 10. SECRETARY. The secretary shall (a) keep the minutes of the
proceedings of the shareholders, the Trustees and committees of the Trustees in
one or more books provided for that purpose; (b) see that all notices are duly
given in accordance with the provisions of these Bylaws or as required by law;
(c) be custodian of the trust records and of the seal of the Trust; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the secretary by such shareholder; (e) have general charge of the share
transfer books of the Trust; and (f) in general perform such other duties as
from time to time may be assigned to him by the chief executive officer, the
president or by the Trustees.
Section 11. TREASURER. The treasurer shall have the custody of the funds
and securities of the Trust and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Trust and shall deposit all
moneys and other valuable effects in the name and to the credit of the Trust in
such depositories as may be designated by the Trustees.
He shall disburse the funds of the Trust as may be ordered by the Trustees,
taking proper vouchers for such disbursements, and shall render to the president
and Trustees, at the regular meetings of the Trustees or whenever they may
require it, an account of all his transactions as treasurer and of the financial
condition of the Trust.
If required by the Trustees, he shall give the Trust a bond in such sum and
with such surety or sureties as shall be satisfactory to the Trustees for the
faithful performance of the duties of his office and for the restoration to the
Trust, in case of his death, resignation, retirement or removal from office, of
all books, papers, vouchers, moneys and other property of whatever kind in his
possession or under his control belonging to the Trust.
Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant
secretaries and assistant treasurers, in general, shall perform such duties as
shall be assigned to them by the secretary or treasurer, respectively, or by the
president or the Trustees. The assistant treasurers shall, if required by the
Trustees, give bonds for the faithful performance of their duties in such sums
and with such surety or sureties as shall be satisfactory to the Trustees.
Section 13. SALARIES. The salaries and other compensation of the officers
shall be fixed from time to time by the Trustees and no officer shall be
prevented from receiving such salary or other compensation by reason of the fact
that he is also a Trustee.
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ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Trustees may authorize any officer or agent to
enter into any contract or to execute and deliver any instrument in the name of
and on behalf of the Trust and such authority may be general or confined to
specific instances. Any agreement, deed, mortgage, lease or other document
executed by one or more of the Trustees or by an authorized person shall be
valid and binding upon the Trustees and upon the Trust when authorized or
ratified by action of the Trustees.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Trust shall be signed by such officer or agent of the Trust in such manner
as shall from time to time be determined by the Trustees.
Section 3. DEPOSITS. All funds of the Trust not otherwise employed shall be
deposited from time to time to the credit of the Trust in such banks, trust
companies or other depositories as the Trustees may designate.
ARTICLE VII
SHARES
Section 1. CERTIFICATES. Each shareholder shall be entitled to a
certificate or certificates which shall represent and certify the number of
shares of each class of beneficial interests held by him in the Trust. Each
certificate shall be signed by the chief executive officer, the president or a
vice president and countersigned by the secretary or an assistant secretary or
the treasurer or an assistant treasurer and may be sealed with the seal, if any,
of the Trust. The signatures may be either manual or facsimile. Certificates
shall be consecutively numbered; and if the Trust shall, from time to time,
issue several classes of shares, each class may have its own number series. A
certificate is valid and may be issued whether or not an officer who signed it
is still an officer when it is issued. Each certificate representing shares
which are restricted as to their transferability or voting powers, which are
preferred or limited as to their dividends or as to their allocable portion of
the assets upon liquidation or which are redeemable at the option of the Trust,
shall have a statement of such restriction, limitation, preference or redemption
provision, or a summary thereof, plainly stated on the certificate. In lieu of
such statement or summary, the Trust may set forth upon the face or back of the
certificate a statement that the Trust will furnish to any shareholder, upon
request and without charge, a full statement of such information.
Section 2. TRANSFERS. Certificates shall be treated as negotiable and title
thereto and to the shares they represent shall be transferred by delivery
thereof to the same extent as those of a Maryland stock corporation. Upon
surrender to the Trust or the transfer agent of the Trust of a share certificate
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, the Trust shall issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon its
books.
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The Trust shall be entitled to treat the holder of record of any share or
shares as the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of
Maryland.
Notwithstanding the foregoing, transfers of shares of beneficial interest
of the Trust will be subject in all respects to the Declaration of Trust and all
of the terms and conditions contained therein.
Section 3. REPLACEMENT CERTIFICATE. Any officer designated by the Trustees
may direct a new certificate to be issued in place of any certificate previously
issued by the Trust alleged to have been lost, stolen or destroyed upon the
making of an affidavit of that fact by the person claiming the certificate to be
lost, stolen or destroyed. When authorizing the issuance of a new certificate,
an officer designated by the Trustees may, in his discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or the owner's legal representative to advertise the same
in such manner as he shall require and/or to give bond, with sufficient surety,
to the Trust to indemnify it against any loss or claim which may arise as a
result of the issuance of a new certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The Trustees
may set, in advance, a record date for the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or determining
shareholders entitled to receive payment of any dividend or the allotment of any
other rights, or in order to make a determination of shareholders for any other
proper purpose. Such date, in any case, shall not be prior to the close of
business on the day the record date is fixed and shall be not more than 90 days
and, in the case of a meeting of shareholders not less than ten days, before the
date on which the meeting or particular action requiring such determination of
shareholders of record is to be held or taken.
In lieu of fixing a record date, the Trustees may provide that the share
transfer books shall be closed for a stated period but not longer than 20 days.
If the share transfer books are closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders, such
books shall be closed for at least ten days before the date of such meeting.
If no record date is fixed and the share transfer books are not closed for
the determination of shareholders, (a) the record date for the determination of
shareholders entitled to notice of or to vote at a meeting of shareholders shall
be at the close of business on the day on which the notice of meeting is mailed
or the 30th day before the meeting, whichever is the closer date to the meeting;
and (b) the record date for the determination of shareholders entitled to
receive payment of a dividend or an allotment of any other rights shall be the
close of business on the day on which the resolution of the Trustees, declaring
the dividend or allotment of rights, is adopted.
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When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof, except when (i) the determination has been
made through the closing of the transfer books and the stated period of closing
has expired or (ii) the meeting is adjourned to a date more than 120 days after
the record date fixed for the original meeting, in either of which case a new
record date shall be determined as set forth herein.
Section 5. STOCK LEDGER. The Trust shall maintain at its principal office
or at the office of its counsel, accountants or transfer agent, an original or
duplicate share ledger containing the name and address of each shareholder and
the number of shares of each class held by such shareholder.
Section 6. FRACTIONAL SHARES; ISSUANCE OF UNITS. The Trustees may issue
fractional shares or provide for the issuance of scrip, all on such terms and
under such conditions as they may determine. Notwithstanding any other provision
of the Declaration of Trust or these Bylaws, the Trustees may issue units
consisting of different securities of the Trust. Any security issued in a unit
shall have the same characteristics as any identical securities issued by the
Trust, except that the Trustees may provide that for a specified period
securities of the Trust issued in such unit may be transferred on the books of
the Trust only in such unit.
ARTICLE VIII
ACCOUNTING YEAR
The Trustees shall have the power, from time to time, to fix the fiscal
year of the Trust by a duly adopted resolution.
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions upon the shares
of beneficial interest of the Trust may be authorized and declared by the
Trustees, subject to the provisions of law and the Declaration of Trust.
Dividends and other distributions may be paid in cash, property or shares of the
Trust, subject to the provisions of law and the Declaration of Trust.
Section 2. CONTINGENCIES. Before payment of any dividends or other
distributions, there may be set aside out of any funds of the Trust available
for dividends or other distributions such sum or sums as the Trustees may from
time to time, in their absolute discretion, think proper as a reserve fund for
contingencies, for equalizing dividends or other distributions, for repairing or
maintaining any property of the Trust or for such other purpose as the Trustees
shall determine to be in the best interest of the Trust, and the Trustees may
modify or abolish any such reserve in the manner in which it was created.
16
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ARTICLE X
PROHIBITED INVESTMENTS AND ACTIVITIES
Notwithstanding anything to the contrary in the Declaration of Trust, the
Trust shall not enter into any transaction referred to in (i), (ii) or (iii)
below which it does not believe is in the best interests of the Trust, and will
not, without the approval of a majority of the disinterested Trustees, (i)
acquire from or sell to any Trustee, officer or employee of the Trust, any
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise in which a Trustee, officer or employee of the Trust owns more than a
one percent interest or any affiliate of any of the foregoing, any of the assets
or other property of the Trust, except for the acquisition directly or
indirectly of certain properties or interest therein, directly or indirectly,
through entities in which it owns an interest in connection with the initial
public offering of shares by the Trust or pursuant to agreements entered into in
connection with such offering, which properties shall be described in the
prospectus relating to such initial public offering, (ii) make any loan to or
borrow from any of the foregoing persons or (iii) engage in any other
transaction with any of the foregoing persons. Each such transaction will be in
all respects on such terms as are, at the time of the transaction and under the
circumstances then prevailing, fair and reasonable to the Trust. Subject to the
provisions of the Declaration of Trust, the Board of Trustees may from time to
time adopt, amend, revise or terminate any policy or policies with respect to
investments by the Trust as it shall deem appropriate in its sole discretion.
ARTICLE XI
SEAL
Section 1. SEAL. The Trustees may authorize the adoption of a seal by the
Trust. The seal shall have inscribed thereon the name of the Trust and the year
of its formation. The Trustees may authorize one or more duplicate seals and
provide for the custody thereof.
Section 2. AFFIXING SEAL. Whenever the Trust is permitted or required to
affix its seal to a document, it shall be sufficient to meet the requirements of
any law, rule or regulation relating to a seal to place the word "(SEAL)"
adjacent to the signature of the person authorized to execute the document on
behalf of the Trust.
ARTICLE XII
INDEMNIFICATION AND ADVANCES FOR EXPENSES
To the maximum extent permitted by Maryland law in effect from time to
time, the Trust shall indemnify (a) any Trustee, officer or shareholder or any
former Trustee, officer or shareholder (including among the foregoing, for all
purposes of this Article XII and without limitation, any individual who, while a
Trustee, officer or shareholder and at the express request of the Trust, serves
or has served another corporation, partnership, joint venture, trust, employee
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benefit plan or any other enterprise as a director, officer, shareholder,
partner or trustee of such corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise) who has been successful, on the
merits or otherwise, in the defense of a proceeding to which he was made a party
by reason of service in such capacity, against reasonable expenses incurred by
him in connection with the proceeding, (b) any Trustee or officer or any former
Trustee or officer against any claim or liability to which he may become subject
by reason of such status unless it is established that (i) his act or omission
was material to the matter giving rise to the proceeding and was committed in
bad faith or was the result of active and deliberate dishonesty, (ii) he
actually received an improper personal benefit in money, property or services or
(iii) in the case of a criminal proceeding, he had reasonable cause to believe
that his act or omission was unlawful and (c) each shareholder or former
shareholder against any claim or liability to which he may become subject by
reason of such status. In addition, the Trust shall, without requiring a
preliminary determination of the ultimate entitlement to indemnification, pay or
reimburse, in advance of final disposition of a proceeding, reasonable expenses
incurred by a Trustee, officer or shareholder or former Trustee, officer or
shareholder made a party to a proceeding by reason such status, provided that,
in the case of a Trustee or officer, the Trust shall have received (i) a written
affirmation by the Trustee or officer of his good faith belief that he has met
the applicable standard of conduct necessary for indemnification by the Trust as
authorized by these Bylaws and (ii) a written undertaking by or on his behalf to
repay the amount paid or reimbursed by the Trust if it shall ultimately be
determined that the applicable standard of conduct was not met. The Trust may,
with the approval of its Trustees, provide such indemnification or payment or
reimbursement of expenses to any Trustee, officer or shareholder or any former
Trustee, officer or shareholder who served a predecessor of the Trust and to any
employee or agent of the Trust or a predecessor of the Trust. Neither the
amendment nor repeal of this Article, nor the adoption or amendment of any other
provision of the Declaration of Trust or these Bylaws inconsistent with this
Article, shall apply to or affect in any respect the applicability of this
Article with respect to any act or failure to act which occurred prior to such
amendment, repeal or adoption.
Any indemnification or payment or reimbursement of the expenses permitted
by these Bylaws shall be furnished in accordance with the procedures provided
for indemnification or payment or reimbursement of expenses, as the case may be,
under MGCL ss. 2-418 for directors of Maryland corporations. The Trust may
provide to Trustees, officers and shareholders such other and further
indemnification or payment or reimbursement of expenses, as the case may be, to
the fullest extent permitted by the MGCL, as in effect from time to time, for
directors of Maryland corporations.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the Declaration of
Trust or Bylaws or pursuant to applicable law, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice. Neither the business to be transacted at nor the purpose of any
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meeting need be set forth in the waiver of notice, unless specifically required
by statute. The attendance of any person at any meeting shall constitute a
waiver of notice of such meeting, except where such person attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE XIV
AMENDMENT OF BYLAWS
The Trustees may adopt, alter or repeal any provision of these Bylaws and
to make new Bylaws; provided, however, that Article II, Sections 2, 10 and 12 of
Article III and this Article XIV of these Bylaws shall not be amended without
the consent of shareholders by a vote of a majority of the votes cast at a
meeting of shareholders duly called and at which a quorum is present.
ARTICLE XV
MISCELLANEOUS
All references to the Declaration of Trust shall include any amendments
thereto.
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EXHIBIT 10.36
LOAN AGREEMENT
Dated as of November 26, 1997
Between
RAMCO PROPERTIES ASSOCIATES LIMITED PARTNERSHIP,
as Borrower
and
SECORE FINANCIAL CORPORATION
as Lender
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TABLE OF CONTENTS
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I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions..................................................................................1
Section 1.2 Principles of Construction..................................................................15
II. THE LOAN
Section 2.1 The Loan....................................................................................15
2.1.1 Agreement to Lend and Borrow................................................................15
2.1.2 Single Disbursement to Borrower.............................................................15
2.1.3 The Note....................................................................................15
2.1.4 Use of Proceeds.............................................................................15
2.1.5 Loan Application Fee and Loan Origination Fee...............................................15
Section 2.2 Interest Rate...............................................................................16
2.2.1 Initial Interest Rate.......................................................................16
2.2.2 Adjusted Interest Rate......................................................................16
2.2.3 Default Rate................................................................................16
2.2.4 Interest Calculation........................................................................16
2.2.5 Usury Savings...............................................................................16
Section 2.3 Loan Payments...............................................................................17
2.3.1 Payment Before Anticipated Repayment Date...................................................17
2.3.2 Payments After Anticipated Repayment Date...................................................17
2.3.3 Payment on Maturity Date....................................................................17
2.3.4 Late Payment Charge.........................................................................17
2.3.5 Method and Place of Payment.................................................................17
Section 2.4 Prepayments.................................................................................18
2.4.1 Voluntary Prepayments.......................................................................18
2.4.2 Mandatory Prepayments.......................................................................18
2.4.3 Prepayments After Default...................................................................18
Section 2.5 Defeasance..................................................................................18
2.5.1 Total Defeasance............................................................................18
2.5.2 Partial Defeasance..........................................................................20
2.5.3 Defeasance Collateral Account...............................................................22
2.5.4 Successor Borrower..........................................................................23
Section 2.6 Property Substitutions......................................................................23
III. REPRESENTATIONS AND WARRANTIES................................................................................30
Section 3.1 Borrower Representations....................................................................30
3.1.1 Organization................................................................................30
3.1.2 Proceedings.................................................................................31
3.1.3 No Conflicts................................................................................31
3.1.4 Litigation..................................................................................31
3.1.5 Agreements..................................................................................31
3.1.6 Title.......................................................................................32
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3.1.7 No Bankruptcy Filing..................................................................32
3.1.8 Full and Accurate Disclosure..........................................................32
3.1.9 No Plan Assets........................................................................32
3.1.10 Compliance............................................................................33
3.1.11 Financial Information.................................................................33
3.1.12 Condemnation..........................................................................33
3.1.13 Federal Reserve Regulations...........................................................33
3.1.14 Utilities and Public Access...........................................................34
3.1.15 Not a Foreign Person..................................................................34
3.1.16 Separate Lots.........................................................................34
3.1.17 Assessments...........................................................................34
3.1.18 Enforceability........................................................................34
3.1.19 No Prior Assignment...................................................................34
3.1.20 Insurance.............................................................................34
3.1.21 Use of Properties.....................................................................35
3.1.22 Certificate of Occupancy Licenses.....................................................35
3.1.23 Flood Zone............................................................................35
3.1.24 Physical Condition....................................................................35
3.1.25 Boundaries............................................................................35
3.1.26 Leases................................................................................35
3.1.27 Survey................................................................................36
3.1.28 Loan to Value.........................................................................36
3.1.29 Filing and Recording Taxes............................................................36
3.1.30 Single Purpose........................................................................37
3.1.31 No Change in Facts or Circumstances; Disclosure.......................................39
3.1.32 Illegal Activity......................................................................40
Section 3.2 Survival of Representations...........................................................40
IV. BORROWER COVENANTS..........................................................................................40
Section 4.1 Borrower Affirmative Covenants.........................................................40
4.1.1 Existence; Compliance with Legal Requirements; Insurance...............................40
4.1.2 Taxes and Other Charges................................................................41
4.1.3 Litigation.............................................................................41
4.1.4 Access to Premises.....................................................................42
4.1.5 Notice of Default......................................................................42
4.1.6 Cooperate in Legal Proceedings.........................................................42
4.1.7 Perform Loan Documents.................................................................42
4.1.8 Insurance Benefits.....................................................................42
4.1.9 Further Assurances; Supplemental Mortgage Affidavits...................................42
4.1.10 Financial Reporting...................................................................43
4.1.11 Business and Operations...............................................................46
4.1.12 Title to the Properties...............................................................46
4.1.13 Costs of Enforcement..................................................................46
4.1.14 Estoppel Statement....................................................................46
4.1.15 Loan Proceeds.........................................................................47
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4.1.16 Performance by Borrower...............................................................47
4.1.17 Confirmation of Representations.......................................................47
4.1.18 No Joint Assessment...................................................................47
4.1.19 Leasing Matters.......................................................................47
4.1.20 Alterations...........................................................................48
4.1.21 Subordination Agreements and Other Post-Closing Obligations...........................49
Section 4.2 Borrower Negative Covenants..............................................................50
4.2.1 Operation of Properties................................................................50
4.2.2 Liens..................................................................................50
4.2.3 Dissolution............................................................................50
4.2.4 Change in Business.....................................................................51
4.2.5 Debt Cancellation......................................................................51
4.2.6 Affiliate Transactions.................................................................51
4.2.7 Zoning.................................................................................51
4.2.8 Assets.................................................................................51
4.2.9 Debt...................................................................................51
4.2.10 No Joint Assessment...................................................................51
4.2.11 Principal Place of Business...........................................................52
4.2.12 ERISA.................................................................................52
4.2.13 Transfers, Indebtedness and Subordinate Liens.........................................52
V. INSURANCE, CASUALTY AND CONDEMNATION.........................................................................57
Section 5.1 Insurance................................................................................57
5.1.1 Insurance Policies.....................................................................57
5.1.2 Insurance Company......................................................................61
Section 5.2 Casualty and Condemnation................................................................61
5.2.1 Casualty...............................................................................61
5.2.2 Condemnation...........................................................................61
Section 5.3 Restoration..............................................................................62
5.3.1 Minor Casualty or Condemnation.........................................................62
5.3.2 Major Casualty or Condemnation.........................................................62
VI. RESERVE FUNDS...............................................................................................65
Section 6.1 Required Repairs; Required Repair Funds..................................................65
6.1.1 Required Repairs; Deposits.............................................................65
6.1.2 Release of Required Repair Funds.......................................................65
6.1.3 Failure to Perform Required Repairs; Application of Required
Repair Funds........................................................................66
Section 6.2 Tax Funds................................................................................67
6.2.1 Tax Funds..............................................................................67
6.2.2 Release of Tax Funds...................................................................67
6.2.3 Application of Tax Funds...............................................................67
Section 6.3 Insurance Premium Funds..................................................................67
6.3.1 Insurance Premium Funds................................................................67
6.3.2 Release of Insurance Premium Funds.....................................................68
6.3.3 Application of Insurance Premium Funds.................................................68
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Section 6.4 Capital Expenditures Funds..............................................................68
6.4.1 Capital Expenditures....................................................................68
6.4.2 Release of Capital Expenditure Funds....................................................69
6.4.3 Application of Capital Expenditure Funds................................................70
Section 6.5 Intentionally Deleted...................................................................71
Section 6.6 Security Interest in Funds..............................................................71
6.6.1 Grant of Security Interest..............................................................71
6.6.2 Income Taxes............................................................................71
6.6.3 Prohibition Against Further Encumbrance.................................................71
Section 6.7 Cash Management.........................................................................71
6.7.1 Lockbox Account.........................................................................71
6.7.2 Deposits into Lockbox Account...........................................................71
Section 6.8 Servicer................................................................................72
VII. DEFAULTS...................................................................................................72
Section 7.1 Event of Default........................................................................72
7.2 Remedies .. ............................................................................74
7.3 Remedies Cumulative.....................................................................75
VIII. SALE AND SECURITIZATION OF MORTGAGES......................................................................76
Section 8.1 Sale of Mortgages and Securitization....................................................76
8.2 Securitization Indemnification..........................................................77
8.3 Rating Surveillance.....................................................................80
IX. MISCELLANEOUS...............................................................................................80
Section 9.1 Survival................................................................................80
9.2 Lender's Discretion.....................................................................80
9.3 Governing Law .........................................................................80
9.4 Modification, Waiver in Writing.........................................................82
9.5 Delay Not a Waiver......................................................................82
9.6 Notices .............................................................................82
9.7 Trial by Jury .........................................................................83
9.8 Headings .............................................................................84
9.9 Severability ...........................................................................80
9.10 Preferences ...........................................................................84
9.11 Waiver of Notice........................................................................84
9.12 Remedies of Borrower....................................................................84
9.13 Expenses; Indemnity.....................................................................85
9.14 Schedules Incorporated..................................................................86
9.15 Offsets, Counterclaims and Defenses.....................................................86
9.16 No Joint Venture or Partnership; No Third Party Beneficiaries...........................86
9.17 Publicity .............................................................................87
9.18 Cross-Default; Cross-Collateralization; Waiver of Marshalling of Assets.................87
9.19 Waiver of Counterclaim..................................................................88
9.20 Conflict; Construction of Documents; Reliance...........................................88
9.21 Brokers and Financial Advisors..........................................................88
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9.22 Management of the Property; Termination of Manager................................................89
9.23 Exculpation ....................................................................................91
9.24 Prior Agreements..................................................................................92
</TABLE>
SCHEDULES
Schedule I - Allocated Loan Amounts
Schedule II - Required Repairs
Schedule III - Rent Roll
Schedule IV - Post-Closing SNDA Tenants
Schedule V - Letter of Instruction
Schedule VI - CPA Certificate
Schedule VII - Form of Financial Statement
Schedule VIII - Form of Subordination, Non-Disturbance and Attornment
Agreement
Schedule IX - Trade Payable Limits
Schedule X - West Allis Environmental Matter
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<PAGE> 7
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of November 26, 1997 (as
amended, restated, replaced, supplemented or otherwise modified from time to
time, this "AGREEMENT"), between SECORE FINANCIAL CORPORATION, having an address
at 3 Bethesda Metro Center, Suite 700, Bethesda, Maryland 20814 ("LENDER") and
RAMCO PROPERTIES ASSOCIATES LIMITED PARTNERSHIP, having an address at 27600
Northwestern Highway, Suite 200, Southfield, Michigan 48304 ("BORROWER").
All capitalized terms used herein shall have the respective
meanings set forth in Article I hereof.
W I T N E S S E T H :
WHEREAS, Borrower desires to obtain the Loan from Lender;
WHEREAS, Lender is willing to make the Loan to Borrower,
subject to and in accordance with the terms of this Agreement and the other Loan
Documents;
NOW, THEREFORE, in consideration of the agreements and
covenants set forth in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree, represent and warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.1 DEFINITIONS.
For all purposes of this Agreement, except as otherwise
expressly required or unless the context clearly indicates a contrary intent:
"ACCOUNTS" shall mean collectively the Lockbox
Accounts, the Cash Management Account, the Required Repair Account, the Tax
Account, the Insurance Premium Account, the Debt Service Account and the
Capital Expenditures Account.
"ACCRUED INTEREST" shall have the meaning set forth in
Section 2.3.2 hereof.
"ADJUSTED INTEREST RATE" shall mean a rate per annum equal
to the greater of (i) the Initial Interest Rate plus two percentage points
(2.0%) or (ii) the Treasury Rate plus two percentage points (2.0%).
"AFFILIATE" shall mean, as to any Person, any other Person
that, directly or indirectly, is in control of, is controlled by or is under
common control with such Person or is a director or officer of such Person or
of an Affiliate of such Person.
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<PAGE> 8
"AGENT" shall mean NBD Bank, a Michigan banking corporation,
its permitted successors and assigns.
"ALLOCATED LOAN AMOUNT" shall mean the portion of the Loan
allocated to each Individual Property as set forth on Schedule I hereto.
"ALTA" shall mean American Land Title Association, or any
successor thereto.
"ANNUAL BUDGET" shall mean the operating budget, including all
planned capital expenditures, for all the Properties prepared by Borrower for
the applicable Fiscal Year or other period.
"ANTICIPATED REPAYMENT DATE" shall mean December 1, 2007.
"APPLICABLE INTEREST RATE" shall mean (i) prior to the
Anticipated Repayment Date, the Initial Interest Rate and (ii) on and after the
Anticipated Repayment Date, the Adjusted Interest Rate.
"APPROVED ANNUAL BUDGET" shall have the meaning set forth in
Section 4.1.10(d).
"ASSIGNMENT AND SUBORDINATION OF MANAGEMENT AGREEMENT" shall
mean, with respect to each Individual Property, that certain Assignment of
Management Agreement and Subordination of Management Agreement dated the date
hereof between Manager and Lender.
"ASSIGNMENT OF LEASES" shall mean, with respect to each
Individual Property, that certain first priority Assignment of Leases and Rents,
dated as of the date hereof, from Borrower, as assignor, to Lender, as assignee,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
"AWARD" shall mean any compensation paid by any Governmental
Authority in connection with a Condemnation in respect of all or any part of an
Individual Property.
"BANKRUPTCY CODE" shall mean Title 11 of the United States
Code entitled "Bankruptcy", as amended from time to time, and any successor
statute or statutes and all rules and regulations from time to time promulgated
thereunder, and any comparable foreign laws relating to bankruptcy, insolvency
or creditors' rights.
"BASIC CARRYING COSTS" shall mean, with respect to an
Individual Property, the sum of the following costs associated with such
Individual Property for the relevant Fiscal Year or payment period: (i) real
property taxes with respect to such Individual Property and (ii) insurance
premiums with respect to such Individual Property.
"BORROWER" shall mean Ramco Properties Associates Limited
Partnership, a Michigan limited partnership, together with its permitted
successors and permitted assigns.
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or day on
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which national banks in New York, New York are not open for business.
"CAPITAL EXPENDITURE FUNDS" shall have the meaning set forth
in Section 6.4.1.
"CAPITAL EXPENDITURES" for any period shall mean amounts
expended for replacements and alterations to the Properties and required to be
capitalized according to GAAP. Amounts paid for items set forth on the Capital
Expenditures Budget meeting the foregoing definition of Capital Expenditures
shall be deemed Capital Expenditures.
"CAPITAL EXPENDITURES ACCOUNT" shall have the meaning set
forth in the Cash Management Agreement.
"CAPITAL EXPENDITURES BUDGET" shall mean the budget annexed
hereto as Schedule III, as amended from time to time in accordance with Section
6.4.1.
"CAPITAL EXPENDITURES WORK" shall mean any labor performed or
materials installed in connection with any item of work described on the Capital
Expenditures Budget which is a Capital Expenditure.
"CASH" shall mean coin or currency of the government of the
United States of America.
"CASH AND CASH EQUIVALENTS" shall mean any or a combination of
the following:
(i) Cash, and (ii) U.S. Obligations.
"CASH MANAGEMENT ACCOUNT" shall have the meaning set forth in
Section 6.7.2.
"CASH MANAGEMENT AGREEMENT" shall mean that certain Cash
Management Agreement among Lender, Borrower and Agent relating to funds
deposited in the Lockbox Account.
"CASUALTY" shall mean the occurrence of any casualty, damage
or injury, by fire or otherwise, to any of the Individual Properties or any part
thereof.
"CASUALTY CONSULTANT" shall have the meaning set forth in
Section 5.3.2(c).
"CASUALTY RETAINAGE" shall have the meaning set forth in
Section 5.3.2(d)
"CLOSING DATE" shall mean the later to occur of (i) the date
hereof or (ii) the date of funding the Loan.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended, and as it may be further amended from time to time, any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"CONDEMNATION" shall mean a temporary or permanent taking by
any Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of
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<PAGE> 10
condemnation or eminent domain, of all or any part of the Premises, or any
interest therein or right accruing thereto, including any right of access
thereto or any change of grade affecting the Premises or any part thereof.
"DEBT" shall mean the outstanding principal amount of the Loan
together with all interest accrued and unpaid thereon and all other sums
(including the Yield Maintenance Premium) due to Lender in respect of the Loan
under the Note, this Agreement, the Mortgages, the Environmental Indemnities or
any other Loan Document.
"DEBT SERVICE" shall mean, with respect to any particular
period of time, scheduled principal and interest payments under the Note.
"DEBT SERVICE ACCOUNT" shall have the meaning set forth in the
Cash Management Agreement.
"DEBT SERVICE COVERAGE RATIO" shall mean the ratio of (a) Net
Operating Income for the immediately preceding 12 calendar month period adjusted
downward (or downward or upward, as the case may be, with respect to
straightlining of rents only) for (i) a management fee of 4% of Gross Income,
(ii) any non-recurring revenues, and (iii) straightlining of rents to (b) the
product of the greater of (i) 9.66% or (ii) the Initial Interest Rate and the
original principal amount of the Loan.
"DEFAULT" shall mean the occurrence of any event hereunder or
under any other Loan Document which, but for the giving of notice or passage of
time, or both, would be an Event of Default.
"DEFAULT RATE" shall mean, with respect to the Loan, a rate
per annum equal to the lesser of (a) the maximum rate permitted by applicable
law, or (b) five percent (5%) above the Applicable Interest Rate.
"DEFEASANCE COLLATERAL ACCOUNT" shall have the meaning set
forth in Section 2.5.1(iii).
"DEFEASANCE DATE" shall have the meaning set forth in Section
2.5.1(i).
"DEFEASED NOTE" shall have the meaning set forth in Section
2.5.2(iv) hereof.
"DISCLOSURE DOCUMENT" shall have the meaning set forth in
Section 8.2(a).
"ELIGIBLE ACCOUNT" shall mean a separate and identifiable
account from all other funds held by the holding institution that is either (i)
an account or accounts maintained with a federal or state-chartered depository
institution or trust company which complies with the definition of Eligible
Institution or (ii) a segregated trust account or accounts maintained with a
federal or state chartered depository institution or trust company acting in its
fiduciary capacity which, in the case of a state chartered depository
institution or trust company is subject to regulations substantially similar to
12 C.F.R. ss.9.10(b), having in either case a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal and
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<PAGE> 11
state authority. An Eligible Account will not be evidenced by a certificate
of deposit, passbook or other instrument.
"ELIGIBLE INSTITUTION" shall mean a depository institution or
trust company insured by the Federal Deposit Insurance Corporation the short
term unsecured debt obligations or commercial paper of which are rated at least
A-1 by Standard & Poor's Ratings Group, P-1 by Moody's Investors Service, Inc.,
D-1 by Duff & Phelps Credit Rating Co. and F-1+ by Fitch Investors Service, L.P.
in the case of accounts in which funds are held for 30 days, or less (or, in the
case of accounts in which funds are held for more than 30 days, or Letters of
Credit, the long term unsecured debt obligations of which are rated at least
"AA" by Fitch, Duff and S&P and "Aa2" by Moody's). NBD Bank, a Michigan banking
corporation, shall be deemed an Eligible Institution so long as its long term
unsecured debt obligations are at all times rated at least A or better by
Standard & Poor's Ratings Group and A2 by Moody's Investors Service, Inc.
"ENVIRONMENTAL INDEMNITY" shall mean, with respect to each
Individual Property, that certain Environmental Indemnification Agreement dated
as of the date hereof executed by Borrower in connection with the Loan for the
benefit of Lender.
"EQUIPMENT" shall have the meaning set forth in the granting
clause of the Mortgage with respect to each Individual Property.
"ERISA" shall have the meaning set forth in Section 4.2.12.
"EVENT OF DEFAULT" shall have the meaning set forth in
Section 7.1.
"EXCHANGE ACT" shall have the meaning set forth in Section
8.2(a).
"EXTRAORDINARY EXPENSE" shall have the meaning set
forth in Section 4.1.10(d).
"FISCAL YEAR" shall mean each twelve month period commencing
on January 1 and ending on December 31 during each year of the term of the Loan.
"GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be in general use
by significant segments of the U.S. accounting profession, to the extent such
principles apply to partnerships and are applicable to the facts and
circumstances on the date of determination.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency,
commission, office or authority of any nature whatsoever for any governmental
unit (federal, state, county, district, municipal, city or otherwise) whether
now or hereafter in existence.
"GROSS INCOME" shall mean all revenue, computed in accordance
with GAAP, derived from the ownership and operation of the Properties from
whatever source, including,
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but not limited to, Rents, utility charges, escalations, forfeited security
deposits, interest on credit accounts, service fees or charges, license fees,
parking fees, rent concessions or credits, and other required pass-throughs but
excluding sales, use and occupancy or other taxes on receipts required to be
accounted for by Borrower to any Government Authority, refunds and uncollectible
accounts, proceeds of casualty insurance and Awards (other than business
interruption or other loss of income insurance), and any disbursements to the
Borrower of Required Repair Funds, Tax Funds, Insurance Premium Funds, Capital
Expenditure Funds or any other fund established by the Loan Documents.
"IMPROVEMENTS" shall have the meaning set forth in the
granting clause of the related Mortgage with respect to each Individual
Property.
"INDEBTEDNESS" of a Person, at a particular date, means the
sum (without duplication) at such date of (a) indebtedness or liability for
borrowed money; (b) obligations evidenced by bonds, debentures, notes, or other
similar instruments; (c) obligations for the deferred purchase price of property
or services (including trade obligations); (d) obligations under letters of
credit; (e) obligations under acceptance facilities; (f) all guaranties,
endorsements (other than for collection or deposit in the ordinary course of
business), and other contingent obligations to purchase, to provide funds for
payment, to supply funds to invest in any Person or entity, or otherwise to
assure a creditor against loss; and (g) obligations secured by any Liens,
whether or not the obligations have been assumed.
"INDEPENDENT DIRECTOR" shall have the meaning set forth in
Section 3.1.30(p).
"INDIVIDUAL PROPERTY" shall mean each parcel of real property,
the improvements thereon and all personal property owned by Borrower and
encumbered by a Mortgage, together with all rights pertaining to such property
and improvements, as more particularly described in the Granting Clauses of such
Mortgages.
"INITIAL INTEREST RATE" shall mean a rate per annum equal to
six and eighty-three hundredths percent (6.83%).
"INSOLVENCY OPINION" shall have the meaning set forth in
Section 3.1.30(r).
"INSURANCE PREMIUM FUND" shall have the meaning set forth in
Section 6.3.1.
"INSURANCE PREMIUM ACCOUNT" shall have the meaning set forth
in the Cash Management Agreement.
"INSURANCE PREMIUM FUNDS" shall have the meaning set forth in
Section 6.3.1.
"INSURANCE PREMIUMS" shall have the meaning set forth in
Section 5.1.1.
"LEASE" shall mean any lease, sublease or subsublease,
letting, license, concession or other agreement (whether written or oral and
whether now or hereafter in effect) pursuant to which any person is granted a
possessory interest in, or right to use or occupy all or any portion of any
space in any Individual Property of Borrower, and every modification, amendment
or
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other agreement relating to such lease, sublease, subsublease, or other
agreement entered into in connection with such lease, sublease, subsublease, or
other agreement and every guarantee of the performance and observance of the
covenants, conditions and agreements to be performed and observed by the other
party thereto.
"LEGAL REQUIREMENTS" shall mean, with respect to each
Individual Property, all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting such Individual
Property or any part thereof or the construction, use, alteration or operation
thereof, or any part thereof, whether now or hereafter enacted and in force, and
all permits, licenses and authorizations and regulations relating thereto, and
all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Borrower, at any time in force
affecting such Individual Property or any part thereof, including, without
limitation, any which may (i) require repairs, modifications or alterations in
or to such Individual Property or any part thereof, or (ii) in any way limit the
use and enjoyment thereof.
"LENDER" shall mean Secore Financial Corporation, together
with its successors and assigns, including, without limitation, Morgan Stanley
Mortgage Capital Inc.
"LETTER OF CREDIT" shall mean an irrevocable, unconditional,
transferable, clean sight draft letter of credit in favor of Lender and
entitling Lender to draw thereon in New York, New York, issued by a domestic
Eligible Institution or the U.S. agency or branch of a foreign Eligible
Institution, or if there are no domestic U.S. agencies or branches of a foreign
Eligible Institution then issuing letters of credit, then such letter of credit
may be issued by a domestic bank, the long term unsecured debt rating of which
is the highest such rating then given by the Rating Agencies to a domestic
commercial bank. If at any time the bank issuing any such Letter of Credit shall
cease to be an Eligible Institution, Lender shall have the right immediately to
draw down the same in full and hold the proceeds of such draw in accordance with
the applicable provisions hereof, unless Borrower shall deliver a replacement
Letter of Credit within thirty (30) days after Lender delivers written notice to
Borrower that such bank shall have ceased to be an Eligible Institution.
"LIABILITIES" shall have the meaning set forth in Section
8.2 (b).
"LICENSES" shall have the meaning set forth in Section 3.1.22.
"LIEN" shall mean, with respect to each Individual Property,
any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security
interest, or any other encumbrance, charge or transfer of, on or affecting the
related Individual Property or any portion thereof or Borrower, or any interest
therein, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, the filing of any financing statement, and
mechanic's, materialmen's and other similar liens and encumbrances.
"LOAN" shall mean the loan made by Lender to Borrower
pursuant to this
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<PAGE> 14
Agreement.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the
Note, the Mortgages, the Assignments of Leases, the Assignments and
Subordinations of Management Agreement, the Environmental Indemnities, the Cash
Management Agreement and any other document pertaining to the Individual
Properties as well as all other documents executed and/or delivered in
connection with the Loan.
"LOCKBOX ACCOUNTS" shall have the meaning set forth in
Section 6.7.1.
"MANAGEMENT AGREEMENT" shall mean, with respect to each
Individual Property, the management agreement entered into by and between
Borrower and the Manager, pursuant to which the Manager is to provide management
and other services with respect to such Individual Property.
"MANAGER" shall mean Ramco-Gershenson, Inc., a Michigan
corporation.
"MANAGER TERMINATION RATIO" shall have the meaning set forth
in Section 9.22.
"MATURITY DATE" shall mean December 1, 2027, or such other
date on which the final payment of principal of the Note becomes due and payable
as therein provided, whether at such stated maturity date, by declaration of
acceleration, or otherwise.
"MAXIMUM LEGAL RATE" shall mean the maximum nonusurious
interest rate, if any, that at any time or from time to time may be contracted
for, taken, reserved, charged or received on the indebtedness evidenced by the
Note and as provided for herein or the other Loan Documents, under the laws of
such state or states whose laws are held by any court of competent jurisdiction
to govern the interest rate provisions of the Loan.
"MONTHLY CAPITAL EXPENDITURES DEPOSIT" shall have the meaning
set forth in Section 6.4.1.
"MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall mean a constant
monthly payment of $326,962.39.
"MONTHLY INSURANCE PREMIUM DEPOSIT" shall have the meaning set
forth in Section 6.3.1.
"MONTHLY PAYMENT DATE" shall mean the first day of every
calendar month occurring during the term of the Loan.
"MONTHLY TAX DEPOSIT" shall have the meaning set forth in
Section 6.2.1.
"MORGAN STANLEY " shall have the meaning set forth in
Section 8.2(b).
"MORGAN STANLEY GROUP" shall have the meaning set forth in
Section 8.2(b).
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"MORTGAGE" shall mean, with respect to each Individual
Property, that certain first priority Mortgage (or Deed of Trust or Deed to
Secure Debt), and Security Agreement, dated the date hereof, executed and
delivered by Borrower as security for the Loan made to Borrower and encumbering
such Individual Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"NET CASH FLOW" for any period shall mean the amount obtained
by subtracting Operating Expenses and Capital Expenditures for such period from
Gross Income for such period.
"NET CASH FLOW SCHEDULE" shall have the meaning set forth in
Section 4.1.10(b).
"NET OPERATING INCOME" means the amount obtained by
subtracting Operating Expenses from Gross Income.
"NET PROCEEDS" shall mean: (i) the net amount of all insurance
proceeds payable as a result of a Casualty to an Individual Property, after
deduction of reasonable costs and expenses (including, but not limited to,
reasonable attorneys' fees), if any, in collecting such insurance proceeds, or
(ii) the net amount of the Award, after deduction of reasonable costs and
expenses (including, but not limited to, reasonable attorneys' fees), if any, in
collecting such Award.
"NET PROCEEDS DEFICIENCY" shall have the meaning set forth in
Section 5.3.2(f).
"NOTE" shall have the meaning set forth in Section 2.1.3.
"OFFICER'S CERTIFICATE" shall mean a certificate delivered to
Lender by Borrower which is signed by an authorized senior officer of the
managing member of the general partner of Borrower.
"OPERATING EXPENSES" shall mean the total of all expenditures,
computed in accordance with GAAP, relating to the operation, maintenance and
management of the Properties, including without limitation, utilities, repairs
and maintenance, insurance, license fees, property taxes and assessments,
advertising expenses, management fees, payroll and related taxes, computer
processing charges, and equipment lease payments, but excluding depreciation,
Debt Service, Extraordinary Expenses, and Capital Expenditures.
"OTHER CHARGES" shall mean all ground rents, maintenance
charges, impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Properties, now or hereafter levied or assessed or
imposed against the Properties or any part thereof.
"PARTIAL DEFEASANCE DATE" shall have the meaning set forth in
Section 2.5.2(a)(i).
"PARTIAL DEFEASANCE COLLATERAL" shall mean U.S. Obligations
which provide payments (i) on or prior to, but as close as possible to, all
Monthly Payment Dates and other scheduled payment dates, if any, under the
Defeased Note after the Defeasance Date and up to
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and including the Anticipated Repayment Date, and (ii) in amounts equal to or
greater than 125% of the Scheduled Defeasance Payments.
"PERMITTED ENCUMBRANCES" shall mean, with respect to an
Individual Property, collectively, (a) the Liens and security interests created
by the Loan Documents, (b) all Liens, encumbrances and other matters disclosed
in the Title Insurance Policies relating to such Individual Property or any part
thereof, (c) Liens, if any, for Taxes imposed by any Governmental Authority not
yet due or delinquent, and (d) such other title and survey exceptions as Lender
has approved or may approve in writing in Lender's sole discretion, which in the
aggregate do not materially adversely affect the value or use of such Individual
Property or Borrower's ability to repay the Loan.
"PERMITTED INVESTMENTS" shall have the meaning specified in
the Cash Management Agreement.
"PERSON" shall mean any individual, corporation, partnership,
joint venture, estate, trust, unincorporated association, any other entity, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"PHYSICAL CONDITIONS REPORT" shall mean a report prepared by a
company satisfactory to Lender regarding the physical condition of such
Individual Property, satisfactory in form and substance to Lender in its sole
discretion, which report shall, among other things, (i) confirm that such
Individual Property and its use complies, in all material respects, with all
applicable Legal Requirements (including, without limitation, zoning,
subdivision and building laws) and (ii) include a copy of a final certificate of
occupancy with respect to all Improvements on such Individual Property.
"POLICIES" shall have the meaning specified in Section 5.1.1.
"PREMISES" shall have the meaning set forth in the granting
clause of the related Mortgage with respect to each Individual Property.
"PRO-RATA ALLOCATED LOAN AMOUNT" shall mean for an Individual
Property the product of (a) the quotient obtained by dividing the Allocated Loan
Amount for such Individual Property as adjusted in accordance with the
provisions of Section 2.4.2, by the sum of the original Allocated Loan Amount
for all Properties as adjusted in accordance with the provisions of Section
2.4.2 and (b) the outstanding principal balance of the Loan.
"PRO-RATA SUBSTITUTE ALLOCATED LOAN AMOUNT" shall mean for a
Substitute Property the product of (a) the quotient obtained by dividing the
Substitute Allocated Loan Amount for such Individual Property as adjusted in
accordance with the provisions of Section 2.4.2 by the sum of the original
Allocated Loan Amount for all Properties, as adjusted in accordance with the
provisions of Section 2.4.2, and (b) the outstanding principal balance of the
Loan.
"PROPERTIES" shall mean, collectively, all of the Individual
Properties which are
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"PROVIDED INFORMATION" shall have the meaning set forth in
Section 8.1(b).
"QUALIFYING MANAGER" shall mean any property manager
acceptable to Lender.
"RATING AGENCIES" shall mean each of Standard & Poor's Ratings
Group, a division of McGraw-Hill, Inc., Moody's Investors Service, Inc., Duff &
Phelps Credit Rating Co. and Fitch Investors Service, L.P., or any other
nationally-recognized statistical rating agency which has been approved by
Lender.
"REGISTRATION STATEMENT" shall have the meaning set forth in
Section 8.2(b).
"RELEASE DATE" shall mean the date that is the earlier of
(a) three years from the Closing Date or (b) two years from the date of a
Securitization of the Loan.
"REMIC TRUST" shall mean a "real estate mortgage investment
conduit" within the meaning of Section 860D of the Code that holds the Note.
"RENTABLE SPACE PERCENTAGE" shall have the meaning set forth
in Section 5.3.2(iii).
"RENTS" shall mean, with respect to each Individual
Property, all rents, rent equivalents, moneys payable as damages or in
lieu of rent or rent equivalents, royalties (including, without limitation,
all oil and gas or other mineral royalties and bonuses), income, receivables,
receipts, revenues, deposits (including, without limitation, security, utility
and other deposits), accounts, cash, issues, profits, charges for services
rendered, and other consideration of whatever form or nature received by or
paid to or for the account of or benefit of Borrower or its agents or employees
from any and all sources arising from or attributable to the Individual
Property.
"REQUIRED REPAIR ACCOUNT" shall have the meaning set forth in
the Cash Management Agreement.
"REQUIRED REPAIR FUNDS" shall have the meaning set forth in
Section 6.1.1.
"REQUIRED REPAIRS" shall have the meaning set forth in Section
6.1.1.
"RESTORATION" shall have the meaning set forth in
Section 5.2.1.
"SCHEDULED DEFEASANCE PAYMENTS" shall mean scheduled payments
of interest and principal under the Note or Defeased Note, as applicable
(including, in the case of a total defeasance, the outstanding principal balance
on the Note as of the Anticipated Repayment Date and, in the case of a partial
defeasance, the outstanding principal balance on the Defeased Note as of the
Anticipated Repayment Date), and payments required, if any, under the Loan
Documents for servicing fees, Rating Agency Surveillance Charges and other
similar charges.
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<PAGE> 18
"SECONDARY MARKET TRANSACTION" shall have the meaning set
forth in Section 8.1(a).
"SECURITIES" shall have the meaning set forth in Section
8.1 (a).
"SECURITIES ACT" shall have the meaning set forth in Section
8.2(a).
"SECURITIZATION" shall have the meaning set forth in
Section 8.1.
"SECURITY AGREEMENT" shall mean a security agreement in form
and substance satisfactory to Lender pursuant to which Borrower grants
Lender a perfected, first priority security interest in the Defeasance
Collateral Account, the Total Defeasance Collateral and the Partial Defeasance
Collateral, as applicable.
"SERVICER" shall have the meaning set forth in Section 6.8.
"SERVICING AGREEMENT" shall have the meaning set forth in
Section 6.8.
"SEVERED LOAN DOCUMENTS" shall have the meaning set
forth in Section 7.2(c).
"SPC MANAGING MEMBER shall have the meaning set forth in
Section 3.1.30(o).
"SPE GENERAL PARTNER" shall have the meaning set
forth in Section 3.1.30(o).
"STATE" shall mean, with respect to an Individual Property,
the State or Commonwealth in which such Individual Property or any part thereof
is located.
"SUBSTITUTE PROPERTY" shall have the meaning set forth in
Section 2.6(a).
"SUBSTITUTE ALLOCATED LOAN AMOUNT" shall have the
meaning set forth in Section 2.6(viii).
"SUBSTITUTED PROPERTY" shall have the meaning set forth in
Section 2.6.
"SUCCESSOR BORROWER" shall have the meaning set forth in
Section 2.5.4.
"SURVEY" shall mean a survey of the Individual Property
in question prepared by a surveyor licensed in the State and satisfactory to
Lender and the company or companies issuing the Title Insurance Policies,
and containing a certification of such surveyor satisfactory to Lender.
"TAX ACCOUNT" shall have the meaning set forth in the
Cash Management Agreement.
"TAX FUNDS" shall have the meaning set forth in Section 6.2.1.
"TAXES" shall mean all real estate and personal property
taxes, assessments, water rates or sewer rents, now or hereafter levied or
assessed or imposed against any of the
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<PAGE> 19
Properties or part thereof.
"TENANT" shall mean any Person obligated under any Lease now
or hereafter affecting all or any part of any Individual Property.
"THRESHOLD AMOUNT" shall have the meaning set forth in
Section 4.1.20.
"TITLE INSURANCE POLICIES" shall mean, with respect to each
Individual Property, ALTA mortgagee title insurance policies in the form
(acceptable to Lender) issued with respect to such Individual Property and
insuring the lien of the Mortgage encumbering such Individual Property.
"TOTAL DEFEASANCE COLLATERAL" shall mean U.S. Obligations,
which provide payments (i) on or prior to, but as close as possible to, all
Monthly Payment Dates and other scheduled payment dates, if any, under the Note
after the Defeasance Date and up to and including the Anticipated Repayment
Date, and (ii) in amounts equal to or greater than the Scheduled Defeasance
Payments.
"TRADE PAYABLES" shall have the meaning set forth in Section
4.2.13.
"TRANSFER" shall mean sell, assign, convey, transfer,
mortgage, grant a security interest in, pledge or otherwise dispose of, or where
used as a noun, a sale, assignment, conveyance, mortgage, grant of a security
interest in, transfer, pledge or other disposition.
"TRANSFEREE" shall have the meaning set forth in Section
4.2.13.
"TREASURY RATE" shall mean, as of the Anticipated Repayment
Date, the yield, calculated by linear interpolation (rounded to the nearest
one-thousandth of one percent (i.e., 0.001%) of the yields of noncallable United
States Treasury obligations with terms (one longer and one shorter) most nearly
approximately the period from such date of determination to the Maturity Date,
as determined by Lender on the basis of Federal Reserve Statistical Release
H.15-Selected Interest Rates under the heading U.S. Governmental
Security/Treasury Constant Maturities, or other recognized source of financial
market information selected by Lender.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform
Commercial Code as in effect in the applicable State or Commonwealth in which an
Individual Property is located.
"UNDEFEASED NOTE" shall have the meaning set forth in Section
2.5.2(iv) hereof.
"UNDERWRITER GROUP" shall have the meaning set forth in
Section 8.2(b).
"U.S. OBLIGATIONS" shall mean direct non-callable obligations
of the United States of America.
"YIELD MAINTENANCE PREMIUM" shall mean an amount equal to the
greater of: (i) one (1%) percent of the principal amount of the Loan being
prepaid or (ii) the present value
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as of the Prepayment Date of the Calculated Payments from the Prepayment Date
through the Anticipated Repayment Date determined by discounting such payments
at the Discount Rate. As used in this definition, the term "PREPAYMENT DATE"
shall mean the date on which prepayment is made. As used in this definition, the
term "CALCULATED PAYMENTS" shall mean the monthly payments of interest only
which would be due based on the principal amount of the Loan being prepaid on
the Prepayment Date and assuming an interest rate per annum equal to the
difference (if such difference is greater than zero) between (y) the Initial
Interest Rate and (z) the Yield Maintenance Treasury Rate. As used in this
definition, the term "DISCOUNT RATE" shall mean the rate which when compounded
monthly, is equivalent to the Yield Maintenance Treasury Rate when compounded
semi-annually. As used in this definition, the term "YIELD MAINTENANCE TREASURY
RATE" shall mean the yield calculated by the linear interpolation of the yields,
as reported in the Federal Reserve Statistical Release H.15-Selected Interest
Rates under the heading U.S. Government Securities/Treasury constant maturities
for the week ending prior to the Prepayment Date, of U.S. Treasury constant
maturities with maturity dates (one longer or one shorter) most nearly
approximating the Anticipated Repayment Date. In the event Release H.15 is no
longer published, Lender shall select a comparable publication to determine the
Yield Maintenance Treasury Rate. In no event, however, shall Lender be required
to reinvest any prepayment proceeds in U.S. Treasury obligations or otherwise.
SECTION 1.2 PRINCIPLES OF CONSTRUCTION.
All references to sections and schedules are to sections and
schedules in or to this Agreement unless otherwise specified. Unless otherwise
specified, the words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. Unless otherwise specified,
all meanings attributed to defined terms herein shall be equally applicable to
both the singular and plural forms of the terms so defined.
II. THE LOAN
SECTION 2.1 THE LOAN.
2.1.1 AGREEMENT TO LEND AND BORROW. Subject to and upon the
terms and conditions set forth herein, Lender shall make the Loan to Borrower
and Borrower shall accept the Loan from Lender on the Closing Date, in the
original principal amount of $50,000,000.00.
2.1.2 SINGLE DISBURSEMENT TO BORROWER. Borrower shall receive
only one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed.
2.1.3 THE NOTE. The Loan shall be evidenced by a note made by
Borrower to Lender in the original principal amount of $50,000,000.00 (as the
same may be amended, supplemented, restated, increased, extended and
consolidated, together with any Defeased Note and Undefeased Note that may exist
from time to time, the "NOTE").
2.1.4 USE OF PROCEEDS. Borrower shall use proceeds of the
Loan to (i) pay and
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discharge any existing loans relating to the Properties, (ii) pay all past-due
Basic Carrying Costs, if any, in respect of the Properties, (iii) make deposits
of the Required Repair Funds and Tax Funds, Insurance Premium Funds and Capital
Expenditure Funds, (iv) pay costs and expenses incurred in connection with the
closing of the Loan, as approved by Lender, (v) fund any working capital
requirements of the Properties, approved by Lender and (vi) distribute the
balance, if any, to the Borrower.
2.1.5 LOAN APPLICATION FEE AND LOAN ORIGINATION FEE .
Borrower shall pay on the date hereof, a non-refundable loan origination fee
(the "LOAN ORIGINATION FEE") in the amount of $312,500.
SECTION 2.2 INTEREST RATE.
2.2.1 INITIAL INTEREST RATE. Interest on the outstanding
principal balance of the Loan shall accrue from the Closing Date up to but
excluding the Anticipated Repayment Date at the Initial Interest Rate.
2.2.2 ADJUSTED INTEREST RATE. Interest on the outstanding
principal balance of the Loan shall accrue from and including the Anticipated
Repayment Date to and including the Maturity Date at the Adjusted Interest Rate.
2.2.3 DEFAULT RATE. In the event that, and for so long as, any
Event of Default shall have occurred and be continuing, the outstanding
principal balance of the Loan and, to the extent permitted by law, overdue
interest in respect of the Loan, shall accrue interest at the Default Rate,
calculated from the date such payment was due without regard to any grace or
cure periods contained herein.
2.2.4 INTEREST CALCULATION. Interest on the outstanding
principal balance of the Loan shall be calculated by multiplying (a) the actual
number of days elapsed in the period for which the calculation is being made by
(b) a daily rate based on a three hundred sixty (360) day year.
2.2.5 USURY SAVINGS. This Agreement and the Note are subject
to the express condition that at no time shall Borrower be obligated or required
to pay interest on the principal balance of the Loan at a rate which could
subject Lender to either civil or criminal liability as a result of being in
excess of the Maximum Legal Rate. If by the terms of this Agreement or the other
Loan Documents, Borrower is at any time required or obligated to pay interest on
the principal balance due hereunder at a rate in excess of the Maximum Legal
Rate, the interest rate or the Default Rate, as the case may be, shall be deemed
to be immediately reduced to the Maximum Legal Rate and all previous payments in
excess of the Maximum Legal Rate shall be deemed to have been payments in
reduction of principal and not on account of the interest due hereunder. All
sums paid or agreed to be paid to Lender for the use, forbearance, or detention
of the sums due under the Loan, shall, to the extent permitted by applicable
law, be amortized, prorated, allocated, and spread throughout the full stated
term of the Loan until payment in full so that the rate or amount of interest on
account of the Loan does not exceed the Maximum Legal Rate of interest from time
to time in effect and applicable to the Loan for so long as the
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Loan is outstanding.
SECTION 2.3 LOAN PAYMENTS.
2.3.1 PAYMENT BEFORE ANTICIPATED REPAYMENT DATE. Borrower
shall make a payment to Lender of interest only on the Closing Date. Borrower
shall make a payment to Lender of principal and interest in the amount of
$326,962.39 on the Monthly Payment Date occurring in January, 1998 and on each
Monthly Payment Date thereafter to and including the Anticipated Repayment Date.
Each payment shall be applied first to accrued and unpaid interest and the
balance to principal.
2.3.2 PAYMENTS AFTER ANTICIPATED REPAYMENT DATE. On each
Monthly Payment Date occurring after the Anticipated Repayment Date Borrower
shall (a) make a payment to Lender of principal and interest in the amount of
$326,962.39, such payment to be applied to interest in an amount equal to
interest that would have accrued on the outstanding principal balance of the
Loan (without adjustment for Accrued Interest) at the Initial Interest Rate and
the balance applied to principal and (b) pay to Lender amounts to be applied to
principal as set forth in Section 3.3(b) of the Cash Management Agreement.
Interest accrued at the Adjusted Interest Rate and not paid pursuant to the
preceding sentence ("ACCRUED INTEREST"), shall be added to the Debt and shall
earn interest at the Adjusted Interest Rate, to the extent permitted by law.
2.3.3 PAYMENT ON MATURITY DATE. Borrower shall pay to Lender
on the Maturity Date the outstanding principal balance, all accrued and unpaid
interest (including without limitation the Accrued Interest) and all other
amounts due hereunder and under the Note, the Mortgages and other the Loan
Documents.
2.3.4 LATE PAYMENT CHARGE. If any principal, interest or any
other sum due under the Loan Documents is not paid by Borrower on the date on
which it is due, Borrower shall pay to Lender upon demand an amount equal to the
lesser of five percent (5%) of such unpaid sum or the maximum amount permitted
by applicable law in order to defray the expense incurred by Lender in handling
and processing such delinquent payment and to compensate Lender for the loss of
the use of such delinquent payment. Any such amount shall be secured by the
Mortgages and the other Loan Documents.
2.3.5 METHOD AND PLACE OF PAYMENT. (a) Except as otherwise
specifically provided herein all payments and prepayments under this Agreement
and the Note shall be made to Lender not later than 5:00 P.M., New York City
time, on the date when due and shall be made in lawful money of the United
States of America in immediately available funds at Lender's office, and any
funds received by Lender after such time shall, for all purposes hereof, be
deemed to have been paid on the next succeeding Business Day.
(b) Whenever any payment to be made hereunder, under the Note
or other Loan Documents shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest shall be
payable at the applicable rate during such extension.
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(c) All payments made by Borrower hereunder or under the Note
or the other Loan Documents shall be made irrespective of, and without any
deduction for, any setoff or counterclaims.
SECTION 2.4 PREPAYMENTS.
2.4.1 VOLUNTARY PREPAYMENTS. Except as otherwise provided
herein, Borrower shall not have the right to prepay the Loan in whole or in
part. On September 1, 2007, or on any Monthly Payment Date thereafter, Borrower
may, at its option and upon thirty (30) days prior written notice to Lender,
prepay the Debt in whole or in part without payment of the Yield Maintenance
Premium. Any partial prepayment shall be applied to the last payments of
principal due under the Loan.
2.4.2 MANDATORY PREPAYMENTS. On each date on which Borrower
actually receives a distribution of the proceeds of any insurance payment or
Award in respect of any Individual Property, and if Lender does not make such
proceeds available to Borrower for the restoration of such Individual Property,
Borrower shall prepay the outstanding principal balance of the Note in an amount
equal to one hundred percent (100%) of such proceeds. No Yield Maintenance
Premium shall be due in connection with any prepayment made pursuant to this
Section 2.4.2. The Allocated Loan Amount with respect to such Individual
Property will be reduced in an amount equal to such prepayment.
2.4.3 PREPAYMENTS AFTER DEFAULT. If after an Event of Default,
payment of all or any part of the principal of the Loan is tendered by Borrower,
a purchaser at foreclosure or any other Person, such tender shall be deemed an
attempt to circumvent the prohibition against prepayment set forth in Section
2.4.1 and Borrower, such purchaser at foreclosure or other Person shall pay, in
addition to the outstanding principal balance, all accrued and unpaid interest
and other amounts payable under the Loan Document, and the Yield Maintenance
Premium.
SECTION 2.5 DEFEASANCE.
2.5.1 TOTAL DEFEASANCE. (a) Provided no Event of Default shall
have occurred and remain uncured, Borrower shall have the right at any time
after the Release Date and prior to the Anticipated Repayment Date to obtain a
release of the Lien of the Mortgages encumbering all Properties upon
satisfaction of the following conditions:
(i) Borrower shall provide Lender thirty (30) days prior
written notice specifying a Monthly Payment Date (the "DEFEASANCE DATE") on
which the Borrower shall have satisfied the conditions in this Section 2.5.1 and
on which it shall effect the defeasance;
(ii) Borrower shall pay to Lender (A) all accrued and unpaid
interest on the principal balance of the Note to and including the Defeasance
Date and (B) all other sums, then due under the Note, this Agreement, the
Mortgages and the other Loan Documents;
(iii) Borrower shall deposit the Total Defeasance Collateral
into the Defeasance Collateral Account and otherwise comply with the provisions
of Sections 2.5.3 and 2.5.4 hereof;
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(iv) Borrower shall execute and deliver a Security Agreement
in respect of the Defeasance Collateral Account and the Total Defeasance
Collateral;
(v) Borrower shall deliver to Lender an opinion of counsel for
Borrower satisfactory to Lender in its sole discretion opining, among other
things, that (A) Lender has a legal and valid perfected first priority security
interest in the Defeasance Collateral Account and the Total Defeasance
Collateral, (B) if a Securitization has occurred, the REMIC Trust formed
pursuant to such Securitization will not fail to maintain its status as a "real
estate mortgage investment conduit" within the meaning of Section 860D of the
Code as a result of the defeasance pursuant to this Section 2.5.1, (C) a
defeasance pursuant to this Section 2.5.1 will not result in a deemed exchange
for purposes of the Code and will not adversely effect the status of the Note as
indebtedness for federal income tax purposes, (D) delivery of the Total
Defeasance Collateral and the grant of a security interest therein to Lender
shall not constitute an avoidable preference under Section 547 of the Bankruptcy
Code or applicable state law and (E) if required by the applicable Rating
Agencies, a non-consolidation opinion with respect to the Successor Borrower;
(vi) Borrower shall deliver to Lender evidence in writing from
the applicable Rating Agencies to the effect that the release of the Properties
from the Lien of the Mortgage as contemplated by this Section 2.5.1 and the
substitution of the Total Defeasance Collateral will not result in a
downgrading, withdrawal or qualification of the respective ratings in effect
immediately prior to such defeasance for the Securities issued in connection
with the Securitization which are then outstanding;
(vii) Borrower shall deliver an Officer's Certificate
certifying that the requirements set forth in this Section 2.5.1(a) have been
satisfied;
(viii) Borrower shall deliver a certificate of Borrower's
independent certified public accountant certifying that the Total Defeasance
Collateral will generate monthly amounts equal to or greater than the Scheduled
Defeasance Payments in the form annexed hereto as Schedule VI;
(ix) Borrower shall deliver such other certificates, documents
or instruments as Lender may reasonably request; and
(x) Borrower shall pay all costs and expenses of Lender
incurred in connection with the defeasance, including Lender's reasonable
attorneys' fees and expenses.
(b) If the Borrower has elected to defease the entire Note and
the requirements of this Section 2.5 have been satisfied, all of the Properties
shall be released from the Liens of their respective Mortgages and the Total
Defeasance Collateral, pledged pursuant to the Security Agreement, shall be the
sole source of collateral securing the Note. In connection with the release of
the Liens, the Borrower shall submit to Lender, not less than thirty (30) days
prior to the Defeasance Date, a release of Lien (and related Loan Documents) for
execution by Lender. Such release shall be in a form appropriate in each
jurisdiction in which an Individual Property is located and satisfactory to
Lender in its sole discretion. In addition, Borrower shall
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provide all other documentation Lender reasonably requires to be delivered by
Borrower in connection with such release, together with an Officer's Certificate
certifying that such documentation (i) is in compliance with all legal
requirements, and (ii) will effect such releases in accordance with the terms of
this Agreement. Borrower shall pay all costs, taxes and expenses associated with
the release of the Lien of the Mortgages, including Lender's reasonable
attorneys' fees. Except as set forth in this Section 2.5, no repayment,
prepayment or defeasance of all or any portion of the Note shall cause, give
rise to a right to require, or otherwise result in, the release of any Lien of
any Mortgage on any of the Properties.
2.5.2 PARTIAL DEFEASANCE (a) Provided no Event of Default
shall have occurred and remain uncured, Borrower shall have the right at any
time after the Release Date and prior to the Anticipated Repayment Date to
obtain a release of the Lien of the Mortgages encumbering one or more Individual
Properties upon a Partial Defeasance of the Note in an amount equal to 125% of
the Pro-Rata Allocated Loan Amount with respect to the Individual Property or
Properties to be released from the Lien and the satisfaction of the following
conditions:
(i) Borrower shall provide Lender thirty (30) days prior
written notice specifying a Monthly Payment Date (the "PARTIAL DEFEASANCE DATE")
on which the Borrower shall have satisfied the conditions in this Section 2.5.2
and shall effect the defeasance;
(ii) Borrower shall pay to Lender (A) all accrued and unpaid
interest on the principal balance of the Note to and including the Partial
Defeasance Date and (B) all other sums, then due under the Note, this Agreement,
the Mortgages and the other Loan Documents;
(iii) Borrower shall deposit the Partial Defeasance Collateral
into the Defeasance Collateral Account and otherwise comply with the provisions
of Sections 2.5.3 and 2.5.4 hereof;
(iv) Borrower shall prepare all necessary documents to modify
this Agreement and to amend and restate the Note and issue two substitute notes,
one note having a principal balance equal to the defeased portion of the
original Note (the "DEFEASED NOTE") and the other note having a principal
balance equal to the undefeased portion of the Note (the "UNDEFEASED NOTE"). The
Defeased Note and Undefeased Note shall have identical terms as the Note except
for the principal balance. A Defeased Note may not be the subject of any further
defeasance;
(v) Borrower shall execute and deliver to Lender a Security
Agreement in respect of the Defeasance Collateral Account and the Partial
Defeasance Collateral;
(vi) After giving effect to the release of the Lien of the
Mortgages encumbering the Individual Property or Properties proposed by Borrower
to be released, the Debt Service Coverage Ratio with respect to the remaining
Properties is not less than the greater of (A) the Debt Service Coverage Ratio
of all Properties encumbered by the Mortgages prior to the release and (B) 1.60
to 1;
(vii) Borrower shall have delivered to Lender and the Rating
Agencies shall have received from Borrower with respect to the matters referred
to in clause (vi), (A)
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statements of the Net Operating Income and Debt Service (both on a consolidated
basis and separately for the applicable Individual Property or Properties to be
released) for the applicable measuring period and (B) based on the foregoing
statements of Net Operating Income and Debt Service, calculations of the Debt
Service Coverage Ratio both with and without giving effect to the proposed
release, and (C) calculations of the ratios referred to in such clause (vi),
accompanied by an Officer's Certificate stating that such statements,
calculations and information are true, correct and complete in all material
respects;
(viii) Borrower shall deliver to Lender an opinion of counsel
for Borrower satisfactory to Lender in its sole discretion opining, among other
things, that (A) Lender has a legal and valid perfected first priority security
interest in the Defeasance Collateral Account and the Partial Defeasance
Collateral, (B) if a Securitization has occurred, the REMIC Trust formed
pursuant to such Securitization will not fail to maintain its status as a "real
estate mortgage investment conduit" within the meaning of Section 860D of the
Code as a result of the defeasance pursuant to this Section 2.5.2, (C) a
defeasance pursuant to this Section 2.5.2 will not result in a deemed exchange
for purposes of the Code and will not adversely affect the status of the
Defeased Note and the Undefeased Note as indebtedness for federal income tax
purposes, (D) delivery of the Partial Defeasance Collateral and the grant of a
security interest therein to Lender shall not constitute an avoidable preference
under Section 547 of the Bankruptcy Code or applicable state law and (E) if
required by the applicable Rating Agencies, a non-consolidation opinion with
respect to the Successor Borrower;
(ix) Borrower shall deliver to Lender evidence in writing from
the applicable Rating Agencies to the effect that the release of the Individual
Property or Properties from the Lien of the Mortgage as contemplated by this
Section 2.5.2 and the substitution of the Partial Defeasance Collateral will not
result in a downgrading, withdrawal or qualification of the respective ratings
in effect immediately prior to such defeasance for the Securities issued in
connection with the Securitization which are then outstanding;
(x) Borrower shall deliver to Lender a certificate of
Borrower's independent certified public accountant certifying that the Partial
Defeasance Collateral will generate monthly amounts equal to or greater than
125% of the Scheduled Defeasance Payments in the form annexed hereto as Schedule
VI;
(xi) Borrower shall deliver to Lender an Officer's Certificate
certifying that the requirements set forth in this Section 2.5.2(a) have been
satisfied;
(xii) Borrower shall deliver to Lender such other
certificates, documents or instruments as Lender may reasonably request; and
(xiii) Borrower shall pay all costs and expenses of Lender
incurred in connection with the defeasance, including Lender's reasonable
attorneys' fees and expenses.
(b) If the Borrower has elected to make a partial defeasance
and the requirements of this Section 2.5 have been satisfied, the Individual
Property or Properties identified by Borrower shall be released from the Lien of
their Mortgage and the Partial
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Defeasance Collateral, pledged pursuant to the Security Agreement, shall be the
sole source of collateral securing the Defeased Note. In connection with the
release of the Lien, the Borrower shall submit to Lender, not less than thirty
(30) days prior to the Partial Defeasance Date, a release of Lien for execution
by Lender. Such release shall be in a form appropriate in the jurisdiction in
which such Individual Property is located and satisfactory to Lender in its sole
discretion. In addition, Borrower shall provide all other documentation Lender
reasonably requires to be delivered by Borrower in connection with such release,
together with an Officer's Certificate certifying that such documentation (i) is
in compliance with all legal requirements, and (ii) will effect such releases in
accordance with the terms of this Agreement. Borrower shall pay all costs, taxes
and expenses associated with the release of the Lien of the Mortgages, including
Lender's reasonable attorneys' fees. Except as set forth in this Section 2.5, no
repayment, prepayment or defeasance of all or any portion of the Note shall
cause, give rise to a right to require, or otherwise result in, the release of
any Lien of any Mortgage on any of the Properties.
2.5.3 DEFEASANCE COLLATERAL ACCOUNT. On or before the date on
which Borrower delivers the Total Defeasance Collateral or Partial Defeasance
Collateral, Borrower shall open at any Eligible Institution the defeasance
collateral account (the "DEFEASANCE COLLATERAL ACCOUNT") which shall at all
times be an Eligible Account. The Defeasance Collateral Account shall contain
only (i) Total Defeasance Collateral and Partial Defeasance Collateral, and (ii)
cash from interest and principal paid on the Total Defeasance Collateral or
Partial Defeasance Collateral. All cash from interest and principal payments
paid on the Total Defeasance Collateral or Partial Defeasance Collateral shall
be paid over to Lender on each Monthly Payment Date and applied first to accrued
and unpaid interest and then to principal then due and owing. Any interest or
other investment income earned on any Partial Defeasance Collateral, which
interest or other income was not included in the determination of the Partial
Defeasance Collateral requirement, shall be paid monthly by Lender, provided no
Event of Default has occurred and is continuing, into the Cash Management
Account to be held in accordance with the Cash Management Agreement. Any amounts
not paid over to Lender shall be retained in the Defeasance Collateral Account
as additional collateral for the Loan. Borrower shall cause the Eligible
Institution at which the Total Defeasance Collateral and Partial Defeasance
Collateral are deposited to enter an agreement with Borrower and Lender,
satisfactory to Lender in its sole discretion, pursuant to which such Eligible
Institution shall agree to hold and distribute the Total Defeasance Collateral
and Partial Defeasance Collateral in accordance with this Agreement. Borrower
shall be the owner of the Defeasance Collateral Account and shall report all
income accrued on Total Defeasance Collateral and Partial Defeasance Collateral
for federal, state and local income tax purposes in its income tax return.
Borrower shall prepay all cost and expenses associated with opening and
maintaining the Defeasance Collateral Account. Lender shall not in any way be
liable by reason of any insufficiency in the Defeasance Collateral Account.
2.5.4 SUCCESSOR BORROWER. In connection with a total or
partial defeasance under this Section 2.5, Borrower may, and at the request of
Lender shall, establish or designate a successor entity (the "SUCCESSOR
BORROWER") which shall be a single purpose bankruptcy remote entity approved by
Lender. Borrower shall transfer and assign all obligations, rights and duties
under and to the Note or the Defeased Note, as applicable, together with the
Total Defeasance Collateral or the Partial Defeasance Collateral, as applicable,
to such Successor
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<PAGE> 28
Borrower. Such Successor Borrower shall assume the obligations under the Note or
the Defeased Note, as applicable, and the Security Agreement and Borrower shall
be relieved of its obligations under such documents. The Borrower shall pay
$1,000 to any such Successor Borrower as consideration for assuming the
obligations under the Note or the Defeased Note, as applicable, and the Security
Agreement. Borrower shall pay all costs and expenses incurred by Lender,
including Lender's attorney's fees and expenses, incurred in connection
therewith.
SECTION 2.6 PROPERTY SUBSTITUTIONS.
(a) Provided no Event of Default shall have occurred and
remain uncured, Borrower shall have the right at any time after the date hereof
and before the Anticipated Repayment Date (but only on a Monthly Payment Date)
to obtain a release of the Lien of a Mortgage encumbering an Individual Property
(a "SUBSTITUTED PROPERTY") by substituting therefor another retail property to
be acquired by Borrower (individually, a "SUBSTITUTE PROPERTY" and collectively,
the "SUBSTITUTE PROPERTIES"), provided that (a) not more than two (2) Individual
Properties may be substituted during the term of the Loan, (b) no such
substitution may occur if there has been one or more prior substitution(s) and
the total appraised value as of the date hereof of all Substituted Properties in
such prior substitutions together with the current proposed substitution equals
or exceeds 20% of the appraised value as of the date hereof of all the
Properties, and (c) such substitution shall be subject, in each case, to the
satisfaction of the following conditions precedent:
(i) Lender shall have received a copy of a deed conveying all
of Borrower's right, title and interest in and to the Substituted Property to an
entity other than Borrower and a letter from Borrower countersigned by a title
insurance company acknowledging receipt of such deed or assignment and
assumption, as applicable, and agreeing to record such deed or assignment and
assumption, as applicable, in the real estate records for the county in which
the Substituted Property is located;
(ii) Lender shall have received an appraisal of the Substitute
Property dated no more than sixty (60) days prior to the substitution by an
appraiser acceptable to the Rating Agencies, indicating an appraised value of
the Substitute Property that is not less than the greater of (A) the value of
the Substituted Property determined by Lender as of the Closing Date and (B) the
value of the Substituted Property determined by Lender as of the date
immediately preceding the substitution;
(iii) After giving effect to the substitution, the Debt
Service Coverage Ratio for all of the Properties is not less than the greater of
(A) the Debt Service Coverage Ratio for the Loan for all of the Properties as of
the Closing Date and (B) the Debt Service Coverage Ratio for all of the
Properties as of the date immediately preceding the substitution;
(iv) The Net Operating Income for the Substitute Property does
not show a downward trend over the three (3) years immediately prior to the date
of substitution or, with respect to a Substitute Property for which information
regarding the Net Operating Income of such Substitute Property for the three (3)
years immediately prior to the date of substitution cannot be obtained by
Borrower after Borrower's exercise of diligent efforts, the Net Operating
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Income shall not show a downward trend for such period of time immediately prior
to the date of substitution as may be determined from the information regarding
such Net Operating Income available or if the Net Operating Income for the
Substitute Property does show such downward trend, Lender shall have received
written evidence from Borrower acceptable to the Rating Agencies that the Net
Operating Income for the Substitute Property will show on a pro-forma basis an
upward trend over the 24-month period immediately following the date of
substitution as a result of the execution and delivery of new, significant
tenant leases at the Substitute Property;
(v) Lender shall have received evidence in writing from the
Rating Agencies to the effect that such substitution will not result in a
withdrawal, qualification or downgrade of the respective ratings in effect
immediately prior to such substitution for the Securities issued in connection
with the Securitization that are then outstanding;
(vi) Lender shall have received a certificate from Borrower
stating that the representations and warranties of Borrower contained in this
Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date of the substitution with respect to Borrower, the
Properties and the Substitute Property and containing any other representations
and warranties with respect to Borrower, the Properties, the Substitute Property
or the Loan as the Rating Agencies may require, such certificate to be in form
and substance satisfactory to the Rating Agencies;
(vii) Borrower shall have executed, acknowledged and delivered
to Lender (A) a Mortgage, an Assignment of Leases and two UCC Financing
Statements with respect to the Substitute Property, together with a letter from
Borrower countersigned by a title insurance company acknowledging receipt of
such Mortgage, Assignment of Leases and UCC-1 Financing Statements and agreeing
to record or file, as applicable, such Mortgage, Assignment of Leases and Rents
and one of the UCC-1 Financing Statements in the real estate records for the
county in which the Substitute Property is located and to file one of the UCC-1
Financing Statement in the office of the Secretary of State of the state in
which the Substitute Property is located, so as to effectively create upon such
recording and filing valid and enforceable Liens upon the Substitute Property,
of the requisite priority, in favor of Lender (or such other trustee as may be
desired under local law), subject only to the Permitted Encumbrances and such
other Liens as are permitted pursuant to the Loan Documents, (B) an Assignment
and Subordination of Management Agreement and an Environmental Indemnity with
respect to the Substitute Property and (C) any other modifications to the Loan
Documents reasonably required by the Rating Agencies as a result of such
substitution. The Mortgage, Assignment of Leases, UCC-1 Financing Statements,
Assignment and Subordination of Management Agreement and Environmental Indemnity
shall be the same in form and substance as the counterparts of such documents
executed and delivered with respect to the related Substituted Property subject
to modifications reflecting the Substitute Property as the Individual Property
that is the subject of such documents and such modifications reflecting the laws
of the state in which the Substitute Property is located as shall be recommended
by the counsel admitted to practice in such state and delivering the opinion as
to the enforceability of such documents required pursuant to clause (xv) below.
The Mortgage encumbering the Substitute Property shall secure all amounts
evidenced by the Note, provided that in the event that the jurisdiction in which
the Substitute
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Property is located imposes a mortgage recording, intangibles or similar tax and
does not permit the allocation of indebtedness for the purpose of determining
the amount of such tax payable, the principal amount secured by such Mortgage
shall be equal to one hundred fifty percent (150%) of the amount of the Loan
allocated to the Substitute Property. The amount of the Loan allocated to the
Substitute Property (such amount being hereinafter referred to as the
"SUBSTITUTE ALLOCATED LOAN AMOUNT") shall equal the Allocated Loan Amount of the
related Substituted Property;
(viii) Lender shall have received (A) any "tie-in" or similar
endorsement to each Title Insurance Policy insuring the Lien of an existing
Mortgage as of the date of the substitution available with respect to the Title
Insurance Policy insuring the Lien of the Mortgage with respect to the
Substitute Property and (B) a Title Insurance Policy (or a marked, signed and
redated commitment to issue such Title Insurance Policy) insuring the Lien of
the Mortgage encumbering the Substitute Property, issued by the title company
that issued the Title Insurance Policies insuring the Lien of the existing
Mortgages and dated as of the date of the substitution, with reinsurance and
direct access agreements that replace such agreements issued in connection with
the Title Insurance Policy insuring the Lien of the Mortgage encumbering the
Substituted Property. The Title Insurance Policy issued with respect to the
Substitute Property shall (1) provide coverage in the amount of the Substitute
Allocated Loan Amount if the "tie-in" or similar endorsement described above is
available or, if such endorsement is not available, in an amount equal to one
hundred fifty percent (150%) of the Substitute Allocated Loan Amount, (2) insure
Lender that the relevant Mortgage creates a valid first lien on the Substitute
Property encumbered thereby, free and clear of all exceptions from coverage
other than Permitted Encumbrances and standard exceptions and exclusions from
coverage (as modified by the terms of any endorsements), (3) contain such
endorsements and affirmative coverages as are contained in the Title Insurance
Policies insuring the Liens of the existing Mortgages, and (4) name Lender as
the insured. Lender also shall have received copies of paid receipts showing
that all premiums in respect of such endorsements and Title Insurance Policies
have been paid;
(ix) Lender shall have received a current title survey for
each Substitute Property, certified to the title company and Lender and their
successors and assigns, in the same form and having the same content as the
certification of the Survey of the Substituted Property prepared by a
professional land surveyor licensed in the state in which the Substitute
Property is located and acceptable to the Rating Agencies in accordance with the
1992 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. Such
survey shall reflect the same legal description contained in the Title Insurance
Policy relating to such Substitute Property and shall include, among other
things, a metes and bounds description of the real property comprising part of
such Substitute Property. The surveyor's seal shall be affixed to each survey
and each survey shall certify that the surveyed property is not located in a
"one-hundred-year flood hazard area;"
(x) Lender shall have received valid certificates of insurance
indicating that the requirements for the policies of insurance required for an
Individual Property hereunder have been satisfied with respect to the Substitute
Property and evidence of the payment of all premiums payable for the existing
policy period;
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(xi) Lender shall have received a Phase I environmental report
and, if recommended under the Phase I environmental report, a Phase II
environmental report, which conclude that the Substitute Property does not
contain any Hazardous Substance (as defined in the Mortgage) and is not subject
to any risk of contamination from any off-site Hazardous Substance. If any such
report discloses the presence of any Hazardous Substance or the risk of
contamination from any off-site Hazardous Substance, such report shall include
an estimate of the cost of any related remediation and Borrower shall deposit
with Lender an amount equal to one hundred fifty percent (150%) of such
estimated cost, which deposit shall constitute additional security for the Loan
and Lender shall release on a monthly basis (a) to Borrower an amount equal to
the costs of such remediation work that have been paid for in the prior month as
evidenced by paid receipts delivered by Borrower to Lender and satisfaction by
Borrower of the same conditions for disbursement as are set forth in Sections
6.1 and 6.4 hereof or (b) directly to the contractor, subcontractor or supplier
performing such remediation work for such work completed in the prior month as
evidenced by bills or invoices for such work delivered to Lender together with
such other documentation as Lender may reasonably require, including, without
limitation, conditional lien waivers which shall be conditioned only upon the
payment of the amount of the bills or invoices submitted by such contractor,
subcontractor or supplier, and satisfaction by Borrower of the same conditions
to disbursement as are set forth in Sections 6.1 and 6.4 hereof,; the balance of
which will be released upon delivery of (A) an update to such report indicating
that there is no longer any Hazardous Substance on the Substitute Property or
any danger of contamination from any off-site Hazardous Substance that has not
been fully remediated and (B) paid receipts indicating that the costs of all
such remediation work have been paid;
(xii) Borrower shall deliver or cause to be delivered to
Lender (A) updates certified by Borrower of all organizational documentation
related to Borrower and/or the formation, structure, existence, good standing
and/or qualification to do business delivered to Lender in connection with the
initial closing of the Loan; (B) good standing certificates, certificates of
qualification to do business in the jurisdiction in which the Substitute
Property is located (if required in such jurisdiction) and (C) resolutions of
the general partner of Borrower authorizing the substitution and any actions
taken in connection with such substitution;
(xiii) Lender shall have received the following opinions of
Borrower's counsel: (A) an opinion or opinions of counsel admitted to practice
under the laws of the state in which the Substitute Property is located stating
that the Loan Documents delivered with respect to the Substitute Property
pursuant to clause (vii) above are valid and enforceable in accordance with
their terms, subject to the laws applicable to creditors' rights and equitable
principles, and that Borrower is qualified to do business and in good standing
under the laws of the jurisdiction where the Substitute Property is located or
that Borrower is not required by applicable law to qualify to do business in
such jurisdiction; (B) an opinion of counsel acceptable to the Rating Agencies
stating that the Loan Documents delivered with respect to the Substitute
Property pursuant to clause (vii) above were duly authorized, executed and
delivered by Borrower and that the execution and delivery of such Loan Documents
and the performance by Borrower of its obligations thereunder will not cause a
breach of, or a default under, any agreement, document or instrument to which
Borrower is a party or to which it or its properties are bound; (C) an opinion
of counsel acceptable to the Rating Agencies stating that subjecting the
Substitute
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Property to the Lien of the related Mortgage and the execution and delivery of
the related Loan Documents does not and will not affect or impair the ability of
Lender to enforce its remedies under all of the Loan Documents or to realize the
benefits of the cross-collateralization provided for thereunder; (D) an update
of the Insolvency Opinion indicating that the substitution does not affect the
opinions set forth therein; (E) an opinion of counsel acceptable to the Rating
Agencies stating that the substitution and the related transactions do not
constitute a fraudulent conveyance or avoidable preference under the Bankruptcy
Code or applicable state laws and (F) an opinion of counsel acceptable to the
Rating Agencies that the substitution does not constitute a "significant
modification" of the Loan under Section 1001 of the Code or otherwise cause a
tax to be imposed on a "prohibited transaction" by any REMIC Trust;
(xiv) Borrower shall have paid all Basic Carrying Costs
relating to each of the Properties and the Substitute Property, including
without limitation, (i) accrued but unpaid insurance premiums relating to each
of the Properties and the Substitute Property, (ii) currently due Taxes
(including any in arrears) relating to each of the Properties and the Substitute
Property and (iii) currently due Other Charges relating to each of the
Properties and Substitute Property;
(xv) Borrower shall have paid or reimbursed Lender for all
costs and expenses incurred by Lender (including, without limitation, reasonable
attorneys fees and disbursements) in connection with the substitution and
Borrower shall have paid all recording charges, filing fees, taxes or other
expenses (including, without limitation, mortgage and intangibles taxes and
documentary stamp taxes) payable in connection with the substitution. Borrower
shall have paid all costs and expenses of the Rating Agencies incurred in
connection with the substitution;
(xvi) Lender shall have received annual operating statements
and occupancy statements for the Substitute Property for the most current
completed fiscal year and a current operating statement for the Substituted
Property, each certified to Lender as being true and correct and a certificate
from Borrower certifying that there has been no adverse change in the financial
condition of the Substitute Property since the date of such operating
statements;
(xvii) Borrower shall have delivered to Lender estoppel
certificates from any existing tenants who (A) constitute anchor tenants at the
Substitute Property, (B) who are obligated under their Lease to pay rent equal
to or exceeding 5% of the gross rent from the Substitute Property and/or (C)
lease no less than seventy-five percent (75%) of the excess of the gross
leasable area at the Substitute Property over the gross leasable area covered by
the leases described in clauses (A) and (B). All such estoppel certificates
shall indicate that (1) the subject lease is a valid and binding obligation of
the tenant thereunder and the amount of rent payable thereunder, (2) there are
no defaults under such lease on the part of the landlord or tenant thereunder,
(3) the tenant thereunder has no defense or offset to the payment of rent under
such leases, (4) no rent under such lease has been paid more than one (1) month
in advance, (5) the tenant thereunder has no option or right of first refusal
under such lease to purchase all or any portion of the Substitute Property and
(6) all tenant improvement work required under such lease has been completed and
the tenant under such lease is in actual occupancy of its leased premises. If an
estoppel certificate indicates that all tenant improvement work required under
the subject lease has not yet been completed, Borrower shall, if required by the
Rating Agencies, deliver
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to Lender financial statements indicating that Borrower has adequate funds to
pay all costs related to such tenant improvement work as required under such
lease;
(xviii) Lender shall have received copies of all tenant leases
and any ground leases affecting the Substitute Property certified by Borrower as
being true and correct. Lender shall have received a current rent roll of the
Substitute Property certified by Borrower as being true and correct;
(xix) Lender shall have received subordination, nondisturbance
and attornment agreements in the form acceptable to the Rating Agencies with
respect to all of the Leases affecting the Substitute Property other than such
Leases that are, by their terms, subordinate to the Mortgage with respect to the
Substitute Property (provided, however, that such agreements shall not be
required to the extent that such tenants are not required under the terms of
such Lease(s) to deliver such agreements);
(xx) Lender shall have received (A) an endorsement to the
Title Insurance Policy insuring the Lien of the Mortgage encumbering the
Substitute Property insuring that the Substitute Property constitutes a separate
tax lot or, if such an endorsement is not available in the state in which the
Substitute Property is located, a letter from the title insurance company
issuing such Title Insurance Policy stating that the Substitute Policy
constitutes a separate tax lot or (B) a letter from the appropriate taxing
authority stating that the Substitute Property constitutes a separate tax lot;
(xxi) Lender shall have received a Physical Conditions Report
with respect to the Substitute Property stating that the Substitute Property and
its use comply in all material respects with all applicable Legal Requirements
(including, without limitation, zoning, subdivision and building laws) and that
the Substitute Property is in good condition and repair and free of damage or
waste. If compliance with any Legal Requirements are not addressed by the
Physical Conditions Report, such compliance shall be confirmed by delivery to
Lender of a certificate of an architect licensed in the state in which the
Substitute Property is located, a letter from the municipality in which such
Property is located, a certificate of a surveyor that is licensed in the state
in which the Substitute Property is located (with respect to zoning and
subdivision laws), or a subdivision endorsement to the Title Insurance Policy
delivered pursuant to clause (viii) above (with respect to subdivision laws). In
addition, an ALTA 3.1 zoning endorsement to the Title Insurance Policy delivered
pursuant to clause (viii) above (with respect to zoning laws) if available in
the state of such Substitute Property, shall be delivered to Lender. If the
Physical Conditions Report recommends that any repairs be made with respect to
the Substitute Property, such Physical Conditions Report shall include an
estimate of the cost of such recommended repairs and Borrower shall deposit with
Lender an amount equal to one hundred fifty percent (150%) of such estimated
cost, which deposit shall constitute additional security for the Loan and shall
be released on a monthly basis (a) to Borrower in an amount equal to the costs
of such work that have been paid for in the prior month upon delivery to Lender
of paid receipts for the costs of such repairs for which Borrower is requesting
payment and satisfaction by Borrower of the same conditions to disbursement as
are set forth in Sections 6.1 and 6.4 hereof, or (b) directly to the contractor,
subcontractor or supplier performing such work for such work completed in the
prior month as evidenced by bills or invoices for such work delivered to
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Lender together with such other documentation as Lender may reasonably require,
including, without limitation, conditional lien waivers which shall be
conditioned only upon the payment of the amount of the bills or invoices
submitted by such contractor, subcontractor or supplier, and satisfaction by
Borrower of the same conditions to disbursement as are set forth in Sections 6.1
and 6.4 hereof, and the balance to be released upon the delivery to Lender of
(A) an update to such Physical Conditions Report or a letter from the engineer
that prepared such Physical Conditions Report indicating that the recommended
repairs were completed in good and workmanlike manner and (B) paid receipts
indicating that the costs of all such repairs have been paid;
(xxii) Lender shall have received a certified copy of the
termination of the Management Agreement for the Substituted Property and the new
Management Agreement for the Substitute Property (such new Management Agreement
to be in form and substance as the Management Agent so terminated) and Manager
shall have executed and delivered to Lender a new Assignment and Subordination
of Management Agreement reflecting such new Management Agreement;
(xxiii) Lender shall have received copies of all contracts and
agreements relating to the leasing and operation of the Substitute Property
(other than the Management Agreement) together with a certification of Borrower
attached to each such contract or agreement certifying that the attached copy is
a true and correct copy of such contract or agreement and all amendments
thereto;
(xxiv) Borrower shall submit to Lender, not less than thirty
(30) days prior to the date of such substitution, a release of Lien (and related
Loan Documents) for the Substituted Property for execution by Lender. Such
release shall be in a form appropriate for the jurisdiction in which the
Substituted Property is located and satisfactory to Lender in its sole
discretion. Borrower shall deliver an Officer's Certificate certifying that the
requirements set forth in this Section 2.6 have been satisfied; and
(xxv) Lender shall have received such other and further
approvals, opinions, documents and information in connection with the
substitution as the Rating Agencies may have requested.
(b) Upon the satisfaction of the foregoing conditions
precedent, Lender will release its Lien from the Substituted Property to be
released and the Substitute Property shall be deemed to be an Individual
Property for purposes of this Agreement and the Substitute Allocated Loan Amount
with respect to such Substitute Property shall be deemed to be the Allocated
Loan Amount with respect to such Substitute Property for all purposes hereunder.
III. REPRESENTATIONS AND WARRANTIES
SECTION 3.1 BORROWER REPRESENTATIONS.
Borrower represents and warrants as of the date hereof and as
of the Closing Date that:
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3.1.1 ORGANIZATION. Borrower has been duly organized and is
validly existing and in good standing with requisite power and authority to own
its properties and to transact the businesses in which it is now engaged.
Borrower is duly qualified to do business and is in good standing in each
jurisdiction where it is required to be so qualified in connection with its
properties, businesses and operations. Borrower possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own its properties and to transact the businesses in which it is now engaged,
and the sole business of Borrower is the ownership, management and operation of
the Properties.
3.1.2 PROCEEDINGS. Borrower has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents. This Agreement and such other Loan Documents have been
duly executed and delivered by or on behalf of Borrower and constitute legal,
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
3.1.3 NO CONFLICTS. The execution, delivery and performance of
this Agreement and the other Loan Documents by Borrower will not conflict with
or result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, partnership agreement or other agreement or instrument to
which Borrower is a party or by which any of Borrower's property or assets is
subject, nor will such action result in any violation of the provisions of any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over Borrower or any of Borrower's properties or
assets, and any consent, approval, authorization, order, registration or
qualification of or with any court or any such regulatory authority or other
governmental agency or body required for the execution, delivery and performance
by Borrower of this Agreement or any other Loan Documents has been obtained and
is in full force and effect.
3.1.4 LITIGATION. There are no actions, suits or proceedings
at law or in equity by or before any Governmental Authority or other agency now
pending or threatened against or affecting Borrower or any of the Properties,
which actions, suits or proceedings, if determined against Borrower or any of
the Properties, might materially adversely affect the condition (financial or
otherwise) or business of Borrower or the condition or ownership of any of the
Properties.
3.1.5 AGREEMENTS. Borrower is not a party to any agreement or
instrument or subject to any restriction which might materially and adversely
affect Borrower or any of the Properties, or Borrower's business, properties or
assets, operations or condition, financial or otherwise. Borrower is not in
default in any material respect in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party or by which Borrower or any of its Properties
are bound. Borrower has no material financial obligation under any indenture,
mortgage, deed of trust, loan
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agreement or other agreement or instrument to which the Borrower is a party or
by which the Borrower or any of the Properties is otherwise bound, other than
obligations incurred in the ordinary course of the operation of the Properties
and other than obligations under the Loan Documents.
3.1.6 TITLE. Borrower has good, marketable and insurable title
in fee simple to the real property comprising part of the Properties and good
title to the balance of such Properties, free and clear of all Liens whatsoever
except the Permitted Encumbrances, such other Liens as are permitted pursuant to
the Loan Documents and the Liens created by the Loan Documents. Each Mortgage
intended to encumber any of the Properties, when properly recorded in the
appropriate records, together with any Uniform Commercial Code financing
statements required to be filed in connection therewith, will create (i) a
valid, perfected lien on the applicable Individual Property, subject only to
Permitted Encumbrances and the Liens created by the Loan Documents and (ii)
perfected security interests in and to, and perfected collateral assignments of,
all personalty (including the Leases), all in accordance with the terms thereof,
in each case subject only to any applicable Permitted Encumbrances, such other
Liens as are permitted pursuant to the Loan Documents and the Liens created by
the Loan Documents. There are no claims for payment for work, labor or materials
affecting any of Borrower's Properties which are or may become a lien prior to,
or of equal priority with, the Liens created by the Loan Documents.
3.1.7 NO BANKRUPTCY FILING. Borrower is not contemplating
either the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of all or a major portion of Borrower's
assets or property, and Borrower has no knowledge of any Person contemplating
the filing of any such petition against it.
3.1.8 FULL AND ACCURATE DISCLOSURE. No statement of fact made
by Borrower in this Agreement or in any of the other Loan Documents contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading. There
is no material fact presently known to Borrower which has not been disclosed to
Lender which adversely affects, nor as far as Borrower can foresee, might
adversely affect, any of the Properties or the business, operations or condition
(financial or otherwise) of Borrower.
3.1.9 NO PLAN ASSETS. Borrower is not an "employee benefit
plan," as defined in Section 3(3) of ERISA, subject to Title I of ERISA, and
none of the assets of Borrower constitutes or will constitute "plan assets" of
one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101. In
addition, (i) Borrower is not a "governmental plan" within the meaning of
Section 3(32) of ERISA and (ii) transactions by or with Borrower are not subject
to state statutes regulating investment of, and fiduciary obligations with
respect to, governmental plans.
3.1.10 COMPLIANCE. To the best of Borrower's knowledge,
Borrower and each of the Properties and the use thereof comply in all material
respects with all applicable Legal Requirements, including, without limitation,
building and zoning ordinances and codes. To the best of Borrower's knowledge,
Borrower is not in default or violation of any order, writ,
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injunction, decree or demand of any Governmental Authority, the violation of
which might materially adversely affect the condition (financial or otherwise)
or business of Borrower. To the best of Borrower's knowledge, there has not been
and shall never be committed by Borrower or any other person in occupancy of or
involved with the operation or use of the Properties any act or omission
affording the federal government or any state or local government the right of
forfeiture as against any of the Properties or any part thereof or any monies
paid in performance of Borrower's obligations under any of the Loan Documents.
Borrower hereby covenants and agrees not to commit, permit or suffer to exist
any act or omission affording such right of forfeiture.
3.1.11 FINANCIAL INFORMATION. To the best of Borrower's
knowledge, all financial data, including, without limitation, the statements of
cash flow and income and operating expense, that have been delivered to Lender
in respect of the Properties (i) are true, complete and correct in all material
respects, (ii) accurately represent the financial condition of the Properties as
of the date of such reports, and (iii) to the extent prepared or audited by an
independent certified public accounting firm, have been prepared in accordance
with GAAP throughout the periods covered, except as disclosed therein. Borrower
does not have any contingent liabilities, liabilities for taxes, unusual forward
or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments that are known to Borrower and reasonably likely to have
a materially adverse effect on the Properties or the operation thereof as retail
shopping centers, except as referred to or reflected in said financial
statements. Since the date of such financial statements, there has been no
materially adverse change in the financial condition, operations or business of
Borrower from that set forth in said financial statements.
3.1.12 CONDEMNATION. No Condemnation or other proceeding has
been commenced or, to Borrower's best knowledge, is contemplated with respect to
all or any portion of any of the Properties or for the relocation of roadways
providing access to any of the Properties.
3.1.13 FEDERAL RESERVE REGULATIONS. No part of the proceeds of
the Loan will be used for the purpose of purchasing or acquiring any "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or for any other purpose which would be inconsistent with
such Regulation U or any other Regulations of such Board of Governors, or for
any purposes prohibited by legal requirements or by the terms and conditions of
this Agreement or the other Loan Documents.
3.1.14 UTILITIES AND PUBLIC ACCESS. Each of the Properties has
rights of access to public ways and is served by water, sewer, sanitary sewer
and storm drain facilities adequate to service such Property for its respective
intended uses. All public utilities necessary or convenient to the full use and
enjoyment of each of the Properties are located either in the public
right-of-way abutting such Properties (which are connected so as to serve the
Properties without passing over other property) or in recorded easements serving
such Properties and such easements are set forth in the Title Insurance
Policies. All roads necessary for the use of each of the Properties for their
current respective purposes have been completed and dedicated to public use and
accepted by all Governmental Authorities.
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<PAGE> 38
3.1.15 NOT A FOREIGN PERSON. Borrower is not a "foreign
person" within the meaning of ss. 1445(f)(3) of the Code.
3.1.16 SEPARATE LOTS. Each Individual Property is comprised of
one (1) or more parcels which constitutes a separate tax lot and does not
constitute a portion of any other tax lot not a part of such Individual
Property.
3.1.17 ASSESSMENTS. There are no pending or proposed special
or other assessments for public improvements or otherwise affecting any of the
Properties, except as set forth in the title insurance policies delivered to
Lender in connection with the Loan, nor are there any contemplated improvements
to any of the Properties that may result in such special or other assessments.
3.1.18 ENFORCEABILITY. The Loan Documents are not subject to
any right of rescission, set-off, counterclaim or defense by Borrower, including
the defense of usury, nor would the operation of any of the terms of the Loan
Documents, or the exercise of any right thereunder, render the Loan Documents
unenforceable, and Borrower has not asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.
3.1.19 NO PRIOR ASSIGNMENT. There are no prior assignments of
the Leases or any portion of the Rents due and payable or to become due and
payable which are presently outstanding.
3.1.20 INSURANCE. Borrower has obtained and has delivered to
Lender certified copies of all insurance policies reflecting the insurance
coverages, amounts and other requirements set forth in this Agreement. No claims
have been made under any such policy, and no Person, including Borrower, has
done, by act or omission, anything which would impair the coverage of any such
policy.
3.1.21 USE OF PROPERTIES. Each of the Properties is used
exclusively for RETAIL purposes and other appurtenant and related uses.
3.1.22 CERTIFICATE OF OCCUPANCY LICENSES. To the best of
Borrower's knowledge, all certifications, permits, licenses and approvals,
including without limitation, certificates of completion and occupancy permits
required for the legal use, occupancy and operation of each of the Properties as
a retail shopping center (collectively, the "LICENSES"), have been obtained and
are in full force and effect. Borrower shall keep and maintain all licenses
necessary for the operation of each of the Properties as a retail shopping
center. To the best of Borrower's knowledge, the use being made of each
Individual Property is in conformity with the certificate of occupancy issued
for such Individual Property.
3.1.23 FLOOD ZONE. None of the Improvements on any of the
Properties are located in an area as identified by the Federal Emergency
Management Agency as an area having special flood hazards.
3.1.24 PHYSICAL CONDITION. To the best of Borrower's
knowledge, each of the Properties, including, without limitation, all
buildings, improvements, parking facilities,
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sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire
protection systems, electrical systems, equipment, elevators, exterior sidings
and doors, landscaping, irrigation systems and all structural components, are in
good condition, order and repair in all material respects; there exists no
structural or other material defects or damages in any of the Properties,
whether latent or otherwise, and Borrower has not received notice from any
insurance company or bonding company of any defects or inadequacies in any of
the Properties, or any part thereof, which would adversely affect the
insurability of the same or cause the imposition of extraordinary premiums or
charges thereon or of any termination or threatened termination of any policy of
insurance or bond.
3.1.25 BOUNDARIES. Except as shown of the surveys delivered by
Borrower to Lender in connection with the Loan, all of the improvements which
were included in determining the appraised value of each Individual Property lie
wholly within the boundaries and building restriction lines of such Individual
Property, and no improvements on adjoining properties encroach upon such
Individual Property, and no easements or other encumbrances upon the applicable
Individual Property encroach upon any of the improvements, so as to affect the
value or marketability of the applicable Individual Property except those which
are insured against by title insurance.
3.1.26 LEASES. The Properties are not subject to any Leases
other than the Leases described in Schedule III attached hereto and made a part
hereof. No person has any possessory interest in any of the Properties or right
to occupy the same except under and pursuant to the provisions of the Leases.
The current Leases identified on Schedule III are in full force and effect and
there are no defaults thereunder by either party and there are no conditions
that, with the passage of time or the giving of notice, or both, would
constitute defaults thereunder (the foregoing representation as to defaults
being to the best of Borrower's knowledge as to defaults by tenants). No Rent
(including security deposits) has been paid more than one (1) month in advance
of its due date. All work to be performed by Borrower under each Lease has been
performed as required and has been accepted by the applicable tenant, and any
payments, free rent, partial rent, rebate of rent or other payments, credits,
allowances or abatements required to be given by Borrower to any tenant has
already been received by such tenant. Other than hypothecations which are no
longer in effect, there has been no prior sale, transfer or assignment,
hypothecation or pledge of any Lease or of the Rents received therein. Except as
set forth in Schedule III, no tenant listed on Schedule III has assigned its
Lease or sublet all or any portion of the premises demised thereby, no such
tenant holds its leased premises under assignment or sublease, and all tenants
are occupying their spaces. No tenant under any Lease has an option pursuant to
such Lease or otherwise to purchase all or any part of the leased premises or
the building of which the leased premises are a part. No tenant under any Lease
has any right or option for additional space in the Improvements. To the best of
Borrower's knowledge, other than normal and customary tenant inventory, cleaning
supplies and building materials used in tenant's business and in compliance with
law, no hazardous wastes or toxic substances, as defined by applicable federal,
state or local statutes, rules and regulations, have been disposed, stored or
treated by any tenant under any Lease on or about the leased premises nor does
Borrower have any knowledge of any tenant's intention to use its leased premises
for any activity which, directly or indirectly, involves the use, generation,
treatment, storage, disposal or transportation of any petroleum product or any
toxic or hazardous
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chemical, material, substance or waste.
3.1.27 SURVEY. The Survey for each of the Properties delivered
to Lender in connection with this Agreement has been prepared in accordance with
the provisions of Section 3.1(c)(iii) hereof, and does not fail to reflect any
material matter affecting any of the Properties or the title thereto.
3.1.28 LOAN TO VALUE. The Loan is secured by interest in real
property having a fair market value as of the date hereof at least equal to
eighty percent (80%) of the original principal balance of the Loan.
3.1.29 FILING AND RECORDING TAXES. All transfer taxes, deed
stamps, intangible taxes or other amounts in the nature of transfer taxes
required to be paid by any Person under applicable Legal Requirements currently
in effect in connection with the transfer of the Properties to Borrower have
been paid. All mortgage, mortgage recording, stamp, intangible or other similar
tax required to be paid by any Person under applicable Legal Requirements
currently in effect in connection with the execution, delivery, recordation,
filing, registration, perfection or enforcement of any of the Loan Documents,
including, without limitation, the Mortgages encumbering the Properties have
been paid, and, under current Legal Requirements, the Mortgages encumbering the
Properties are enforceable in accordance with their respective terms by Lender
(or any subsequent holder thereof).
3.1.30 SINGLE PURPOSE. Borrower hereby represents and warrants
to, and covenants with, Lender that as of the date hereof and until such time as
the Debt shall be paid in full:
(a) Borrower does not own and will not own any asset or
property other than (A) the Properties, and (B) incidental personal property
necessary for the ownership or operation of the Properties.
(b) Borrower will not engage in any business other than the
ownership, management and operation of the Properties and Borrower will conduct
and operate its business as presently conducted and operated.
(c) Borrower will not enter into any contract or agreement
with any affiliate of the Borrower, any constituent party of Borrower or any
affiliate of any constituent party, except in any such case upon terms and
conditions that are intrinsically fair and substantially similar to those that
would be available on an arms-length basis with third parties other than any
such party.
(d) Borrower has not incurred and will not incur any
Indebtedness, secured or unsecured, direct or indirect, absolute or contingent
(including guaranteeing any obligation) other than the Debt. No Indebtedness
other than the Debt may be secured (subordinate or pari passu) by the
Properties.
(e) Borrower has not made and will not make any loans or
advances to any third party (including any affiliate or constituent party), and
shall not acquire obligations or
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securities of its affiliate, provided, however, that Borrower may make loans to
Tenants under Leases for tenant improvement work pursuant to such Leases which
loans are made in the ordinary course of Borrower's business and which loans
shall not exceed at any time $1,000,000 in the aggregate for all Properties.
(f) Borrower is and will remain solvent and Borrower will pay
its debts and liabilities (including, as applicable, shared personnel and
overhead expenses) from its assets as the same shall become due.
(g) Borrower has done or caused to be done and will do all
things necessary to observe partnership formalities and preserve its existence,
and Borrower will not, nor will Borrower permit any constituent party to amend,
modify or otherwise change the partnership certificate, partnership agreement,
articles of incorporation and bylaws, trust or other organizational documents of
Borrower or such constituent party without the prior written consent of Lender.
(h) Borrower will maintain all of its books, records,
financial statements and bank accounts separate from those of its affiliates and
any constituent party and Borrower will file its own tax returns, provided,
however, that Borrower's assets may be included in a consolidated financial
statement of its parent companies if such a consolidated statement is required
to comply with the requirements of GAAP, provided that such consolidated
financial statement shall contain a footnote to the effect that Borrower's
assets are owned by Borrower and that they are being included on the financial
statement of its parent solely to comply with the requirements of GAAP, and
further provided that such assets shall be listed on Borrower's own separate
balance sheet. Borrower shall maintain its books, records, resolutions and
agreements as official records.
(i) Borrower will be, and at all times will hold itself out to
the public as, a legal entity separate and distinct from any other entity
(including any affiliate of Borrower or any constituent party of Borrower),
shall correct any known misunderstanding regarding its status as a separate
entity, shall conduct business in its own name, shall not identify itself or any
of its affiliates as a division or part of the other and shall maintain and
utilize a separate telephone number and separate stationery, invoices and
checks.
(j) Borrower will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations.
(k) Neither Borrower nor any constituent party will seek or
effect the liquidation, dissolution, winding up, liquidation, consolidation or
merger, in whole or in part, of the Borrower.
(l) Borrower will not commingle the funds and other assets of
Borrower with those of any affiliate or constituent party or any other Person.
(m) Borrower has and will maintain its assets in such a
manner that it will not
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be costly or difficult to segregate, ascertain or identify its individual assets
from those of any affiliate or constituent party or any other Person.
(n) Borrower does not and will not hold itself out to be
responsible for the debts or obligations of any other Person.
(o) If Borrower is a limited partnership, each general partner
is a corporation or a limited liability company whose sole asset is its interest
in Borrower (the "SPE GENERAL PARTNER"), and if any such SPE General Partner (or
managing member) is a limited liability company, each managing member of such
limited liability company is a corporation whose sole asset is its interest in
such limited liability company (the "SPE MANAGING MEMBER"), and each SPE General
Partner and each SPC Managing Member will at all times comply, and will cause
Borrower to comply, with each of the representations, warranties, and covenants
contained in this Section 3.1.30 as if such representation, warranty or covenant
was made directly by such general partner.
(p) Borrower shall at all times cause there to be at least one
duly appointed member of the board of directors (an "INDEPENDENT DIRECTOR") of
the SPC Managing Member of the SPE General Partner of Borrower reasonably
satisfactory to Lender who shall not have been at the time of such individual's
appointment, and may not have been at any time during the preceding five years
(i) a stockholder, director, officer, employee, partner, attorney or counsel of
such corporation, Borrower or any affiliate of either of them, (ii) a customer,
supplier or other person who derives more than 10% of its purchases or revenues
from its activities with such corporation, Borrower or any affiliate of either
of them, (iii) a person or other entity controlling or under common control with
any such stockholder, partner, customer, supplier or other person, or (iv) a
member of the immediate family of any such stockholder, director, officer,
employee, partner, customer, supplier or other person. As used in this
definition, the term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management, policies or
activities of a person or entity, whether through ownership of voting
securities, by contract or otherwise.
(q) Borrower shall not cause or permit the board of directors
of the SPC Managing Member of the SPE General Partner to take any action which,
under the terms of any certificate of incorporation, by-laws or any voting trust
agreement with respect to any common stock, requires a vote of the board of
directors of such SPC Managing Member unless at the time of such action there
shall be at least one member who is an Independent Director.
(r) Borrower shall conduct its business so that the
assumptions made with respect to Borrower in that certain opinion letter dated
the date hereof (the "INSOLVENCY OPINION") delivered by Honigman Miller Schwartz
and Cohn in connection with the Loan shall be true and correct in all respects.
(s) Borrower will not permit any Affiliate or constituent
party independent access to its bank accounts.
(t) Borrower shall maintain a sufficient number of employees,
if any, in light
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of its contemplated business operations and shall pay the salaries of its own
employees, if any.
(u) Borrower shall compensate each of its consultants and
agents from its funds for services provided to it and pay from its own assets
all obligations of any kind incurred. Upon the withdrawal or the disassociation
of the SPE General Partner from Borrower or the SPC Managing Member from the SPE
General Partner, Borrower shall immediately appoint a new member whose operating
agreement or articles of incorporation, as the case may be, are substantially
similar to those of the SPE General Partner or SPC Managing Member, as
applicable, and deliver a new non-consolidation opinion to the Rating Agency or
Rating Agencies, as applicable, with respect to the new special purpose partner
or member, as the case may be, and its equity owners.
3.1.31 NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE. All
information submitted by Borrower to Lender and in all financial statements,
rent rolls, reports, certificates and other documents submitted in connection
with the Loan or in satisfaction of the terms thereof and all statements of fact
made by Borrower in this Agreement or in any other Loan Document, are accurate,
complete and correct in all material respects. There has been no material
adverse change in any condition, fact, circumstance or event that would make any
such information inaccurate, incomplete or otherwise misleading in any material
respect or that otherwise materially and adversely affects or might materially
and adversely affect the Property or the business operations or the financial
condition of Borrower. Borrower has disclosed to Lender all material facts and
has not failed to disclose any material fact that could cause any representation
or warranty made herein to be materially misleading.
3.1.32 ILLEGAL ACTIVITY. No portion of the Property has been
or will be purchased with proceeds of any illegal activity.
SECTION 3.2 SURVIVAL OF REPRESENTATIONS.
Borrower agrees that all of the representations and warranties
of Borrower set forth in Section 4.1 and elsewhere in this Agreement and in the
other Loan Documents shall survive for so long as any amount remains owing to
Lender under this Agreement or any of the other Loan Documents by Borrower. All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents by Borrower shall be deemed to have been relied upon
by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.
IV. BORROWER COVENANTS
SECTION 4.1 BORROWER AFFIRMATIVE COVENANTS.
From the date hereof and until payment and performance in full
of all obligations of Borrower under the Loan Documents or the earlier release
of the Liens of all Mortgages encumbering the Properties (and all related
obligations) in accordance with the terms of this Agreement and the other Loan
Documents, Borrower hereby covenants and agrees with Lender that:
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4.1.1 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS;
INSURANCE. Borrower shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply with all Legal Requirements
applicable to it and its Properties. Borrower shall at all times maintain,
preserve and protect all franchises and trade names and preserve all the
remainder of its property used or useful in the conduct of its business and
shall keep all of the Properties in good working order and repair, and from time
to time make, or cause to be made, all reasonably necessary repairs, renewals,
replacements, betterments and improvements thereto, all as more fully provided
in the Mortgages encumbering such Properties. Borrower shall keep each of the
Properties insured at all times by financially sound and reputable insurers, to
such extent and against such risks, and maintain liability and such other
insurance, as is more fully provided in this Agreement.
4.1.2 TAXES AND OTHER CHARGES. Borrower shall pay all Taxes
and Other Charges now or hereafter levied or assessed or imposed against the
Properties or any part thereof as the same become due and payable; provided,
however, Borrower's obligation to directly pay Taxes shall be suspended for so
long as Borrower complies with the terms and provisions of Section 6.3.2 hereof.
Borrower will deliver to Lender receipts for payment or other evidence
satisfactory to Lender that the Taxes and Other Charges have been so paid or are
not then delinquent no later than two (2) Business Days prior to the date on
which the Taxes and/or Other Charges would otherwise be delinquent or penalties
or interest would accrue if not paid. Borrower shall furnish to Lender receipts
for the payment of the Taxes and the Other Charges prior to the date the same
shall become delinquent (provided, however, that Borrower is not required to
furnish such receipts for payment of Taxes in the event that such Taxes have
been paid by Lender pursuant to Section 6.2 hereof). Borrower shall not suffer
and shall promptly cause to be paid and discharged any lien or charge whatsoever
which may be or become a lien or charge against the Properties, and shall
promptly pay for all utility services provided to the Properties. After prior
written notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good faith and
with due diligence, the amount or validity or application in whole or in part of
any Taxes or Other Charges, provided that (i) no Default or Event of Default has
occurred and remains uncured; (ii) Borrower is permitted to do so under the
provisions of any mortgage or deed of trust superior in lien to the applicable
Mortgage; (iii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower is
subject and shall not constitute a default thereunder and such proceeding shall
be conducted in accordance with all applicable statutes, laws and ordinances;
(iv) no Individual Property nor any part thereof or interest therein will be in
danger of being sold, forfeited, terminated, canceled or lost; (v) Borrower
shall promptly upon final determination thereof pay the amount of any such Taxes
or Other Charges, together with all costs, interest and penalties which may be
payable in connection therewith; (vi) such proceeding shall suspend the
collection of Taxes or Other Charges from the applicable Individual Property;
and (vii) Borrower shall furnish such security as may be required in the
proceeding, or as may be requested by Lender, to insure the payment of any such
Taxes or Other Charges, together with all interest and penalties thereon. Lender
may pay over any such cash deposit or part thereof held by Lender to the
claimant entitled thereto at any time when, in the judgment of Lender, the
entitlement of such claimant is established.
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4.1.3 LITIGATION. Borrower shall give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened
against Borrower which might materially adversely affect Borrower's condition
(financial or otherwise) or business or any of the Properties.
4.1.4 ACCESS TO PREMISES. Borrower shall permit agents,
representatives and employees of Lender to inspect any of its Properties or any
part thereof at reasonable hours upon reasonable advance notice.
4.1.5 NOTICE OF DEFAULT. Borrower shall promptly advise Lender
of any material adverse change in Borrower's condition, financial or otherwise,
or of the occurrence of any Default or Event of Default of which Borrower has
knowledge.
4.1.6 COOPERATE IN LEGAL PROCEEDINGS. Borrower shall cooperate
fully with Lender with respect to any proceedings before any court, board or
other Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election, to participate in
any such proceedings.
4.1.7 PERFORM LOAN DOCUMENTS. Borrower shall observe, perform
and satisfy all the terms, provisions, covenants and conditions of, and shall
pay when due all costs, fees and expenses to the extent required under the Loan
Documents executed and delivered by, or applicable to, Borrower.
4.1.8 INSURANCE BENEFITS. Borrower shall cooperate with Lender
in obtaining for Lender the benefits of any Insurance Proceeds lawfully or
equitably payable in connection with any of the Properties, and Lender shall be
reimbursed for any expenses incurred in connection therewith (including
attorneys' fees and disbursements, and the payment by Borrower of the expense of
an appraisal on behalf of Lender in case of a Casualty) out of such Insurance
Proceeds.
4.1.9 FURTHER ASSURANCES; SUPPLEMENTAL MORTGAGE AFFIDAVITS.
Borrower shall, at Borrower's sole cost and expense:
(a) furnish to Lender all instruments, documents, boundary
surveys, footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and every
other document, certificate, agreement and instrument required to be furnished
by Borrower pursuant to the terms of the Loan Documents or reasonably requested
by Lender in connection therewith;
(b) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the obligations of Borrower under the Loan
Documents, as Lender may reasonably require; and
(c) do and execute all and such further lawful and reasonable
acts, conveyances and assurances for the better and more effective carrying out
of the intents and
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purposes of this Agreement and the other Loan Documents, as Lender shall
reasonably require from time to time.
As of the date hereof, Borrower represents that it has paid
all state, county and municipal recording and all other taxes imposed upon the
execution and recordation of the Mortgages encumbering each of the Properties.
If at any time Lender determines, based on applicable law, that Lender is not
being afforded the maximum amount of security available from any one or more of
the Properties as a direct or indirect result of applicable taxes not having
been paid with respect to any such Properties, Borrower agrees that Borrower
will execute, acknowledge and deliver to Lender, immediately upon Lender's
request, supplemental affidavits increasing the amount of the Debt attributable
to any such Individual Property (as set forth on Schedule I annexed hereto) for
which all applicable taxes have not been paid to an amount determined by Lender
to be equal to the lesser of (a) the greater of the fair market value of the
applicable Individual Property (i) as of the date hereof and (ii) as of the date
such supplemental affidavits are to be delivered to Lender, and (b) the amount
of the Debt attributable to any such Individual Property (as set forth on
Schedule I annexed hereto), and Borrower shall, on demand, pay any additional
taxes.
4.1.10 FINANCIAL REPORTING.
(a) Borrower will keep and maintain or will cause to be kept
and maintained on a Fiscal Year basis, in accordance with GAAP (or such other
accounting basis reasonably acceptable to Lender), proper and accurate books,
records and accounts reflecting all of the financial affairs of Borrower and all
items of income and expense in connection with the operation on an individual
basis of each of the Properties. Lender shall have the right from time to time
at all times during normal business hours upon reasonable notice to examine such
books, records and accounts at the office of Borrower or other Person
maintaining such books, records and accounts and to make such copies or extracts
thereof as Lender shall desire. After the occurrence of an Event of Default,
Borrower shall pay any costs and expenses incurred by Lender to examine
Borrower's accounting records with respect to the Properties, as Lender shall
determine to be necessary or appropriate in the protection of Lender's interest.
(b) Borrower will furnish to Lender annually, within one
hundred (100) days following the end of each Fiscal Year of Borrower, audited
special purpose financial statements on a combined basis prepared in accordance
with GAAP (or such other accounting basis acceptable to Lender) audited by a
"Big Six" accounting firm or other independent certified public accountant
acceptable to Lender in the form annexed as Schedule VII. Such financial
statements shall include an audit of all operating revenues and expenses of the
Properties. The special purpose financial statements will include a supplemental
schedule which details the operating revenues and expenses for each Individual
Property. Audited balance sheets shall not be required but Borrower shall
deliver a balance sheet certified by Borrower covering the Properties on a
combined basis as well as each Individual Property for such Fiscal Year and
containing statements of profit and loss for the Borrower and the Properties; as
well as a complete copy of Borrower's quarterly and annual financial statements
certified by Borrower to be provided within fifty (50) days and one hundred
(100) days following the end of such respective Fiscal quarter or Fiscal Year,
as the case may be (provided Borrower shall have 100
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days to deliver said statements with respect to the fourth quarter of any such
Fiscal Year). Such statements shall set forth the financial condition and the
results of operations for the Properties for such Fiscal Year, and shall
include, but not be limited to, amounts representing annual Net Cash Flow, Net
Operating Income, Gross Income and Operating Expenses. Borrower's annual
financial statements shall be accompanied by (i) a comparison of the budgeted
income and expenses and the actual income and expenses for the prior Fiscal
Year, (ii) a certificate executed by the chief financial officer of Borrower or
the general partner of Borrower, as applicable, stating that each such annual
financial statement presents fairly the financial condition and the results of
operations of the Borrower and the Properties being reported upon and has been
prepared in accordance with GAAP, (iii) an unqualified opinion of a "Big Six"
accounting firm or other independent certified public accountant reasonably
acceptable to Lender with respect to such firm's review of such financial
statements in accordance with GAAP, (iv) a list of tenants, if any, occupying
more than twenty (20%) percent of the total floor area of the Improvements, (v)
a breakdown showing the year in which each Lease then in effect expires and the
percentage of total floor area of the Improvements and the percentage of base
rent with respect to which Leases shall expire in each such year, each such
percentage to be expressed on both a per year and cumulative basis, (vi) a
schedule reviewed by such independent certified public accountant in accordance
with GAAP reconciling Net Operating Income to Net Cash Flow (the "NET CASH FLOW
SCHEDULE"), which shall itemize all adjustments made to Net Operating Income to
arrive at Net Cash Flow deemed material by such independent certified public
accountant, (vii) sales reports for each tenant at the Properties for the prior
Fiscal Year, and (viii) a report of all Capital Expenditures made with respect
to the Properties for the prior Fiscal Year. Together with Borrower's annual
financial statements, Borrower shall furnish to Lender an Officer's Certificate
certifying as of the date thereof whether there exists an event or circumstance
which constitutes a Default or Event of Default under the Loan Documents
executed and delivered by, or applicable to, Borrower, and if such Default or
Event of Default exists, the nature thereof, the period of time it has existed
and the action then being taken to remedy the same.
(c) Borrower will furnish, or cause to be furnished, to Lender
on or before fifty (50) days after the end of each of the first three calendar
quarters and on or before 100 days after the end of the fourth calendar quarter
commencing with the quarter ending March 31, 1998 the following items,
accompanied by an Officer's Certificate stating that such items are true,
correct, accurate, and complete and fairly present the financial condition and
results of the operations of Borrower and the Properties on a combined basis as
well as each Individual Property (subject to normal year-end adjustments) as
applicable: (i) a rent roll for the subject quarter accompanied by an Officer's
Certificate with respect thereto; (ii) quarterly and year-to-date operating
statements prepared for each calendar quarter, noting Net Operating Income,
Gross Income, and Operating Expenses (not including any contributions to the
Capital Expenditure Funds), and other information necessary and sufficient to
fairly represent the financial position and results of operation of the
Properties during such calendar quarter containing a comparison of budgeted
income and expenses and the actual income and expenses together with a detailed
explanation of any variances of five percent (5%) or more on an aggregate basis
between budgeted and actual amounts for such periods, all in form satisfactory
to Lender; (iii) a calculation reflecting the annual Debt Service Coverage Ratio
for the
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immediately preceding twelve (12) month period as of the last day of such
quarter accompanied by an Officer's Certificate with respect thereto; and (iv) a
Net Cash Flow Schedule. In addition, such certificate shall also be accompanied
by an Officer's Certificate stating that the representations and warranties of
Borrower set forth in Section 4.1.30(d) are true and correct as of the date of
such certificate and that there are no trade payables outstanding for more than
sixty (60) days.
(d) (i) For the partial year period commencing on the Closing
Date, and for each Fiscal Year thereafter until the Fiscal Year in which the
Anticipated Repayment Date shall occur, Borrower shall submit to Lender for
review the Annual Budget not later than sixty (60) days prior to the
commencement of such Fiscal Year. Such Annual Budget shall set forth in
reasonable detail budgeted monthly operating income and monthly operating
capital and monthly operating and other expenses for the Properties, including
all planned capital expenditures in respect of the Properties for such period or
Fiscal Year.
(ii) For the Fiscal year in which the Anticipated
Repayment Date shall occur and for each Fiscal Year thereafter, the
Borrower shall submit to Lender, for Lender's written approval, the Annual
Budget not later than sixty (60) days prior to the commencement of such Fiscal
Year. Each such Annual Budget approved by Lender shall hereinafter be referred
to as an "APPROVED ANNUAL BUDGET". Until such time that Lender approves a
proposed Annual Budget, the most recently Approved Annual Budget shall
apply; provided that such Approved Annual Budget shall be adjusted to reflect
actual increases in real estate taxes, insurance premiums and utilities
expenses. In the event that, after the Anticipated Repayment Date, the
Borrower must incur an extraordinary operating expense or capital
expenditure not set forth in the Annual Budget (each an "EXTRAORDINARY
EXPENSE"), then the Borrower shall promptly deliver to Lender a
reasonably detailed explanation of such proposed Extraordinary Expense for
the Lender's approval.
(e) Borrower shall furnish to Lender, within ten (10) Business
Days after request (or as soon thereafter as may be reasonably possible), such
further detailed information with respect to the operation of any of the
Properties and the financial affairs of Borrower as may be reasonably requested
by Lender.
(f) Borrower will, promptly after written request by Lender or
the Rating Agencies, but in no event later than 10 Business Days after such
request, also furnish or cause to be furnished any information required pursuant
to Rule 144A, or in connection with a public offering, or in accordance with any
other applicable securities regulation (including, without limitation, with
respect to the applicable fiscal year or years of Borrower, "summarized
financial information" (as defined in Section 210.1-02 (bb) of Regulation S-X
promulgated under the Securities Act of 1933, as amended) of Borrower, which
information shall be accompanied by an Officer's Certificate certifying that to
the best of the signer's knowledge, such statements fairly present the
information required to be stated therein in accordance with GAAP.
4.1.11 BUSINESS AND OPERATIONS. Borrower will continue to
engage in the businesses presently conducted by it as and to the extent the same
are necessary for the ownership, maintenance, management and operation of each
of the Properties. Borrower will
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qualify to do business and will remain in good standing under the laws of each
jurisdiction as and to the extent the same are required for the ownership,
maintenance, management and operation of each of the Properties.
4.1.12 TITLE TO THE PROPERTIES. Borrower will warrant and
defend (i) the title to each of the Properties and every part thereof, subject
only to Liens permitted hereunder (including Permitted Encumbrances), and (ii)
the validity and priority of the Liens of the Mortgages and the Assignments of
Leases on the Properties, subject only to Liens permitted hereunder (including
Permitted Encumbrances), in each case against the claims of all Persons
whomsoever. Borrower shall reimburse Lender for any losses, costs, damages or
expenses (including reasonable attorneys' fees and court costs) incurred by
Lender if an interest in any of the Properties, other than as permitted
hereunder, is claimed by another Person.
4.1.13 COSTS OF ENFORCEMENT. In the event (i) that any
Mortgage encumbering any of the Properties is foreclosed in whole or in part or
that any such Mortgage is put into the hands of an attorney for collection,
suit, action or foreclosure, (ii) of the foreclosure of any mortgage prior to or
subsequent to any Mortgage encumbering any of the Properties in which proceeding
Lender is made a party, or (iii) of the bankruptcy, insolvency, rehabilitation
or other similar proceeding in respect of Borrower or an assignment by Borrower
for the benefit of its creditors, Borrower, its successors or assigns, shall be
chargeable with and agrees to pay all costs of collection and defense, including
attorneys' fees in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, which shall be due and
payable together with all required service or use taxes.
4.1.14 ESTOPPEL STATEMENT. (a) After request by Lender,
Borrower shall within ten (10) days furnish Lender with a statement, duly
acknowledged and certified, setting forth (i) the amount of the original
principal amount of the Note, (ii) the unpaid principal amount of the Note,
(iii) the Applicable Interest Rate of the Note, (iv) the date installments of
interest and/or principal were last paid, (v) any offsets or defenses to the
payment of the Debt, if any, and (vi) that the Note, this Agreement, the
Mortgages and the other Loan Documents are valid, legal and binding obligations
and have not been modified or if modified, giving particulars of such
modification.
(b) Borrower shall use its best efforts to deliver to Lender
upon request, tenant estoppel certificates from each commercial tenant leasing
space at the Properties in form and substance reasonably satisfactory to Lender
provided that Borrower shall not be required to deliver such certificates more
frequently than one (1) time in any calendar year.
4.1.15 LOAN PROCEEDS. Borrower shall use the proceeds of
the Loan received by it on the Closing Date only for the purposes set forth in
Section 2.1.4.
4.1.16 PERFORMANCE BY BORROWER. Borrower shall in a timely
manner observe, perform and fulfill each and every covenant, term and provision
of each Loan Document executed and delivered by, or applicable to, Borrower, and
shall not enter into or otherwise suffer or permit any amendment, waiver,
supplement, termination or other modification of any Loan Document executed and
delivered by, or applicable to, Borrower without the prior written
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consent of Lender.
4.1.17 CONFIRMATION OF REPRESENTATIONS. In addition to and not
in limitation of the covenants and agreements of Borrower contained in Section
8.1, Borrower shall deliver, in connection with any Securitization, (i) one or
more Officer's Certificates certifying that as of the date of the closing of
such Secondary Market Transaction all representations made by Borrower in the
Loan Documents remain true and correct as of the date such representations were
made, and (ii) certificates of the relevant Governmental Authorities in all
relevant jurisdictions indicating the good standing and qualification of
Borrower and its general partner as of the date of the Secondary Market
Transaction.
4.1.18 NO JOINT ASSESSMENT. Borrower shall not suffer, permit
or initiate the joint assessment of any Individual Property (i) with any other
real property constituting a tax lot separate from such Individual Property, and
(ii) with any portion of such Individual Property which may be deemed to
constitute personal property, or any other procedure whereby the lien of any
taxes which may be levied against such personal property shall be assessed or
levied or charged to such Individual Property.
4.1.19 LEASING MATTERS. Any Leases with respect to an
Individual Property written after the date hereof and prior to the Anticipated
Repayment Date, for more than 15,000 square feet shall be approved by Lender,
which approval shall not be unreasonably withheld, conditioned or delayed,
provided, however, that if Lender has failed to approve or disapprove any such
Lease within seven (7) Business Days of receipt thereof together with any
supplementary materials reasonably necessary to make such determinations,
Borrower shall provide notice of such failure to Lender, and in the event that
Lender does not approve or disapprove such Lease within five (5) Business Days
of Lender's receipt of such notice, the Lease shall be deemed approved. After
the Anticipated Repayment Date, all Leases shall be approved by Lender, which
approval may be withheld in Lender's sole discretion. Upon request, Borrower
shall furnish Lender with executed copies of all Leases. Without in any way
limiting Lender's foregoing rights, (i) all renewals of Leases and all proposed
Leases shall provide for rental rates comparable to existing local market rates,
(ii) all renewals of Leases and all proposed Leases shall be on commercially
reasonable terms and shall not contain any terms which would materially affect
Lender's rights under the Loan Documents, and (iii) all renewals of Leases and
all proposed Leases executed after the date hereof shall provide that they are
subordinate to the Mortgage encumbering the applicable Individual Property and
that the lessee agrees to attorn to Lender. Borrower (i) shall observe and
perform the obligations imposed upon the lessor under the Leases in a
commercially reasonable manner; (ii) shall enforce and may amend or terminate
the terms, covenants and conditions contained in the Leases upon the part of the
lessee thereunder to be observed or performed in a commercially reasonable
manner; (iii) shall not collect any of the rents more than one (1) month in
advance (other than security deposits); (iv) shall not execute any other
assignment of lessor's interest in the Leases or the Rents (except as
contemplated by the Loan Documents); (v) shall not alter, modify or change the
terms of the Leases in a manner inconsistent with the provisions of the Loan
Documents; and (vi) shall execute and deliver at the request of Lender all such
further assurances, confirmations and assignments in connection with the Leases
as Lender shall from time to time reasonably require.
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4.1.20 ALTERATIONS. Prior to the Anticipated Repayment Date,
Borrower shall obtain Lender's prior written consent, which consent shall not be
unreasonably withheld or delayed, to any alterations to any Improvements on any
Individual Property that may have a material adverse effect on Borrower's
financial condition, the value of such Individual Property or the Net Operating
Income with respect to such Individual Property, other than (i) tenant
improvement work performed pursuant to the terms of any Lease executed on or
before the date hereof, (ii) tenant improvement work performed pursuant to the
terms and provisions of a Lease and not adversely affecting any structural
component of any Improvements, any utility or HVAC system contained in any
Improvements or the exterior of any building constituting a part of any
Improvements, provided that the cost of such alteration, under clause (i) or
(ii) above, does not exceed five percent (5%) of the Allocated Loan Amount for
such Individual Property and that the total of all such alterations, under
clause (i) or (ii) above, shall not exceed five percent (5%) of the original
amount of the Loan at any one time, or (iii) alterations performed in connection
with the restoration of the Property after the occurrence of a Casualty in
accordance with the terms and provisions of this Agreement. After the
Anticipated Repayment Date, Borrower shall obtain Lender's prior written consent
to all alterations, which consent may be withheld at Lender's sole discretion.
If the total unpaid amounts due and payable with respect to alterations to the
Improvements (other than such amounts to be paid or reimbursed by tenants under
the Leases) shall at any time equal or exceed either (i) five percent (5%) of
the Allocated Loan Amount with respect to the Individual Property on which the
alterations have been or are being performed or (ii) five percent (5%) of the
original principal amount of the Loan with respect to all alterations at all of
the Properties which have been or are being performed (the "THRESHOLD AMOUNT"),
Borrower shall promptly deliver to Lender as security for the payment of such
amounts and as additional security for Borrower's obligations under the Loan
Documents any of the following: (A) cash, (B) U.S. Obligations, (C) other
securities having a rating acceptable to Lender and that the applicable Rating
Agencies have confirmed in writing will not, in and of itself, result in a
downgrade, withdrawal or qualification of the initial, or, if higher, then
current ratings assigned in connection with any Securitization, or (D) a
completion bond or letter of credit issued by a financial institution having a
rating by Standard & Poor's Ratings Group of not less than A-1+ if the term of
such bond or letter of credit is no longer than three (3) months or, if such
term is in excess of three (3) months, issued by a financial institution having
a rating that is acceptable to Lender and that the applicable Rating Agencies
have confirmed in writing will not, in and of itself, result in a downgrade,
withdrawal or qualification of the initial, or, if higher, then current ratings
assigned in connection with any Securitization. Such security shall be in an
amount equal to the excess of the total unpaid amounts with respect to
alterations to the Improvements on the Property (other than such amounts to be
paid or reimbursed by tenants under the Leases) over the Threshold Amount and
may be reduced from time to time by the cost estimated by Lender to terminate
any of the alterations and restore the Property to the extent necessary to
prevent any material adverse effect on the value of the Property.
Provided no Event of Default shall have occurred and provided
that Lender has received from Borrower paid receipts indicating that such
alteration(s) have been paid for up to the Threshold Amount, then Borrower may
request the release of portions of such security that is being held in cash on a
monthly basis to reimburse Borrower for further work on such alteration
performed for the prior month (a) to Borrower provided that Borrower has
delivered
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paid receipts for such work and has complied with the conditions for
disbursement as are set forth in Sections 6.1 and 6.4 hereof, or (b) directly to
the contractor, subcontractor or supplier performing such work for such work
completed in the prior month as evidenced by bills or invoices for such work
delivered to Lender together with such other documentation as Lender may
reasonably require, including, without limitation, conditional lien waivers
which shall be conditioned only upon the payment of the amount of the bills or
invoices submitted by such contractor, subcontractor or supplier, and
satisfaction by Borrower of the same conditions to disbursement as are set forth
in Sections 6.1 and 6.4 hereof.
4.1.21 SUBORDINATION AGREEMENTS AND OTHER POST-CLOSING
OBLIGATIONS . Borrower shall use its best efforts to obtain Subordination,
Non-Disturbance and Attornment Agreements substantially in the form annexed as
Schedule VIII ("SNDA") from all of the tenants of the Properties listed on
Schedule IV within 60 days after the date hereof. In addition, Borrower shall
use its best efforts to obtain and deliver to Lender within 60 days of the date
hereof Tenant Estoppel Certificates addressed to Lender in form reasonably
satisfactory to Lender from all Tenants at the Properties from which Lender did
not receive Tenant Estoppel Certificates at the closing of the Loan, including
without limitation, an acceptable Tenant Estoppel Certificate from Sears
Hardware. Furthermore, with respect to the West Allis Individual Property,
Borrower shall use its best efforts to deliver to Lender within 60 days of the
date hereof, a so-called "closure" letter from the Wisconsin Department of
Natural Resources (the "DNR") indicating that either (i) the environmental
matters referenced in the summary attached hereto as Schedule X present no issue
or concern to the DNR or (ii) DNR does not maintain a file with respect to such
environmental matters and that therefore, such matters present no issue or
concern to the DNR. With respect to the Property known as Taylors Square, South
Carolina, Borrower shall use its best efforts to deliver to Lender evidence
satisfactory to Lender that the Property complies with the parking requirements
under the zoning law and an updated survey for the reflecting such compliance
with the Parking requirements. Such best efforts shall include commencing legal
proceedings against any tenants that are required to execute and deliver SNDA's
or Tenant Estoppels to Lender in accordance with the terms of their Leases. In
addition, within 60 days from the date hereof, Borrower shall deliver to Lender
(i) revisions to the appraisals and environmental reports received by Lender
such that the reports are addressed to Lender, (ii) copies of all Leases at the
Properties known as Fraser, West Allis and Troy certified by Borrower, (iii) a
letter from Dames and Moore confirming that there is no groundwater
contamination at the Taylor Square Property, and (iv) certificates of occupancy
for all of the space at the Northwest Crossing, Tennessee Property. Borrower and
Lender agree that the initial deposit of Insurance Premium Funds and the hedging
costs will be reviewed following the Closing and adjusted, if appropriate, based
upon further analysis by Lender and Borrower.
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SECTION 4.2 BORROWER NEGATIVE COVENANTS
From the date hereof until payment and performance in full of
all obligations of Borrower under the Loan Documents or the earlier release of
the Liens of all Mortgages encumbering each of the Properties in accordance with
the terms of this Agreement and the other Loan Documents, Borrower covenants and
agrees with Lender that it will not do, directly or indirectly, any of the
following:
4.2.1 OPERATION OF PROPERTIES. Borrower shall not, without the
prior consent of Lender (which consent shall not be unreasonably withheld),
terminate the Management Agreement or otherwise replace the Manager or enter
into any other management agreement with respect to any of the Properties.
4.2.2 LIENS. Borrower shall not, without the prior written
consent of Lender, create, incur, assume or suffer to exist any Lien on any
portion of any of the Properties or permit any such action to be taken, except:
(a) Permitted Encumbrances;
(b) Liens created by or permitted pursuant to the Loan
Documents;
(c) Liens for Taxes or Other Charges not yet due.
4.2.3 DISSOLUTION. Borrower shall not (i) engage in any
dissolution, liquidation or consolidation or merger with or into any other
business entity, (ii) engage in any business activity not related to the
ownership and operation of the Property, (iii) transfer, lease or sell, in one
transaction or any combination of transactions, the assets or all or
substantially all of the properties or assets of the Borrower except to the
extent permitted by the Loan Documents, or (iv) cause the SPE General Partner or
the SPC Managing Member to (A) dissolve, wind up or liquidate or take any
action, or omit to take an action, as a result of which the SPE General Partner
or the SPC Managing Member, as the case may be, would be dissolved, wound up or
liquidated in whole or in part, or (B) amend, modify, waive or terminate the
operating agreement of the SPE General Partner or the certificate of
incorporation or bylaws of the SPC Managing Member, as the case may be, in each
case, without obtaining the prior written consent of Lender or Lender's
designee.
4.2.4 CHANGE IN BUSINESS. Borrower shall not enter into any
line of business other than the ownership and operation of the Properties, or
make any material change in the scope or nature of its business objectives,
purposes or operations, or undertake or participate in activities other than the
continuance of its present business.
4.2.5 DEBT CANCELLATION. Borrower shall not cancel or
otherwise forgive or release any claim or debt (other than termination of Leases
in accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.
4.2.6 AFFILIATE TRANSACTIONS. Borrower shall not enter
into, or be a party to,
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any transaction with an Affiliate of Borrower or any of the partners of Borrower
except in the ordinary course of business and on terms which are fully disclosed
to Lender in advance and are no less favorable to Borrower or such Affiliate
than would be obtained in a comparable arm's-length transaction with an
unrelated third party.
4.2.7 ZONING. Borrower shall not initiate or consent to any
zoning reclassification of any portion of any of the Properties or seek any
variance under any existing zoning ordinance or use or permit the use of any
portion of any of the Properties in any manner that could result in such use
becoming a non-conforming use under any zoning ordinance or any other applicable
land use law, rule or regulation, without the prior consent of Lender, which
consent shall not be unreasonably withheld as to any such non-conforming use.
4.2.8 ASSETS. Borrower shall not purchase or own any
properties other than the Properties.
4.2.9 DEBT. Borrower shall not create, incur or assume any
debt other than the Debt.
4.2.10 NO JOINT ASSESSMENT. Borrower shall not suffer, permit
or initiate the joint assessment of the Property (i) with any other real
property constituting a tax lot separate from the Property, and (ii) with any
portion of the Property which may be deemed to constitute personal property, or
any other procedure whereby the lien of any taxes which may be levied against
such personal property shall be assessed or levied or charged to the Property.
4.2.11 PRINCIPAL PLACE OF BUSINESS. Borrower shall not change
its principal place of business set forth on the first page of this Agreement
without first giving Lender thirty (30) days prior written notice.
4.2.12 ERISA. (a) Borrower shall not engage in any transaction
which would cause any obligation, or action taken or to be taken, hereunder (or
the exercise by Lender of any of its rights under the Note, this Agreement or
the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
(b) Borrower further covenants and agrees to deliver to Lender
such certifications or other evidence from time to time throughout the term of
the Loan, as requested by Lender in its sole discretion, that (A) Borrower is
not an "employee benefit plan" as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (B) Borrower is not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental plans; and
(C) one or more of the following circumstances is true:
(i) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each outstanding
class of equity interests in Borrower are held by "benefit plan investors"
within the meaning of 29 C.F.R.
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Section 2510.3-101(f)(2); or
(iii) Borrower qualifies as an "operating company" or a "real
estate operating company" within the meaning of 29 C.F.R. Section 2510.3-101(c)
or (e) or an investment company registered under The Investment Company Act of
1940.
4.2.13 TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS. Unless
such action is permitted by the provisions of this Section 4.2.13, Borrower
will not (i) Transfer all or any part of any of the Properties, (ii) incur
indebtedness for borrowed money, (iii) permit or suffer any direct or indirect
Transfer of any interest in Borrower or in any partner of Borrower, or (iv)
file a declaration of condominium with respect to the Property. Borrower shall
deliver to Lender written notice pursuant to the provisions of Section 9.6
hereof of any such Transfer permitted pursuant to the provisions of this
Section 4.2.13 hereof. Borrower shall provide Lender and the Rating Agencies
with copies of executed deeds, assignments of interests in Borrower or its SPE
General Partner or SPC Managing Member, mortgages or other similar closing
documents within ten (10) days after any closing on any transaction which is
subject to the provisions of this Section 4.2.13.
Notwithstanding anything to the contrary contained in this
Section 4.2.13, holders of share interests in Ramco Gershenson Properties
Trust, a Massachusetts real estate investment trust (the "REIT"), the general
partner of the limited partner of Borrower, shall have the right to transfer
their share interests in the REIT without Lender's consent; provided that (i)
after taking into account any prior transfers pursuant to this Section, whether
to the proposed transferee or otherwise, no such transfer (or series of
transfers) shall result in the proposed transferee, together with all members
of his/her immediate family or any Affiliates thereof, owning in the aggregate
(directly, indirectly or beneficially) 49% or more of the ownership and/or
voting interests in the REIT, and (ii) no such transfer of interests shall
result in a change of control of the REIT, Limited Partner or Borrower or the
day-to-day operation of the Properties.
Notwithstanding anything to the contrary contained in this
Section 4.2.13, holders of partnership interests in Ramco Gershenson
Properties, L.P., a Delaware limited partnership, the limited partner of
Borrower ("Limited Partner"), shall have the right to transfer their
partnership interests in Limited Partner without Lender's consent; provided,
that (i) after taking into account any prior transfers pursuant to this
Section, whether to the proposed transferee or otherwise, no such transfer (or
series of transfers) shall result in the proposed transferee, together with all
members of his/her immediate family or any Affiliates thereof, owning in the
aggregate (directly, indirectly or beneficially) 49% or more of the ownership
and/or voting interests in Borrower (or any entity directly or indirectly
holding an interest in Borrower), (ii) no such transfer of interests shall
result in a change of control of Borrower or Limited Partner or the day to day
operations of the Properties, and (iii) no such transfer shall result in the
REIT holding less than a 51% partnership and voting interest in Borrower and in
Limited Partner (directly or indirectly). To the extent the REIT at any time
owns a 49% or more ownership and voting interest (directly or indirectly) in
Limited Partner, then a transfer of a partnership interest in Limited Partner
pursuant to this Paragraph resulting in the REIT owning (directly or
indirectly) additional partnership interests in Limited Partner shall not
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require the consent of Lender hereunder provided that the conditions set forth
in clauses (ii) and (iii) of this Paragraph remain satisfied.
Notwithstanding anything to the contrary contained in this
Section 4.2.13, either (a) a one-time only sale or transfer of 49% or more of
the share interests in the REIT to one Person or an affiliated group of Persons
or (b) a one time only sale or transfer to one Person or an affiliated group of
Persons of less than 49% of the share interests in the REIT which results in a
change of control of the REIT, the Limited Partner, the Borrower and/or the day
to day operation of the Properties, shall be permitted hereunder after
consideration and approval by Lender and the Rating Agencies, in their sole
discretion, of all relevant factors, provided that:
(A) no Event of Default shall have occurred and remain
uncured;
(B) the transferee shall be a reputable entity or person of
good character, creditworthy, with sufficient financial worth considering the
obligations assumed and undertaken, as evidenced by financial statements and
other information reasonably requested by Lender, Borrower and its constituent
entities shall comply in all respects with the provisions set forth in the
definition of Single Purpose Entity and Borrower, its constituent entities and
such transferee shall comply with all other applicable criteria of the Rating
Agencies;
(C) Lender shall have received evidence satisfactory to Lender
that all required approvals, if any, to such sale or transfer shall have been
obtained;
(D) Lender shall have receive evidence satisfactory to Lender
and the Rating Agencies to the effect that the legal and financial structure of
Borrower and its shareholders, partners or members, as the case may be, after
such transfer and the single purpose and bankruptcy remote nature of Borrower
and such shareholders, partners or members satisfies Lender's then current
applicable underwriting criteria and requirements including, without limitation,
the requirement that the single purpose and bankruptcy remote nature of Borrower
and such shareholders, partners or members following such transfer is in
accordance with the standards of two of the Rating Agencies or, if a
Securitization has occurred, the Rating Agencies rating the securities in the
Securitization;
(E) Lender shall have received evidence in writing from the
Rating Agencies to the effect that such transfer will not result in a
re-qualification, reduction or withdrawal of any rating initially or then
currently assigned or to be assigned in a Securitization;
(F) Lender shall have received such opinion of counsel as may
be reasonably requested by Lender (including a so called "non-consolidation"
opinion of counsel to the transferee with respect to Borrower, its SPE General
Partner and their constituent entities) or as may be requested by any Rating
Agency in connection with such sale or transfer;
(G) Lender shall have received payment of all costs and
expenses incurred by Lender in connection with such assumption (including
reasonable attorneys' fees and costs), together with a transfer fee equal to one
quarter of one percent (0.25%) of the outstanding
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principal balance of the Loan at the time of such transfer; and
(H) Lender shall have received from Borrower at least 30 days'
prior written notice of the date of such transfer.
For the purposes of this Section, a proposed transferee
shall be deemed to own that interest in the Borrower, Limited Partner, REIT
and/or a constituent entity of Borrower owned by an immediate family member. For
purposes of this Section, (1) an "immediate family member" shall mean an
individual's spouse, brothers and sisters (whether by the whole or half blood),
ancestors or lineal descendants by birth or adoption, trusts for the exclusive
benefit of any of the foregoing individuals, and/or any limited partnership in
which the immediate family member is a general partner; and (2) a change of
control of Borrower, Limited Partner or the REIT shall be deemed to have
occurred if, as a result of such transfer, the transferee, its Affiliates and/or
its nominees have the right, directly or indirectly, by virtue of the limited
partnership agreement, articles of organization, the operating agreement or any
other agreement, or through any board of directors or trustees, with or without
taking any formative action, to make substantially all of the operating
decisions with respect to the Properties, Borrower, Limited Partner and/or the
REIT, as the case may be, and to make substantially all policy decisions with
respect to the Properties, Borrower, Limited Partner and/or the REIT, as the
case may be.
(i) Sale of the Mortgaged Properties. Borrower may transfer or
dispose of Building Equipment which is being replaced or which is no longer
necessary in connection with the operation of the Property free from the Lien of
the Mortgage provided that such transfer or disposal will not materially
adversely affect the value of a Mortgaged Property taken as a whole, will not
materially impair the utility of the Property, and will not result in a
reduction or abatement of, or right of offset against, the Rents payable under
any Lease, in either case as a result thereof, and provided that any new
Building Equipment acquired by Borrower (and not so disposed of) shall be
subject to the Lien of the Mortgage. Lender shall, from time to time, upon
receipt of an Officer's Certificate requesting the same and confirming
satisfaction of the conditions set forth above, execute a written instrument in
form reasonably satisfactory to Lender to confirm that such Building Equipment
which is to be, or has been, sold or disposed of is free from the Lien of the
Mortgage.
(ii) Transfer of Interests in Borrower. In any instance where
Lender shall be asked to consent to any Transfer of any interest in Borrower or
its SPE General Partner, without limiting any conditions which Lender may
require in connection with such consent, (a) if 12.5% or more of direct or
indirect beneficial interests in Borrower are sold or transferred, (b) if any
sale or transfer shall result in a Person or a group of Affiliates or family
members, as applicable, acquiring more than a 49% direct or indirect interest in
Borrower or its SPE General Partner, or (c) if there is any sale or transfer of
any direct interest in Borrower held by any SPE General Partner of Borrower,
Borrower shall deliver or cause to be delivered to the Rating Agencies and
Lender (x) an Opinion of Counsel addressed to the Rating Agencies and Lender and
dated as of the date of the sale or transfer to the effect that in a properly
presented case, a bankruptcy court in a case involving such transferee, or any
Affiliate thereof, would not disregard the corporate, company or partnership
forms of Borrower or its SPE General Partner,
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as the case may be, so as to consolidate the assets and liabilities of such
transferee or any Affiliate thereof with those of Borrower or its SPE General
Partner, and (y) an Officer's Certificate certifying that such sale or transfer
is not an Event of Default.
(iii) Indebtedness. Borrower shall not incur, create or assume
any Debt or incur any liabilities without the consent of Lender; provided,
however, that if no Event of Default shall have occurred and be continuing,
Borrower may, without the consent of Lender, incur, create or assume any or all
of the following indebtedness (collectively, "PERMITTED DEBT"):
(A) the Note and the other obligations, indebtedness and
liabilities specifically provided for in this Agreement or in any other Loan
Document and secured by the Mortgage and the other Loan Documents; and
(B) Liabilities created in the ordinary course of business for
or on respect of the operation of the Property consistent with the Annual Budget
submitted to Lender (or, after Anticipated Repayment Date, approved by Lender)
("TRADE PAYABLES"), not secured by liens on the Property, not to exceed at any
time for each Individual Property, the Trade Payable Limits for such Individual
Property set forth on Schedule IX hereto or $351,000 in the aggregate for all
Properties, payable by or on behalf of Borrower, provided that (but subject to
the terms of the next sentence) each such amount shall be paid within sixty (60)
days following the date on which each such amount was due. For purposes of this
definition, Trade Payable shall include payables to an Affiliate of Borrower
authorized to pay a Trade Payable on behalf of Borrower. Nothing contained
herein shall be deemed to require Borrower to pay any amount, so long as
Borrower is in good faith, and by proper legal proceedings, diligently
contesting the validity, amount or application thereof, provided that in each
case, at the time of the commencement of any such action or proceeding, and
during the pendency of such action or proceeding (1) no Event of Default shall
exist and be continuing hereunder, (2) adequate reserves with respect thereto
are maintained on the books of Borrower in accordance with GAAP, (3) unless
waived in writing by Lender in its sole discretion, in the event that any Trade
Payables are not paid within 60 days, Borrower shall deposit with Lender
additional collateral in the form of Cash or Cash Equivalents or Letters of
Credit equal to 125% of the such unpaid amount to be held pursuant the Cash
Management Agreement, and (4) such contest operates to suspend collection or
enforcement, as the case may be, of the contested amount and such contest is
maintained and prosecuted continuously and with diligence. Notwithstanding
anything set forth herein, in no event shall Borrower be permitted under this
provision to enter into a note or other instrument for borrowed money.
(iv) One-Time Transfer. Borrower shall have the right to a
one-time only sale or transfer of all of the Properties after consideration and
approval by Lender and the Rating Agencies, in their sole discretion, of all
relevant factors, provided that:
(A) no Event of Default shall have occurred and remain
uncured;
(B) the proposed transferee ("TRANSFEREE") shall be a
reputable entity or person of good character, creditworthy, with sufficient
financial worth considering the
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obligations assumed and undertaken, as evidenced by financial statements and
other information reasonably requested by Lender and shall comply in all
respects with the provisions set forth in the definition of Single Purpose
Entity and all other applicable criteria of the Rating Agencies;
(C) Lender shall have received evidence satisfactory to Lender
that all required approvals, if any, to such sale or transfer shall have been
obtained;
(D) Lender shall have received evidence in writing from the
Rating Agencies to the effect that such transfer will not result in a
re-qualification, reduction or withdrawal of any rating initially or then
currently assigned or to be assigned in a Securitization;
(E) Lender shall have received such opinion of counsel as may
be reasonably requested by Lender (including an opinion of counsel to the
Transferee, addressed to the Rating Agencies and Lender and dated as of the date
of the sale or transfer, to the effect that, in a properly presented case, a
bankruptcy court in a case involving the Transferee would not disregard the
corporate, company or partnership form of the Borrower or its SPC General
Partner so as to consolidate the assets and liabilities of such Transferee with
those of Borrower or its SPC General Partner, as applicable) or as may be
requested by any Rating Agency in connection with such sale or transfer;
(F) the Transferee shall have executed and delivered to Lender
an assumption agreement in form and substance reasonably acceptable to Lender,
evidencing such Transferee's agreement to abide and be bound by the terms of the
Note, this Agreement, the Mortgage and the other Loan Documents, together with
such title insurance endorsements as may be reasonably requested by Lender, and
upon such assumption, Borrower shall be released from its obligations under this
Agreement and the other Loan Documents first arising or accruing from and after
the date of such assumption;
(G) Lender shall have received payment of all costs and
expenses incurred by Lender in connection with such assumption (including
reasonable attorneys' fees and costs), together with an assumption fee equal to
one half of one percent (0.50%) of the outstanding principal balance of the Loan
at the time that the Loan is transferred;
(H) Adequate provision by reserve or otherwise, satisfactory
in all respects to Lender in its sole discretion, is made for the payment by
Borrower of increased real estate taxes due to a reappraisal or reassessment
caused by or related to any transfer or conveyance of the Property; and
(I) Lender shall have received from Borrower at least 30 days'
prior written notice of the date of such Transfer.
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V. INSURANCE, CASUALTY AND CONDEMNATION
SECTION 5.1 INSURANCE.
5.1.1 INSURANCE POLICIES. (a) Borrower shall obtain and
maintain, or cause to be maintained, insurance for Borrower and each of the
Properties providing at least the following coverages:
(i) comprehensive all risk insurance on the Improvements and
the personal property at the Properties, including contingent liability from
Operation of Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements, in each case (A) in an amount equal to one hundred percent (100%)
of the "FULL REPLACEMENT COST," which for purposes of this Agreement shall mean
actual replacement value (exclusive of costs of excavations, foundations,
underground utilities and footings) with a waiver of depreciation, but the
amount shall in no event be less than the outstanding principal balance of the
Loan; (B) containing an agreed amount endorsement with respect to the
Improvements and personal property at the Properties waiving all co-insurance
provisions; (C) providing for no deductible in excess of Fifty Thousand and
No/100 Dollars ($50,000) for flood and windstorm insurance and Ten Thousand and
No/100 Dollars ($10,000) for all such other insurance coverage; and (D)
containing an "Ordinance or Law Coverage" or "Enforcement" endorsement if any of
the Improvements or the use of the Individual Property shall at any time
constitute legal non-conforming structures or uses. In addition, Borrower shall
obtain: (y) if any portion of the Improvements is currently or at any time in
the future located in a federally designated "special flood hazard area", flood
hazard insurance in an amount equal to the lesser of (1) the outstanding
principal balance of the Note or (2) the maximum amount of such insurance
available under the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as
each may be amended or such greater amount as Lender shall require; and (z)
earthquake insurance in amounts and in form and substance satisfactory to Lender
in the event the Individual Property is located in an area with a high degree of
seismic activity, provided that the insurance pursuant to clauses (y) and (z)
hereof shall be on terms consistent with the comprehensive all risk insurance
policy required under this subsection (i).
(ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in or
about the Individual Property, such insurance (A) to be on the so-called
"occurrence" form with a combined limit, including umbrella coverage, of not
less than Five Million and No/100 Dollars ($5,000,000) or, if any of the
Improvements contain elevators, Five Million and No/100 Dollars ($5,000,000);
(B) to continue at not less than the aforesaid limit until required to be
changed by Lender in writing by reason of changed economic conditions making
such protection inadequate; and (C) to cover at least the following hazards: (1)
premises and operations; (2) products and completed operations on an "if any"
basis; (3) independent contractors; (4) blanket contractual liability for all
legal contracts; and (5) contractual liability covering the indemnities
contained in Article 9 of the Mortgages to the extent the same is available;
(iii) business income insurance (A) with loss payable to
Lender; (B) covering
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all risks required to be covered by the insurance provided for in subsection (i)
above; (C) containing an extended period of indemnity endorsement which provides
that after the physical loss to the Improvements and Personal Property has been
repaired, the continued loss of income will be insured until such income either
returns to the same level it was at prior to the loss, or the expiration of
eighteen (18) months from the date that the Property is repaired or replaced and
operations are resumed, whichever first occurs, and notwithstanding that the
policy may expire prior to the end of such period; and (D) in an amount equal to
one hundred percent (100%) of the projected rental income from the Individual
Property for a period of eighteen (18) months from the date that the Individual
Property is repaired or replaced and operations are resumed. The amount of such
business income insurance shall be determined prior to the date hereof and at
least once each year thereafter based on Borrower's reasonable estimate of the
rental income from the Property for the succeeding eighteen (18) month period.
All proceeds payable to Lender pursuant to this subsection shall be held by
Lender and shall be applied to the obligations secured by the Loan Documents
from time to time due and payable hereunder and under the Note in accordance
with the terms of the Cash Management Agreement; provided, however, that nothing
herein contained shall be deemed to relieve Borrower of its obligations to pay
the obligations secured by the Loan Documents on the respective dates of payment
provided for in the Note and the other Loan Documents except to the extent such
amounts are actually paid out of the proceeds of such business income insurance;
(iv) at all times during which structural construction,
repairs or alterations are being made with respect to the Improvements, and only
if the Individual Property coverage form does not otherwise apply, (A) owner's
contingent or protective liability insurance covering claims not covered by or
under the terms or provisions of the above mentioned commercial general
liability insurance policy; and (B) the insurance provided for in subsection (i)
above written in a so-called builder's risk completed value form (1) on a
non-reporting basis, (2) against all risks insured against pursuant to
subsection (i) above, (3) including permission to occupy the Individual
Property, and (4) with an agreed amount endorsement waiving co-insurance
provisions;
(v) workers' compensation, subject to the statutory limits of
the state in which the Individual Property is located, and employer's liability
insurance with statutory limits per accident and per disease per employee, and
statutory limits for disease aggregate in respect of any work or operations on
or about the Individual Property, or in connection with the Individual Property
or its operation (if applicable);
(vi) comprehensive boiler and machinery insurance, if
applicable, in amounts as shall be reasonably required by Lender on terms
consistent with the commercial property insurance policy required under
subsection (i) above;
(vii) umbrella liability insurance in an amount not less than
Five Million and No/100 Dollars ($5,000,000) per occurrence on terms consistent
with the commercial general liability insurance policy required under subsection
(ii) above;
(viii) motor vehicle liability coverage for all owned and
non-owned vehicles, including rented and leased vehicles containing minimum
limits per occurrence, including
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umbrella coverage, of One Million and No/100 Dollars ($1,000,000); and
(ix) upon sixty (60) days' written notice, such other
reasonable insurance and in such reasonable amounts as Lender from time to time
may reasonably request against such other insurable hazards which at the time
are commonly insured against for property similar to the Individual Property
located in or around the region in which the Individual Property is located.
(b) All insurance provided for in Section 6.1.1(a) shall be
obtained under valid and enforceable policies (collectively, the "POLICIES" or
in the singular, the "POLICY"), and shall be subject to the approval of Lender
as to deductibles, loss payees and insureds. Not less than ten (10) days prior
to the expiration dates of the Policies theretofore furnished to Lender,
certificates of insurance evidencing the Policies accompanied by evidence
satisfactory to Lender of payment of the premiums due thereunder (the "INSURANCE
PREMIUMS"), shall be delivered by Borrower to Lender.
(c) Any blanket insurance Policy shall specifically allocate
to the Individual Property the amount of coverage from time to time required
hereunder and shall otherwise provide the same protection as would a separate
Policy insuring only the Property in compliance with the provisions of Section
5.1.1(a).
(d) All Policies of insurance provided for or contemplated by
Section 5.1.1(a), except for the Policy referenced in Section 5.1.1(a)(v), shall
name Borrower as the insured and Lender as the additional insured, as its
interests may appear, and in the case of property damage, boiler and machinery,
flood and earthquake insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender.
(e) All Policies of insurance provided for in Section
5.1.1(a)(v) shall contain clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for
Borrower, or of any tenant or other occupant, or failure to comply with the
provisions of any Policy, which might otherwise result in a forfeiture of the
insurance or any part thereof, shall in any way affect the validity or
enforceability of the insurance insofar as Lender is concerned;
(ii) the Policy shall not be materially changed (other than to
increase the coverage provided thereby) or canceled without at least thirty (30)
days' written notice to Lender and any other party named therein as an
additional insured; and
(iii) each Policy shall provide that the issuers thereof shall
give written notice to Lender if the Policy has not been renewed fifteen (15)
days prior to its expiration; and
(iv) Lender shall not be liable for any Insurance Premiums
thereon or subject to any assessments thereunder.
(f) If at any time Lender is not in receipt of written
evidence that all insurance
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required hereunder is in full force and effect, Lender shall have the right,
without notice to Borrower, to take such action as Lender deems necessary to
protect its interest in the Property, including, without limitation, the
obtaining of such insurance coverage as Lender in its sole discretion deems
appropriate and all premiums incurred by Lender in connection with such action
or in obtaining such insurance and keeping it in effect shall be paid by
Borrower to Lender upon demand and until paid shall be secured by the Mortgages
and shall bear interest at the Default Rate.
(g) In the event of foreclosure of the Mortgage with respect
to the Individual Property, or other transfer of title to the Individual
Property in extinguishment in whole or in part of the Debt all right, title and
interest of Borrower in and to the Policies that are not blanket Policies then
in force concerning the Individual Property and all proceeds payable thereunder
shall thereupon vest in the purchaser at such foreclosure or Lender or other
transferee in the event of such other transfer of title.
5.1.2 INSURANCE COMPANY. The Policies shall be issued by
financially sound and responsible insurance companies authorized to do business
in the state in which each Individual Property is located and having a claims
paying ability rating of "AA" or better by at least two (2) of the Rating
Agencies.
SECTION 5.2 CASUALTY AND CONDEMNATION.
5.2.1 CASUALTY. If an Individual Property shall sustain a
Casualty, Borrower shall give prompt notice of such Casualty to Lender and shall
promptly commence and diligently prosecute to completion of the repair and
restoration of the Individual Property as nearly as possible to the condition
the Individual Property was in immediately prior to such Casualty (a
"RESTORATION") and otherwise in accordance with Section 5.3. Borrower shall pay
all costs of such Restoration whether or not such costs are covered by
insurance. Lender may, but shall not be obligated to make proof of loss if not
made promptly by Borrower.
5.2.2 CONDEMNATION. Borrower shall give Lender prompt notice
of any actual or threatened Condemnation by any Governmental Authority of all or
any part of any Individual Property and shall deliver to Lender a copy of any
and all papers served in connection with such proceedings. Lender may
participate in any such proceedings, and Borrower shall from time to time
deliver to Lender all instruments requested by Lender to permit such
participation. Borrower shall, at its expense, diligently prosecute any such
proceedings, and shall consult with Lender, its attorneys and experts, and
cooperate with them in the carrying on or defense of any such proceedings.
Notwithstanding any Condemnation, Borrower shall continue to pay the Debt at the
time and in the manner provided for its payment in the Note and in this
Agreement. Lender shall not be limited to the interest paid on the Award by any
Governmental Authority but shall be entitled to receive out of the Award
interest at the rate or rates provided herein or in the Note. If an Individual
Property or any portion thereof is taken by any Governmental Authority, Borrower
shall promptly commence and diligently prosecute the Restoration of the Property
and otherwise comply with the provisions of Section 5.3. If the Property is
sold, through foreclosure or otherwise, prior to the receipt by Lender of the
Award, Lender shall have the right, whether or not a deficiency judgment on the
Note shall have been sought, recovered
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or denied, to receive the Award, or a portion thereof sufficient to pay the
Debt.
SECTION 5.3 RESTORATION.
5.3.1 MINOR CASUALTY OR CONDEMNATION. If a Casualty or
Condemnation has occurred to an Individual Property and the Net Proceeds shall
be less than the greater of $250,000 or five percent (5%) of the Allocated Loan
Amount with respect to such Individual Property, and the costs of completing the
Restoration shall be less than the greater of $250,000 or five percent (5%) of
the Allocated Loan Amount with respect to such Individual Property, and provided
no Event of Default shall have occurred and remain uncured, the Net Proceeds
will be disbursed by Lender to Borrower. Promptly after receipt of the Net
Proceeds, Borrower shall commence and satisfactorily complete with due diligence
the Restoration in accordance with the terms of this Agreement.
5.3.2 MAJOR CASUALTY OR CONDEMNATION. (a) If a Casualty or
Condemnation has occurred to an Individual Property and the Net Proceeds are
equal to or greater than the greater of $250,000 or five percent (5%) of the
Allocated Loan Amount with respect to such Individual Property or the costs of
completing the Restoration is equal to or greater than the greater of $250,000
or five percent (5%) of the Allocated Loan Amount with respect to such
Individual Property, Lender shall make the Net Proceeds available for the
Restoration, provided that each of the following conditions are met:
(i) no Event of Default shall have occurred and be
continuing;
(ii) (A) in the event the Net Proceeds are insurance proceeds,
less than forty percent (40%) of the total floor area of the Improvements at the
Individual Property has been damaged, destroyed or rendered unusable as a result
of such Casualty or (B) in the event the Net Proceeds are an Award, less than
ten percent (10%) of the land constituting the Individual Property is taken, and
such land is located along the perimeter or periphery of the Individual
Property, and no portion of the Improvements is the subject of the Condemnation;
(iii) Leases demising more than the Rentable Space Percentage
shall remain in full force and effect during and after the completion of the
Restoration without abatement of rent beyond the time required for Restoration,
notwithstanding the occurrence of such Casualty or Condemnation. The term
"RENTABLE SPACE PERCENTAGE" shall mean (A) in the event the Net Proceeds are
insurance proceeds, seventy percent (70%) and (B) in the event the Net Proceeds
are an Award seventy percent (70%);
(iv) Borrower shall commence the Restoration as soon as
reasonably practicable (but in no event later than sixty (60) days after such
Casualty or Condemnation, whichever the case may be, occurs) and shall
diligently pursue the same to satisfactory completion;
(v) Lender shall be satisfied that any operating deficits and
all payments of principal and interest under the Note, will be paid, during the
period required for Restoration, from (A) the Net Proceeds, or (B) by other
funds of Borrower;
(vi) Lender shall be satisfied that the Restoration will
be completed on or
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before the earliest to occur of (A) six months prior to the Anticipated
Repayment Date, (B) the earliest date required for such completion under the
terms of any Lease remaining in full force and effect pursuant to the
calculation of the applicable Rentable Space Percentage in accordance with the
provisions of subsection (iii) above, (C) such time as may be required under
applicable zoning law, ordinance, rule or regulation in order to repair and
restore the Property to the condition it was in immediately prior to such
Casualty or to as nearly as possible the condition it was in immediately prior
to such Condemnation, as applicable or (D) the expiration of the insurance
coverage referred to in Section 5.1.1(iii);
(vii) the Individual Property and the use thereof after the
Restoration will be in compliance with and permitted under all applicable zoning
laws, ordinances, rules and regulations;
(viii) the Restoration shall be done and completed by Borrower
in an expeditious and diligent fashion and in compliance with all applicable
governmental laws, rules and regulations (including, without limitation, all
applicable environmental laws); and
(ix) such Casualty or Condemnation, as applicable, does not
result in the loss of access to the Individual Property or the related
Improvements.
(b) The Net Proceeds shall be paid directly to Lender and held
by Lender in an interest-bearing account and, until disbursed in accordance with
the provisions of this Section 5.3.2, shall constitute additional security for
the Debt. The Net Proceeds shall be disbursed by Lender to, or as directed by,
Borrower from time to time during the course of the Restoration, upon receipt of
evidence satisfactory to Lender that (A) all materials installed and work and
labor performed (except to the extent that they are to be paid for out of the
requested disbursement) in connection with the Restoration have been paid for in
full, and (B) there exist no notices of pendency, stop orders, mechanic's or
materialman's liens or notices of intention to file same, or any other liens or
encumbrances of any nature whatsoever on the Individual Property arising out of
the Restoration which have not either been fully bonded to the satisfaction of
Lender and discharged of record or in the alternative fully insured to the
satisfaction of Lender by the title company issuing the Title Insurance Policy.
(c) All plans and specifications required in connection with
the Restoration shall be subject to prior approval by Lender and by an
independent architect selected by Borrower and approved by Lender (the "CASUALTY
CONSULTANT"). The identity of the contractors, subcontractors and materialmen
engaged in the Restoration, as well as the contracts of the contractors, but not
subcontractors or materialmen, under which they have been engaged, shall be
subject to approval by Lender and the Casualty Consultant. All costs and
expenses incurred by Lender in connection with holding and advancing the Net
Proceeds for the Restoration including, without limitation, reasonable
attorneys' fees and disbursements and the Casualty Consultant's fees and
disbursements, shall be paid by Borrower.
(d) In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal to the costs
actually incurred from time to time for work in place as part of the
Restoration, as certified by the Casualty Consultant, less the Casualty
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Retainage. The term "CASUALTY RETAINAGE" shall mean an amount equal to ten
percent (10%) of the costs actually incurred for work in place as part of the
Restoration, as certified by the Casualty Consultant, until fifty percent (50%)
of the Restoration has been completed, and five (5%) of the costs actually
incurred for work in place thereafter as part of the Restoration, as certified
by the Casualty Consultant, until the Restoration has been completed. The
Casualty Retainage shall in no event, and notwithstanding anything to the
contrary set forth above in this Section 5.3.2(d), be less than the amount
actually held back by Borrower from contractors, subcontractors and materialmen
engaged in the Restoration. The Casualty Retainage shall not be released until
the Casualty Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section 5.3.2(d) and that
all approvals necessary for the re-occupancy and use of the Individual Property
have been obtained from all appropriate Governmental Authorities, and Lender
receives evidence satisfactory to Lender that the costs of the Restoration have
been paid in full or will be paid in full out of the Casualty Retainage;
provided, however, that Lender will release the portion of the Casualty
Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the Casualty
Consultant certifies to Lender that the contractor, subcontractor or materialman
has satisfactorily completed all work and has supplied all materials in
accordance with the provisions of the contractor's, subcontractor's or
materialman's contract, the contractor, subcontractor or materialman delivers
the lien waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably requested by
Lender or by the title company issuing the Title Insurance Policy, and Lender
receives an endorsement to the Title Insurance Policy insuring the continued
priority of the lien of the related Mortgage and evidence of payment of any
premium payable for such endorsement. If required by Lender, the release of any
such portion of the Casualty Retainage shall be approved by the surety company,
if any, which has issued a payment or performance bond with respect to the
contractor, subcontractor or materialman.
(e) Lender shall not be obligated to make disbursements of the
Net Proceeds more frequently than once every calendar month.
(f) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the opinion of Lender in consultation with the Casualty
Consultant, be sufficient to pay in full the balance of the costs which are
estimated by the Casualty Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall deposit the deficiency (the "NET
PROCEEDS DEFICIENCY") with Lender before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall
be held by Lender and shall be disbursed for costs actually incurred in
connection with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed pursuant to this
Section 6.3.2 shall constitute additional security for the Debt.
(g) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender after the
Casualty Consultant certifies to Lender that the Restoration has been completed
in accordance with the provisions of this Section 5.3.2, and the receipt by
Lender of evidence satisfactory to Lender that all costs incurred in connection
with the Restoration have been paid in full, shall be remitted by Lender to
Borrower, provided no Event of Default shall have occurred and shall be
continuing under any
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of the Loan Documents.
(h) All Net Proceeds not required (i) to be made available for
the Restoration or (ii) to be returned to Borrower as excess Net Proceeds
pursuant to Section 5.3.2(g) may be retained and applied by Lender toward the
payment of the Debt without payment of any Yield Maintenance Premium whether or
not then due and payable in such order, priority and proportions as Lender in
its sole discretion shall deem proper, or, at the discretion of Lender, the same
may be paid, either in whole or in part, to Borrower for such purposes as Lender
shall designate.
VI. RESERVE FUNDS
SECTION 6.1 REQUIRED REPAIRS; REQUIRED REPAIR FUNDS
6.1.1 REQUIRED REPAIRS; DEPOSITS. Borrower shall perform the
repairs at the Properties as set forth on Schedule II hereto (such repairs
hereinafter referred to as "REQUIRED REPAIRS"). Borrower shall complete each of
the Required Repairs on or before the 18 month anniversary of the date hereof,
provided, however, so long as no Event of Default has occurred and is
continuing, if Lender, in its sole discretion, determines, based on evidence
delivered by Borrower satisfactory to Lender, including, without limitation,
revisions to the engineering reports delivered at closing satisfactory to
Lender, that any particular Required Repair is of a nature that it is not
necessary in Lender's judgment to perform such Required Repair within such
18-month period, then Lender shall release to Borrower Required Repair Funds
relating to such particular Required Repair. On the Closing Date, Borrower shall
deposit with Lender the amount for each Individual Property set forth on such
Schedule II hereto to perform the Required Repairs for such Individual Property
such amount so deposited shall hereinafter be referred to as the "REQUIRED
REPAIR FUNDS").
6.1.2 RELEASE OF REQUIRED REPAIR FUNDS. Lender shall disburse
to Borrower the Required Repair Funds upon satisfaction by Borrower of each of
the following conditions: (a) Borrower shall submit a written request for
payment to Lender at least fifteen(15) days prior to the date on which Borrower
requests such payment be made and specifies the Required Repairs to be paid, (b)
on the date such request is received by Lender and on the date such payment is
to be made, no Event of Default shall exist and remain uncured, (c) Lender shall
have received a certificate from Borrower (i) stating that all Required Repairs
at the applicable Individual Property to be funded by the requested disbursement
have been completed in good and workmanlike manner and in accordance with all
applicable federal, state and local laws, rules and regulations, such
certificate to be accompanied by a copy of any license, permit or other approval
by any Governmental Authority required in connection with the Required Repairs,
(ii) identifying each Person that supplied materials or labor in connection with
the Required Repairs performed at such Individual Property to be funded by the
requested disbursement, and (iii) stating that each such Person has been paid in
full or will be paid in full upon such disbursement, such certificate to be
accompanied by lien waivers or other evidence of payment satisfactory to Lender,
(d) at Lender's option, a title search for such Individual Property indicating
that such Individual Property is free from all liens, claims and other
encumbrances not previously approved by Lender, (e) Lender shall have received
such other evidence as
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Lender shall reasonably request that the Required Repairs at such Individual
Property to be funded by the requested disbursement have been completed and are
paid for or will be paid upon such disbursement to the Borrower, and (f) if the
Required Repairs are in excess of $50,000, Lender may require that an engineer
satisfactory to Lender in Lender's sole discretion inspect the work before
releasing any Required Repairs Funds. Lender shall not be required to disburse
Required Repair Funds more frequently than once each calendar month, or with
respect to any Individual Property unless such requested disbursement is in an
amount greater than $25,000 (or a lesser amount if the total Required Repair
Funds is less than $25,000, in which case only one disbursement of the amount
remaining in the account shall be made). Lender shall make reasonable good faith
efforts to disburse Required Repair Funds within fifteen (15) days of receipt of
request from Borrower provided all conditions to disbursement have been
satisfied by Borrower. In the event Required Repair Funds are held by Agent in
accordance with Section 6.7 hereof, and provided the conditions set forth in
this Section 6.1.2 have been satisfied, Lender shall consent in writing to
Agent's disbursement of Required Repair Funds in accordance with the certificate
approved by Lender pursuant to this Section 6.1.2.
6.1.3 FAILURE TO PERFORM REQUIRED REPAIRS; APPLICATION OF
REQUIRED REPAIR FUNDS. It shall be an Event of Default under this Agreement if
Borrower does not complete the Required Repairs at each Individual Property by
the deadline for each repair as set forth on Schedule II. Upon the occurrence of
an Event of Default, Lender, at its option, may withdraw all Required Repair
Funds from the Required Repair Account and Lender may apply the Required Repair
funds either to completion of the Required Repairs at one or more of the
Properties or to payment of the Debt in such order, proportion and priority as
Lender may determine in its sole discretion. Lender's right to withdraw and
apply Required Repair Funds shall be in addition to all other rights and
remedies provided to Lender under the Loan Documents.
SECTION 6.2 TAX FUNDS
6.2.1 TAX FUNDS. Borrower shall deposit with Lender on the
Monthly Payment Date an amount (the "MONTHLY TAX DEPOSIT") equal to one-twelfth
of the Taxes that Lender estimates will be payable during the next ensuing
twelve (12) months in order to accumulate with Lender sufficient funds to pay
all such Taxes at least ten (10) days prior to their respective due dates (such
amounts so deposited shall hereinafter be referred to as the "TAX FUNDS")
provided, however, that Borrower shall not be required to make a Monthly Tax
Deposit with respect to Taxes that are paid directly to the taxing authority by
anchor tenants at an Individual Property or with respect to Taxes that are paid
by such anchor tenants to Borrower on other than a monthly basis (in which event
Borrower shall make deposits to the Tax Account of such Taxes paid by such
anchor tenants to Borrower, as and when such anchor tenants are required to pay
such Taxes to Borrower).
6.2.2 RELEASE OF TAX FUNDS. Lender shall have the right to
apply the Tax Funds to payments of Taxes. In making any payment relating to
Taxes, Lender may do so according to any bill, statement or estimate procured
from the appropriate public office (with respect to Taxes) without inquiry into
the accuracy of such bill, statement or estimate or into the validity of any
tax, assessment, sale, forfeiture, tax lien or title or claim thereof. If the
amount of the
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Tax Funds shall exceed the amounts due for Taxes, Lender shall return any excess
to Borrower. Any Tax Funds remaining after the Debt has been paid in full shall
be returned to Borrower. If at any time Lender reasonably determines that the
Tax Funds will not be sufficient to pay the Taxes, Lender shall notify Borrower
of such determination and Borrower shall increase its monthly payments to Lender
by the amount that Lender estimates is sufficient to make up the deficiency at
least ten (10) days prior to the respective due dates for the Taxes.
6.2.3 APPLICATION OF TAX FUNDS. Upon the occurrence of an
Event of Default, Lender, at its option, may withdraw all the Tax Funds from the
Tax Account and may apply the Tax Funds either to the payment of Taxes or to
payment of the Debt in such order, proportion and priority as Lender may
determine in its sole discretion. Lender's right to withdraw and apply the Tax
Funds shall be in addition to all other rights and remedies provided to Lender
under the Loan Documents.
SECTION 6.3 INSURANCE PREMIUM FUNDS
6.3.1 INSURANCE PREMIUM FUNDS. Borrower shall deposit with
Lender on each Monthly Payment Date an amount (the "MONTHLY INSURANCE PREMIUM
DEPOSIT") equal to one-twelfth of the Insurance Premiums that Lender estimates
will be payable for the renewal of the coverage afforded by the Policies upon
the expiration thereof in order to accumulate with Lender sufficient funds to
pay all such Insurance Premiums at least thirty (30) days prior to the
expiration of the Policies (such amounts so deposited shall hereinafter be
referred to as the "INSURANCE PREMIUM FUNDS").
6.3.2 RELEASE OF INSURANCE PREMIUM FUNDS . Lender shall have
the right to apply the Insurance Premium Funds to payment of Insurance Premiums.
To the extent anchor tenants at Individual Properties are self-insuring any
risks to be covered under the Agreement or carry their own third-party insurance
to cover such risks (and directly pay the costs thereof), and provided that
Lender is satisfied that such insurance meets the requirements of this Agreement
and that Lender is named as additional insured and loss payee on such
self-insurance or third-party insurance, then Lender shall not require the
application of the Insurance Premium Funds to pay any such anchor insurance
policies. In making any payment relating to Insurance Premiums, Lender may do so
according to any bill, statement or estimate procured from the insurer or its
agent, without inquiry into the accuracy of such bill, statement or estimate. If
the amount of the Insurance Premium Funds shall exceed the amounts due for
Insurance Premiums, Lender shall return any excess to Borrower. Any Insurance
Premium Funds remaining after the Debt has been paid in full shall be returned
to Borrower. If at any time Lender reasonably determines that the Insurance
Premium Funds will not be sufficient to pay the Insurance Premiums, Lender shall
notify Borrower of such determination and Borrower shall increase its monthly
payments to Lender by the amount that Lender estimates is sufficient to make up
the deficiency at least thirty (30) days prior to expiration of the Policies.
6.3.3 APPLICATION OF INSURANCE PREMIUM FUNDS. Upon the
occurrence of an Event of Default, Lender at its option may withdraw the
Insurance Premium Funds from the Insurance Premium Account and may apply the
Insurance Premium Funds to the payment of Insurance Premiums or to the payment
of the Debt in such order, proportion and priority as
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Lender shall determine in its sole discretion. Lender's right to withdraw and
apply the Insurance Premium Funds shall be in addition to all other rights and
remedies provided to Lender under the Loan Documents.
SECTION 6.4 CAPITAL EXPENDITURES FUNDS .
6.4.1 CAPITAL EXPENDITURES FUNDS . Borrower shall deposit with
Lender on each Monthly Payment Date an amount (the "MONTHLY CAPITAL EXPENDITURES
DEPOSIT") equal to one-twelfth of $212,624.00, based on $.15 per square foot of
gross leasable area of the Properties per year, such amounts so deposited shall
hereinafter be referred to as the "CAPITAL EXPENDITURES FUNDS"). Notwithstanding
the foregoing, the amounts in the Capital Expenditure Account shall not exceed
$425,248.00, based upon $0.30 per square foot of gross leasable area of the
Properties at any one time.
6.4.2 RELEASE OF CAPITAL EXPENDITURE FUNDS . (a) Lender shall
disburse Capital Expenditure Funds only for the costs of those items which are
Capital Expenditures, provided no more than 50% of the annual amount escrowed
each year may be used for Capital Expenditures associated with leasing.
(b) Lender shall disburse to Borrower the Capital Expenditures
Funds upon satisfaction by Borrower of each of the following conditions: (i)
Borrower shall submit a written request for payment to Lender at least fifteen
(15) days prior to the date on which Borrower requests such payment be made and
specifies the Capital Expenditures to be paid, (ii) on the date such request is
received by Lender and on the date such payment is to be made, no Event of
Default shall exist and remain uncured, (iii) Lender shall have received a
certificate from Borrower (A) stating that the items to be funded by the
requested disbursement are Capital Expenditures in accordance with this
Agreement, (B) stating that all Capital Expenditures at the applicable
Individual Property to be funded by the requested disbursement have been
completed in good and workmanlike manner and in accordance with all applicable
federal, state and local laws, rules and regulations, such certificate to be
accompanied by a copy of any license, permit or other approval by any
Governmental Authority required in connection with the Capital Expenditures, (C)
identifying each Person that supplied materials or labor in connection with the
Capital Expenditures performed at such Individual Property to be funded by the
requested disbursement, and (D) stating that each such Person has been paid in
full or will be paid in full upon such disbursement, such certificate to be
accompanied by lien waivers or other evidence of payment satisfactory to Lender,
(iv) at Lender's option, a title search for such Individual Property indicating
that such Individual Property is free from all liens, claims and other
encumbrances not previously approved by Lender, (v) Lender shall have received
such other evidence as Lender shall reasonably request that the Capital
Expenditures at such Individual Property to be funded by the requested
disbursement have been completed and are paid for or will be paid upon such
disbursement to the Borrower, and (vi) if the Capital Expenditure is in excess
of $50,000, Lender may require that an Engineer satisfactory to Lender in
Lender's sole discretion inspect the work before releasing any Capital
Expenditure Funds. Lender shall not be required to disburse Capital Expenditure
Funds more frequently than once each calendar month or with respect to any
Individual Property unless such requested disbursement is in an amount greater
than $25,000 (or a lesser amount if the total amount of Capital Expenditure
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Funds is less than $25,000, in which case only one disbursement of the amount
remaining in the account shall be made). Lender shall make reasonable good faith
efforts to disburse Capital Expenditure Funds within fifteen (15) days of
receipt of request from Borrower provided all conditions to disbursement have
been satisfied by Borrower. In the event Capital Expenditures Funds are held by
Agent in accordance with Section 6.7 hereof and provided the conditions set
forth in this Section 6.4.2 have been satisfied, Lender shall consent in writing
to Agent's disbursement of Capital Expenditures Funds in accordance with the
certificate approved by Lender pursuant to this Section 6.4.2.
(c) Lender reserves the right, at its option, to approve all
contracts or work orders with the general contractor in connection with the
Capital Expenditures Work. Upon Lender's request, Borrower shall assign any
contract or subcontract to Lender.
(d) In the event Lender determines in its reasonable
discretion that any Capital Expenditures Work is not being performed in a
workmanlike or timely manner or that any Capital Expenditures Work has not been
completed in a workmanlike or timely manner, Lender shall have the option to
withhold disbursement for such unsatisfactory Capital Expenditures Work and to
proceed under existing contracts or to contract with third parties to complete
such Capital Expenditures Work and to apply the Capital Expenditures Funds
toward the labor and materials necessary to complete such Capital Expenditures
Work.
(e) In order to facilitate Lender's completion of the Capital
Expenditures Work pursuant to Section 6.4.3(d) above, Borrower grants Lender the
right to enter onto any Individual Property and perform any and all work and
labor necessary to complete the Capital Expenditures Work and/or employ watchmen
to protect such Individual Property from damage. All sums so expended by Lender
shall be deemed to have been advanced under the Loan to Borrower and secured by
the Mortgages. For this purpose Borrower constitutes and appoints Lender its
true and lawful attorney-in-fact with full power of substitution to complete or
undertake the Capital Expenditures Work in the name of Borrower. Such power of
attorney shall be deemed to be a power coupled with an interest and cannot be
revoked.
(f) Nothing in this Section 6.4.3 shall (i) make Lender
responsible for making or completing the Capital Expenditures Work; (ii) require
Lender to expend funds in addition to the Capital Expenditures Funds to complete
any Capital Expenditures Work; (iii) obligate Lender to proceed with the Capital
Expenditures Work; or (iv) obligate Lender to demand from Borrower additional
sums to complete any Capital Expenditures Work.
(g) Borrower shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer, architect, or
inspector) or third parties to enter onto each Individual Property during normal
business hours (subject to the rights of tenants under their Leases) to inspect
the progress of any Capital Expenditures Work and all materials being used in
connection therewith and to examine all plans and shop drawings relating to such
Capital Expenditures Work. Borrower shall cause all contractors and
subcontractors to cooperate with Lender or Lender's representatives or such
other persons described above in connection with inspections described in this
Section 6.4.3(g).
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(h) In addition to any insurance required under the Loan
Documents, Borrower shall provide or cause to be provided workmen's compensation
insurance, builder's risk, and public liability insurance and other insurance to
the extent required under applicable law in connection with Capital Expenditures
Work. All such policies shall be in form and amount reasonably satisfactory to
Lender.
6.4.3 APPLICATION OF CAPITAL EXPENDITURE FUNDS . Upon the
occurrence of an Event of Default, Lender, at its option, may withdraw the
Capital Expenditure Funds form the Capital Expenditures Account and apply the
Capital Expenditure Funds to completion of the Capital Expenditures Work or to
payment of the Debt in such order, proportion and priority as Lender may
determine in its sole discretion. Lender's right to withdraw and apply the
Capital Expenditure Funds shall be in addition to all other rights and remedies
provided to Lender under the Loan Documents.
SECTION 6.5 INTENTIONALLY DELETED.
6.6 SECURITY INTEREST IN FUNDS.
6.6.1 GRANT OF SECURITY INTEREST . Borrower shall be the owner
of the Required Repair Funds, the Tax Funds, the Insurance Premium Funds and the
Capital Expenditures Funds. Borrower hereby pledges, assigns and grants a
security interest to Lender, as security for payment of the Debt and the
performance of all other terms, conditions and covenants of the Loan Documents
on Borrower's part to be paid and performed, in all of Borrower's right, title
and interest in and to the Required Repair Funds, the Tax Funds, the Insurance
Premium Funds and the Capital Expenditures Funds. The Required Repair Funds, the
Tax Funds, the Insurance Premium Funds and the Capital Expenditure Funds shall
be under the sole dominion and control of Lender.
6.6.2 INCOME TAXES . Borrower shall report on its federal,
state and local income tax returns all interest or income accrued on the
Required Reserve Funds, Tax Funds, Insurance Premium Funds and Capital
Expenditure Funds.
6.6.3 PROHIBITION AGAINST FURTHER ENCUMBRANCE . Borrower shall
not, without the prior consent of Lender, further pledge, assign or grant any
security interest in the Required Repair Funds, the Tax Funds, the Insurance
Premium Funds and the Capital Expenditures Funds or permit any lien or
encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements, except those naming Lender as the secured party, to be
filed with respect thereto.
SECTION 6.7 CASH MANAGEMENT.
6.7.1 LOCKBOX ACCOUNT. On or before the Closing Date, Borrower
shall open an account for each of the Individual Properties (the "LOCKBOX
ACCOUNTS") with Agent. The Lockbox Accounts shall be in Lender's name, or at
Lender's option, in the Servicer's name. The Lockbox Accounts shall be under the
sole dominion and control of Lender. The Lockbox Accounts will be opened and
maintained as an Eligible Account.
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6.7.2 DEPOSITS INTO LOCKBOX ACCOUNT. Borrower shall cause all
Tenants at all Properties to pay Rent directly into the Lockbox Account for
their respective Individual Property on or before the date such Rent is due
under the terms of the applicable Lease. On the Closing Date, Borrower shall
send a notice, substantially in the form of Schedule VI hereto, to all Tenants
at all Properties directing them to pay all Rent into the respective Lockbox
Account. All sums deposited into the Lockbox Accounts shall be swept daily into
an account (the "Cash Management Account") established by Borrower with Agent on
or before the Closing Date (the Cash Management Account to be held and
administered in accordance with the Cash Management Agreement). The Cash
Management Account shall be in Lender's name, or at Lender's option, in the
Servicer's name. The Cash Management Account shall be under the sole dominion
and control of Lender. The Cash Management Account will be opened and maintained
as an Eligible Account. Neither the Lockbox Accounts, the Cash Management
Account nor the Cash Management Agreement shall alter or diminish in any way
Borrower's obligation to make timely payment and deposits of all sums required
to be paid or deposited under any Loan Document.
SECTION 6.8 SERVICER.
At the option of Lender, the Loan may be serviced by a
servicer (the "SERVICER") selected by Lender and Lender may delegate all or any
portion of its responsibilities under this Agreement and the other Loan
Documents to the Servicer pursuant to a servicing agreement (the "SERVICING
AGREEMENT") between Lender and Servicer. Lender shall be responsible for any
set-up fees or any other initial costs relating to or arising under the
Servicing Agreement and for payment of the monthly servicing fee due to the
Servicer under the Servicing Agreement.
VII. DEFAULTS
SECTION 7.1 EVENT OF DEFAULT.
(a) Each of the following events shall constitute an event of
default hereunder (an "EVENT OF DEFAULT"):
(i) if any portion of the Debt is not paid when due;
(ii) if any of the Taxes or Other Charges are not paid
when the same are due and payable;
(iii) if the Policies are not kept in full force and effect,
or if certified copies of the Policies are not delivered to Lender upon request;
(iv) if Borrower transfers or encumbers any portion of the
Properties without Lender's prior written consent;
(v) if any representation or warranty made by Borrower herein
or in any other Loan Document, or in any report, certificate, financial
statement or other instrument, agreement or document furnished to Lender shall
have been false or misleading in any material respect as
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of the date the representation or warranty was made, and, provided such default
is not related to the bankruptcy or insolvency of Borrower or any constituent
member of Borrower, such default is not cured within 5 days after notice;
(vi) if Borrower shall make an assignment for the benefit
of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed
for Borrower or if Borrower shall be adjudicated a bankrupt or insolvent, or if
any petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, Borrower, or if any proceeding for
the dissolution or liquidation of Borrower shall be instituted; provided,
however, if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by Borrower, upon the same not being
discharged, stayed or dismissed within thirty (30) days;
(viii) if Borrower attempts to assign its rights under this
Agreement or any of the other Loan Documents or any interest herein or therein
in contravention of the Loan Documents;
(ix) if Borrower breaches any covenant contained in
Section 3.1.30 hereof;
(x) with respect to any term, covenant or provision set
forth herein which specifically contains a notice requirement or grace period,
if Borrower shall be in default under such term, covenant or condition after the
giving of such notice or the expiration of such grace period;
(xi) if any of the assumptions contained in the Insolvency
Opinion, or in any other "non-consolidation" opinion delivered to Lender in
connection with the Loan, or in any other "non-consolidation" delivered
subsequent to the closing of the Loan, is or shall become untrue in any material
respect;
(xii) if Borrower shall continue to be in Default under any
of the other terms, covenants or conditions of this Agreement not specified in
subsections (i) to (xi) above, for ten (10) days after notice to Borrower from
Lender, in the case of any Default which can be cured by the payment of a sum of
money, or for thirty (30) days after notice from Lender in the case of any other
Default; provided, however, that if such non-monetary Default is susceptible of
cure but cannot reasonably be cured within such 30-day period and provided
further that Borrower shall have commenced to cure such Default within such
30-day period and thereafter diligently and expeditiously proceeds to cure the
same, such 30-day period shall be extended for such time as is reasonably
necessary for Borrower in the exercise of due diligence to cure such Default,
such additional period not to exceed sixty (60) days; or
(xiii) if there shall be a default under any of the other Loan
Documents beyond any applicable cure periods contained in such documents,
whether as to Borrower or any of the Properties, or if any other such event
shall occur or condition shall exist, if the effect of such event or condition
is to accelerate the maturity of any portion of the Debt or to permit Lender to
accelerate the maturity of all or any portion of the Debt;
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(b) Upon the occurrence of an Event of Default (other than an
Event of Default described in clauses (vi), (vii) or (viii) above) and at any
time thereafter the Lender may, in addition to any other rights or remedies
available to it pursuant to this Agreement and the other Loan Documents or at
law or in equity, Lender may take such action, without notice or demand, that
Lender deems advisable to protect and enforce its rights against Borrower and in
and to all or any of the Properties, including, without limitation, declaring
the Debt to be immediately due and payable, and Lender may enforce or avail
itself of any or all rights or remedies provided in the Loan Documents against
Borrower and any or all of the Properties, including, without limitation, all
rights or remedies available at law or in equity; and upon any Event of Default
described in clauses (vi), (vii) or (viii) above, the Debt and all other
obligations of Borrower hereunder and under the other Loan Documents shall
immediately and automatically become due and payable, without notice or demand,
and Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding.
SECTION 7.2 REMEDIES.
(a) Upon the occurrence of an Event of Default, all or any one
or more of the rights, powers, privileges and other remedies available to Lender
against Borrower under this Agreement or any of the other Loan Documents
executed and delivered by, or applicable to, Borrower or at law or in equity may
be exercised by Lender at any time and from time to time, whether or not all or
any of the Debt shall be declared due and payable, and whether or not Lender
shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents with
respect to all or any of the Properties. Any such actions taken by Lender shall
be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents. Without limiting the generality of the foregoing, Borrower agrees
that if an Event of Default is continuing (i) Lender is not subject to any "one
action" or "election of remedies" law or rule, and (ii) all liens and other
rights, remedies or privileges provided to Lender shall remain in full force and
effect until Lender has exhausted all of its remedies against the Properties and
each Mortgage has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.
(b) With respect to Borrower and the Properties, nothing
contained herein or in any other Loan Document shall be construed as requiring
Lender to resort to any Individual Property for the satisfaction of any of the
Debt in preference or priority to any other Individual Property, and Lender may
seek satisfaction out of all of the Properties or any part thereof, in its
absolute discretion in respect of the Debt. In addition, Lender shall have the
right from time to time to partially foreclose the Mortgages in any manner and
for any amounts secured by the Mortgages then due and payable as determined by
Lender in its sole discretion including, without limitation, the following
circumstances: (i) in the event Borrower defaults beyond any applicable grace
period in the payment of one or more scheduled payments of principal and
interest, Lender may foreclose one or more of the Mortgages to recover such
delinquent
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payments, or (ii) in the event Lender elects to accelerate less than the entire
outstanding principal balance of the Loan, Lender may foreclose one or more of
the Mortgages to recover so much of the principal balance of the Loan as Lender
may accelerate and such other sums secured by one or more of the Mortgages as
Lender may elect. Notwithstanding one or more partial foreclosures, the
Properties shall remain subject to the Mortgages to secure payment of sums
secured by the Mortgages and not previously recovered.
(c) Lender shall have the right from time to time to sever the
Note and the other Loan Documents into one or more separate notes, mortgages and
other security documents (the "SEVERED LOAN DOCUMENTS") in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Borrower shall execute and
deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall request in order to
effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not
make or execute any such documents under such power until three (3) days after
notice has been given to Borrower by Lender of Lender's intent to exercise its
rights under such power. Except as may be required in connection with a
securitization pursuant to Section 9.1 hereof, (i) Borrower shall not be
obligated to pay any costs or expenses incurred in connection with the
preparation, execution, recording or filing of the Severed Loan Documents, and
(ii) the Severed Loan Documents shall not contain any representations,
warranties or covenants not contained in the Loan Documents and any such
representations and warranties contained in the Severed Loan Documents will be
given by Borrower only as of the Closing Date.
SECTION 7.3 REMEDIES CUMULATIVE.
The rights, powers and remedies of Lender under this Agreement
shall be cumulative and not exclusive of any other right, power or remedy which
Lender may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to Borrower shall not be construed to be a waiver
of any subsequent Default or Event of Default by Borrower or to impair any
remedy, right or power consequent thereon.
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VIII. SALE AND SECURITIZATION OF MORTGAGES
SECTION 8.1 SALE OF MORTGAGES AND SECURITIZATION.
(a) Lender shall have the right, at Lender's option, (i) to
sell or otherwise transfer the Loan and the Loan Documents as a whole loan, (ii)
to sell a participation interest in the Loan and the Loan Documents or (iii) to
securitize the Loan in a single asset securitization or a pooled loan
securitization. (The transaction referred to in clauses (i), (ii) and (iii)
shall hereinafter be referred to collectively as "SECONDARY MARKET TRANSACTIONS"
and the transaction referred to in clause (iii) shall hereinafter be referred to
as a "SECURITIZATION". Any certificates or other securities issued in connection
with a Securitization are hereinafter referred to as "SECURITIES").
(b) At the request of Lender, Borrower shall use reasonable
efforts to satisfy the market standards to which Lender customarily adheres or
which may be reasonably required in the marketplace or by the Rating Agencies in
connection with any Secondary Market Transactions, including, without
limitation, to:
(i)(A) provide such financial and other information with
respect to the Properties, the Borrower and the Manager, (B) provide
budgets relating to the Properties and (C) to perform or permit or cause to be
performed or permitted such site inspection, appraisals, market studies,
environmental reviews and reports (Phase I's and, if appropriate, Phase II's),
engineering reports and other due diligence investigations of the Properties, as
may be reasonably requested by Lender or the Rating Agencies or as may be
necessary or appropriate in connection with any Secondary Market Transactions
(the "PROVIDED INFORMATION"), together, if customary, with appropriate
verification of the Provided Information through letters of auditors or opinions
of counsel acceptable to the Lender and the Rating Agencies;
(ii) opinions of counsel, which may be relied upon by
Lender, the Rating Agencies and their respective counsel, agents and
representatives, as to non-consolidation, fraudulent conveyance, and true sale
or any other opinion customary in Secondary Market Transactions with respect to
the Properties and Borrower and its affiliates, which counsel and opinions shall
be reasonably satisfactory to Lender and the Rating Agencies;
(iii) make such representations and warranties as of the
closing date of the Secondary Market Transaction with respect to the
Properties, Borrower, and the Loan Documents as are customarily provided in
Secondary Market Transactions and as may be reasonably requested by the Lender
or the Rating Agencies and consistent with the representations and warranties
made in the Loan Documents; and
(iv) execute such amendments to the Loan Documents and
Borrower's organizational documents, enter into a lockbox or similar
arrangement with respect to the Rents and establish and fund such reserve funds
as may be requested by Lender or the Rating Agencies or otherwise to effect the
Secondary Market Transaction; provided, however, that the Borrower shall not be
required to modify or amend any Loan Document if such modification or amendment
would (i) change the interest rate, the stated maturity or the amortization of
principal
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as set forth herein or in the Note, or (ii) modify or amend any other material
economic term of the Loan.
(c) All third party costs and expenses incurred by Lender in
connection with the Securitization or other sale or transfer of the Loan for
which Borrower would not otherwise be responsible under the Loan Documents
absent the Securitization and all additional reasonable third party costs and
expenses incurred by Borrower in connection with the Securitization or other
sale or transfer of the Loan for which Borrower would not otherwise be
responsible under the Loan Documents absent the Securitization shall be paid by
Lender.
SECTION 8.2 SECURITIZATION INDEMNIFICATION.
(a) Borrower understands that certain of the Provided
Information may be included in disclosure documents in connection with the
Securitization, including, without limitation, a prospectus, prospectus
supplement or private placement memorandum (each, a "DISCLOSURE DOCUMENT") and
may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "SECURITIES ACT"), or
the Securities and Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or
provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating to the
Securitization. In the event that the Disclosure Document is required to be
revised prior to the sale of all Securities, the Borrower will cooperate with
Lender in updating the Disclosure Document by providing all current information
necessary to keep the Disclosure Document accurate and complete in all material
respects.
(b) Borrower agrees to provide in connection with each of (i)
a preliminary and a final private placement memorandum or (ii) a preliminary and
final prospectus or prospectus supplement, as applicable, an indemnification
certificate (A) certifying that Borrower has carefully examined such memorandum
or prospectus, as applicable, including without limitation, the sections
entitled "Special Considerations," "Description of the Mortgages," "Description
of the Mortgage Loans and Mortgaged Properties," "The Manager," "The Borrower"
and "Certain Legal Aspects of the Mortgage Loan," and that such sections (and
any other sections reasonably requested) as such sections relate to the
Properties, the Loan Documents, Borrower, Manager and/or this Loan, do not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading, (B) indemnifying
Lender (and for purposes of this Section 8.2, Lender hereunder shall include its
officers and directors), the affiliate of Morgan Stanley, Dean Witter Discover &
Co. ("MORGAN STANLEY"), that has filed the registration statement relating to
the Securitization (the "REGISTRATION STATEMENT"), each of its directors, each
of its officers who have signed the Registration Statement and each person or
entity who controls the affiliate within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, the "MORGAN
STANLEY GROUP"), and Morgan Stanley, each of its directors and each person who
controls Morgan Stanley within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act (collectively, the "UNDERWRITER GROUP") for
any losses, claims, damages or liabilities (collectively, the "LIABILITIES") to
which Lender, the Morgan Stanley Group or the Underwriter Group may become
subject insofar as the Liabilities arise out of or are based upon any untrue
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statement or alleged untrue statement of any material fact contained in such
sections (as such sections relate to the Properties, the Loan Documents,
Borrower, Manager and/or this Loan) or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated in such sections (as such sections relate to the Properties, the Loan
Documents, Borrower, Manager and/or this Loan) or necessary in order to make the
statements in such sections (as such sections relate to the Properties, the Loan
Documents, Borrower, Manager and/or this Loan) or in light of the circumstances
under which they were made, not misleading and (C) agreeing to reimburse Lender,
the Morgan Stanley Group and the Underwriter Group for any legal or other
expenses reasonably incurred by Lender and Morgan Stanley in connection with
investigating or defending the Liabilities; provided, however, that Borrower
will be liable in any such case under clauses (B) or (C) above only to the
extent that any such loss claim, damage or liability arises out of or is based
upon any such untrue statement or omission made therein in reliance upon and in
conformity with information furnished to Lender by or on behalf of Borrower in
connection with the preparation of the memorandum or prospectus or in connection
with the underwriting of the debt, including, without limitation, financial
statements of Borrower, operating statements, rent rolls, environmental site
assessment reports and property condition reports with respect to the
Properties. This indemnity agreement will be in addition to any liability which
Borrower may otherwise have.
(c) In connection with filings under the Exchange Act,
Borrower agrees to indemnify (i) Lender, the Morgan Stanley Group and the
Underwriter Group for Liabilities to which Lender, the Morgan Stanley Group or
the Underwriter Group may become subject insofar as the Liabilities arise out of
or are based upon the omission or alleged omission to state in the Provided
Information a material fact required to be stated in the Provided Information in
order to make the statements in the Provided Information, in light of the
circumstances under which they were made not misleading and (ii) reimburse
Lender, the Morgan Stanley Group or the Underwriter Group for any legal or other
expenses reasonably incurred by Lender, the Morgan Stanley Group or the
Underwriter Group in connection with defending or investigating the Liabilities.
(d) Promptly after receipt by an indemnified party under this
Section 8.2 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8.2, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent that
failure to notify causes prejudice to the indemnifying party. In the event that
any action is brought against any indemnified party, and its notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled, jointly with any other indemnifying party, to participate therein and,
to the extent that it (or they) may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. After notice from the indemnifying party to such
indemnified party under this Section 8.2 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified
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party shall have reasonably concluded that there are any legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party to parties. The indemnifying party shall not be liable
for the expenses of more than one separate counsel unless an indemnified party
shall have reasonably concluded that there may be legal defenses available to it
that are different from or additional to those available to another indemnified
party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 8.2(b) or
(c) is for any reason held to be unenforceable by an indemnified party in
respect of any losses, claims, damages or liabilities (or action in respect
thereof) referred to therein which would otherwise be indemnifiable under
Section 8.2(b) or (c), the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses, claims,
damages or liabilities (or action in respect thereof); provided, however, that
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) Morgan Stanley's and Borrower's
relative knowledge and access to information concerning the matter with respect
to which claim was asserted; (ii) the opportunity to correct and prevent any
statement or omission; and (iii) any other equitable considerations appropriate
in the circumstances. Lender and Borrower hereby agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation.
(f) The liabilities and obligations of both Borrower and
Lender under this Section 8.2 shall survive the termination of this Agreement
and the satisfaction and discharge of the Debt.
SECTION 8.3 RATING SURVEILLANCE.
The Borrower will retain the Rating Agencies to provide rating
surveillance services on any certificates issued in a Securitization. Such
rating surveillance will be at the expense of Lender.
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IX. MISCELLANEOUS
SECTION 9.1 SURVIVAL.
This Agreement and all covenants, agreements, representations
and warranties made herein and in the certificates delivered pursuant hereto
shall survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Debt is outstanding and unpaid unless a longer period is expressly
set forth herein or in the other Loan Documents. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender.
SECTION 9.2 LENDER'S DISCRETION.
Whenever pursuant to this Agreement, Lender exercises any
right given to it to approve or disapprove, or any arrangement or term is to be
satisfactory to Lender, the decision of Lender to approve or disapprove or to
decide whether arrangements or terms are satisfactory or not satisfactory shall
(except as is otherwise specifically herein provided) be in the sole discretion
of Lender and shall be final and conclusive.
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SECTION 9.3 GOVERNING LAW.
(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK,
AND MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF
NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF
THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS
CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE
APPLICABLE INDIVIDUAL PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE
FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW
YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN
DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE
FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS
AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW
YORK, AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE
BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND
APPOINT AUDREY GREENFELD, ESQ., C/O MIRO, WEINER AND KRAMER, 32ND FLOOR, 712
FIFTH AVENUE, NEW YORK, NEW YORK 10019 AS ITS AUTHORIZED AGENT TO ACCEPT AND
ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN
ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK,
NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND
WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE
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MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF
NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS
OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME
DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK
(WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS
FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF
ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS
DISSOLVED WITHOUT LEAVING A SUCCESSOR.
SECTION 9.4 MODIFICATION, WAIVER IN WRITING.
All notices, demands, waivers, consents or other
communications required or permitted hereunder shall be in writing. No
modification, amendment, extension, discharge, termination or waiver of any
provision of this Agreement, or of the Note, or of any other Loan Document, nor
consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar or
other circumstances.
SECTION 9.5 DELAY NOT A WAIVER.
Neither any failure nor any delay on the part of Lender in
insisting upon strict performance of any term, condition, covenant or agreement,
or exercising any right, power, remedy or privilege hereunder, or under the Note
or under any other Loan Document, or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Note or any other Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under this Agreement, the Note or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.
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SECTION 9.6 NOTICES.
All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document shall be given in writing
and shall be effective for all purposes if hand delivered or sent by (a)
certified or registered United States mail, postage prepaid, or (b) expedited
prepaid delivery service, either commercial or United States Postal Service,
with proof of attempted delivery, and by telecopier (with answer back
acknowledged), addressed as follows (or at such other address and person as
shall be designated from time to time by any party hereto, as the case may be,
in a written notice to the other parties hereto in the manner provided for in
this Section):
If to Lender: Morgan Stanley Mortgage Capital Inc.
1585 Broadway
New York, New York 10036
Attention: Shirish Godbole
Facsimile No. (212) 761-0508
with a copy to: Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: W. Christopher White,
Esq. Facsimile No. (212) 504-6666
If to Borrower: Ramco Properties Associates Limited
Partnership 27600 Northwestern
Highway, Suite 200 Southfield,
Michigan 48304
Attention: Dennis Gershenson
Facsimile No. (248) 350-9925
with a copy to: Honigman Miller Schwartz and Cohn
2290 First National Building
Detroit, Michigan 48226
Attention: Alan M. Hurvitz, Esq.
Facsimile No. (313) 962-0176
A notice shall be deemed to have been given: in the case of
hand delivery, at the time of delivery; in the case of registered or certified
mail, when delivered or the first attempted delivery on a Business Day; or in
the case of expedited prepaid delivery and telecopy, upon the first attempted
delivery on a Business Day.
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SECTION 9.7 TRIAL BY JURY.
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO
THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE
LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
SECTION 9.8 HEADINGS.
The Article and/or Section headings and the Table of Contents
in this Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
SECTION 9.9 SEVERABILITY.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
SECTION 9.10 PREFERENCES.
Lender shall have the continuing and exclusive right to apply
or reverse and reapply any and all payments by Borrower to any portion of the
obligations of Borrower hereunder. To the extent Borrower makes a payment or
payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
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SECTION 9.11 WAIVER OF NOTICE.
Borrower shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which this Agreement
or the other Loan Documents specifically and expressly provide for the giving of
notice by Lender to Borrower and except with respect to matters for which
Borrower is not, pursuant to applicable Legal Requirements, permitted to waive
the giving of notice. Borrower hereby expressly waives the right to receive any
notice from Lender with respect to any matter for which this Agreement or the
other Loan Documents do not specifically and expressly provide for the giving of
notice by Lender to Borrower.
SECTION 9.12 REMEDIES OF BORROWER.
In the event that a claim or adjudication is made that Lender
or its agents have acted unreasonably or unreasonably delayed acting in any case
where by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
Borrower agrees that neither Lender nor its agents shall be liable for any
monetary damages, and Borrower's sole remedies shall be limited to commencing an
action seeking injunctive relief or declaratory judgment. The parties hereto
agree that any action or proceeding to determine whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment.
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SECTION 9.13 EXPENSES; INDEMNITY.
(a) Borrower covenants and agrees to pay, or if Borrower fails
to pay to reimburse, Lender upon receipt of written notice from Lender for all
reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) incurred by Lender in connection with (i) the preparation,
negotiation, execution and delivery of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated hereby and
thereby and all the costs of furnishing all opinions by counsel for Borrower
(including without limitation any opinions requested by Lender as to any legal
matters arising under this Agreement or the other Loan Documents with respect to
the Properties); (ii) Borrower's ongoing performance of and compliance with
Borrower's respective agreements and covenants contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date, including, without limitation, confirming compliance with
environmental and insurance requirements; (iii) Lender's ongoing performance and
compliance with all agreements and conditions contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date; (iv) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications to
this Agreement and the other Loan Documents and any other documents or matters
requested by Lender; (v) securing Borrower's compliance with any requests made
pursuant to Section 10.1 hereof; (vi) the filing and recording fees and
expenses, title insurance and reasonable fees and expenses of counsel for
providing to Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the Liens in favor of Lender pursuant to
this Agreement and the other Loan Documents; (vii) enforcing or preserving any
rights, in response to third party claims or the prosecuting or defending of any
action or proceeding or other litigation, in each case against, under or
affecting Borrower, this Agreement, the other Loan Documents, the Properties, or
any other security given for the Loan; and (viii) enforcing any obligations of
or collecting any payments due from Borrower under this Agreement, the other
Loan Documents or with respect to the Properties or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or of any insolvency or bankruptcy
proceedings; provided, however, that Borrower shall not be liable for the
payment of any such costs and expenses to the extent the same arise by reason of
the gross negligence, illegal acts, fraud or willful misconduct of Lender. Any
cost and expenses due and payable to Lender may be paid from any amounts in the
Lockbox Account.
(b) Borrower shall indemnify, defend and hold harmless Lender
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for Lender in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not Lender shall be designated a party thereto), that may be imposed
on, incurred by, or asserted against Lender in any manner relating to or arising
out of (i) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the "INDEMNIFIED LIABILITIES"); provided, however, that Borrower
shall not have any obligation to Lender hereunder to the extent that such
Indemnified Liabilities arise
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from the gross negligence, illegal acts, fraud or willful misconduct of Lender.
To the extent that the undertaking to indemnify, defend and hold harmless set
forth in the preceding sentence may be unenforceable because it violates any law
or public policy, Borrower shall pay the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Lender.
SECTION 9.14 SCHEDULES INCORPORATED.
The Schedules annexed hereto are hereby incorporated herein as
a part of this Agreement with the same effect as if set forth in the body
hereof.
SECTION 9.15 OFFSETS, COUNTERCLAIMS AND DEFENSES.
Any assignee of Lender's interest in and to this Agreement,
the Note and the other Loan Documents shall take the same free and clear of all
offsets, counterclaims or defenses which are unrelated to such documents which
Borrower may otherwise have against any assignor of such documents, and no such
unrelated counterclaim or defense shall be interposed or asserted by Borrower in
any action or proceeding brought by any such assignee upon such documents and
any such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.
SECTION 9.16 NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
BENEFICIARIES.
(a) Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Properties other than that of
mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for
the benefit of Lender and the Borrower and nothing contained in this Agreement
or the other Loan Documents shall be deemed to confer upon anyone other than the
Lender and the Borrower any right to insist upon or to enforce the performance
or observance of any of the obligations contained herein or therein. All
conditions to the obligations of Lender to make the Loan hereunder are imposed
solely and exclusively for the benefit of Lender and no other Person shall have
standing to require satisfaction of such conditions in accordance with their
terms or be entitled to assume that Lender will refuse to make the Loan in the
absence of strict compliance with any or all thereof and no other Person shall
under any circumstances be deemed to be a beneficiary of such conditions, any or
all of which may be freely waived in whole or in part by Lender if, in Lender's
sole discretion, Lender deems it advisable or desirable to do so.
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SECTION 9.17 PUBLICITY.
All news releases, publicity or advertising by Borrower or
their Affiliates through any media intended to reach the general public which
refers to the Loan Documents or the financing evidenced by the Loan Documents,
to the Lender, Morgan Stanley Mortgage Capital, Inc., or any of their Affiliates
shall be subject to the prior written approval of Lender.
SECTION 9.18 CROSS-DEFAULT; CROSS-COLLATERALIZATION; WAIVER OF
MARSHALLING OF ASSETS.
(a) The Borrower acknowledges that Lender has made the Loan to
the Borrower upon the security of its collective interest in the Properties and
in reliance upon the aggregate of the Properties taken together being of greater
value as collateral security than the sum of the Properties taken separately.
The Borrower agrees that the Mortgages are and will be cross-collateralized and
cross-defaulted with each other so that (i) an Event of Default under any of the
Mortgages shall constitute an Event of Default under each of the other Mortgages
which secure the Note; (ii) an Event of Default under the Note or this Loan
Agreement shall constitute an Event of Default under each Mortgage; and (iii)
each Mortgage shall constitute security for the Note as if a single blanket lien
were placed on all of the Properties as security for the Note.
(b) To the fullest extent permitted by law, Borrower, for
itself and its successors and assigns, waives all rights to a marshalling of the
assets of Borrower, Borrower's partners and others with interests in Borrower,
and of the Properties, or to a sale in inverse order of alienation in the event
of foreclosure of all or any of the Mortgages, and agrees not to assert any
right under any laws pertaining to the marshalling of assets, the sale in
inverse order of alienation, homestead exemption, the administration of estates
of decedents, or any other matters whatsoever to defeat, reduce or affect the
right of Lender under the Loan Documents to a sale of the Properties for the
collection of the Debt without any prior or different resort for collection or
of the right of Lender to the payment of the Debt out of the net proceeds of the
Properties in preference to every other claimant whatsoever. In addition,
Borrower, for itself and its successors and assigns, waives in the event of
foreclosure of any or all of the Mortgages, any equitable right otherwise
available to the Borrower which would require the separate sale of the
Properties or require Lender to exhaust its remedies against any Individual
Property or any combination of the Properties before proceeding against any
other Individual Property or combination of Properties; and further in the event
of such foreclosure the Borrower does hereby expressly consents to and
authorizes, at the option of the Lender, the foreclosure and sale either
separately or together of any combination of the Properties.
SECTION 9.19 WAIVER OF COUNTERCLAIM.
Borrower hereby waives the right to assert a counterclaim,
other than a compulsory counterclaim, in any action or proceeding brought
against it by Lender or its agents.
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SECTION 9.20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE.
In the event of any conflict between the provisions of this
Loan Agreement and any of the other Loan Documents, the provisions of this Loan
Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Loan Documents and that such Loan Documents shall not be
subject to the principle of construing their meaning against the party which
drafted same. Borrower acknowledges that, with respect to the Loan, Borrower
shall rely solely on its own judgment and advisors in entering into the Loan
without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or affiliate of Lender.
Lender shall not be subject to any limitation whatsoever in the exercise of any
rights or remedies available to it under any of the Loan Documents or any other
agreements or instruments which govern the Loan by virtue of the ownership by it
or any parent, subsidiary or affiliate of Lender of any equity interest any of
them may acquire in Borrower, and Borrower hereby irrevocably waives the right
to raise any defense or take any action on the basis of the foregoing with
respect to Lender's exercise of any such rights or remedies. Borrower
acknowledges that Lender engages in the business of real estate financings and
other real estate transactions and investments which may be viewed as adverse to
or competitive with the business of the Borrower or its affiliates.
SECTION 9.21 BROKERS AND FINANCIAL ADVISORS.
Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Borrower hereby
agrees to indemnify, defend and hold Lender harmless from and against any and
all claims, liabilities, costs and expenses of any kind (including Lender's
attorneys' fees and expenses) in any way relating to or arising from a claim by
any Person that such Person acted on behalf of Borrower or Lender in connection
with the transactions contemplated herein. The provisions of this Section 10.21
shall survive the expiration and termination of this Agreement and the payment
of the Debt.
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SECTION 9.22 MANAGEMENT OF THE PROPERTY; TERMINATION OF MANAGER.
(a) The Properties are operated under the terms and conditions
of the Management Agreements. Lender hereby acknowledges that Manager is a
Qualifying Manager and the terms of the Management Agreements are acceptable to
Lender. Borrower shall (i) diligently perform and observe all of the terms,
covenants and conditions of the Management Agreements on the part of Borrower to
be performed and observed to the end that all things shall be done which are
necessary to keep unimpaired the rights of Borrower under the Management
Agreements and (ii) promptly notify Lender of the giving of any notice to
Borrower of any default by Borrower in the performance or observance of any of
the terms, covenants or conditions of the Management Agreements on the part of
Borrower to be performed and observed and deliver to Lender a true copy of each
such notice. If Borrower shall default in the performance or observance of any
material term, covenant or condition of the Management Agreements on the part of
Borrower to be performed or observed, then, without limiting the generality of
the other provisions of this Agreements or the other Loan Documents, and without
waiving or releasing Borrower from any of its obligations hereunder, Lender
shall have the right, but shall be under no obligation, to pay any sums and to
perform any act or take any reasonable action as may be appropriate to cause all
the material terms, covenants and conditions of the Management Agreements on the
part of Borrower to be performed or observed to be promptly performed or
observed in all material respects on behalf of Borrower, to the end that the
rights of Borrower in, to and under the Management Agreements shall be kept
unimpaired and free from default. Lender and any Person designated by Lender
shall have, and are hereby granted, the right to enter upon the Property at any
time and from time to time for the purpose of taking any such action. If the
Manager under any Management Agreement shall deliver to Lender a copy of any
notice sent to Borrower of default under such Management Agreement, such notice
shall constitute full protection to Lender for any action taken or omitted to be
taken by Lender in good faith, in reliance thereon. Borrower shall from time to
time, obtain from the Manager under the Management Agreements such certificates
of estoppel with respect to compliance by Borrower with the terms of the
Management Agreements as may be requested by Lender. Borrower shall exercise
each individual option, if any, to extend or renew the term of any Management
Agreement upon demand by Lender made at any time within one (1) year of the last
day upon which any such option may be exercised, and Borrower hereby expressly
authorizes and appoints Lender its attorney-in-fact to exercise any such option
in the name of and upon behalf of Borrower, which power of attorney shall be
irrevocable and shall be deemed to be coupled with an interest. Any sums
expended by Lender pursuant to this Section shall bear interest at the Default
Rate from the date such cost is incurred to the date of payment to Lender, shall
be deemed to constitute a portion of the Debt, shall be secured by the lien of
this Security Instrument and the other Loan Documents and shall be immediately
due and payable upon demand by Lender therefor.
(b) Borrower shall not surrender the Management Agreements,
consent to the assignment by the Manager of its interest under the Management
Agreements, or terminate or cancel the Management Agreements, modify, change,
supplement, alter or amend the Management Agreements, in any respect, either
orally or in writing or change, replace or terminate the Manager or enter into
new management agreements with the existing or any proposed Qualifying Managers
without Lender's consent. Borrower shall notify Lender and the
-85-
<PAGE> 92
Rating Agencies in writing (and shall deliver a copy of the proposed management
agreement) of any entity proposed to be designated as a Qualifying Manager of
any Property no less than thirty (30) days before such Qualifying Manager begins
to manage such Property and shall obtain prior to any appointment of a
Qualifying Manager Lender's approval of such Qualifying Manager and a written
confirmation from the Rating Agencies that retention of such other Person as a
Qualifying Manager shall not result in a downgrade, withdrawal or qualification
of the then current ratings of any securities backed in part by the Mortgage.
Upon the retention of a Qualifying Manager, Lender shall have the right to
approve any new management agreement with such Qualifying Manager.
(c) Lender shall have the right to require Borrower to replace
any existing Qualifying Manager with a firm chosen by Borrower and approved by
Lender upon the occurrence of any one or more of the following events: (i) six
months after the Anticipated Repayment Date if Lender determines, in its sole
discretion, that the Properties are not being managed in a manner similar to
comparable properties managed by other professional property managers engaged in
a similar business, (ii) at any time following the occurrence of an Event of
Default, (iii) if at any time the Debt Service Coverage Ratio falls below 1.20
to 1.0 (the "MANAGER TERMINATION RATIO"), as determined by Lender in its sole
discretion on a quarterly basis and/or (iv) at any time that the Qualifying
Manager has engaged in (x) gross negligence, (y) fraud or (z) willful misconduct
arising out of or in connection with its management agreement with Borrower,
unless any such gross negligence or willful misconduct (but not fraud) is
remedied by the Qualifying Manager within ten (10) days following receipt of
notice from Lender. Notwithstanding the provisions of clause (c)(iii) above,
Borrower shall nevertheless have the right to retain such existing Qualifying
Manager if, prior to the replacement of such existing Qualifying Manager by
Lender, Borrower shall provide additional collateral in the form of Cash and
Cash Equivalents and/or Letters of Credit for a portion of the Loan,
satisfactory to Lender, such that the Manager Termination Ratio can be
maintained on the Loan Amount net of such additional collateral. Lender, in its
discretion, may require Borrower to increase the additional collateral to the
extent such Debt Service Coverage Ratio continues to decline in subsequent
quarters. Such additional collateral will only be released to Borrower when the
Debt Service Coverage Ratio equals or exceeds the Manager Termination Ratio for
three consecutive months and provided no Event of Default has occurred. All
additional collateral provided under this section shall be additional security
for the repayment of the Indebtedness and may be withdrawn by Lender upon the
occurrence of an Event of Default and applied by Lender in such order and
priority as Lender may determine. All calculations of Debt Service Coverage
Ratio shall be made by Lender in its reasonable discretion. Borrower shall
provide Lender with all necessary information required to make such
determination.
-86-
<PAGE> 93
SECTION 9.23 EXCULPATION.
Subject to the qualifications below, Lender shall not enforce
the liability and obligation of Borrower to perform and observe the obligations
contained in the Note, this Agreement, the Mortgages or the other Loan Documents
by any action or proceeding wherein a money judgment shall be sought against
Borrower, except that Lender may bring a foreclosure action, an action for
specific performance or any other appropriate action or proceeding to enable
Lender to enforce and realize upon its interest under the Note, this Agreement,
the Mortgages and the other Loan Documents, or in the Properties, the Rents, or
any other collateral given to Lender pursuant to the Loan Documents; provided,
however, that, except as specifically provided herein, any judgment in any such
action or proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Properties, in the Rents and in any other collateral
given to Lender, and Lender, by accepting the Note, this Agreement, the
Mortgages and the other Loan Documents, agrees that it shall not sue for, seek
or demand any deficiency judgment against Borrower in any such action or
proceeding under or by reason of or under or in connection with the Note, this
Agreement, the Mortgages or the other Loan Documents. The provisions of this
Section shall not, however, (a) constitute a waiver, release or impairment of
any obligation evidenced or secured by any of the Loan Documents; (b) impair the
right of Lender to name Borrower as a party defendant in any action or suit for
foreclosure and sale under any of the Mortgages; (c) affect the validity or
enforceability of or any guaranty made in connection with the Loan or any of the
rights and remedies of the Lender thereunder; (d) impair the right of Lender to
obtain the appointment of a receiver; (e) impair the enforcement of any of the
Assignments of Leases; (f) constitute a prohibition against Lender to seek a
deficiency judgment against Borrower in order to fully realize the security
granted by each of the Mortgages or to commence any other appropriate action or
proceeding in order for Lender to exercise its remedies against all of the
Properties; or (g) constitute a waiver of the right of Lender to enforce the
liability and obligation of Borrower, by money judgment or otherwise, to the
extent of any loss, damage, cost, expense, liability, claim or other obligation
incurred by Lender (including attorneys' fees and costs reasonably incurred)
arising out of or in connection with the following:
(i) fraud or intentional misrepresentation by Borrower
or any guarantor in connection with the Loan;
(ii) the willful misconduct of Borrower;
(iii) the breach of any representation, warranty, covenant or
indemnification provision in the Environmental Indemnity or in the Mortgages
concerning environmental laws, hazardous substances and asbestos and any
indemnification of Lender with respect thereto in either document;
(iv) the removal or disposal of any portion of the
Properties after an Event of Default;
(v) the misapplication or conversion by Borrower of (A) any
insurance proceeds paid by reason of any loss, damage or destruction to the
Properties, (B) any Awards
-87-
<PAGE> 94
or other amounts received in connection with the Condemnation of all or a
portion of the Properties, or (C) any Rents following an Event of Default;
(vi) failure by Borrower to pay charges for labor or materials
or other charges contracted for by Borrower or on behalf of Borrower that can
create liens on any portion of the Properties; and
(vii) any security deposits, advance deposits or any other
deposits collected with respect to the Properties which are not delivered to
Lender upon a foreclosure of the Properties or action in lieu thereof, except to
the extent any such security deposits were applied in accordance with the terms
and conditions of any of the Leases prior to the occurrence of the Event of
Default that gave rise to such foreclosure or action in lieu thereof.
Notwithstanding anything to the contrary in this Agreement,
the Note or any of the Loan Documents, (A) Lender shall not be deemed to have
waived any right which Lender may have under Section 506(a), 506(b), 1111(b) or
any other provisions of the U.S. Bankruptcy Code to file a claim for the full
amount of the Debt secured by the Mortgages or to require that all collateral
shall continue to secure all of the Debt owing to Lender in accordance with the
Loan Documents, and (B) the Debt shall be fully recourse to Borrower in the
event that: (i) the first full monthly payment of principal and interest under
the Note is not paid when due; (ii) Borrower fails to permit on-site inspections
of the Properties, fails to provide financial information, fails to maintain its
status as a single purpose entity or fails to appoint a new property manager
upon the request of Lender after an Event of Default, each as required by, and
in accordance with the terms and provisions of, this Loan Agreement and the
Mortgages; (iii) Borrower fails to obtain Lender's prior written consent to any
subordinate financing or other voluntary lien encumbering the Properties; or
(iv) Borrower fails to obtain Lender's prior written consent to any assignment,
transfer, or conveyance of the Properties or any interest therein as required by
the Mortgage.
SECTION 9.24 PRIOR AGREEMENTS.
This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, including, without limitation, the Commitment
Letter dated October 13, 1997 (as amended) between Borrower and Lender are
superseded by the terms of this Agreement and the other Loan Documents.
-88-
<PAGE> 95
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed by their duly authorized representatives, all as
of the day and year first above written.
RAMCO PROPERTIES ASSOCIATES LIMITED
PARTNERSHIP,
a Michigan limited partnership
By: Ramco Properties GP, L.L.C.,
a Michigan limited liability company
By: Ramco SPC, Inc.,
a Michigan corporation, managing member
By: /s/ Dennis Gershenson
-------------------------------
Dennis Gershenson, President
SECORE FINANCIAL CORPORATION
By: /s/ Authorized Officer
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
<PAGE> 96
SCHEDULE I
ALLOCATED LOAN AMOUNTS
Allocated
Property Name State Loan Amount
------------- ----- -----------
Fraser Shopping Center Fraser, Michigan $ 2,654,000
Stonegate Plaza Kingsport, Tennessee $ 3,622,000
Troy Towne Center Troy, Ohio $ 7,350,000
Northwest Crossing Knoxville, Tennessee $ 8,552,000
Ridgeview Crossing Elken, North Carolina $ 6,146,000
Taylors Square Greenville, South Carolina $ 8,517,000
West Allis Towne Center West Allis, Wisconsin $13,159,000
-----------
TOTAL $50,000,000
===========
I-1
<PAGE> 97
SCHEDULE II
-----------
REQUIRED REPAIRS
<TABLE>
<CAPTION>
DESCRIPTION COST DEPOSIT AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
RIDGEVIEW CROSSING SHOPPING CENTER
ELKIN, NORTH CAROLINA
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repair section of asphalt $ 20,000 $ 25,000
pavement
Remove broken concrete curbing, $ 7,000 $ 8,750
repair and seal new curbing
Remove roof and replace $ 12,000 $ 16,000
covering, repair walls, flashings
and eliminate leaks
Repair leaks and seal joints at $ 5,000 $ 6,250
parapet wall areas to eliminate
moisture penetration
Repair roof parapet walls at $ 3,000 $ 3,750
smaller units to eliminate moisture
penetration
Re-stripe and convert two spaces $ 3,000 $ 3,750
---------- ----------
to van accessible handicap spaces
for a total of three spaces with
signs
TOTAL $ 50,000 $ 62,500
========== ==========
- ------------------------------------------------------------------------------------------------------------------------
STONE PLAZA SHOPPING CENTER
KINGSPORT, TN
- ------------------------------------------------------------------------------------------------------------------------
Repair walls, flashing and seal $ 30,000 $ 37,500
roof and equipment opening of the
larger (Wal-Mart) anchor unit
Modify 2 spaces into van- $ 3,000 $ 3,750
---------- ----------
accessible handicap spaces
TOTAL $ 33,000 $ 41,250
========== ==========
- ------------------------------------------------------------------------------------------------------------------------
TAYLORS SQUARE SHOPPING CENTER
TAYLORS, SOUTH CAROLINA
- ------------------------------------------------------------------------------------------------------------------------
Fill base areas, regrade and $ 5,000 $ 6,250
reseed where needed along slope
Repair rear masonry wall from $ 13,500 $ 16,875
moisture at select locations and
repaint
Reseal BUR roof and perform $ 44,000 $ 55,000
repairs on EPDM roof where
required
Restrip van accessible spaces in $ 3,500 $ 4,375
---------- ----------
the parking lot and place handicap
parking signs and posts
TOTAL $ 66,000 $ 82,500
========== ==========
</TABLE>
II-1
<PAGE> 98
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NORTHWEST CROSSING SHOPPING CENTER
KNOXVILLE, TN
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Reseal the asphalt pavement in $ 7,500 $ 7,375
selected areas where repairs were
made. Estimated 30% of
pavement and seal longitudinal
joints.
Repair roof bridging at Good's. $ 25,400 $ 31,750
Repair damages at canopy soffit at $ 80,000 $ 100,000
---------- ---------
select locations.
TOTAL $ 112,900 $ 141,125
========== ==========
- ------------------------------------------------------------------------------------------------------------------------
FRASER SHIPPING CENTER
FRASER, MI
- ------------------------------------------------------------------------------------------------------------------------
Repair concrete surfaces, replace $ 4,000 $ 5,000
sealangs
Asphalt pavement rehabilitation $ 70,000 $ 87,500
Repair coal tar built-up roof $ 8,000 $ 10,000
membrane, flashings & sheet
metal
Replace modified bitumen roofing $ 9,000 $ 11,250
on canopies
Replace shingle roof on Unit #1 $ 4,000 $ 5,000
Replace metal coping on Unit #1 $ 10,000 $ 12,500
---------- ---------
TOTAL $ 105 000 $ 131,250
========== ==========
- ------------------------------------------------------------------------------------------------------------------------
Troy Town Center
Troy, OH
- ------------------------------------------------------------------------------------------------------------------------
Routine maintenance of Asphalt $ 5,000 $ 6,250
---------- ---------
surfaces
TOTAL $ 5,000 $ 6,250
========== =========
- ------------------------------------------------------------------------------------------------------------------------
West Allis Town Center
West Allis, WI
- ------------------------------------------------------------------------------------------------------------------------
Brick masonry tuck pointing $ 4,000 $ 5,000
Concrete base repair program $ 5,000 $ 6,250
Clean and repaint ornamental $ 8,000 $ 10,000
steel, covered walkway
Sealant repairs, Kohl's entrance $ 3,000 $ 3,750
---------- ---------
TOTAL $ 20,000 $ 25,000
========== =========
$ 396,900 $ 496,125
</TABLE>
II-2
<PAGE> 99
SCHEDULE III
RENT ROLL
III-1
<PAGE> 100
SCHEDULE IV
POST-CLOSING SNDA TENANTS
IV-1
<PAGE> 101
SCHEDULE V
LETTER OF INSTRUCTION
____________ ___, 199__
[TENANTS UNDER LEASES]
Re: Lease dated ________ between _______________,
as Landlord, and _______________, as Tenant,
concerning premises known as ________________
Gentlemen:
This letter shall constitute notice to you that the
undersigned has granted a security interest in the captioned lease and all
rents, additional rent and all other monetary obligations to landlord thereunder
(collectively, "RENT") in favor of Morgan Stanley Mortgage Capital Inc., as
lender ("LENDER"), to secure certain of the undersigned's obligations to Lender.
The undersigned hereby irrevocably instructs and authorizes you to disregard any
and all previous notices sent to you in connection with Rent and hereafter to
deliver by wire transfer of immediately available funds all Rent as follows:
Account No. ______________
[BANK WITH OPERATING ACCOUNT]
[BANK'S ADDRESS]
Attention: _________________
ABA# ____________________,
or at such other address and/or account as
shall be designated by Lender by written
notice to you.
IV-2
<PAGE> 102
The instructions set forth herein are irrevocable and are not
subject to modification in any manner, except that Morgan Stanley Mortgage
Capital Inc., under certain [DEEDS OF TRUST, MORTGAGES AND DEEDS TO SECURE DEBT
WITH ASSIGNMENT OF LEASES, SECURITY AGREEMENT AND FIXTURE FILING,] dated as of
the date hereof, from the undersigned in favor of Lender, or any successor
lender so identified by Lender, may by written notice to you rescind the
instructions contained herein.
Sincerely,
[BORROWER]
ACKNOWLEDGMENT AND AGREEMENT
The undersigned acknowledges notice of the security interest of Lender and the
requirement to pay the Rent directly to Lender.
[TENANT]
By:
Name:
Its:
Dated as of: __________ ___, 199__
IV-3
<PAGE> 103
SCHEDULE VI
CPA CERTIFICATION
INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING
-------------------------------------------
AGREED-UPON PROCEDURES
----------------------
[Lender]
We have performed the procedures enumerated below, which were agreed to by
Morgan Stanley Mortgage Capital Inc. (the "Lender"), solely to assist the Lender
in evaluating the Defeasance of the notes described on Exhibit A annexed hereto
(the "Notes"). This agreed-upon procedures engagement was performed in
accordance with standards established by the American Institute of Certified
Public Accountants. The sufficiency of the procedures is solely the
responsibility of the specified users of the report. Consequently, we make no
representation regarding the sufficiency of the procedures described below,
either for the purpose for which this report has been requested or for any other
purpose.
The procedures we performed are as follows:
We have read the definition of Defeasance Eligible Investments in the Loan
Agreement between ________________________ and Secore Financial Corporation as
assigned to Lender, dated _____________, 1997 (the "Loan Agreement"), which
indicates that [type of collateral] constitutes Defeasance Eligible
Investments, as defined in the Loan Agreement.
We recalculated the interest due on the Notes, and found it to be in
agreement with the defeasance calculation ("Schedule") submitted to us by
____________ (Schedule attached).
We recalculated the total payment due on [date] in connection with all of the
Notes, by adding the amounts on the Schedule, and found it to be mathematically
correct.
We have examined trade confirmations dated _____________ indicating the
purchase by ___________________ totaling ____________________ face value of
[type of collateral] which mature on [date], and such is sufficient to cover
the total payment due on [date].
We were not engaged to, and did not, perform an examination, the objective of
which is the expression of an opinion on the aforementioned records.
Accordingly, we do not express such an opinion. Had we performed additional
procedures, other matters might have come to our attention that would have been
reported to you.
IV-4
<PAGE> 104
This report is intended solely for the use of the Lender, and should not be used
by those who have not agreed to the procedures and taken responsibility for the
sufficiency of the procedures for their purposes.
[Name of CPA]
[Date]
IV-5
<PAGE> 105
SCHEDULE VII
EXAMPLE OF AUDIT
IV-6
<PAGE> 106
SCHEDULE VIII
================================================================================
----------------------------
(Lender)
- and -
----------------------------
(Tenant)
- --------------------------------------------------------------------------------
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
- --------------------------------------------------------------------------------
Dated:
Location:
Section:
Block:
Lot:
County:
PREPARED BY AND UPON
RECORDATION RETURN TO:
Messrs. Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention:
File No.:
Title No.:
================================================================================
IV-7
<PAGE> 107
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
(the "Agreement") is made as of the ____ day of _______________, 199__ by and
between MORGAN STANLEY MORTGAGE CAPITAL INC., having an address at 1585
Broadway, New York, New York 10036 ("Lender") and
___________________________________________________, having an address at
_________________________________________________________________ ("Tenant").
RECITALS:
A. Lender has made a loan in the approximate amount of
$_______ to Landlord (defined below), which Loan is given pursuant to the terms
and conditions of that certain loan agreement dated ________________, 19__,
between Lender and Landlord (the "Loan Agreement"). The Loan is evidenced by a
certain Promissory Note dated ________________, 19__, given by Landlord to
Lender (the "Note") and secured by a certain mortgage and security agreement
(the "Mortgage"), dated ______________, 19__, given by Landlord to Lender which
encumbers the fee estate of Landlord in certain premises described in Exhibit A
attached hereto (the "Property");
B. Tenant occupies a portion of the Property under and
pursuant to the provisions of a certain lease dated _________________, 19__
between _________________, as landlord ("Landlord") and Tenant, as tenant (the
"Lease"); and
C. Tenant has agreed to subordinate the Lease to the Mortgage
and to the lien thereof and Lender has agreed to grant non-disturbance to Tenant
under the Lease on the terms and conditions hereinafter set forth.
AGREEMENT:
For good and valuable consideration, Tenant and Lender agree
as follows:
Subordination. Tenant agrees that the Lease and all of the
terms, covenants and provisions thereof and all rights, remedies and options of
Tenant thereunder are and shall at all times continue to be subject and
subordinate in all respects to the Mortgage and to the lien thereof and all
terms, covenants and conditions set forth in the Mortgage and the Loan Agreement
including without limitation all renewals, increases, modifications, spreaders,
consolidations, replacements and extensions thereof and to all sums secured
thereby with the same force and effect as if the Mortgage and Loan Agreement had
been executed, delivered and (in the case of the Mortgage) recorded prior to the
execution and delivery of the Lease.
Non-Disturbance. Lender agrees that if any action or
proceeding is commenced by Lender for the foreclosure of the Mortgage or the
sale of the Property, Tenant shall not be named as a party therein unless such
joinder shall be required by law, provided, however, such joinder shall not
result in the termination of the Lease or disturb the Tenant's possession or use
of the premises demised thereunder, and the sale of the Property in any such
action or proceeding and the exercise by Lender of any of its other rights under
the Note, the Mortgage and the Loan Agreement shall be made subject to all
rights of Tenant under the Lease, provided that at the time of the commencement
of any such action or proceeding or at the time of any such sale or exercise of
any such other rights (a) the term of the Lease shall have commenced
<PAGE> 108
pursuant to the provisions thereof, (b) Tenant shall be in possession of the
premises demised under the Lease, (c) the Lease shall be in full force and
effect and (d) Tenant shall not be in default under any of the terms, covenants
or conditions of the Lease or of this Agreement on Tenant's part to be observed
or performed.
Attornment. Lender and Tenant agree that if Lender shall
become the owner of the Property by reason of the foreclosure of the Mortgage or
the acceptance of a deed or assignment in lieu of foreclosure or otherwise, and
the conditions set forth in Section 2 above have been met at the time Lender
becomes owner of the Property, the Lease shall not be terminated or affected
thereby but shall continue in full force and effect as a direct lease between
Lender and Tenant upon all of the terms, covenants and conditions set forth in
the Lease and in that event, Tenant agrees to attorn to Lender and Lender agrees
to accept such attornment, provided, however, that the provisions of the
Mortgage and the Loan Agreement shall govern with respect to the disposition of
any casualty insurance proceeds or condemnation awards and Lender shall not be
(a) obligated to complete any construction work required to be done by Landlord
pursuant to the provisions of the Lease or to reimburse Tenant for any
construction work done by Tenant, (b) liable (i) for Landlord's failure to
perform any of its obligations under the Lease which have accrued prior to the
date on which Lender shall become the owner of the Property, or (ii) for any act
or omission of Landlord, whether prior to or after such foreclosure or sale, (c)
required to make any repairs to the Property or to the premises demised under
the Lease required as a result of fire, or other casualty or by reason of
condemnation unless Lender shall be obligated under the Lease to make such
repairs and shall have received sufficient casualty insurance proceeds or
condemnation awards to finance the completion of such repairs, (d) required to
make any capital improvements to the Property or to the premises demised under
the Lease which Landlord may have agreed to make, but had not completed, or to
perform or provide any services not related to possession or quiet enjoyment of
the premises demised under the Lease, (e) subject to any offsets, defenses,
abatements or counterclaims which shall have accrued to Tenant against Landlord
prior to the date upon which Lender shall become the owner of the Property, (f)
liable for the return of rental security deposits, if any, paid by Tenant to
Landlord in accordance with the Lease unless such sums are actually received by
Lender, (g) bound by any payment of rents, additional rents or other sums which
Tenant may have paid more than one (1) month in advance to any prior Landlord
unless (i) such sums are actually received by Lender or (ii) such prepayment
shall have been expressly approved of by Lender, (h) bound to make any payment
to Tenant which was required under the Lease, or otherwise, to be made prior to
the time Lender succeeded to Landlord's interest, (i) bound by any agreement
amending, modifying or terminating the Lease made without Lender's prior written
consent prior to the time Lender succeeded to Landlord's interest or (j) bound
by any assignment of the Lease or sublease of the Property, or any portion
thereof, made prior to the time Lender succeeded to Landlord's interest other
than if pursuant to the provisions of the Lease.
Notice to Tenant. After notice is given to Tenant by Lender
that the Landlord is in default under the Note and the Mortgage and that the
rentals under the Lease should be paid to Lender pursuant to the terms of the
assignment of leases and rents executed and delivered by Landlord to Lender in
connection therewith, Tenant shall thereafter pay to Lender or as directed by
the Lender, all rentals and all other monies due or to become due to Landlord
under the Lease and Landlord hereby expressly authorizes Tenant to make such
payments to Lender and
-2-
<PAGE> 109
hereby releases and discharges Tenant from any liability to Landlord on account
of any such payments.
Lender's Consent. Tenant shall not, without obtaining the
prior written consent of Lender, (a) enter into any agreement amending,
modifying or terminating the Lease, (b) prepay any of the rents, additional
rents or other sums due under the Lease for more than one (1) month in advance
of the due dates thereof, (c) voluntarily surrender the premises demised under
the Lease or terminate the Lease without cause or shorten the term thereof, or
(d) assign the Lease or sublet the premises demised under the Lease or any part
thereof other than pursuant to the provisions of the Lease; and any such
amendment, modification, termination, prepayment, voluntary surrender,
assignment or subletting, without Lender's prior consent, shall not be binding
upon Lender.
Lender to Receive Notices. Tenant shall provide Lender with
copies of all written notices sent to Landlord pursuant to the Lease
simultaneously with the transmission of such notices to the Landlord. Tenant
shall notify Lender of any default by Landlord under the Lease which would
entitle Tenant to cancel the Lease or to an abatement of the rents, additional
rents or other sums payable thereunder, and agrees that, notwithstanding any
provisions of the Lease to the contrary, no notice of cancellation thereof or of
such an abatement shall be effective unless Lender shall have received notice of
default giving rise to such cancellation or abatement and shall have failed
within sixty (60) days after receipt of such notice to cure such default, or if
such default cannot be cured within sixty (60) days, shall have failed within
sixty (60) days after receipt of such notice to commence and thereafter
diligently pursue any action necessary to cure such default.
Notices. All notices or other written communications hereunder
shall be deemed to have been properly given (i) upon delivery, if delivered in
person or by facsimile transmission with receipt acknowledged by the recipient
thereof and confirmed by telephone by sender, (ii) one (1) Business Day
(hereinafter defined) after having been deposited for overnight delivery with
any reputable overnight courier service, or (iii) three (3) Business Days after
having been deposited in any post office or mail depository regularly maintained
by the U.S. Postal Service and sent by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
If to Tenant: __________________________
__________________________
__________________________
Attention: _________________
Facsimile No. _____________
If to Lender: Morgan Stanley Mortgage Capital Inc.
1585 Broadway
New York, New York 10036
Attention: ___________________
Facsimile No. (212) ___________
-3-
<PAGE> 110
With a copy to: Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: W. Christopher White
Facsimile No. (212) 504-6666
or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this Section , the term "Business Day" shall
mean a day on which commercial banks are not authorized or required by law to
close in New York, New York.
Either party by notice to the other may designate additional or different
addresses for subsequent notices or communications.
Joint and Several Liability. If Tenant consists of more than
one person, the obligations and liabilities of each such person hereunder shall
be joint and several. This Agreement shall be binding upon and inure to the
benefit of Lender and Tenant and their respective successors and assigns.
Definitions. The term "Lender" as used herein shall include
the successors and assigns of Lender and any person, party or entity which shall
become the owner of the Property by reason of a foreclosure of the Mortgage or
the acceptance of a deed or assignment in lieu of foreclosure or otherwise. The
term "Landlord" as used herein shall mean and include the present landlord under
the Lease and such landlord's predecessors and successors in interest under the
Lease, but shall not mean or include Lender. The term "Property" as used herein
shall mean the Property, the improvements now or hereafter located thereon and
the estates therein encumbered by the Mortgage.
No Oral Modifications. This Agreement may not be modified in
any manner orterminated except by an instrument in writing executed by the
parties hereto.
Governing Law. This Agreement shall be deemed to be a contract
entered into pursuant to the laws of the State where the Property is located and
shall in all respects be governed, construed, applied and enforced in accordance
with the laws of the State where the Property is located.
Inapplicable Provisions. If any term, covenant or condition of
this Agreement is held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be construed without such provision.
Duplicate Originals; Counterparts. This Agreement may be
executed in any number of duplicate originals and each duplicate original shall
be deemed to be an original. This Agreement may be executed in several
counterparts, each of which counterparts shall be deemed an original instrument
and all of which together shall constitute a single Agreement. The failure of
any party hereto to execute this Agreement, or any counterpart hereof, shall not
relieve the other signatories from their obligations hereunder.
Number and Gender. Whenever the context may require, any
pronouns used
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<PAGE> 111
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice versa.
Transfer of Loan. Lender may sell, transfer and deliver the
Note and assign the Mortgage, this Agreement and the other documents executed in
connection therewith to one or more Investors (as defined in the Mortgage) in
the secondary mortgage market. In connection with such sale, Lender may retain
or assign responsibility for servicing the loan, including the Note, the
Mortgage, this Agreement and the other documents executed in connection
therewith, or may delegate some or all of such responsibility and/or obligations
to a servicer including, but not limited to, any subservicer or master servicer,
on behalf of the Investors. All references to Lender herein shall refer to and
include any such servicer to the extent applicable.
Further Acts. Tenant will, at the cost of Tenant, and without
expense to Lender, do, execute, acknowledge and deliver all and every such
further acts and assurances as Lender shall, from time to time, require, for the
better assuring and confirming unto Lender the property and rights hereby
intended now or hereafter so to be, or for carrying out the intention or
facilitating the performance of the terms of this Agreement or for filing,
registering or recording this Agreement, or for complying with all applicable
laws.
Limitations on Lender's Liability. Tenant acknowledges that
Lender is obligated only to Landlord to make the Loan upon the terms and subject
to the conditions set forth in the Loan Agreement. In no event shall Lender or
any purchaser of the Property at foreclosure sale or any grantee of the Property
named in a deed-in-lieu of foreclosure, nor any heir, legal representative,
successor, or assignee of Lender or any such purchaser or grantee (collectively
the Lender, such purchaser, grantee, heir, legal representative, successor or
assignee, the "Subsequent Landlord") have any personal liability for the
obligations of Landlord under the Lease and should the Subsequent Landlord
succeed to the interests of the Landlord under the Lease, Tenant shall look only
to the estate and property of any such Subsequent Landlord in the Property for
the satisfaction of Tenant's remedies for the collection of a judgment (or other
judicial process) requiring the payment of money in the event of any default by
any Subsequent Landlord as landlord under the Lease, and no other property or
assets of any Subsequent Landlord shall be subject to levy, execution or other
enforcement procedure for the satisfaction of Tenant's remedies under or with
respect to the Lease; provided, however, that the Tenant may exercise any other
right or remedy provided thereby or by law in the event of any failure by
Landlord to perform any such material obligation.
-5-
<PAGE> 112
IN WITNESS WHEREOF, Lender and Tenant have duly executed this
Agreement as of the date first above written.
LENDER:
MORGAN STANLEY MORTGAGE
CAPITAL INC.
a Delaware Corporation
By:____________________________
Name:
Title:
TENANT:
________________________________
a _________________
By:_____________________________
Name:
Title:
The undersigned accepts and agrees to the provisions of Section 4 hereof:
LANDLORD:
______________________, a
______________________
By:___________________
Name:
Title:
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<PAGE> 113
ACKNOWLEDGMENTS
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the ___ day of November, 1997, before me, the undersigned,
appeared ____________________________, ______________ of
______________________________, the company described herein, and acknowledged
to me that [she/he] executed the same in [her/his] authorized capacity, on
behalf of ________________________________.
Witness my hand and official seal
________________________________
Notary Public
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the ___ day of November, 1997, before me, the undersigned,
appeared ____________________________, ______________ of
______________________________, the company described herein, and acknowledged
to me that [she/he] executed the same in [her/his] authorized capacity, on
behalf of ________________________________.
Witness my hand and official seal
_________________________________
Notary Public
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the ___ day of November, 1997, before me, the undersigned,
appeared ____________________________, ______________ of
______________________________, the company described herein, and acknowledged
to me that [she/he] executed the same in [her/his] authorized capacity, on
behalf of ________________________________.
Witness my hand and official seal
__________________________________
Notary Public
<PAGE> 114
EXHIBIT A
(DESCRIPTION OF PROPERTY)
A-1
<PAGE> 115
SCHEDULE IX
TRADE PAYABLES LIMIT
<TABLE>
<CAPTION>
PROPERTY AMOUNT
<S> <C>
Fraser Shopping Center $ 63,000
Northwest Crossing $ 36,000
Ridgeview Crossing $ 28,000
Stonegate Plaza $ 25,000
Taylors Square $ 10,000
Troy Towne Center $ 31,000
West Allis Towne Center $128,000
--------
TOTAL $351,000
========
</TABLE>
IX-1
<PAGE> 116
SCHEDULE X
WEST ALLIS ENVIRONMENTAL MATTER
IX-1
<PAGE> 1
EXHIBIT 10.37
PROMISSORY NOTE
$50,000,000.00 New York, New York
November 26, 1997
FOR VALUE RECEIVED, RAMCO PROPERTIES ASSOCIATES LIMITED
PARTNERSHIP, a Michigan limited partnership, as maker, having its principal
place of business at 27600 Northwestern Highway, Suite 200, Southfield, Michigan
48304 ("BORROWER"), hereby unconditionally promises to pay to the order of
SECORE FINANCIAL CORPORATION, as lender, having an address at 3 Bethesda Metro
Center, Suite 700, Bethesda, Maryland 20814 ("LENDER"), or at such other place
as the holder hereof may from time to time designate in writing, the principal
sum of FIFTY MILLION AND NO/100 DOLLARS ($50,000,000.00) advanced pursuant to
that certain Loan Agreement dated as of the date hereof between Borrower and
Lender (the "LOAN AGREEMENT"), in lawful money of the United States of America
with interest thereon to be computed from the date of this Note at the
Applicable Interest Rate, and to be paid in accordance with the terms of this
Note and the Loan Agreement. All capitalized terms not defined herein shall have
the respective meanings set forth in the Loan Agreement.
1. Maker agrees to pay the principal sum of this Note and
interest on the unpaid principal sum of this Note from time to time outstanding
at the rates and at the times specified in the Loan Agreement and the
outstanding balance of the principal sum of this Note and all accrued and unpaid
interest thereon shall be due and payable on the Maturity Date.
2. Except as otherwise provided in the Loan Agreement, the
Debt shall without notice become immediately due and payable at the option of
Lender if any payment required in this Note is not paid prior to the date when
due or if not paid on the Maturity Date or on the happening of any other Event
of Default.
3. This Note is secured by the Mortgages and the other Loan
Documents. All of the terms, covenants and conditions contained in the Loan
Agreement, the Mortgages and the other Loan Documents are hereby made part of
this Note to the same extent and with the same force as if they were fully set
forth herein. In the event of a conflict or inconsistency between the terms of
this Note and the Loan Agreement, the terms and provisions of the Loan Agreement
shall govern.
4. Notwithstanding anything to the contrary, (a) all
agreements and communications between Borrower and Lender are hereby and shall
automatically be limited so that, after taking into account all amounts deemed
interest, the interest contracted for, charged or received by Lender shall never
exceed the maximum lawful rate or amount, (b) in calculating whether any
interest exceeds the lawful maximum, all such interest shall be amortized,
prorated, allocated and spread over the full amount and term of all principal
indebtedness of Borrower to Lender, and (c) if through any contingency or event,
Lender receives or is deemed to receive interest in excess of the lawful
maximum, any such excess shall be deemed to have been applied toward payment of
the principal of any and all then outstanding indebtedness of Borrower to
Lender, or if there is no such indebtedness, shall immediately be returned to
Borrower.
5. This Note may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Borrower or
<PAGE> 2
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.
6. Except as otherwise provided in the Loan Agreement,
Borrower and all others who may become liable for the payment of all or any part
of the Debt do hereby severally waive presentment and demand for payment, notice
of dishonor, notice of intention to accelerate, notice of acceleration, protest
and notice of protest and non-payment and all other notices of any kind. No
release of any security for the Debt or extension of time for payment of this
Note or any installment hereof, and no alteration, amendment or waiver of any
provision of this Note, the Loan Agreement or the other Loan Documents made by
agreement between Lender or any other Person shall release, modify, amend,
waive, extend, change, discharge, terminate or affect the liability of Borrower,
and any other Person who may become liable for the payment of all or any part of
the Debt, under this Note, the Loan Agreement or the other Loan Documents. No
notice to or demand on Borrower shall be deemed to be a waiver of the obligation
of Borrower or of the right of Lender to take further action without further
notice or demand as provided for in this Note, the Loan Agreement or the other
Loan Documents. If Borrower is a partnership, the agreements herein contained
shall remain in force and applicable, notwithstanding any changes in the
individuals comprising the partnership, and the term "Borrower," as used herein,
shall include any alternate or successor partnership, but any predecessor
partnership and their partners shall not thereby be released from any liability.
If Borrower is a corporation, the agreements contained herein shall remain in
full force and applicable notwithstanding any changes in the shareholders
comprising, or the officers and directors relating to, the corporation, and the
term "Borrower" as used herein, shall include any alternative or successor
corporation, but any predecessor corporation shall not be relieved of liability
hereunder. (Nothing in the foregoing sentence shall be construed as a consent
to, or a waiver of, any prohibition or restriction on transfers of interests in
such partnership which may be set forth in the Loan Agreement, the Mortgages or
any other Loan Document.)
7. Upon the transfer of this Note, Borrower hereby waiving
notice of any such transfer, Lender may deliver all the collateral mortgaged,
granted, pledged or assigned pursuant to the Loan Documents, or any part
thereof, to the transferee who shall thereupon become vested with all the rights
herein or under applicable law given to Lender with respect thereto, and Lender
shall thereafter forever be relieved and fully discharged from any liability or
responsibility in the matter; but Lender shall retain all rights hereby given to
it with respect to any liabilities and the collateral not so transferred.
8. The provisions of Section 9.23 of the Loan Agreement are
hereby incorporated by reference into this Note to the same extent and with the
same force as if fully set forth herein.
9. (A) THIS NOTE WAS NEGOTIATED IN THE STATE OF NEW YORK, AND
MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THIS NOTE WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT
LIMITING
-2-
<PAGE> 3
THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO
PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY
AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER
JURISDICTION GOVERNS THIS NOTE AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(B) TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY LEGAL SUIT,
ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO
THIS NOTE MAY AT LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN
THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW, AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY
NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH
SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES
HEREBY DESIGNATE AND APPOINT AUDREY GREENFELD , ESQ. C/O MIRO, WEINER & KRAMER,
32ND FLOOR, 712 FIFTH AVENUE, NEW YORK, NEW YORK 10019, AS ITS AUTHORIZED AGENT
TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY
BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT
IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT
SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER
IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE
OF PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF
NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS
OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME
DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK
(WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS
FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF
ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS
DISSOLVED WITHOUT LEAVING A SUCCESSOR. SOLELY AS A COURTESY TO BORROWER, LENDER
WILL USE REASONABLE EFFORTS TO DELIVER A COPY OF ANY PROCESS SERVED UPON SAID
AGENT AT BORROWER'S ADDRESSES SET FORTH IN SECTION 10.6 OF THE LOAN AGREEMENT,
PROVIDED THAT ANY FAILURE ON THE PART OF LENDER TO SO DELIVER ANY SUCH COPY
SHALL IN NO MANNER LIMIT THE EFFECTIVENESS OF ANY PROCESS SERVED UPON SAID
AGENT.
-3-
<PAGE> 4
10. All notices or other written communications hereunder
shall be delivered in accordance with Section 9.6 of the Loan Agreement.
IN WITNESS WHEREOF, Borrower has duly executed this Note as of
the day and year first above written.
BORROWER:
RAMCO PROPERTIES ASSOCIATES
LIMITED PARTNERSHIP,
a Michigan limited partnership
By: Ramco Properties GP, L.L.C.,
a Michigan limited liability
company
By: Ramco SPC, Inc.,
a Michigan corporation,
managing member
By: /s/ Dennis Gershenson
----------------------------
Dennis Gershenson, President
-4-
<PAGE> 1
EXHIBIT 10.38
LOAN AGREEMENT
BY AND BETWEEN
RAMCO-GERSHENSON PROPERTIES, L.P.
AND
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
Loan No. 158186
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page #
<S> <C> <C>
ARTICLE I
DEFINITIONS.....................................................................................1
ARTICLE 2
THE LOAN........................................................................................2
Section 2.1 Loan............................................................................................2
Section 2.2 Loan Documents..................................................................................2
ARTICLE 3
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS..........................................2
Section 3.1 No Consent Required.............................................................................2
Section 3.2 No Conflicting Law or Agreement.................................................................2
Section 3.3 Binding Obligations.............................................................................2
Section 3.4 Filing Fees.....................................................................................2
Section 3.5 Further Assurances..............................................................................2
Section 3.6 Name............................................................................................3
Section 3.7 Chief Executive Office..........................................................................3
Section 3.8 Notice of Certain Events........................................................................3
Section 3.9 Full and Faithful Disclosure....................................................................3
Section 3.10 Financial Statements and Reports................................................................3
Section 3.11 Impairment of Business or Property..............................................................3
Section 3.12 Maintenance of Premises.........................................................................3
Section 3.13 Utilities.......................................................................................3
Section 3.14 No Defaults.....................................................................................3
Section 3.15 Disclosure of Litigation........................................................................4
Section 3.16 Payment of Obligations..........................................................................4
Section 3.17 Certifications by Borrower......................................................................4
Section 3.18 Use of Lender's Name............................................................................4
Section 3.19 Notice to Lender Upon Perceived Breach..........................................................4
Section 3.20 Prohibition Against Removal or Material Alteration..............................................4
ARTICLE 4
TAXES AND INSURANCE...............................................4
Section 4.1 Taxes; Governmental Charges.....................................................................4
Section 4.2 Taxes and Other Encumbrances....................................................................4
Section 4.3 Tax and Insurance Deposits......................................................................4
Section 4.4 Insurance Coverages.............................................................................5
ARTICLE 5
DAMAGE OR DESTRUCTION; INSURANCE PROCEEDS....................................5
Section 5.1 Notice..........................................................................................5
Section 5.2 Assignment of Insurance Proceeds, Authority to Settle Claims....................................5
Section 5.3 Lender's Election Regarding Insurance Proceeds..................................................5
Section 5.4 Destruction.....................................................................................5
Section 5.5 Application of Proceeds.........................................................................5
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 5.6 Restoration.....................................................................................6
Section 5.7 Payment of Deposited Funds......................................................................6
Section 5.8 Application of Insurance Proceeds in Event of Default...........................................6
ARTICLE 6
EMINENT DOMAIN; CONDEMNATION AWARDS.......................................6
Section 6.1 Notice..........................................................................................6
Section 6.2 Assignment of Condemnation Awards...............................................................6
Section 6.3 Total Taking....................................................................................6
Section 6.4 Partial Taking - Lender's Election..............................................................7
Section 6.5 Abandonment; Failure of Borrower to Respond to Offer, etc.......................................7
Section 6.6 Application of Proceeds.........................................................................7
Section 6.7 Expenses........................................................................................7
Section 6.8 Application of Condemnation Awards in Event of Default..........................................7
ARTICLE 7
ENVIRONMENTAL MATTERS..............................................7
Section 7.1 Environmental Indemnity Agreements..............................................................7
Section 7.2 Entry Upon Premises.............................................................................7
ARTICLE 8
DEFAULTS AND REMEDIES..............................................7
Section 8.1 Events of Default...............................................................................7
Section 8.2 Remedies........................................................................................8
Section 8.3 Additional Amount Due After Acceleration........................................................8
Section 8.4 Remedies Not Exclusive..........................................................................8
ARTICLE 9
MISCELLANEOUS PROVISIONS.............................................8
Section 9.1 Right to Inspect; Right to Require Management Agent.............................................8
Section 9.2 No Effect on Liability..........................................................................8
Section 9.3 Renewal, Extension or Rearrangement.............................................................8
Section 9.4 No Marshalling of Assets........................................................................8
Section 9.5 Transfer of Loan................................................................................8
Section 9.6 Notices.........................................................................................8
Section 9.7 Joint and Several Liability.....................................................................9
Section 9.8 Severability....................................................................................9
Section 9.9 Binding Effect; No Assignment...................................................................9
Section 9.10 Entire Agreement................................................................................9
Section 9.11 Counterparts....................................................................................9
Section 9.12 Negotiated Document.............................................................................9
Section 9.13 Not Partners; No Third Party Beneficiaries......................................................9
Section 9.14 Governing Law...................................................................................9
Section 9.15 Modification Procedure..........................................................................9
Section 9.16 No Waiver.......................................................................................9
Section 9.17 Captions........................................................................................9
Section 9.18 Incorporation of Exhibits.......................................................................9
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 9.19 Time of Essence.................................................................................9
Section 9.20 Gender and Number..............................................................................10
Section 9.21 Maximum Interest Payable.......................................................................10
Section 9.22 Payment by any Party...........................................................................10
Section 9.23 Fee for Services Rendered......................................................................10
Section 9.24 Indemnity; Lender's Expenses...................................................................10
Section 9.25 Jurisdiction...................................................................................10
Section 9.26 Waiver of Trial by Jury........................................................................10
Section 9.27 Additional Provisions..........................................................................10
</TABLE>
iii
<PAGE> 5
Loan No. 158186
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Loan Agreement") is entered into as of the 17th of
December, 1997, by and between RAMCO-GERSHENSON PROPERTIES, L.P., A DELAWARE
LIMITED PARTNERSHIP ("Borrower"), and THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY ("Lender"), an Indiana corporation.
W I T N E S S E T H:
WHEREAS, Lender has agreed to extend credit to Borrower, on certain terms
and conditions; and
WHEREAS, one condition to Lender's agreement to extend credit to Borrower
is that Lender and Borrower must enter into a comprehensive loan agreement
setting forth the terms and conditions of the extension of credit to Borrower;
NOW, THEREFORE, as an inducement to cause Lender to extend credit to
Borrower. and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Lender and Borrower agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Loan Agreement or in any Collateral Loan Document, the
following capitalized terms shall have the following meanings, unless the
context expressly requires otherwise:
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as it may be
amended from time to time.
"Collateral" means any and all Property now or hereafter securing the
Obligations.
"Collateral Loan Documents" means, collectively, the Commitment, this Loan
Agreement, the Environmental Indemnity Agreements and the other documents
(except for the Note and the Mortgage) listed in Section 2.2 hereof, and each
writing furnished Lender in connection with this Loan Agreement, whenever
delivered.
SEE EXHIBIT A, ADDITIONAL PROVISIONS, SECTION AL.
"Commitment" means that certain letter of application dated July 21, 1997,
submitted by Borrower with respect to the Loan, as modified by letter dated July
17, 1997, and further modified by letter dated August 1, 1997, and accepted by
Lincoln Investment Management, Inc. on behalf of Lender on September 19, 1997.
"Debt" means, with respect to any Person, all liabilities and obligations,
contingent or otherwise, of that Person including, but not limited to, any
nonrecourse obligations secured by Property of that Person.
"Default" means the occurrence of any of the events specified in Section
8.1 hereof, as to which any requirement for notice or lapse of time (or both)
has been satisfied.
"Default Condition" means the occurrence of any of the events specified in
Section 8.1 hereof, in the Note. the Mortgage, or in any of the Collateral Loan
Documents which, with the giving of notice or passage of time (or both) would
constitute a Default hereunder.
"Default Rate" means an interest rate equal to the lesser of four
percentage points (4%) in excess of the Interest Rate (as defined in the Note)
or the maximum rate of interest permissible under applicable law.
"Encumbrance" means any interest in any Property in favor of one not the
owner thereof, whether voluntary or involuntary, including, but not limited to,
(i) the lien or security interest arising from a deed of trust, mortgage,
pledge, security agreement, conditional sale, capital lease, consignment, or
bailment for security purposes, and (ii) reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases, and other title exceptions.
"Environmental Indemnity Agreements" means, collectively, those certain
environmental indemnity agreements described in Sections 2.2 and 7.1 hereof.
"Financial Statements" means all balance sheets. income statements, and
statements of cash flow for Borrower and any guarantors, delivered by Borrower
and any guarantors of the Secured Indebtedness or of Borrower's obligations
hereunder, to Lender prior to the date hereof or pursuant to the requirements
hereof or of any Collateral Loan Document.
"Guarantor" shall mean Ramco-Gershenson Properties Trust, a Massachusetts
business trust (formerly known as RPS Realty Trust).
"Hazardous Substances" shall have the meaning ascribed to that term in the
Environmental Indemnity Agreements.
"Improvements" means all structures, buildings and other improvements now
upon or which may hereafter be put upon Ene Real Property (as more particularly
defined in the Mortgage).
"Lease" shall have the same meaning ascribed to that term in the Assignment
of Leases, Rents and Profits of even date herewith.
"Lender" means The Lincoln National Life Insurance Company, its successors
and assigns.
"Loan" means the loan to be made by Lender to Borrower pursuant to the Note
and this Loan Agreement.
"Note" means that certain note described in Section 2.2.
1
<PAGE> 6
"Obligations" means all present and future Debts of Borrower to Lender,
whether arising by contract, tort, guaranty, overdraft, or otherwise; whether or
not the advances or events creating such Debts are presently foreseen; whether
such Debt was originally payable to Lender or are acquired by Lender from
another Person; and regardless of the class of the Debts, be they otherwise
secured or unsecured. Without limiting the foregoing, the "Obligations"
specifically include the obligation of Borrower under the Note, the Mortgage,
and the Collateral Loan Documents to perform the covenants and agreements
contained therein and in any modification, extension or amendment thereof.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, trust,
unincorporated organization, government, or any agency or political subdivision
thereof, or any other form of entity.
"Personal Property" means all fixtures and articles of property now or
hereafter attached to or used or adopted for use in the operation of the Real
Property or the Improvements (as more particularly defined in the Mortgage).
"Premises" means the Real Property and any Improvements, Personal Property
or Property located thereon.
"Property" or "Properties" means any interest in any kind of property,
whether real, personal, or mixed, or tangible or intangible.
"Real Property" means that certain property described on Exhibit A to the
Mortgage and all present and future fixtures, leases, rents, and other
appurtenant rights.
"Restoration" shall have the meaning ascribed to that term in Section 5.6
hereof.
"Secured Indebtedness" means the indebtedness, now or hereafter secured by
the Mortgage (as more particularly defined in the Mortgage).
ARTICLE 2
THE LOAN
Section 2.1 Loan. Concurrently with the execution of this Loan Agreement,
Lender shall make the Loan to Borrower on the terms set forth in the Note, the
Mortgage, and the Collateral Loan Documents.
Section 2.2 Loan Documents. Concurrently with the execution hereof, and as
a condition to this Loan, Borrower shall deliver to Lender the following
documents, all fully executed by the appropriate parties and in form and
substance acceptable to Lender:
(a) This Loan Agreement.
(b) That certain Note made by Borrower in the original principal amount of
Eight Million Five Hundred Thousand Dollars and No Cents ($8,500,000.00) payable
to the order of Lender.
(c) That certain Mortgage conveying to a mortgagee thereunder, the Premises
described on Exhibit A thereto.
(d) All U.C.C. Financing Statements to be filed with the appropriate
governmental offices to perfect the security interests granted under the
Mortgage and the Collateral Loan Documents.
(e) One or more Environmental Indemnity Agreements executed by Borrower and
Guarantor, dated December 17, 1997.
(f) Such other documents, assignments, certificates, agreements, opinions,
title insurance policies, environmental assessments, and indemnities as are
required by Lender pursuant to the Commitment or as Lender may reasonably
require, including without limitation, those documents, if any, shown on Exhibit
A attached hereto and incorporated herein by this reference.
ARTICLE 3
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
Borrower represents and wan-ants that, as of the date hereof, and Borrower
covenants and agrees that during the term of this Loan Agreement while any
portion of the Obligations remain unpaid or unsatisfied (and thereafter where
expressly stated herein):
Section 3.1 No Consent Required. Borrower's execution, delivery, and
performance of the Note, the Mortgage, and the Collateral Loan Documents do not
require the consent or approval of or the giving of notice to any Person which
approval has not been duly obtained or which notice has not been duly given.
Section 3.2 No Conflicting Law or Agreement. Borrower's execution, delivery
and performance of the Note, the Mortgage, and the Collateral Loan Documents do
not constitute a breach of or default under, and will not violate or conflict
with, any provisions of the organizational or governing documents of Borrower;
any contract, financing agreement, Lease, or other agreement to which Borrower
is a party or by which its Properties may be affected; or any law, regulation,
order, injunction, judgment, decree, or writ to which Borrower is subject or by
which its Properties may be affected; nor will the same result in the creation
or imposition of any Encumbrance upon any Properties of Borrower, other than
those contemplated by the Note, the Mortgage, and the Collateral Loan Documents.
Borrower shall not enter into any agreement which would be violated or breached
by the performance by Borrower of its Obligations.
Section 3.3 Binding Obligations. This Loan Agreement is, and the Note, the
Mortgage, and the Collateral Loan Documents. when executed and delivered to
Lender, will be, legal, valid and binding upon Borrower, enforceable in
accordance with their respective terms.
Section 3.4 Filing Fees. Borrower shall pay all filing, registration or
recording fees, and all expenses incident to the execution and acknowledgment of
the Note, the Mortgage, and the Collateral Loan Documents and any extension,
amendment or renewal thereof.
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Section 3.5 Further Assurances. Borrower shall promptly cure, and ratify
the cure of, any defects in the creation, issuance, and delivery of the Note,
the Mortgage, and the Collateral Loan Documents. Borrower at its expense will
execute (or cause to be executed) and deliver to Lender upon request all such
other and further documents, agreements, and instruments in compliance with or
accomplishment of the covenants and agreements of Borrower in the Note, the
Mortgage, or any of the Collateral Loan Documents, or to evidence further and to
describe more fully any Collateral intended as security for the Obligations, or
to correct any omissions in the Note, the Mortgage, or any of the Collateral
Loan Documents, or to state more fully the Obligations and agreements set out in
the Note, the Mortgage, or any of the Collateral Loan Documents, or to perfect,
protect, or preserve any Encumbrances created pursuant to the Note, the
Mortgage, or any of the Collateral Loan Documents, or to make any recordings, to
file any notices, or to obtain any consents, all as may be reasonably necessary
or appropriate in connection therewith.
Section 3.6 Name. Borrower has not existed, been known under or done
business under, nor shall Borrower exist, be known under or do business under
any name other than the name used by Borrower in executing this Loan Agreement.
Borrower has not registered or applied for registration nor shall Borrower
register under any fictitious name statute of any state.
Section 3.7 Chief Executive Office. Borrower's chief executive office is
located at the address listed in Section 9.6 hereof and shall not be transferred
to any other location outside of the county in which it is presently located
without Lender's prior written consent.
Section 3.8 Notice of Certain Events. Borrower shall promptly notify Lender
if Borrower learns of the occurrence of (i) any event that constitutes a Default
or a Default Condition together with a detailed statement of the steps being
taken as a result thereof; (ii) any legal, judicial, or regulatory proceedings
affecting Borrower which, if adversely determined, would have a material adverse
effect on the business or the financial condition of Borrower; (iii) any dispute
between Borrower and any government or regulatory authority or any other Person
which, if adversely determined. might interfere with the normal business
operations of Borrower or otherwise have a material adverse effect on Borrower,
its business or Properties; (iv) any labor dispute to which Borrower may become
a party, any strikes or walkouts affecting its operations, any demand for
collective bargaining, and the expiration of any labor contract by which it may
be bound; (v) any material change in the management of Borrower; (vi) any
material adverse changes, either individually or in the aggregate, in the
assets, liabilities, financial condition, business, operations, affairs, or
circumstances of Borrower from those reflected in the Financial Statements or
from the facts warranted or represented in any of the Collateral Loan Documents,
or (vii) any material Default by Borrower under Debt to any party other than
Lender.
Section 3.9 Full and Faithful Disclosure. Borrower has fully advised Lender
of all matters involving Borrower's financial condition. operations, Properties
or industry that would be reasonably expected to have a material adverse effect
on the financial condition, operations, Properties or prospects of Borrower. No
information, exhibit, or report furnished or to be furnished by Borrower to
Lender in connection with the Note, the Mortgage, or any of the Collateral Loan
Documents contains. as of the date thereof, any misrepresentation of fact or
fails to state any material fact. the omission of which would render the
statements therein materially false or misleading.
Section 3.10 Financial Statements and Reports.
(a) The Financial Statements are complete and correct, have been prepared
in accordance with recognized financial accounting standards which are
consistently applied, and "present fairly the financial condition and results of
operations of Borrower, and any guarantors. of the Secured Indebtedness as of
the date and for the period stated therein. No material adverse change in the
financial condition of Borrower or any guarantors of the Secured Indebtedness
has occurred since the date of the Financial Statements. Borrower acknowledges
that Lender has advanced (or shall advance) the Loan in reliance upon the
Financial Statements.
(b) Borrower shall furnish to the Lender or cause the Lender to receive all
of the following, all of which must be in form and substance satisfactory to the
Lender:
(i) Annual Reports. Within one hundred twenty (120) days after the end of
each calendar year, Borrower shall furnish to Lender an annual financial and
operating statement covering the Premises in such detail as may be required by
Lender, such statements to be prepared by a certified public accountant approved
by Lender (who need not be independent) and certified as true and correct by the
Chief Financial Officer of the Guarantor, including therein (i) current rent mil
(prepared in accordance with a format approved by Lender), (ii) gross income
received, (iii) operating expenses (including but not limited to taxes,
assessments, insurance premiums, repairs and maintenance. salaries and wages),
and (iv) the net operating income and depreciation for federal income tax
purposes and stated to have been prepaid on a basis consistent with prior years
except as otherwise noted.
(ii) Other Reports. From time to time, as may be reasonably requested by
Lender, Borrower shall. with reasonable promptness, deliver to Lender interim
rent rolls certified as true and correct by an officer or other authorized party
of the Borrower, together with other pertinent information and dam regarding
Borrower, its business operations and Properties.
SEE EXHIBIT A, ADDITIONAL PROVISIONS, SECTION A4.
Section 3.11 Impairment of Business or Property. Neither the business nor
the Property of Borrower is impaired as a result of any fire. explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of property, cancellation of
contracts. permits, concessions by any domestic or foreign government or any
agency thereof. riot, activities of armed forces or acts of God or of any public
enemy.
Section 3.12 Maintenance of Premises. Borrower shall maintain the Premises
in good and workable condition at all times and make all repairs, replacements,
additions, and improvements to the Premises reasonably necessary and proper to
ensure that the business carried on in connection with the Premises may be
conducted properly and efficiently at all times. including. without limitation,
repairing, restoring, replacing or rebuilding any part of the Premises now or
hereafter subject to the lien of the Mortgage which may be damaged or destroyed
by any casualty whatsoever or which may be affected by any eminent domain or
similar proceedings Borrower shall not in any manner commit or suffer any waste
of the Premises. Borrower shall complete and pay, within a reasonable time, for
any structure at any time in the process of construction on the Premises and
shall not initiate, join in, or consent to any change in any private restrictive
covenant, zoning ordinance or other public or private restrictions, limiting or
defining the uses which may be made of the Premises or any part thereof.
Section 3.13 Utilities. Borrower agrees to pay. or cause to be paid. when
due all utility charges which are incurred for the benefit of the Premises or
which may become a charge or lien against the Premises for energy, fuel, gas,
electricity, water, or sewer services
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furnished to the Premises and all other assessments or charges of a similar
nature, whether public or private, affecting the Premises or any portion
thereof, whether or not such assessments or charges are liens thereon.
Section 3.14 No Defaults. Borrower is not in default in any respect that
affects its business, Properties, operations, or condition, financial or
otherwise, under any indenture, mortgage, deed of mm, credit agreement, note,
agreement, Lease, sale agreement or other instrument to which Borrower is a
party or by which its Properties are bound. To the best of Borrower's knowledge,
information and belief, no other party to any contract with Borrower is in
default or breach thereof and no circumstances exist which, with the giving of
notice and/or the passing of time would constitute such default or breach. As of
the date hereof, no Default or Default Condition exists under the Note, the
Mortgage, or any of the Collateral Loan Documents.
Section 3.15 Disclosure of Litigation. There is no litigation other than
personal injury claims, the defense of which has been assumed by Borrower's
liability insurer and which can be resolved within applicable policy limits,
arbitration, legal or administrative proceeding, tax audit. investigation, or
other action of any nature pending or, to the knowledge of Borrower, threatened
against, likely to be instituted against or affecting Borrower, any guarantor of
the Secured Indebtedness or any of their respective Properties except as
disclosed in the proxy materials of the Guarantor and/or the financial
statements as provided to Lender. Neither Borrower nor any guarantor of the
Secured Indebtedness is subject to any outstanding court or administrative
order, writ or injunction. To the best of Borrower's knowledge, information and
belief, no facts exist that give claims to third parties against Borrower or any
guarantor of the Secured Indebtedness, except as disclosed in the Financial
Statements.
Section 3.16 Payment of Obligations. The Borrower shall pay, in lawful
money of the United States, all sums due the Lender at the time and in the
manner as set forth in the Note, the Mortgage, and in the Collateral Loan
Documents.
Section 3.17 Certifications by Borrower. Borrower, within ten (10) business
days of request, made either personally or by mail, shall certify, by a writing
duly acknowledged, to the Lender, or to any proposed assignee of this Loan
Agreement, (1) the balance of the Obligations, including a breakdown of the
principal and interest then owing on the Loan, (2) any offsets or defenses to
payment of the Obligations, (3) a then current list of lessees of the Premises,
if any. with beginning date and the term, minimum annual rent, amount of square
footage and status of each Lease, and (4) a copy of each current Lease of the
Premises.
Section 3.18 Use of Lender's Name. Borrower shall not, without the prior
written consent of Lender, use the name of Lender or the name of any affiliates
of Lender in connection with any of Borrower's business or activities, except in
connection with internal business matters, as required in making required
securities law disclosure, in dealings with governmental agencies and financial
institutions and to trade creditors of Borrower solely for credit reference
purposes.
Section 3.19 Notice to Lender Upon Perceived Breach. Borrower agrees to
give Lender prompt written notice of any action or inaction by Lender in
connection with this Loan Agreement or the Obligations that Borrower believes
may be actionable against Lender or a defense to payment of Obligations for any
reason, including, but not limited to. commission of a tort or violation of any
contractual duty or duty implied by law.
Section 3.20 Prohibition Against Removal or Material Alteration. No
Improvements or other Property now or hereafter covered by the lien of the
Mortgage or otherwise constituting the Premises shall be removed. demolished or
materially altered or enlarged, nor shall any new improvements be constructed
thereon, without the prior written consent of Lender except to the extent
Borrower's tenants are entitled to do so under the terms of their leases, and
except that Borrower shall have the right, without such consent, to remove and
dispose of, free from the lien of the Mortgage, such Personal Property as from
time to time may become worn out or obsolete, provided that either
simultaneously with or prior to such removal any such Personal Property shall be
replaced with other Personal Property of a value at least equal to that of the
replaced Personal Property and free from any title retention or other security
agreement or other encumbrance and from any reservation of title, and by such
removal and replacement Borrower shall be deemed to have subjected such new
Personal Property to the lien of the Mortgage and to have granted a security
interest therein to Lender. Notwithstanding the foregoing, Borrower shall have
the right to make improvements or alterations to the Premises provided the cost
of any particular related improvements or alternations made by the Borrower
(hereinafter, a "Project") does not exceed $100,000. For the purposes of this
Section 3.20, Borrower agrees to accept Lender's reasonable determination as to
which improvements or alterations are sufficiently related in scope or in time
so as to constitute a Project.
ARTICLE 4
TAXES AND INSURANCE
Section 4.1 Taxes; Governmental Charges. Borrower has filed or caused to be
filed all tax returns and reports required to be filed. Borrower has paid, or
made adequate provision for the payment of, all taxes that have or may have
become due pursuant to such returns or otherwise, or pursuant to any assessment
received by Borrower, except such taxes, if any. as are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided. Borrower knows of no proposed material tax assessment against it or
any guarantor of the Secured Indebtedness and no extension of time for the
assessment of federal, state or local taxes of Borrower or any guarantor of the
Secured Indebtedness that is in effect or has been requested, except as
disclosed in the Financial Statements. Borrower has made all required
withholding deposits.
Section 4.2 Taxes and Other Encumbrances. Borrower shall make due and
timely payment or deposit of all federal, state and local taxes (including but
not limited to FICA payments and withholding taxes), impositions, assessments
(general or special) or contributions required of it by law, or levied on or
assessed against the Premises, the Mortgage, the Note, the Obligations, or any
interest of the Lender therein and execute and deliver to Lender. on demand.
appropriate certificates attesting to the payment or deposit thereof. It is
understood that, to the extent Borrower makes deposits with Lender for taxes and
insurance. as provided in Section 4.3. Borrower shall be in compliance with this
Section with respect to the deposited sums.
Borrower may, in good faith and with due diligence, contest the validity or
amount of such taxes or impositions; provided that (i) Borrower either pays in
full the amount under protest in the manner allowed by law, or withholds payment
thereof so long as such contest has the effect of preventing the sale or
foreclosure of the Premises or any portion thereof, or (ii) Borrower notifies
Lender in writing at least forty-five (45) days prior to the date such
imposition will be increased by reason of penalties or interest of its intent to
contest the same; and Borrower furnishes Lender with a letter of credit or with
such other security, bond or indemnification as Lender may, in good faith,
require for the final payment and discharge thereof. In the event of a ruling
adverse to Borrower, Borrower shall promptly pay such tax or imposition,
together with all interest and penalties.
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Section 4.3 Tax and Insurance Deposits. Borrower will pay to Lender, on the
installment payment dates of the Note, until the Note and all other sums secured
by the Mortgage are fully paid or until notification from Lender to the
contrary, an amount equal to one-twelfth of the estimated annual insurance
premiums, ad valorem property taxes and any special assessments ("Impound
Payments"), assessments, and other charges due during the succeeding calendar
year. Nothing contained herein shall cause Lender to be deemed a trustee of said
funds, and no interest shall be allowed to Borrower on account of any deposit or
deposits made hereunder and said deposits need not be kept separate and apart
from any other funds of Lender. Borrower shall furnish to Lender at least thirty
(30) days before the date on which the same shall become due, insurance premium
invoices and an official statement of the amount of said taxes and assessments
next due, and Lender shall be entitled to rely on such invoices and statements,
tax bills, etc. without inquiry into their accuracy or validity, and Lender
shall pay said premium and charges but only if the amounts received from
Borrower are sufficient. An official receipt therefor shall be conclusive
evidence of such payment and of the validity of such charges. If such amounts
received from Borrower are determined in good faith by Lender to exceed what is
necessary to fully pay estimated Impound Payments as they become due, upon
Borrower's written request but not more often than annually, Lender shall reduce
the monthly payments required hereunder by an amount reasonably calculated to
reduce the surplus funds on hand to an insignificant amount within the ensuing
twelve (12) months. If such amounts received from Borrower are insufficient,
Lender shall notify Borrower of the shortage whereupon Borrower will immediately
deposit (with Lender) such needed funds within five (5) days after receipt of
such notice. If Borrower shall fail to make such payment, Lender may elect to
advance any needed funds and any sums so advanced shall become immediately due
and payable to Lender, become part of the Secured Indebtedness, and bear
interest at the Default Rate from the date of such advance. If Borrower is in
Default hereunder or under the Mortgage, the Note, or any of the Collateral Loan
Documents, Lender, at its option, may instead apply such amounts to the Secured
Indebtedness in such priority as it may determine, with any excess held by it
over the amount of the Secured Indebtedness to be returned to Borrower or any
party entitled thereto without interest. The amount of the existing credit
hereunder at the time of any transfer of the Premises shall, without assignment
thereof, inure to the benefit of the successor-owner of the Premises, and shall
be applied under and subject to all of the provisions hereof. Upon payment in
full of the Secured Indebtedness, the amount of any unused credit shall be paid
over to the then owner of record.
Section 4.4 Insurance Coverages.
(a) Borrower will keep the Improvements insured for the benefit of the
Lender and Borrower under 1) "All Risk" type Property Insurance to include as a
minimum the perils of fire and extended coverage. vandalism. water damage,
collapse, earthquake and Law and Ordinance (demolition and increased cost of
construction) coverage in an amount equal to 100% of the full insurable
replacement value of the Improvements (i.e., total cost less value of and
nondestructibles such as foundations, underground utilities, etc.), which
replacement shall be subject to annual adjustment based on reconstruction
indices published by national appraisal organizations such as Marshall & Swift
or E.H. Boeckh; 2) Personal Property Insurance as required by Lender in an
amount equal to 100% of the full insurable replacement value of the Personal
Property; 3) Business Income Insurance in an amount equal to (i) annual net
income plus continuing normal operating expenses, or (ii) one year's rental
value including, but not limited to, rental income from all Leases or subleases
which are assigned to Lender (and in an amount to be adjusted annually to
reflect current rental values); 4) Flood Insurance in an amount equal to 100% of
the full insurable replacement value unless Lender is furnished a surveyor's
certificate indicating that the Premises are not located inside the special
flood hazard Boundary Map (FHBM) or in Flood Insurance Rate Map (FMAI) Zones A,
AE, A1-A30, AH. AO, A99, VE, V1-V30 or M); 5) Boiler and Machinery Insurance in
an amount equal to 25% of the full insurable replacement value of the
Improvements or One Million Dollars ($1.000,000). whichever is greater, when
boilers or other pressure vessels or significant air conditioning equipment or
electrical switch gear are located on Premises; and 6) Premises Liability
Insurance including the Broad Form endorsement in the amount of One Million
Dollars ($1,000,000) CSL (combined single limit for bodily injury and property
damage) per occurrence and no policy general aggregate, or for policies
containing aggregate limits, One Million Dollars ($1,000,000) each occurrence,
One Million Dollars ($1,000,000) products/completed operations aggregate, Two
Million Dollars ($2,000,000) general aggregate per location, and One Million
Dollars ($1,000,000) personal and advertising injury aggregate. or in such
amount as required in any collateralized whichever is greater, with defense
appearance cost coverage and naming Lender as an additional insured. All
insurance herein provided for shall be in form and content and be issued by
carriers approved by Lender (minimum Best's rating of A-, V). Borrower shall
deliver to the Lender all policies of insurance which insure against any loss or
damage to the Premises, as collateral and further security for the payment of
the Secured Indebtedness, with (i) a Standard Mortgage Clause giving Lender
thirty (30) days' written notice prior to cancellation of any of said policies,
(ii) a replacement cost or restoration endorsement, (iii) a provision stating
that a waiver of subrogation rights by the insured does not void coverage, and
(iv) such special endorsements as may be required by the terms of any Leases
assigned as a source for repayment of the Loan. If Borrower defaults in so
insuring the Premises or in so delivering the policies, Lender may at its option
(but without any obligation to do so) effect such insurance from year to year,
and pay the premiums therefor, and Borrower will reimburse Lender for any
premiums so paid, on demand, with interest at the Default Rate from the time of
payment and the same shall be deemed a part of the Secured Indebtedness. Lender,
upon receipt of any money for loss or damage pursuant to such insurance, may, at
its option, (a) retain and apply such monies toward payment of the Secured
Indebtedness, with any excess held by it over the amount of the Secured
Indebtedness to be returned to Borrower or any party entitled thereto without
interest, or (b) pay such monies in whole or in part to Borrower for the repair
or restoration of the Improvements or for the erection of new Improvements in
their place, or for any other purpose or object satisfactory to Lender, but
Lender shall not be obligated to see to the proper application of any amount
paid over to Borrower. Not less than ten (10) days prior to the expiration dates
of each policy required of Borrower, Borrower will deliver to Lender a paid
renewal or replacement policy. Borrower shall not take out separate insurance
concurrent in form or contributing in the event of loss separate from that
insurance required to be maintained hereunder unless Lender is included thereon
under a standard mortgagee's clause acceptable to Lender. Borrower shall
immediately notify Lender whenever any such separate insurance is taken out and
shall promptly deliver to Lender the policy or policies of such insurance; and
SEE EXHIBIT A, ADDITIONAL PROVISIONS, SECTION A 7.
(b) In the event of a foreclosure of the Mortgage, or deed in lieu of
foreclosure or other transfer of title of the Premises in extinguishment, in
whole or in part, of the indebtedness secured thereby, all right, title and
interest of Borrower in and to all policies of insurance on the Premises,
including any right to unearned premiums, are hereby assigned to and shall inure
to the benefit of Lender or the purchaser of the Premises.
SEE EXHIBIT A, ADDITIONAL PROVISIONS, SECTION A6.
ARTICLE 5
DAMAGE OR DESTRUCTION; INSURANCE PROCEEDS
Section 5.1 Notice. In case of casualty to the Premises resulting in damage
or destruction, Borrower shall promptly give written notice thereof to Lender.
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Section 5.2 Assignment of Insurance Proceeds; Authority to Settle Claims.
Borrower hereby grants, transfers and assigns to Lender any insurance proceeds
which Borrower is otherwise entitled to receive in connection with any damages
to the Premises or part thereof and the same shall be paid to Lender. Borrower
hereby authorizes and directs any affected insurance carrier to make payment of
such proceeds directly to Lender. Provided no Default or Default Condition
exists under the Note, the Mortgage, or any Collateral Loan Document, Borrower
and Lender shall both have the right to participate in the settlement,
adjustment or compromise of any claims for loss, damage or destruction under any
policy or policies of insurance, but in the event such Default or Default
Condition exists, only Lender shall have the right to settle, adjust, and
compromise insurance claims. No interest shall be allowed to Borrower on any
insurance proceeds paid to and held by the Lender.
Section 5.3 Lender's Election Regarding Insurance Proceeds. The insurance
proceeds shall be delivered to Lender and be applied (pursuant to the provisions
of this Article) to reduction or full pay off of the Secured Indebtedness,
without prepayment premium, unless Lender elects to make such proceeds available
for restoration purposes. Within thirty (30) days after receipt of the written
notice referred to in Section 5.1, Lender shall endeavor to advise Borrower in
writing as to whether Lender elects to apply the insurance proceeds on the
Secured Indebtedness or for restoration of the Premises.
Section 5.4 Destruction. If at any time during the term of the Mortgage all
or any portion of the Premises is damaged or destroyed, and if Lender elects to
have all insurance proceeds applied to payment of the Secured Indebtedness, as
provided in Section 5.5, but such proceeds are not sufficient to pay in full the
then unpaid balance of said indebtedness, with accrued interest thereon,
Borrower shall, within six (6) months days after application of such proceeds,
pay such deficiency to Lender.
Section 5.5 Application of Proceeds. If Lender elects to have the insurance
proceeds applied to pay off or reduce the unpaid balance of the Secured
Indebtedness, such proceeds shall, promptly after receipt by Lender, be applied
by the Lender, first, to pay the actual costs, fees and expenses, if any,
incurred in connection with the adjustment of the loss, and, second, to
reduction or pay off of the Secured Indebtedness, without prepayment premium,
with any excess held by it over the amount of the Secured Indebtedness to be
returned to Borrower or any party entitled thereto without interest. If the
damage or destruction is less than total, and if part of the Premises is to
remain open or be reopened for business. and if such proceeds are not sufficient
to pay off the Secured Indebtedness in full then such reduction shall be applied
in inverse order of payment in the Note provided, and unless Lender agrees in
writing, any application of such proceeds to reduction of principal shall not
extend or postpone the due date of the monthly installments or change the amount
of such installments as provided for in the Note. In the event of such
application, Borrower shall be entitled to reamortize the payment schedule of
the Note.
Section 5.6 Restoration. If the insurance proceeds are made available for
restoration by Lender in its sole discretion, Borrower shall, whether or not the
insurance proceeds shall be sufficient for the purpose, restore. repair,
replace, and rebuild (hereinafter referred to as "Restoration") the Premises as
nearly as possible to its value, condition and character immediately prior to
such damage or destruction. In such event, all insurance money paid to Lender on
account of such damage or destruction, less the actual costs, fees and expenses,
if any, incurred in connection with adjustment of the loss, shall be released by
Lender to be applied to payment (to the extent of actual restoration performed)
of the cost of the aforesaid Restoration, including the cost of temporary
repairs or Restoration. If the insurance proceeds are so made available by
Lender for Restoration, any surplus which may remain out of such proceeds after
payment of the cost of restoration shall, at the option of Lender, be applied to
the Secured Indebtedness, without prepayment premium, or be paid to any party
entitled thereto and under the conditions that Lender may require.
Notwithstanding the foregoing, however, so long as there is no Default and so
long as Borrower is pursuing Restoration diligently, Borrower shall be entitled
to receive any insurance proceeds paid out under a policy covering business
interruption. Insurance proceeds released for Restoration shall at Lender's
option be disbursed from time to time as such Restoration progresses or at one
time upon completion of such Restoration subject to the following conditions:
(a) Borrower is not then in Default under and no Default Condition then
exists with respect to any of the terms, covenants and conditions under the
Note, the Mortgage, or any of the Collateral Loan Documents, and Borrower is not
then in default under any Leases of the Premises; and
(b) if Lender has elected to disburse such proceeds at one time upon
completion of Restoration, Lender shall first be given satisfactory proof that
all portions of the Premises affected by the loss or damage have been fully
restored in accordance with plans and specifications acceptable to Lender, free
and clear of all liens, except for any liens to be satisfied from such proceeds
and except for the lien of the Mortgage; and
(c) if Lender has elected to disburse such proceeds from time to time as
Restoration progresses, Lender shall first be given satisfactory proof that by
the expenditure of such proceeds, the Premises will be fully restored, free and
clear of all liens, except as to the lien of the Mortgage, or, if such proceeds
are insufficient to restore or rebuild the Premises, Borrower shall either (i)
deposit promptly with Lender funds which, together with such proceeds, shall be
sufficient in Lender's sole determination to complete Restoration, or (ii)
provide other assurance satisfactory to Lender that Restoration will be
completed; and
(d) in the event Borrower shall fail either to pursue Restoration
diligently to completion or to complete Restoration within a reasonable time,
Lender, at its option, may complete Restoration for or on behalf of Borrower and
for such purpose may do all necessary acts.
In the event any of the said conditions are not or cannot be satisfied.
then Lender may apply such proceeds to payment of the Secured Indebtedness, as
provided in Section 5.5. Lender no circumstances shall Lender become personally
liable for the fulfillment of the terms, covenants and conditions contained in
any of the Leases with respect to the matters referred to in this paragraph nor
obligated to take any action to restore the Premises. Lender shall not be
obligated to see to the proper application of any funds released hereunder, nor
shall any amount so released or used be deemed a payment on the Secured
Indebtedness.
If any of the said conditions is not satisfied, and if Lender is unwilling
to waive that condition and thereby to make such proceeds so available, Borrower
shall have the right to prepay, without prepayment premium, the balance of the
Secured Indebtedness that remains unpaid after application of the proceeds or
awards thereto.
Section 5.7 Payment of Deposited Funds. Upon (i) completion of all the
Restoration in a good workmanlike manner and substantially in accordance with
the plans and specifications therefor, if any, approved by Lender and (ii)
receipt by Lender of satisfactory evidence of the character required by
conditions (b) and (c) of Section 5.6 hereof, that the Restoration has been
completed and paid for in full (or, if any part of such Restoration has not been
paid for, adequate security for such payment shall exist in form satisfactory to
Lender) and that there are no liens of the character referred to in said
condition (b), any balance of the insurance proceeds at the time held by Lender
shall, at Lender's option, be applied to reduce the Secured Indebtedness,
without prepayment premium, or be paid to Borrower or its designee provided
Borrower is not then in Default under and no Default Condition then exists with
respect to any of the terms or provisions of the Note, the Mortgage, or any of
the Collateral Loan Documents.
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<PAGE> 11
Section 5.8 Application of Insurance Proceeds in Event of Default. If,
while any insurance proceeds are being held by Lender to reimburse Borrower for
the cost of rebuilding or Restoration of the Premises, Lender shall be or become
entitled to. and shall accelerate the Secured Indebtedness upon the terms and
conditions set forth in the Note, Lender shall be entitled to apply all such
proceeds then held by it in reduction of the Secured Indebtedness and any excess
held by it over the amount of the Secured Indebtedness shall be returned to
Borrower or any party entitled thereto without interest.
SEE EXHIBIT A, ADDITIONAL PROVISIONS, SECTION A5.
ARTICLE 6
EMINENT DOMAIN; CONDEMNATION AWARDS
Section 6.1 Notice. In the event that the Premises, or any part thereof,
shall be taken in condemnation proceedings or by exercise of any right of
eminent domain or by conveyance(s) in lieu of condemnation (hereinafter called
collectively, "condemnation proceedings'), or should Borrower receive any notice
or information regarding any such proceeding, Borrower shall give prompt written
notice thereof to Lender. Borrower and Lender shall have the right to
participate in any such condemnation proceedings and the proceeds thereof shall
be deposited with Lender and be distributed in the manner set forth in this
Article 6. Borrower agrees to execute any and all further documents that may be
required in order to facilitate collection of any award or awards and the making
of any such deposit.
Section 6.2 Assignment of Condemnation Awards. Borrower hereby grants,
transfers and assigns to Lender the proceeds of any and all awards or claims for
damages, direct or consequential, which Borrower is otherwise entitled to
receive, in connection with any condemnation of or injury to the Premises, or
part thereof, or for conveyances in lieu of condemnation, and the same shall be
paid to Lender. Borrower hereby authorizes and directs any such condemning
authority to make payment of such award(s) and claim(s) directly to Lender. No
interest shall be allowed to Borrower on any such condemnation awards paid to
and held by Lender.
Section 6.3 Total Taking. If at any time during which any Secured
Indebtedness remains unpaid, title to the whole or substantially all of the
Premises shall be taken in condemnation proceedings or by agreement between
Borrower, Lender and those authorized to exercise such right, Lender shall apply
such award or proceeds which it receives pursuant to Section 6.2 hereof first to
pay the actual costs, fees and expenses, if any, incurred in connection with the
collection of the award, and second to full payment of all remaining Secured
Indebtedness, without prepayment premium. and any excess award funds then
remaining after payment of the Secured Indebtedness in full shall be paid to any
parry entitled thereto. In the event that the amount of the award or proceeds
received by Lender shall not be sufficient to pay in full the then unpaid
balance of the Secured Indebtedness, with the accrued interest thereon, Borrower
shall, within ten (10) days after the application of the award or proceeds as
aforesaid pay such deficiency to Lender. For the purposes of this Section
"substantially all of the Premises" shall be deemed to have been taken if the
portion of the Premises not so taken cannot be so repaired or reconstructed as
to constitute a complete, rentable structure(s) capable of producing a fair and
reasonable net annual income sufficient, after the payment of all operating
expenses thereof, to retire the Obligations per the terms of the Note.
Section 6.4 Partial Taking - Lender's Election. If at any time during which
any Secured Indebtedness remains unpaid, title to less than the whole or
substantially all of the Premises shall be taken as aforesaid, then Lender will
elect, within thirty (30) days after receipt of written notice of such taking,
whether to have the proceeds of the award applied to reduction of the unpaid
balance of the Secured Indebtedness, without prepayment premium, or to have such
proceeds made available to Borrower for the repair and reconstruction necessary
to restore the Premises. If Lender elects to have the award or proceeds applied
to reduce the unpaid balance, said proceeds shall, promptly after receipt by
Lender, be applied by Lender, first, to pay the actual costs, fees and expenses,
if any, incurred in connection with the collection of the award. and, second, to
reduction of the Secured Indebtedness, without prepayment premium, in inverse
order of payments provided for in the Note, but if such proceeds are not
sufficient to pay in full the then unpaid balance of said indebtedness, with
accrued interest thereon, Borrower shall, within ten (10) days after application
of such proceeds, pay such deficiency to Lender. If Lender elects to have the
proceeds of the award used for repair and Restoration, all of the award or
proceeds collected by Lender shall be applied first to pay the actual costs,
fees and expenses, if any. incurred in connection with the collection of the
award, and the balance shall be paid over toward the costs of demolition, repair
and Restoration. substantially in the same manner and subject to the same
conditions as those provided in Article 5 hereof with respect to insurance
proceeds and other monies. Any balance of such award proceeds remaining in the
hands of Lender after payment of such costs of demolition, repair and
Restoration as aforementioned, shall be retained by Lender and applied in
reduction of the Secured Indebtedness, without prepayment premium, in inverse
order of payments as set forth in the Note. In the event that such costs shall
exceed the net award amount collected by Lender, Borrower shall pay the
deficiency, on demand.
Section 6.5 Abandonment; Failure of Borrower to Respond to Offer, etc. If
the Premises are abandoned by Borrower or if after notice to Lender arid/or
Borrower that the condemnor offers to make an award or settle a claim for
damages, Borrower fails to respond to the offer and fails to advise Lender
within thirty (30) days of the date of such notice. then Lender is authorized to
collect and apply the proceeds at the Lender's option either (a) to restore and
repair the Premises as provided in Section 6.4, or lb) to the Secured
Indebtedness, without prepayment premium, in inverse order of payments as set
forth in the Note, with any excess held by it over the amount of the Secured
Indebtedness to be returned to Borrower or any party entitled thereto without
interest.
Section 6.6 Application of Proceeds. In the event that the principal
balance secured by the Mortgage is reduced under the provisions of Sections 6.3,
6.4 or 6.5 hereof, the application of such proceeds to principal shall not
extend or postpone the due date of the monthly installments or change the amount
of such installments as provided in the Note. Borrower shall be entitled to
reamortize the payment schedule of the Note.
Section 6.7 Expenses. In the case of any taking covered by the provisions
of this Article 6, Lender shall be entitled to reimbursement from any awards or
proceeds of all reasonable costs, attorneys' fees and expenses incurred in the
negotiation, settlement, determination and collection of any such awards or
proceeds.
Section 6.8 Application of Condemnation Awards in Event of Default. If,
while any condemnation awards or proceeds are being held by the Lender, Lender
shall be or become entitled to. and shall accelerate the Secured Indebtedness
upon the terms and conditions set forth in the Note, then Lender shall be
entitled to apply all such condemnation awards then held by it in reduction of
the Secured Indebtedness and any excess held by it over the amount of the
Secured Indebtedness shall be returned to Borrower or any party entitled thereto
without interest.
SEE EXHIBIT A, ADDITIONAL PROVISIONS, SECTION A5.
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ARTICLE 7
ENVIRONMENTAL MATTERS
Section 7.1 Environmental Indemnity Agreements. Borrower shall cause itself
and any other parties required by Lender, as listed in Section 2.2(e), to
execute and deliver Environmental Indemnity Agreements in favor of Lender
relating to hazardous and toxic substances and environmental laws as the same
may affect Borrower or the Premises, such agreements to be in form and content
acceptable to Lender in its sole discretion.
Section 7.2 Entry Upon Premises. See Exhibit A, Additional Provisions,
Section A9.
ARTICLE 8
DEFAULTS AND REMEDIES
Section 8.1 Events of Default. The occurrence of any one or more of the
following events shall be considered a Default under this Loan Agreement;
(a) Breach of Warranty. The determination by Lender that any
representation or warranty made in this Loan Agreement was incorrect in any
material respect as of the date thereof;
(b) Breach of Covenant. The failure of Borrower punctually and
properly to perform any covenant or agreement contained in this Loan Agreement;
or
(c) Other Documents. The occurrence of a Default by Borrower or any
guarantor of the Secured Indebtedness under the Note, the Mortgage, or any other
Collateral Loan Document.
Section 8.2 Remedies. Upon the happening of any Default:
(a) Acceleration. Lender may, at its option and subject to applicable
law, declare the entire principal amount of all Obligations then outstanding,
including interest accrued thereon, to be immediately due and payable without
presentment, demand, protest. notice of protest, or dishonor or other notice of
Default of any kind, all of which are hereby expressly waived.
(b) Preservation of Financing. Lender may, at its option, take any
action necessary to cure or prevent a default under any other tender's
commitment to provide financing with respect to any or all of the Premises.
(c) Preservation of Collateral. Lender may, at its option, take any
action necessary to cure or prevent any impairment of the value or to remove any
Encumbrance of the Collateral.
(d) Appointment of Managing Agent. Without limiting the other remedies
granted Lender hereunder. Lender may, at its option, require that Borrower
employ a managing agent (suitable to Lender) for the Premises at Borrower's
expense. See Exhibit A, Additional Provisions, Section A8.
(e) Exercise of Remedies. Lender may, at its option, exercise all
other remedies afforded Lender under the Note. the Mortgage. and the Collateral
Loan Documents and all other rights afforded a creditor under applicable law or
principles of equity.
Section 8.3 Additional Amount Due After Acceleration. Upon the occurrence
of any Default under the Note, the Mortgage, or any Collateral Loan Document and
following the acceleration of maturity of the Secured Indebtedness, as provided
in the Mortgage, there shall be due and payable, in addition to all other
amounts due, the prepayment premium calculated as provided in the Note.
Section 8.4 Remedies Not Exclusive. The rights and remedies of Lender
arising under the Note, the Mortgage, and the Collateral Loan Documents shall be
separate, distinct and cumulative and no such right or remedy shall be exclusive
of any other right or remedy under any of such documents or at law or equity.
ARTICLE 9
MISCELLANEOUS PROVISIONS
Section 9.1 Right to Inspect; Right to Require Management Agent. Lender,
its officers, employees or agents, shall have the right to visit and inspect the
Premises at all reasonable times and as often as Lender may reasonably desire at
Lender's expense unless such right is exercised during the pendency of an
uncured Default. Without limiting the foregoing, Lender and its agents and
consultants shall have the right to enter upon the Premises from time to time to
perform the inspections, audits. etc. referred to in Section 7.2, and in
addition to examine Borrower's books of record and accounts in regard to any
Collateral, to take copies and extracts from such books of record and accounts,
and to discuss the affairs, finances and accounts of Borrower with Borrower's
respective officers. accountants and auditors. At any time during Default by the
Borrower in the performance of any of the terms, covenants or provisions of the
Note, the Mortgage, or any of the Collateral Documents, if the Lender (in the
exercise of reasonable business judgment) determines that the management or
maintenance of the Premises is unsatisfactory, then Lender shall have the right
at its sole option, to require that Borrower employ a managing agent for the
Premises, or replace the existing managing agent. as applicable. Such managing
agent shall be selected by Borrower (with Lender's approval) and shall be
employed at Borrower's expense. The exercise of the rights herein conferred upon
the Lender shall not be deemed an election of remedies or exclusive of any other
right or remedy available to the Lender on account of such Default, but rather
shall be in addition to all such other rights and remedies. The rights granted
Lender in this Section may be enforced by injunctive relief.
SEE EXHIBIT A, ADDITIONAL PROVISIONS, SECTION A8.
Section 9.2 No Effect on Liability. Without affecting the liability of any
other Person liable with respect to the Obligations and without affecting the
lien or charge of the Mortgage upon any portion of the Premises not then or
theretofore released as security for the Obligations, Lender may from time to
time and without notice (a) release any Person so liable, (b) extend the
maturity or alter any of the terms of any of the Obligations, (c) grant other
indulgences, (d) release or reconvey, or cause to be released or reconveyed, any
parcel, portion or all of the Premises, (e) take or release any other or
additional security for any Obligation, or (f) make compositions or other
arrangements with debtors in relation thereto. No sale of the Premises shall in
any way affect the liability of any party to the Note, or any Person liable or
to become liable with respect to the Obligations. The defenses of impairment of
Collateral and impairment of recourse and any requirement of diligence on
Lender's part in collecting the Obligations are hereby waived.
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Section 9.3 Renewal, Extension or Rearrangement. All provisions of this
Loan Agreement relating to Obligations shall apply with equal force and effect
to each and all promissory notes executed hereafter which in whole or in part
represent a renewal, extension for any period, increase, or rearrangement of any
part of the Obligations originally represented by any part of such other
Obligations.
Section 9.4 No Marshalling of Assets. Lender may proceed against any
Collateral and against parties liable therefor in such order as it may elect,
and neither Borrower nor any surety or guarantor for Borrower nor any creditor
of Borrower shall be entitled to require Lender to marshal assets. The benefit
of any rule of law or equity to the contrary is hereby expressly waived.
Section 9.5 Transfer of Loan. Lender may, from time to time, in its sole
discretion, and without notice to Borrower, sell the Loan or participations
therein to such investors or financial institutions as it may elect. Lender may
from time to time disclose to any purchaser or prospective purchaser such
information as Lender may have regarding the financial condition, operations,
and prospects of Borrower and any guarantor of the Secured Indebtedness.
Section 9.6 Notices. Whenever Lender or Borrower desires to give or serve
any notice, demand, request or other communication with respect to the Note, the
Mortgage, or any Collateral Loan Document, each such notice, demand, request or
other communication shall be in writing and shall be effective only if and when
the same is (i) delivered by personal service; (ii) mailed by certified mail,
postage prepaid, return receipt requested, the delivery of which shall be deemed
to have occurred on the day on which such mailing is received or receipt
refused, or (iii) delivered by nationwide overnight delivery service (with
charges prepaid). All notices must be addressed to the following addresses:
LENDER
The Lincoln National Life Insurance Company
c/o Lincoln Investment Management, Inc.
200 East Berry Street
P.O. Box 2390
Fort Wayne, Indiana 46802
Attention: Loan Servicing, Financial Services, Loan No. 158156
BORROWER
RAMCO-GERSHENSON PROPERTIES, L.P.
27600 NORTHWESTERN HIGHWAY
SUITE 200
SOUTHFIELD, MICHIGAN 48034
Any party may at any time change its address for such notices by delivering
or mailing to the other parties hereto, as aforesaid, a notice of such change.
However. nothing in this section shall be construed to require Lender to give
any notice of Default or notice of intent to accelerate.
Section 9.7 Joint and Several Liability. If Borrower consists of more than
one party, then such Borrowers shall be jointly and severally liable under any
and all Obligations, covenants and agreements of the Borrower.
Section 9.8 Severability. In case any one or more of the covenants,
agreements, terms or provisions in the Note. the Mortgage, or any Collateral
Loan Document shall be invalid, illegal or unenforceable in any respect, the
validity of the remaining covenants, agreements, terms or provisions shall in no
way be affected, prejudiced or disturbed thereby, and to this end the provisions
of the Note, the Mortgage, and the Collateral Loan Documents are declared to be
severable.
Section 9.9 Binding Effect; No Assignment. This Loan Agreement shall be
binding upon and inure to the benefit of the respective heirs, successors and
assigns of Borrower and Lender, except that Borrower shall not assign any rights
or delegate any obligations arising hereunder without the prior written consent
of Lender, which may be withheld in Lender's sole discretion. Any attempted
assignment or delegation by Borrower without such required prior consent shall
be void.
Section 9.10 Entire Agreement. The Note, the Mortgage, and the Collateral
Loan Documents represent the entire agreement between the parties concerning the
subject matter hereof, and all oral discussions and prior agreements are merged
herein and therein. Provided, if there is a conflict among any documents
executed contemporaneously herewith with respect to the Obligations, the
provision most favorable to Lender shall control.
Section 9.11 Counterparts. This Loan Agreement may be executed by
counterpart signature pages, and it shall not be necessary that the signatures
of all parties be contained on any one counterpart. Each counterpart shall be
deemed an original, but all of them together shall constitute one and the same
instrument.
Section 9.12 Negotiated Document. The Note, the Mortgage, and the
Collateral Loan Documents have been negotiated by the parties with full benefit
of counsel and should not be construed against either party as author.
Section 9.13 Not Partners; No Third Party Beneficiaries. Nothing contained
herein or in any related document shall be deemed to render Lender a partner of
Borrower for any purpose. This Loan Agreement has been executed for the sole
benefit of Lender, and no third party is authorized to rely upon Lender's rights
hereunder or to rely upon an assumption that Lender has or will exercise its
rights under this Loan Agreement or under any document referred to herein.
Section 9.14 Governing Law. The validity, construction and enforcement of
the Note, the Mortgage, and the Collateral Loan Documents shall be determined
according to the laws of Michigan, applicable to contracts executed and
performed entirely within that state.
Section 9.15 Modification Procedure. None of the Note, the Mortgage, or any
Collateral Loan Document may be modified except by an instrument in writing
executed by the party against whom enforcement of the change is sought. No
requirement of the Note, the Mortgage, or any Collateral Loan Document may be
waived at any time except by a writing signed by both parties. nor shall any
waiver be deemed a waiver of any subsequent breach or Default of Borrower.
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<PAGE> 14
Section 9.16 No Waiver. Failure to accelerate the maturity of the
Obligations, or any portion thereof, upon the occurrence of any Default, or
acceptance of any sum after the same is due, or acceptance of any sum less than
the amount then due, or failure to demand strict performance by Borrower of the
provisions of the Note, the Mortgage, or any Collateral Loan Document or any
forbearance by Lender in exercising any right or remedy hereunder or otherwise
afforded by law shall not constitute a waiver by Lender of any provision of the
Note, the Mortgage, or any Collateral Loan Document nor nullify the effect of
any previous exercise of any such option to accelerate or other right or remedy.
Section 9.17 Captions. The headings or captions of the Articles. sections.
paragraphs, and subdivisions of this Loan Agreement and of the Note, the
Mortgage, and the remainder of the Collateral Loan Documents are for convenience
of reference only, are not to be construed a part hereof or thereof, and shall
not be construed as affecting the content of any such Article, section,
paragraph or subdivision.
Section 9.18 Incorporation of Exhibits. All Exhibits, if any, referred to
in this Loan Agreement are incorporated herein by this reference.
Section 9.19 Time of Essence. Tune is of the essence of this Loan
Agreement, the Note, the Mortgage, and the remainder of the Collateral Loan
Documents, and all dates and time periods specified herein or therein shall be
strictly observed.
Section 9.20 Gender and Number. Words used in this Loan Agreement, the
Note, the Mortgage, or in the remainder of the Collateral Loan Documents
indicating gender or number shall be read as context may require.
Section 9.21 Maximum Interest Payable. None of the provisions of the
Mortgage. the Note, or the Collateral Loan Documents shall have the effect of,
or be construed as, requiring or permitting Borrower to pay interest in excess
of the highest rate per annum allowed by the laws of the state in which the
Premises are located on any item or items of indebtedness referred to herein. If
under any circumstances Lender shall ever receive as interest an amount which
would exceed the highest lawful rate, such amount which would be excessive
interest shall, ipso facto, be applied to the reduction of the unpaid principal
balance due hereunder and not to the payment of interest.
Section 9.22 Payment by any Party. Any payment made in accordance with the
terms of the Note, the Mortgage, or any of the Collateral Loan Documents by any
Person at any time liable for the payment of the whole or any pan of the Secured
Indebtedness, or by any subsequent owner of the Premises, or by any other Person
whose interest in the Premises might be prejudiced in the event of a failure to
make such payment, or by any stockholder, officer or director of a corporation
which at any time may be liable for such payment or may own or have such an
interest in the Premises, or by any partner, limited partner, or an affiliate of
any partnership which at any time may be liable for such payment or may own or
have such an interest in the Premises shall be deemed, as between Lender and all
Persons who at any time may be liable as aforesaid or who may own the Premises,
to have been made on behalf of all such Persons.
Section 9.23 Fee for Services Rendered. Lender further reserves the right
to assess Borrower (and the latter agrees to pay) fees for services rendered by
Lender and/or reasonable attorneys' fees in connection with the Loan or the
Premises including but not limited to modification of any documents, matters
undertaken by Lender at the request of Borrower, collection efforts regarding
mortgage payments, exercising assignments of rents or leases, and foreclosure
proceedings under the Mortgage or in pursuit of any remedies under the Note or
under any Collateral Loan Document. Said sums shall, od notice to Borrower,
become immediately due and payable to Under. If Borrower fails to make payment
of fees pursuant to this Section, then such fees shall be added to the
outstanding principal balance and shall bear interest at the Default Rate.
Section 9.24 Indemnity; Lender's Expenses. Borrower agrees to indemnify,
defend (with counsel satisfactory to Lender) and hold harmless Lender against
any loss, liability, claim or expense, including reasonable attorneys' fees,
that Lender may incur in any manner in connection with the Secured Indebtedness
or the Premises. Without limiting the foregoing, if, in order to (i) sustain the
lien of the Mortgage or its priority, (ii) protect or enforce any of its rights
under the Note, the Mortgage, or any of the Collateral Loan Documents, (iii)
recover amounts due under the Note, the Mortgage, or any of the Collateral Loan
Documents, (iv) recover any of the Obligations, or (v) appear in connection with
any action, suit, proceeding, hearing, motion or application before any court or
administrative body in which Lender may be or become a party by reason of the
Note, this Loan Agreement, the Mortgage, or any Collateral Loan Document
(through the appellate level), including but not limited to condemnation,
bankruptcy and administrative proceedings, as well as any of the foregoing where
a proof of claim is by law required to be filed, Lender shall incur or expend
any sums including but not limited to reasonable attorneys' fees, costs of title
search, continuation of abstract(s), and preparation of survey; then all such
sums shall on notice and demand be paid by Borrower, together with interest
thereon at the Default Rate and shall be a lien on the Premises, and shall be
deemed to be secured by the Mortgage. This Section shall remain in full effect
regardless of the full payment of the Secured Indebtedness, the purported
termination of this Loan Agreement, the delivery of the executed original of
this Loan Agreement to Borrower, or the content or accuracy of any
representation made by Borrower to Lender; provided, however, Lender may
terminate this Section by executing and delivering to Borrower a written
instrument of termination specifically referring to this Section.
Section 9.25 JURISDICTION. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
BORROWER HEREBY IRREVOCABLY SUBMITS TO PERSONAL JURISDICTION IN MICHIGAN AND OF
THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN FOR THE
ENFORCEMENT OF BORROWER'S OBLIGATIONS HEREUNDER, UNDER THE NOTE, THE MORTGAGE,
AND THE COLLATERAL LOAN DOCUMENTS. AND WAIVES ANY AND ALL PERSONAL RIGHTS UNDER
THE LAW OF ANY OTHER STATE TO OBJECT TO JURISDICTION WITHIN MICHIGAN FOR THE
PURPOSES OF LITIGATION TO ENFORCE SUCH OBLIGATIONS. FURTHERMORE, TO THE EXTENT
PERMITTED BY APPLICABLE LAW. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS AND COMPLAINT OR OTHER PROCESS OF THE PAPERS ISSUED THEREIN AND AGREES
THAT SERVICE MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE
BORROWER AT THE ADDRESS SET FORTH HEREIN.
Section 9.26 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING OF ANY KIND OR NATURE, IN ANY COURT IN WHICH AN ACTION MAY BE
COMMENCED, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, THE NOTE, THE
MORTGAGE, ANY COLLATERAL LOAN DOCUMENT, OR ANY OTHER MATTERS RELATING THERETO.
Section 9.27 Additional Provisions. The terms, conditions and provisions of
this Agreement are subject, in all respects, to the additional sections, if any,
set forth on Exhibit A attached hereto and incorporated herein by this
reference.
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IN WITNESS WHEREOF, the parties hereto have caused this Instrument to be
executed and delivered under seal as of the day and year first above written.
THE UNDERSIGNED ACKNOWLEDGE
A THOROUGH UNDERSTANDING OF
THE TERMS OF THIS LOAN
AGREEMENT AND AGREE TO BE
BOUND HEREBY.
BORROWER:
Signed in the presence of: RAMCO-GERSHENSON PROPERTIES, L.P., a
Delaware limited partnership
/s/ Gloria Wallick
- ------------------------------ By: Ramco-Gershenson Properties, Trust, a
Printed Name: Gloria Wallick Massachusetts business trust
---------------- General Partner
/s/ Cynthia Wallick By: /s/ Dennis Gershenson
- ------------------------------ ----------------------------------
Dennis Gershenson
Printed Name: Cynthia Wallick President
----------------
LENDER:
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY, an Indiana corporation
By: Lincoln Investment Management, Inc.,
Attorney-in-Fact
By: /s/ Lawrence T. Kissko
--------------------------------------
Lawrence T. Kissko
Title: Vice President
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EXHIBIT A
Additional Provisions to Loan Agreement
The following shall be included in the Loan Agreement, and to the extent
that there is any inconsistency between the text of the Loan Agreement and the
language hereof, the provisions set forth in this Exhibit shall control:
Section Al. Additional Loan Documents. The following additional documents
shall be included within the Collateral Loan Documents (as defined in Article
1):
(a) That certain Limited Guaranty made by Ramco-Gershenson
Properties Trust ("Guarantor") dated December 17, 1997;
(b) That certain Assignment of leases. Rents and Profits. of
even date herewith, made by Borrower in favor or Lender; and
(c) That certain Assignment of Contract Documents, Permits,
Licenses and Management Agreement and Security Agreement, of even
date herewith, made by Borrower in favor of Lender.
Section A2. Borrower's Authority. Borrower and the persons executing this
Loan Agreement on behalf of Borrower represent and warrant to Lender that
Borrower is a duly formed and validly existing limited partnership and has
qualified, to the extent necessary, in the state or states in which the Real
Property is located, and in all other jurisdictions in which Borrower owns
property or conducts business, and has full power and authority to borrow the
loan proceeds and to execute and deliver the Note, the Mortgage, and the
Collateral Loan Documents, and to perform all of the obligations of Borrower
under the Note, the Mortgage, and the Collateral Loan Documents.
Section A3. No Personal Liability for Debt. Notwithstanding any provision
of this Loan Agreement. Note, Mortgage, or Collateral Loan Documents to the
contrary. the terms and provisions set forth in Section Al of Exhibit A to the
Note are incorporated herein by this reference and shall supersede any
inconsistent provision in the Note, Mortgage. or any of the Collateral Loan
Documents.
Section A4. Financial Statements. In addition to the statements to be
delivered pursuant to Section 3.10:
Borrower shall submit to Lender on a semi-annual basis (no later than
September 30 and March 31 of each year), tenant sales information, in form and
content satisfactory to Lender, for all tenants that are required to report
sales under the terms of their leases.
The Borrower shall cause Guarantor to furnish to the Lender copies of all
those quarterly and annual reports Guarantor is required to rile with the
Securities and Exchange Commission. including but not limited to 10-K's and
10-Q's. All such reports shall be certified to be true and correct by a properly
authorized officer, partner or other party of the Guarantor. and shall be
delivered to Lender within thirty (30) days following the filing of such
reports.
Section A5 Availability of Insurance and Condemnation Proceeds.
Notwithstanding any provision of Sections 4.4, 5.3. 5.6(b) and 6.4 of this Loan
Agreement to the contrary. Lender agrees to make available insurance proceeds
for Restoration, or condemnation proceeds for repair and reconstruction, as the
case may be, subject to the following conditions:
(a) That the Borrower is not then in Default and no Default
Condition then exists;
(b) None of the major leases in the Premises shall have been
terminated as a result of such destruction or condemnation. and
the Premises shall not have substantially changed in character as
a result of any leases which shall have been terminated;
(c) Payout of such proceeds shall be pursuant to reasonable
construction payout arrangements established by Lender and at the
Sole Cost and expense of Borrower;
(d) Sufficient funds are available from either such
condemnation or insurance proceeds or from funds provided by
Borrower to complete such Restoration or repair and
reconstruction;
(e) In the case of insurance proceeds, the aggregate amount of
the estimated cost to complete such Restoration shall not exceed
90% of the then outstanding principal balance of the Loan; or in
the case of condemnation proceeds, the applicable taking
comprises less than 10% of the Premises:
(f) In Lender's judgment such Restoration or such repair and
reconstruction. as the case may be, can be completed on or before
a date which is 12 months prior to the maturity date of the Loan;
and
(g) Lender shall have received evidence satisfactory to it that
upon completing such Restoration or such repair and
reconstruction. as the case may be, the Premises will generate
sufficient cash flow to service the Loan at a ratio of 1.4 to 1.
Section A6. Self-Insurance by Tenants. Notwithstanding the provisions
of Section 4.4. it is understood that any other tenant that has a credit rating
of no less than BBB, as periodically determined by Standard & Poors, or a
similar rating by an equivalent rating agency ("Self-Insuring Tenant") may elect
to "self-insure" property and/or liability insurance under the terms of its
lease agreement. This is acceptable to Lender as long as such tenant
acknowledges and agrees to the following:
(a) Each Self-Insuring Tenant will execute a letter to Lender
confirming that such tenant has elected to self-insure pursuant
to its lease;
(b) Each Self-Insuring Tenant will furnish to Lender a
statement of such tenant's net worth, upon written request by
Lender, if, at any time, it is not a publicly held company;
A-1
<PAGE> 17
(c) If, at any time, (i) a Self-Insuring Tenant's credit rating
falls below BBB, as described in the first paragraph, for more
than one (1) year, or (ii) if the Indiana Insurance Commissioner
challenges or objects to its being self-insured, Borrower will
obtain policies of insurance as required hereunder and will
provide certificates of insurance; and
(d) As each Self-Insuring Tenant may elect to self-insure,
Lender will be relying on the credit of such tenant and,
accordingly, all arrangements regarding self-insurance must
involve the credit of and obligations of such tenant, all in a
manner satisfactory to Lender.
Section A7. Insurance Coverages. The following is added to the end of
Section 4.4(a):
In satisfaction of the foregoing requirements, Lender will accept (a) a
Certificate of (blanket) Insurance relating to liability coverage, and (b)
evidence of blanket coverage insurance with appropriate endorsements, as to all
other coverage required hereunder.
Section A8. Installation of New Management. Lender agrees not to exercise
its right under Section 8.2(d) or 9.1 to require new management until forty-five
(45) days have elapsed following the earlier to occur of (a) a Default or (b) a
Default Condition.
Section A9. Entry Upon Premises. In the event of either (a) a Default, or
(b) a breach of any provision of Section 3 of the Environmental Indemnity
Agreement, upon reasonable prior notice (except that prior notice shall not be
required in case of emergency), Lender, its agents and constituents shall have
the right to enter upon the Premises from time to time to perform such
environmental inspections, audits, tests and site assessments as Lender deems
necessary, and all costs incurred by Lender shall be reimbursed according to the
Environmental Indemnity Agreement.
In all other cases, upon five (5) days' prior notice (except in the case of
emergency or if prior notice is not practicable), Lender and its agents and
consultants shall have the right to enter upon the Premises from time to time to
perform such environmental inspections, audits, tests and site assessments as
Lender deems necessary, provided that in such event, said inspections, audits.
tests and site assessments shall be at Lender's expense, and said entry shall be
reasonably coordinated with Borrower and/or its agents so as to minimize
interference with the affairs of Borrower and its tenants.
Section A10. Letter of Credit.
(a) Simultaneously with the execution hereof, Borrower has delivered to
Lender that certain $500,000.00 Irrevocable Letter of Credit No. 50061742 dated
December 17, 1997 and having an expiration date of December 21, 1998 (the
"Letter of Credit") issued by BankBoston, N.A. ("Bank") to Lender as additional
security for the Loan.
(b) The Letter of Credit issued to Lender is, and any renewals or
replacements thereof shall be clean. unconditional and irrevocable and in form
satisfactory to Lender, payable on Lender's sight draft thereon without any
conditions and without requiring any accompanying documentation other than the
Letter of Credit itself. The Letter of Credit shall not be a "Standby" letter of
credit.
(c) The initial Letter of Credit shall expire no sooner than twelve (12)
months from the date hereof. If and so long as all or any portion of the Secured
Indebtedness remains outstanding, the Letter of Credit must be satisfactorily
renewed or replaced with replacement letters of credit meeting all of the above
requirements except that the expiration date shall be no less than twelve (12)
months from the date of issuance. Such renewal or replacement letters of credit
must be in Lender's hands no later than thirty (30) days prior to the expiration
of the then current letters of credit. Borrower shall be responsible for
obtaining such renewal or replacement Letter of Credit at its sole expense.
Failure to renew the Lender of Credit in accordance with the foregoing will
entitle Lender to present the Letter of Credit for payment and apply the
proceeds to repayment of the Secured Indebtedness without repayment premium.
(d) Borrower understands that Lender is relying upon the financial
condition of Bank as a primary inducement to Lender to consummate the
transactions contemplated herein. In the event Moody's rating on Bank's long
term senior debt becomes less than BBB while the Letter of Credit is
outstanding, Lender may notify Borrower of such fact, and Borrower shall have
twenty (20) days from the date of such notice within which to either (i) secure
the Letter of Credit with additional collateral acceptable to Lender in its sole
discretion; (ii) provide a substitute letter of credit in the same form as the
Letter of Credit but issued by a banking institution reasonably satisfactory to
Lender having its senior long term debt rated at least BBB by Moody's or
equivalent rating service; or (iii) have the Letter of Credit confirmed by a
banking institution reasonably satisfactory to Lender having its senior long
term debt rated at least BBB by Moody's or equivalent rating service. Failure to
do one of the foregoing within such time shall constitute a Default hereunder
and shall entitle Lender to present the Letter of Credit for payment at any time
after such Default.
(e) So long as no Default or Default Condition has occurred upon the
occurrence of the rent commencement date, when Pep Boys (or another tenant
acceptable to Lender (in its sole discretion) begins paying rent on the space
currently referred to as "Major D" on the site plan of the Premises pursuant to
a ground lease acceptable to Lender in its sole discretion, with minimum 15 year
term at an annual net rent of at least $65,000 (or other terms satisfactory to
Lender in its sole discretion), the Letter of Credit shall be released upon
delivery to Lender of an estoppel certificate from the applicable tenant, in
form and content acceptable to Lender in its sole discretion.
(f) In the event that Borrower fails to qualify for release of the Letter
of Credit within twelve (12) months from the date hereof, then Lender shall have
the right (but not the obligation) to present the Letter of Credit for payment,
and any amounts drawn under the Letter of Credit and applied to principal
outstanding under the Note shall not be subject to the prepayment premium
described in the Note. In the event of a Default, in addition to any or all of
its other remedies contained in the Note, the Deed of Trust, this Loan
Agreement, or any other Collateral Loan Document. Lender shall have the right
(but not the obligation) to present the Letter of Credit for payment and apply
the proceeds to the Secured Indebtedness, and such application shall be subject
to the prepayment premium set forth in the Note.
Section A11. Extent of the Recourse Obligations. All persons having any
claim against the Ramco-Gershenson Properties Trust (the "Trust") hereunder or
in connection with any matter that is the subject hereof shall look solely to
the trust assets of the Trust, and in no event shall such obligations of the
Trust be enforceable against any shareholder, trustee, officer, employee or
agent of the Trust personally.
A-2
<PAGE> 18
This Exhibit shall not be binding and shall have no force and effect,
unless executed by both of the parties to the Loan Agreement below:
THE UNDERSIGNED ACKNOWLEDGE A
THOROUGH UNDERSTANDING OF THE TERMS
OF THIS LOAN AGREEMENT AND AGREE TO
BE BOUND HEREBY.
Signed in the presence of: RAMCO-GERSHENSON PROPERTIES, L.P., a
Delaware limited partnership
/s/ Gloria Wallick
--------------------------- By: Ramco-Gershenson Properties Trust a
Printed Name: Gloria Wallick Massachusetts business trust
-------------- General Partner
/s/ Mitch Meisner By: /s/ Dennis Gershenson
-------------------------- ---------------------------
Printed Name: Mitch Meisner Dennis Gershenson
------------- President
LENDER:
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY, an Indiana corporation
By: Lincoln Investment Management.
Inc., Attorney-in- Fact
By: /s/ Lawrence T. Kissko
---------------------------
Lawrence T. Kissko
Title: Vice President
---------------------
A-3
<PAGE> 1
EXHIBIT 10.39
Loan No: 158186
NOTE
$8,500,000.00
December 17,1997
FOR VALUE RECEIVED, the undersigned, RAMCO-GERSHENSON PROPERTIES, LP.,
a Delaware limited partnership, whose address is 27600 Northwestern Highway,
Suite 200, Southfield, Michigan 48034 ("Maker"), promises to pay to the order of
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, an Indiana corporation ("Holder"),
the principal sum of Eight Million Five Hundred Thousand Dollars and No Cents
($8,500,000.00), with interest from date as hereinafter provided, both principal
and interest payable c/o Lincoln Investment Management, Inc., 200 East Berry
Street, P. O. Box 2390, Fort Wayne, Indiana 46802, Attention Loan Servicing,
Financial Services, Loan No. 158156, or at such other place as the Holder of
this Note may designate from time to time.
1. As used in this Note, the term "Maker" shall include the successors
and assigns of the person or entity executing this Note, and the term "Holder"
and/or "Lender" shall include the successors and assigns of The Lincoln National
Life Insurance Company.
2. All payments, both of interest and principal, shall be paid in
lawful money of the United States.
3. Until directed otherwise in writing by the Holder, all payments
under this Note shall be made by Electronic Fund Transfer debit entries to the
Maker's account at an Automated Clearing House ("ACH") member bank. Each payment
shall be initiated by the Holder (or, at Holder's option, by its loan servicing
agent at no cost to Borrower) through the ACH Network for settlement on the
respective due dates. Prior to each payment due date, the Maker shall deposit
and/or maintain sufficient funds in its account to cover each debit entry.
Notwithstanding the foregoing, the failure, for whatever reason, of the
Electronic Funds Transfer debit entry transaction to be timely completed shall
not relieve the Maker from its obligations to promptly and timely make all
payments called for under this Note when due and to comply with Maker's other
obligations hereunder.
4. This obligation shall bear interest from the date hereof as the rate
of Seven and 17/100 percent (7.17%) per annum based on a 360-day year (the
"interest Rate") until maturity. Payments of interest from the date hereof
through the next occurring tenth (10th) day of the month shall be paid in
advance on the date hereof. Monthly installments of Sixty-six Thousand Seven
Hundred Seventy Dollars and Fifty-six Cents ($66,770.56) each shall become due
beginning on February 10, 1998, and a like sum on the tenth (10th) day of each
consecutive month thereafter (provided, however, in the event the tenth (10th)
day of the month is a Saturday, a Sunday, or a legal holiday, payment shall be
due on the immediately preceding business day). On January 10, 2006 (the
"Original Maturity Date"), the entire principal balance and accrued interest
then owing shall become immediately due and payable; it is acknowledged by
Maker, however, that the foregoing payments will not fully amortize the entire
principal sum payable hereunder and that, accordingly, the payment due on
January 10, 2006, will be a "balloon" payment which is substantially larger in
amount than those preceding the same. Each monthly payment shall be credited fir
toward sums other than interest and principal due Holder under this Note, the
Mortgage, or the Collateral Loan Documents (as hereinafter defined), then toward
all interest then due, and then, subject to any provisions hereof prohibiting,
restricting or conditioning prepayment of principal, any amounts remaining shall
be credited to reduce the amount of the principal then outstanding.
5. This Note is secured by a Mortgage (the "Mortgage") of even date
herewith, in favor of one or more mortgagees thereunder, for the benefit of
Holder, encumbering, among other things, certain real estate and other property
more particularly described in Exhibit A attached thereto and made a part
thereof (the "Premises"). This Note shall be governed by and construed in
accordance with the laws of Michigan.
6. At the option of the Holder of this Note, the entire principal
balance and accrued interest owing hereon shall at once become due and payable
without notice or demand upon the occurrence at any time of any of the following
events, (hereinafter sometimes referred to as a "Default") and continuance of
such Default beyond any period which cure is expressly permitted in this Note,
the Mortgage or the Collateral Loan Documents (as hereinafter defined):
(a) Default in the payment of installment of principal or
interest due hereunder on the date such payment shall be due and payable under
the terms of this Note or the failure to pay any other sum of money due under
this Note (time is of the essence of this Note), the Mortgage, or any other
agreement or instrument securing or pertaining g to this Note or the
indebtedness evidenced hereby, including but not limited to that certain Loan
Agreement of even date herewith by and between Maker and Holder and the
Commitment and the Environmental Indemnity Agreements (as defined in the Loan
Agreement) (such other agreements and instruments being collectively referred to
herein as the "Collateral Loan Documents"), on the date such sum of money is due
and payable;
(b) The occurrence of any Default, other than a Default under
Section (a) above, under this Note, the Mortgage, or any of the Collateral Loan
Documents; or
(c) The filing by or against the Maker of this Note, or any
guarantor or surety of the payment of the indebtedness evidenced by this Note,
of a proceeding in bankruptcy or arrangement or reorganization pursuant to the
Federal Bankruptcy Code or any similar law, federal or state, including but not
limited to:
(i) Maker or any guarantor or surety shall file a voluntary
petition in bankruptcy or shall be adjudicated a bankrupt or insolvent, or shall
file any petition or answer seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future federal, state or other statute,
law or regulation relating to bankruptcy, insolvency or other relief for
debtors, or shall seek or consent to or acquiesce in the appointment of any
trustee, receiver or liquidator of Maker or any such guarantor or surety or of
all or any part of the Premises or of all or any of the royalties, revenues,
rents, issues or profits thereof, or shall make any general assignment for the
benefit of creditors, or shall admit in writing its inability to pay or shall
fail to pay its debts generally as they become due; or
(ii) A court of competent jurisdiction shall enter an
order, judgment or decree approving a petition filed against Maker or any
guarantor or surety seeking any reorganization, dissolution or similar relief
under any present or future federal, state or other statute, law or regulation
relating to bankruptcy, insolvency or other relief for debtors, or Maker or any
guarantor or surety shall be the subject of an order for relief entered by such
a court, and such order, judgment or decree shall remain unvacated or unstayed
for an aggregate of sixty (60) days (whether or not consecutive) from the first
date of entry thereof, or any trustee, receiver, custodian or liquidator of
Maker or any guarantor or surety or of all or any part of the Premises
<PAGE> 2
or of any or all of the royalties, revenues, rents, issues or profits thereof
shall be appointed without the consent or acquiescent of Maker or any such
guarantor or surety and such appointment shall remain unvacated and unstayed for
an aggregate of sixty (60) days (whether or not consecutive).
7. All installments of interest and the principal, or any portion
thereof, not paid when due, if permitted by applicable law, shall bear interest
at a rate equal to the lesser of four percent (4%) in excess of the Interest
Rate or the Highest Lawful Rate (as hereinafter defined) (the "Default Rate").
During the existence of any Default hereunder, under the Mortgage or under the
Collateral Loan Documents, the entire unpaid balance hereunder shall , at the
Holder hereof, bear interest at the Default Rate.
8. Except as may otherwise be expressly set forth herein, Maker
and all of the parties now or hereafter liable for payment hereof, whether as
guarantor, surety or otherwise, severally waive demand, presentment, notice of
dishonor, notice of Default, notice of intent to accelerate, diligence in
collecting, grace, notice and protest, and consent to all extensions which from
time to time may be granted by the Holder hereof and to all partial payments
hereon, whether before or after maturity.
9. Without prejudice to any other provision herein, if permitted
by applicable law the Holder hereof may collect a late charge equal to four
percent (4%) of any installment not paid under the terms of this Note and of any
payment to be made under the Mortgage or any of the Collateral Loan Documents
securing same if said installment or payment is not paid when due, to cover the
extra expense in handling delinquent payments; provided that such late charge
shall not, itself or together with other interest to be paid on the indebtedness
evidenced by this Note or indebtedness arising under the Mortgage or under the
Collateral Loan Documents, exceed the Highest Lawful Rate. Late charges shall
not be payable on installments or payments which would have fallen due after
acceleration upon Default, unless the Holder hereof later waives such
acceleration and accepts payment of all principal then due with accrued interest
at the Default Rate. Said fee or late charge shall be added to and become a part
of the next succeeding monthly payment as required hereunder, or , at Holder's
option, may be deducted from that portion of the installment applicable to the
reserve for future tax and insurance payments, if such a reserve is maintained,
or become part of the indebtedness evidenced by this Note. Said late charge
shall not apply to the payment due on the Original Maturity Date if such payment
is received no later than January 17, 2006.
10. If this Note is not paid when due, whether at maturity or by
acceleration, or if it is collected through a bankruptcy, probate or other court
proceeding, or if this note, the Mortgage, or any Collateral Loan Document is
otherwise placed in the hands of an attorney for collection or enforcement,
whether before or after maturity of this Note, or if Holder shall be made a
party to any litigation merely because of the existence of this Note, the
Mortgage, or any Collateral Loan Document, Maker agrees to pay all costs
incurred by Holder in connection with this Note, the Mortgage, or the Collateral
Loan Documents, including, but not limited to, reasonable attorneys' fees, and
all other costs and expenses associated with court and/or administrative
proceedings through the appellate level, costs of title search, environmental
assessments and studies, continuation of abstracts(s) and preparation of survey,
and costs incurred by reason of any action, a suit, proceeding, hearing, motion
or application before any court or administrative body in which the Holder may
be for become a party by reason of this Note, the Mortgage, or any Collateral
Loan Document, including but not limited to condemnation, bankruptcy, and
administrative proceedings, as well as any other of the foregoing where a proof
of claim is by law required to be filed, or in which it becomes necessary to
defend or uphold the terms of this Note, the Mortgage, or any Collateral Loan
Documents.
11. Regardless of any provision contained in this Note, the
Mortgage, or the Collateral Loan Documents, the Holder hereof shall never be
entitled to receive, collect or apply as interest on this Note, any amount in
excess of the Highest Lawful Rate (as hereinafter defined) and, in the event the
Holder hereof ever receives, collects or applies as interest any such excess,
such amount which would be excessive interest shall be deemed a partial
prepayment of principal and treated under this Note as such and such prepayment
shall not be subject to any prepayment premium; and, if the principal of this
Note is paid in full, any remaining excess shall forthwith be paid to Maker. In
furtherance of the foregoing, Holder and Maker stipulate and agree that none of
the terms and provisions contained in this Note, the Mortgage or any Collateral
Loan Document shall ever be construed to create a contract to pay interest at a
rate in excess of the Highest Lawful Rate. In determining whether or not the
interest paid or payable, under any specific contingency, exceeds the Highest
Lawful Rate, Maker and the Holder hereof shall, to the maximum extent permitted
under applicable law, (1) characterize any nonprincipal payment as an expense,
fee or premium rather than as interest (ii) exclude voluntary prepayments and
the effects thereof, and (iii)amortize, prorate, allocate and spread, in equal
parts, the total amount of interest throughout the entire contemplated term of
this Note so that the interest rate is uniform throughout the entire term
thereof; provided that if this Note is paid and performed in full prior to the
end of the full contemplated term thereof, and if the interest received would
exceed the Highest Lawful Rate, then Holder shall refund to Maker the amount of
such excess or credit the amount of such excess against the principal of this
Note, and in such event, the Holder shall not be subject to any penalties
provided by law for contracting for, charging or receiving interest in excess of
the Highest Lawful Rate. "Highest Lawful Rate" shall mean the maximum rate of
interest which Holder hereof is allowed to contract for, charge, take reserve or
receive under applicable law after taking into account, to the extent required
by applicable law, any and all relevant payments or charges under this note, the
Mortgage, or any of the Collateral Loan Documents. The term "applicable law" as
used herein shall mean the laws of Michigan or the laws of the United States,
whichever laws allow the greater rate of interest, as such laws now exist or may
be changed or amended or come into effect in the future.
12. No prepayments of the indebtedness hereunder shall be
permitted, this Note being closed to prepayment, except as expressly permitted
in Exhibit A, Additional Provisions, Section A3.
13. Upon the occurrence of any Default under this Note, the
Mortgage, or the Collateral Loan Documents during any period when this Note is
closed to prepayment, and following the acceleration of maturity of the
indebtedness evidenced hereby as herein provided, if permitted by applicable
law, there shall be due and payable as a part of the indebtedness evidenced
hereby any amount equal to the greater (all as calculated by the Holder) of (i)
the present value (discounted at the Treasury Rate, as hereinafter defined) of
the excess (if any) obtained by subtracting the effective annual compounded
yield (at the time of such acceleration) of United States Treasury Issues (other
than so-called "flower bonds") with maturity dates that match, as closely as
possible, the Original Maturity Date (the "Treasury Rate") from the effective
annual compounded yield of this Note, multiplied by the outstanding principal
balance (at the time of acceleration), multiplied by the number of years (and
any fraction thereof) remaining between the date of acceleration and the
Original Maturity Date (such amount will be computed as if the amount determined
in accordance with the preceding sentence were paid in equal monthly
installments after the date of such acceleration through the Original Maturity
Date); or (ii) five percent (5%) of the outstanding principal balance (at the
time of acceleration) of this Note.
2
<PAGE> 3
14. If there be more than one Maker of this Note, the obligations
of each Maker hereunder shall be joint and several.
15. TO THE EXTENT PERMITTED BY APPLICABLE LAW, MAKER HEREBY
IRREVOCABLY SUBMITS TO PERSONAL JURISDICTION IN MICHIGAN AND OF THE UNITED
STATES DISTRICT COURT FOR THE EASTERN DISTRICT TO MICHIGAN FOR THE ENFORCEMENT
OF MAKER'S OBLIGATIONS HEREUNDER, UNDER THE MORTGAGE, AND THE COLLATERAL LOAN
DOCUMENTS (AS DEFINED IN THE MORTGAGE), AND WAIVES ANY AND ALL PERSONAL RIGHTS
UNDER THE LAW OF ANY OTHER STATE TO OBJECT TO JURISDICTION WITHIN MICHIGAN FOR
THE PURPOSE OF LITIGATION TO ENFORCE SUCH OBLIGATIONS. FURTHERMORE, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, MAKER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS AND COMPLAINT OR OTHER PROCESS OF THE PAPERS ISSUED IN CONNECTION WITH
SUCH LITIGATION AND AGREES THAT SERVICE MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO THE MAKER AT THE ADDRESS SET FORTH HEREIN.
16. TO THE EXTENT PERMITTED BY APPLICABLE LAW, MAKER HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND
OR NATURE, IN ANY COURT IN WHICH AN ACTION MAY BE COMMENCED, ARISING OUT OF OR
IN CONNECTION WITH THIS NOTE, THE MORTGAGE, ANY COLLATERAL LOAN DOCUMENT, OR ANY
OTHER MATTERS RELATED THERETO.
17. The terms, conditions and provisions of this Note are subject,
in all respects, to the additional provisions set forth on Exhibit A attached
and incorporated herein by this reference.
3
<PAGE> 4
IN WITNESS WHEREOF, the undersigned have executed and delivered under
seal this Note as of the day and year first above written.
MAKER
Signed in the presence of: RAMCO-GERSHENSON PROPERTIES, L.P. a
Delaware limited partnership
/s/ Gloria Wallick
- -------------------------------- By: Ramco-Gershenson
Printed Name: Gloria Wallick Properties Trust, a
------------------- Massachusetts business
trust General Partner
/s/ Cynthia Benerjee By: /s/ Dennis Gershenson
- ------------------------------- -----------------------
Printed Name: Cynthia Benerjee Dennis Gershenson
------------------ President
4
<PAGE> 5
EXHIBIT A
ADDITIONAL PROVISIONS TO NOTE
Section A1. No Personal Liability for Debt. Notwithstanding any other provision
of this Note, the Mortgage, or the Collateral Loan Documents to the contrary,
except as provided in this Section A1, the execution of this Note shall impose
no personal liability on the Maker for payment of the indebtedness evidenced
hereby or secured by the Mortgage. Holder shall look only to the Premises and to
the rents, issues and profits thereof, and other collateral identified in the
Mortgage and the Collateral Loan Documents, and in the event of a Default will
not seek any deficiency or personal judgment against Maker except such judgment
or decree as may be necessary to foreclose and bar Maker's interests in the
Premises; provided, however, that nothing herein stated shall:
(a) release, impair or otherwise affect this Note, the Mortgage, or any
of the Collateral Loan Documents; nor
(b) impair or otherwise affect the validity or the lien of this Note,
the Mortgage, or any of the Collateral Loan Documents; nor
(c) impair the right of Holder to accelerate the maturity of this Note
(or to avail itself of any of its other rights and remedies) upon the
occurrence of a Default; nor
(d) relieve the Maker from personal liability for, nor impair the right
of the Holder to proceed against or recover from the Maker for any or
all of the following:
(i) failure by Maker to return tenant security deposits
and prepaid rents to tenants of the Premises as
required by the terms of such tenants' leases or
rental agreement or by Michigan law, or, in the event
Holder takes possession of the Premises upon Default
hereunder through foreclosure or prior to foreclosure
pursuant to the rights and remedies set forth in the
Mortgage, failure by Maker to deliver to Holder all
tenant security deposits and security deposits held
pursuant to tenant leases;
(ii) rents collected for more than one month in advance;
(iii) failure by Maker following Default to apply all
rents, issues and profits from the Premises to the
repayment of the indebtedness evidenced hereby or
secured by the Mortgage or to the normal operating
expenses of the Premises;
(iv) fraud or material breach of Maker's warranties or
representations;
(v) waste with respect to the Premises (or any part
thereof);
(vi) misappropriation or misapplication of insurance or
condemnation proceeds;
(vii) destruction of the Premises (or any part thereof) by
or from an uninsured or underinsured casualty or
event for which maker is required under the Mortgage
or any Collateral Loan Document to obtain insurance;
(viii) to the extent not escrowed in a manner acceptable to
Holder, or otherwise paid to or collected by Holder,
taxes levied on the Premises, including ad valorem
taxes and special improvement assessments, and
insurance premiums for the Premises.
(ix) any and all costs, expecting that of remedial action
for which the Maker had no obligation by virtue of
"grandfather" status, incurred in order to bring the
Premises into compliance with the accessibility
provisions of the Fair Housing Act of 1988 and the
Americans with Disabilities Act of 1990;
(x) any expense, damage, loss or liability (1) arising
from or with respect to the breach of the warranties
contained in this Note, the Mortgage, or the
Collateral Loan Documents in connection with
environmental matters, or (2) arising from or with
respect to the indemnity contained in the
Environmental Indemnity Agreements or with respect to
any other indemnification relating to environmental
matters;
(xi) seizure or forfeiture of the Premises, any portion
thereof, or Maker's interest therein, pursuant to any
federal, state or local criminal law, including but
not limited to racketeering, income tax evasion or
illegal drugs;
(xii) any violation of the ERISA covenants contained in
Section 2.05(b) of the Mortgage; and
(xiii) all amounts due under the $500,000.00 Letter of
Credit to be supplied by Maker, as provided in the
Loan Agreement, if said Letter of Credit is not
timely renewed, as provided in the Loan Agreement, or
if the Letter of Credit is dishonored or Holder is
unable to draw the full amount thereof for any
reason.
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<PAGE> 6
Furthermore, Maker shall remain personally liable for and indemnify
Holder with respect to any loss in connection with the foregoing items,
together with any costs incurred by Holder in connection with the
foregoing items, including, but not limited to, reasonable attorneys'
fees, all costs and expenses associated with court and/or
administrative proceedings through the appellate level, costs of
environmental assessments and studies, costs incurred by reason of any
action, suit, proceeding, hearing, motion or application before any
court or administrative body in which the Holder may be or become a
party by reason thereof including, but not limited to, condemnation,
bankruptcy and administrative proceedings, as well as any other
proceeding where a proof of claim is by law required to be filed, or in
which it becomes necessary to defend or uphold the terms of this Note,
the Mortgage, or any Collateral Loan Documents, as they relate to any
of the foregoing items. Holder may recover from Maker only once for any
single loss, liability or expense occasioned by any of the events
described in clauses (i) through (xiii) above and such right of
recovery shall not convert the indebtedness evidenced hereby to a
recourse obligation.
Section A2. No Default if Malfunction. Holder shall not declare a Default
if Holder does not receive Maker's monthly principal and interest payment on the
date the same is due if the nonpayment is due either to a malfunction in the
Electronic Fund Transfer ("EFT") system or failure by Holder or initiate such
EFT. Notwithstanding the previous sentence the failure, for whatever reason, of
the EFT debit entry transaction to be timely completed shall not relieve Maker
from its obligation to make all payments when due under this Note or from
Maker's other obligations hereunder.
Section A3. Prepayment. The following shall be inserted at the end of
Section 12 of the Note:
Notwithstanding the prohibition of prepayment set forth in this Note,
the Mortgage, or any Collateral Loan Document, the following shall apply:
Effective on February 10, 2000, the privilege is reserved to
make full prepayment of principal, interest and all costs and expenses payable
under this Note, the Mortgage, and the Collateral Loan Documents, on the tenth
(10th) day of any month upon payment to the Holder of a premium on the principal
amount so prepaid, which prepayment premium shall be equal to the greater (all
as calculated by Holder) of:
a) The present value (discounted at the Treasury Rate as
hereinafter defined) of the excess (if any) obtain by subtracting the
effective annual compounded yield (at the time of prepayment) of United
States Treasury Issues (other than so-called "flower bonds") with
maturity dates that match, as closely as possible, the Original
Maturity Date (the "Treasury Rate") from the effective annual
compounded yield of this Note plus fifty (50) basis points, multiplied
by the outstanding principal balance (at the time of prepayment) of
this Note, multiplied by the number of years (and any fraction thereof)
remaining between the date of prepayment and the Original Maturity Date
(such amount shall be computed as if the amount determined in
accordance with the provisions of this subsection were paid in equal
monthly installments after the date of such prepayment through the
Original Maturity Date); or
b) One percent (1%) of the outstanding principal balance (at the
time of prepayment) of this Note.
If the Maker so elects to make full prepayment of the indebtedness hereunder, it
shall give not less than sixty (60) days prior written notice to that effect to
the Holder by registered or certified mail, directed to this address: c/o
Lincoln Investment Management, Inc., 200 East Berry Street, P.O. Box 2390, Fort
Wayne, Indiana 46802. Attention: Loan Servicing, Financial Services, Loan No.
158156. The foregoing premium shall also apply and be payable in the event of
any acceleration by Holder of the indebtedness evidenced by this Note when
otherwise open to prepayment, as provided above.
Commencing on October 10, 2005, and continuing through the
Original Maturity Date, prepayment may be made without prepayment premium.
Section A4. Reamortization. Upon (a) any prepayment of principal permitted
under Section B7 or B11 of the Mortgage; or (b) upon any application of
insurance proceeds or eminent domain awards to repayment of principal as
provided in the Loan Agreement. Maker agrees to adjust the monthly payments due
hereunder at the Interest Rate based on the Mortgage balance existing after
prepayment, using an amortization of twenty-five (25) years minus the number of
years and/or portions of years that have elapsed under this Note after August
17, 1998, but prior to such prepayment.
Section A5. Non-Recourse as to Trustees. All persons having any claim
hereunder against the Ramco-Gershenson Properties Trust (the "Trust"), general
partner of the Maker, or in connection with any matter that is the subject
hereof shall look solely to the trust assets of the Trust, and in no event shall
such obligations of the Trust be enforceable against any shareholder, trustee,
officer, employee or agent of the Trust personally.
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<PAGE> 7
This Exhibit shall not be binding, and shall have no force and effect, unless
executed by the Maker below:
Signed in the presence of: RAMCO-GERSHENSON PROPERTIES, L.P. a
Delaware limited partnership
/s/ Gloria Wallick
- -----------------------------------
By: Ramco-Gershenson Properties
Printed Name: Gloria Wallick Trust, a Massachusetts
---------------------- business trust General
Partner
/s/ Mitch Meisner By: /s/ Dennis Gershenson
- ----------------------------------- ------------------------
Printed Name: Mitch Meisner Dennis Gershenson
---------------------- President
7
<PAGE> 1
EXHIBIT 10.40
RAMCO-GERSHENSON PROPERTIES TRUST
1997 NON-EMPLOYEE TRUSTEE STOCK OPTION PLAN
1. Definitions: As used herein, the following terms shall have the
following meanings:
(a) "Board" shall mean the Board of Trustees of the Trust.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the applicable rules and regulations thereunder.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
(d) "Nonqualified Option" shall mean an option to purchase Shares
which meets the requirements set forth in the Plan but is not intended to
be, or does not qualify as, an incentive stock option within the meaning of
the Code.
(e) "Participant" shall mean any Trustee of the Trust who is not an
officer or other employee of the Trust or any of its Subsidiaries.
(f) "Plan" shall mean this Ramco-Gershenson Properties Trust 1997
Non-Employee Trustee Stock Option Plan.
(g) "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
(h) "Shares" shall mean the Shares of Beneficial Interest, par value
$.10 per share, of the Trust.
(i) "Subsidiary" shall mean any corporation or other entity in which
the Trust has a direct or indirect ownership interest of 50% or more of the
total combined voting power of all classes of outstanding voting equity
interests.
(j) "Trust" shall mean Ramco-Gershenson Properties Trust, a Maryland
business trust.
2. Purpose of Plan: The purposes of the Plan are to provide Participants
with an increased incentive to make contributions to the long-term performance
and growth of the Trust and its Subsidiaries, to join the interests of
Participants with the interests of the Shareholders of the Trust, and to
facilitate attracting qualified independent trustees.
3. Administration: The Plan shall be administered by the Board. Subject to
the provisions of the Plan, the Board is authorized to interpret the Plan, to
promulgate, amend and rescind rules and regulations relating to the Plan and to
make all other determinations necessary or advisable for its administration.
Interpretation and construction of any provision of the Plan by the Board shall
be final and conclusive. A majority of the Board shall constitute a quorum, and
the acts of a majority of the members present at any meeting at which a quorum
is present, or acts approved in writing by a majority of the Board, shall be the
acts of the Board.
4. Indemnification: In addition to such other rights of indemnification as
they may have, the members of the Board shall be indemnified by the Trust in
connection with any claim, action, suit or proceeding relating to any action
taken or failure to act under or in connection with the Plan or any option
granted hereunder to the
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full extent provided for under the Trust's declaration of trust or bylaws with
respect to indemnification of trustees of the Trust.
5. Maximum Number of Shares Subject to Plan: The maximum number of Shares
with respect to which stock options may be granted under the Plan shall be an
aggregate of 100,000 Shares, which may consist in whole or in part of authorized
and unissued or reacquired Shares. Unless the Plan shall have been terminated,
Shares covered by the unexercised portion of canceled, expired or otherwise
terminated options under the Plan shall again be available for option and sale.
Subject to Paragraph 15, the number and type of Shares subject to each
outstanding stock option, the option price with respect to outstanding stock
options, the aggregate number and type of Shares remaining available under the
Plan, and the maximum number and type of Shares that may be granted to any
Participant in any fiscal year of the Trust pursuant to Paragraph 7, shall be
subject to such adjustment as the Board, in its discretion, deems appropriate to
reflect such events as stock dividends, stock splits, recapitalizations,
mergers, statutory share exchanges or reorganizations of or by the Trust;
provided that no fractional shares shall be issued pursuant to the Plan, no
rights may be granted under the Plan with respect to fractional shares, and any
fractional shares resulting from such adjustments shall be eliminated from any
outstanding option.
6. Eligibility: Each member of the Board who is not an officer or employee
of the Trust shall be eligible to participate in the Plan.
7. Granting and Exercise of Options: Without further action by the Board or
Shareholders of the Trust, beginning with the first annual meeting of the
Shareholders of the Trust which is subsequent to the date the Plan is adopted by
the Board and, provided that a sufficient number of Shares remain available
under the Plan, on each date on which an annual meeting of the Shareholders of
the Trust is held, there shall be granted to each Participant who is serving on
or elected to the Board on such date an option to purchase 2,000 Shares. The
options to be granted under the Plan shall be Nonqualified Options.
The options granted pursuant to the Plan shall become exercisable with
respect to 50% of the Shares covered thereby on the first anniversary of the
date of grant and shall become exercisable on a cumulative basis with respect to
the remaining Shares covered thereby on the second anniversary of the date of
grant. Options may be exercised only within ten years of the date of grant.
Except as otherwise provided in this Plan, no option may be exercised at
any time unless the Participant is then a member of the Board. If a Participant
becomes an officer or employee of the Trust and continues to serve as a member
of the Board, options granted under this Plan shall remain exercisable in full.
8. Option Price: The exercise price of an option shall be the fair market
value of the Shares covered by the option on the date the option is granted. The
option price will be subject to adjustment in accordance with the provisions of
Paragraphs 5 and 15 of the Plan. The "fair market value" of the Shares as of a
particular date shall be deemed to be the closing sale price of the Shares on
any exchange or other market on which the Shares shall be traded on such date,
or if there is no sale on such date, on the next following date on which there
is a sale, or the average of the closing bid and asked prices of any market or
quotation system in which the Shares shall be listed or traded on such date.
9. Payment of Option Price: At the time of the exercise in whole or in part
of any option granted under this Plan, payment in full in cash, or with the
consent of the Board, in Shares, shall be made by the Participant for all Shares
so purchased. In the discretion of, and subject to such conditions as may be
established by, the Board, payment of the option price may also be made by the
Trust retaining from the Shares to be delivered upon exercise of the stock
option that number of Shares having a fair market value on the date of exercise
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<PAGE> 3
equal to the option price of the number of Shares with respect to which the
Participant exercises the option. In the discretion of the Board, a Participant
may exercise an option, if then exercisable, in whole or in part, by delivery to
the Trust of written notice of the exercise in such form as the Board may
prescribe, accompanied by irrevocable instructions to a stock broker to promptly
deliver to the Trust full payment for the Shares with respect to which the
option is exercised from the proceeds of the stock broker's sale of or loan
against some or all of the Shares. No Participant shall have any of the rights
of a Shareholder of the Trust under any option until the actual issuance of
Shares to such Participant, and prior to such issuance no adjustment shall be
made for dividends, distributions or other rights in respect of such Shares,
except as provided in Paragraphs 5 and 15.
10. Transferability of Option: Except as otherwise provided in this
Paragraph 10, to the extent determined by the Board in its discretion (either by
resolution or by a provision in, or amendment to, the option), (a) no option
granted under the Plan to a Participant shall be transferable by such
Participant otherwise than (1) by will, or (2) by the laws of descent and
distribution or, (3) pursuant to a qualified domestic relations order as defined
in the Code or Title I of the Employee Retirement Income Security Act, or the
rules thereunder, and (b) such option shall be exercisable, during the lifetime
of the Participant, only by the Participant.
The Board may, in its discretion, authorize all or a portion of the options
to be granted to an optionee to be on terms which permit transfer by such
optionee to, and the exercise of such option by, (a) the spouse, children or
grandchildren of the optionee ("Immediate Family Members"), (b) a trust or
trusts for the exclusive benefit of such Immediate Family Members, (c) a
partnership in which such Immediate Family Members are the only partners, or (d)
such other persons or entities as determined by the Board, in its discretion, on
such terms and conditions as the Board, in its discretion, may determine;
provided that (1) the stock option agreement pursuant to which such options are
granted must be approved by the Board and must expressly provide for
transferability in a manner consistent with this Paragraph 10, and (2)
subsequent transfers of transferred options shall be prohibited except for
transfers the original optionee would be permitted to make (if he or she were
still the owner of the option) in accordance with this Paragraph 10.
Following transfer, any such options shall continue to be subject to the
same terms and conditions as were applicable immediately before transfer,
provided that for purposes of Paragraphs 7, 9, 13, 15 and 17 the term
"Participant" shall be deemed to refer to the transferee. The provisions of
Paragraph 11 with respect to termination of service shall continue to be applied
with respect to the original optionee, following which the options shall be
exercisable by the transferee only to the extent, and for the periods, specified
in Paragraph 11. The original optionee shall remain subject to withholding taxes
and related requirements upon exercise provided in Paragraph 14. The Trust shall
have no obligation to provide any notice to any transferee, including, without
limitation, notice of any termination of the option as a result of termination
of the original optionee's service to the Board.
11. Termination of Service; Expiration of Options: Subject to the other
provisions of the Plan, including, without limitation, Paragraphs 7 and 15 and
this Paragraph 11, if a Participant ceases to be a member of the Board for any
reason other than death or disability, the Participant shall have the right to
exercise the option, to the extent such Participant was entitled to do so on the
date of termination of service, not later than the earlier of (a) three months
after the date of such termination, or (b) the date on which the option expires.
12. Death or Disability of a Participant:
(a) If a Participant dies while serving as a member of the Board, all
of the Participant's options shall immediately become exercisable in full
and the personal representative of the Participant, or the
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<PAGE> 4
person or persons to whom the option shall have been transferred by will or
by the laws of descent and distribution, shall have the right to exercise
such options not later than the earlier of (1) one year from the date of
the Participant's death, or (2) the expiration date of the applicable
options.
(b) If a Participant becomes totally disabled while serving as a
member of the Board, all of the disabled Participant's options which have
been held for a period of at least one year as of the date of such total
disability shall immediately become exercisable in full and the disabled
Participant, or his legal representative, shall have the right to exercise
such options not later than the earlier of (1) one year from the date of
such disability, or (2) the expiration date of the applicable options.
13. Investment Purpose: If the Board in its discretion determines that as a
matter of law such procedure is or may be desirable, it may require a
Participant, upon any exercise of any option granted under the Plan or any
portion thereof and as a condition to the Trust's obligation to deliver
certificates representing the Shares subject to exercise, to execute and deliver
to the Trust a written statement, in form satisfactory to the Board,
representing and warranting that the Participant's purchase of Shares upon
exercise thereof shall be for such person's own account, for investment and not
with a view to the resale or distribution thereof and that any subsequent sale
or offer for sale of any such shares shall be made either pursuant to (a) a
Registration Statement on an appropriate form under the Securities Act, which
Registration Statement has become effective and is current with respect to the
shares being offered and sold, or (b) a specific exemption from the registration
requirements of the Securities Act, but in claiming such exemption the
Participant shall, prior to any offer for sale or sale of such shares, obtain a
favorable written opinion from counsel for or approved by the Trust as to the
availability of such exemption. The Trust may endorse an appropriate legend
referring to the foregoing restriction upon the certificate or certificates
representing any Shares issued or transferred to the Participant upon exercise
of any option granted under the Plan.
14. Agreements with Participants; Withholding Payments: Each grant made
under this Plan shall be evidenced by a written instrument containing such terms
and conditions as the Board shall approve. Each such agreement shall provide
that, as a condition to the grant of the options evidenced thereby, the
Participant agrees that the Trust shall arrange to deduct from any payments due
to the Participant from the Trust, the aggregate amount of federal, state or
local taxes of any kind required by law to be withheld with respect to the
exercise of such options, or if no such payments are due or to become due to the
Participant, that the Participant shall pay to the Trust, or make arrangements
satisfactory to the Trust regarding the payment to it of, the aggregate amount
of such taxes.
15. Extraordinary Transactions: In case the Trust (a) consolidates with or
merges into any other corporation or other entity and is not the continuing or
surviving entity of such consolidation or merger, or (b) permits any other
corporation or other entity to consolidate with or merge into the Trust and the
Trust is the continuing or surviving entity but, in connection with such
consolidation or merger, the Shares are changed into or exchanged for stock or
other securities of any other corporation or other entity or cash or any other
assets, or (c) transfers all or substantially all of its properties and assets
to any other corporation or other person or entity, or (d) dissolves or
liquidates, or (e) effects a capital reorganization or reclassification in such
a way that holders of Shares shall be entitled to receive stock, securities,
cash or other assets with respect to or in exchange for the Shares, then, and in
each such case, proper provision shall be made so that, each Participant holding
a stock option upon the exercise of such option at any time after the
consummation of such consolidation, merger, transfer, dissolution, liquidation,
reorganization or reclassification (each transaction, for purposes of this
Paragraph 15, being herein called a "Transaction"), shall be entitled to receive
(at the aggregate option price in effect for all Shares issuable upon such
exercise immediately prior to such consummation and as adjusted to the time of
such Transaction), in lieu of Shares issuable upon such exercise
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<PAGE> 5
prior to such consummation, the stock and other securities, cash and assets to
which such Participant would have been entitled upon such consummation if such
Participant had so exercised such stock option in full immediately prior thereto
(subject to adjustments subsequent to such Transaction provided for in Paragraph
5).
Notwithstanding anything in the Plan to the contrary, in connection with
any Transaction and effective as of a date selected by the Board, which date
shall, in the Board's judgment, be far enough in advance of the Transaction to
permit Participants holding stock options to exercise their options and
participate in the Transaction as a holder of Shares, the Board, acting in its
discretion without the consent of any Participant, may effect one or more of the
following alternatives with respect to all of the outstanding stock options
(which alternatives may be made conditional on the occurrence of the applicable
Transaction): (a) accelerate the time at which stock options then outstanding
may be exercised so that such stock options may be exercised in full for a
limited period of time on or before a specified date fixed by the Board after
which specified date all unexercised stock options and all rights of
Participants thereunder shall terminate; (b) accelerate the time at which stock
options then outstanding may be exercised so that such stock options may be
exercised in full for their then remaining term; or (c) require the mandatory
surrender to the Trust of outstanding stock options held by such Participants
(irrespective of whether such stock options are then exercisable) as of a date,
before or not later than sixty days after such Transaction, specified by the
Board, and in such event the Trust shall thereupon cancel such stock options and
shall pay to each Participant an amount of cash equal to the excess of the fair
market value of the aggregate Shares subject to such stock option, determined as
of the date such Transaction is effective, over the aggregate option price of
such Shares, less any applicable withholding taxes; provided, however, the Board
shall not select an alternative (unless consented to by the Participant) such
that, if a Participant exercised his or her accelerated stock option pursuant to
alternative (a) or (b) of this paragraph and participated in the Transaction or
received cash pursuant to alternative (c) of this paragraph, the alternative
would result in the Participant's owing any money by virtue of the operation of
Section 16(b) of the Exchange Act. If all such alternatives have such a result,
the Board shall, in its discretion, take such action to put such Participant in
as close to the same position as such Participant would have been in had
alternative (a), (b) or (c) of this paragraph been selected but without
resulting in any payment by such Participant pursuant to Section 16(b) of the
Exchange Act. Notwithstanding the foregoing, with the consent of affected
Participants, each with respect to such Participant's option only, the Board may
in lieu of the foregoing make such provision with respect to any Transaction as
it deems appropriate.
16. Effectiveness of Plan: This Plan shall be effective on the date the
Board adopts this Plan, provided that the Shareholders of the Trust approve the
Plan within 12 months before or after its adoption by the Board. Options may be
granted before Shareholder approval of this Plan, but each such option shall be
subject to Shareholder approval of this Plan. No option granted under this Plan
shall be exercisable unless and until this Plan shall have been approved by the
Trust's Shareholders.
17. Termination, Duration and Amendments to the Plan: The Plan may be
abandoned or terminated at any time by the Board. Unless sooner terminated, the
Plan shall terminate on the date ten years after the earlier of its adoption by
the Board or its approval by the Shareholders of the Trust, and no stock options
may be granted under the Plan thereafter. The termination of the Plan shall not
affect the validity of any option which is outstanding on the date of
termination.
For the purpose of conforming to any changes in applicable law or
governmental regulations, or for any other lawful purpose, the Board shall have
the right, with or without approval of the Shareholders of the Trust, to amend
or revise the terms of this Plan or any option agreement under this Plan at any
time; provided, however, that (a) to the extent required by Section 162(m) of
the Code and related regulations, or any
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successor rule, but only with respect to amendments or revisions affecting
Participants whose compensation is subject to Section 162(m) of the Code, no
such amendment or revision shall increase the maximum number of shares in the
aggregate which are subject to this Plan (subject, however, to the provisions of
Paragraphs 5 and 15) without the approval or ratification of the Shareholders of
the Trust, and (b) no such amendment or revision shall change the option price
(except as contemplated by Paragraphs 5 and 15) or alter or impair any option
which shall have been previously granted under this Plan, in a manner adverse to
a Participant, without the consent of such Participant.
As adopted by the Board of Trustees on April 29, 1997.
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EXHIBIT 10.41
CHANGE OF VENUE MERGER AGREEMENT
THIS CHANGE OF VENUE MERGER AGREEMENT (this "Agreement") is made as of the
2nd day of October, 1997, between RGPT TRUST, a Maryland real estate investment
trust (the "Maryland REIT"), and RAMCO-GERSHENSON PROPERTIES TRUST, a
Massachusetts business trust (the "Massachusetts Trust").
WITNESSETH
WHEREAS, the Maryland REIT is a real estate investment trust organized and
existing under the laws of the State of Maryland, with an authorized capital
consisting of 30,000,000 common shares of beneficial interest, par value $.01
per share (the "Common Shares") and 10,000,000 preferred shares of beneficial
interest (the "Preferred Shares"), of which 1,000 Common Shares, constituting
all of the issued and outstanding shares of beneficial interest of the Maryland
REIT, are owned by the Massachusetts Trust;
WHEREAS, the Massachusetts Trust is a business trust organized and existing
under the laws of the Commonwealth of Massachusetts, and has authorized an
unlimited number of common shares of beneficial interest, without par value,
(the "Shares"), of which 7,123,108 Shares are issued and outstanding;
WHEREAS, the Board of Trustees of the Massachusetts Trust (the
"Massachusetts Trustees") have determined that the business and affairs
conducted by the Massachusetts Trust will be enhanced by changing the domicile
and form or organization of the Massachusetts Trust from a Massachusetts
business trust to a Maryland real estate investment trust pursuant to Title 8
of the Corporations and Associations Article of the Annotated Code of Maryland
and have caused the organization of the Maryland REIT initially as a wholly-
owned subsidiary of the Massachusetts Trust with the intention that, subject to
the approval of the holders of a majority of the outstanding Shares of the
Massachusetts Trust entitled to vote thereon, as provided in the Amended and
Restated Declaration of Trust"), the Massachusetts Trust will merge into the
Maryland REIT and will terminate and the Maryland REIT will succeed to and will
carry on the business and affairs of the Massachusetts Trust, as provided in,
and on the terms and conditions and with the effects set forth in, this
Agreement;
WHEREAS, the Massachusetts Trustees have been advised by counsel that a
merger of a Massachusetts business trust such as the Massachusetts Trust into a
Maryland real estate investment trust is specifically permitted by Section
8-501.1 of the Corporations and Associations Article of the Annotated Code of
Maryland and that
<PAGE> 2
there is no provision of Massachusetts law that prohibits such a merger;
WHEREAS, the Massachusetts Trustees and the Board of Trustees of the
Maryland REIT (the "Maryland Trustees") have each determined that the
Massachusetts Trust and the Maryland REIT be merged into the Maryland REIT with
the Maryland REIT being the surviving entity, on the terms and conditions set
forth herein, all under and pursuant to the Massachusetts Declaration of Trust
and the laws of the state of Maryland; and
WHEREAS, the Massachusetts Trustees and the Maryland Trustees expect that
the Merger provided for herein will be treated for federal income tax purposes
as a reorganization described in Section 368(a)(1)(F) of the Internal Revenue
Code;
NOW, THEREFORE, in consideration of the promises and the mutual covenants
and agreements herein contained, for the purpose of prescribing the terms and
conditions of the merger, the parties hereto agree as follows:
I. TERMS AND CONDITIONS
1.1. Merger. At the Effective Date (as defined in Section 2), the
Massachusetts Trust shall be merged with and into the Maryland REIT (the
"Merger"), the Maryland REIT shall be the surviving entity under the name
"Ramco-Gershenson Properties Trust," and the Massachusetts Trust shall
terminate.
1.2 Successor. At and from the Effective Date, the Maryland REIT shall
succeed to all the rights, powers and property of the Massachusetts Trust
("Trust Property") and shall be liable for all the liabilities, debts and
obligations of the Massachusetts Trust, in the manner of and as more fully set
forth in Section 8-501.1(n) of the Corporations and Associations Article of the
Annotated Code of Maryland. The Articles of Merger evidencing the Merger shall
also constitute and evidence the sale, conveyance, transfer and assignment of
all Trust Property to the Maryland REIT and the Maryland REIT's assumption of
all of the liabilities, debts and obligations of the Massachusetts Trust,
including without implied limitation, obligations to indemnify persons who are
or may be entitled to indemnification under Article IX of the Massachusetts
Declaration of Trust to the extent that such persons are entitled to
indemnification under such Article.
1.3 Conversion of Shares of the Masscahusetts Trust. At the Effective
Date, by virtue of the Merger and without any action on the part of the holder
thereof, each of the Shares outstanding immediately prior thereto shall be
converted into one fully paid and non-assessable Common Share of the Maryland
REIT and, until further action by the Maryland Trustees, each certificate
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representing Shares shall continue to represent the same number of Common Shares
of the Maryland REIT.
II. EFFECTIVE DATE
2. Effective Date. The Merger shall become effective on the day and at
the time ("Effective Date") at which the last of the following actions shall
have been completed: (i) the Massachusetts Declaration of Trust shall have been
amended by the affirmative vote of the holders of at least a majority of the
aggregate number of Shares of the Massachusetts Trust then outstanding and
entitled to vote thereon in accordance with the requirements of the
Massachusetts Declaration of Trust so as to authorize the termination of the
Massachusetts Trust upon consummation of the Merger provided for in this
Agreement and this Agreement shall have been authorized by the sole shareholder
of the Maryland REIT in accordance with the requirements of the laws of the
State of Maryland; (ii) the shares of beneficial interest of the Maryland REIT
issuable to the shareholders of the Massachusetts Trust pursuant to this
Agreement shall have been authorized for listing on the New York Stock Exchange,
upon official notice of issuance; (iii) the Massachusetts Trust shall have
received all consents and/or approvals (if any) required for the Merger; and
(iv) Articles of Merger reflecting the Merger shall have been executed and filed
in accordance with Section 8-501.1(g) of the Corporations and Associations
Article of the Annotated Code of Maryland. The filing of a copy of such
Articles of Merger with the Secretary of State of the Commonwealth of
Massachusetts will conclusively evidence the termination of the Massachusetts
Trust.
III. CHARTER DOCUMENTS, TRUSTEES AND OFFICERS
3.1 Declaration of Trust and Bylaws. The Declaration of Trust of the
Maryland REIT and the Bylaws of the Maryland REIT in effect on the Effective
Date shall continue to be, respectively, the Declaration of Trust and Bylaws of
the Maryland REIT, provided, however, that the Declaration of Trust of the
Maryland REIT shall be amended, as part of the Merger, to change the name of the
Maryland REIT to "Ramco-Gershenson Properties Trust".
3.2 Trustees. Immediately upon the consummation of the Merger, those
persons who were, as of the Effective Date, Massachusetts Trustees shall be
appointed to serve (if not already so appointed) as Maryland Trustees and shall,
subject to any contrary provision in the Declaration of Trust and Bylaws of the
Maryland REIT, take such office upon and subject to the same terms and
conditions subject to which they were appointed as Massachusetts Trustees.
3.3 Officers. The officers of the Maryland REIT as of the Effective Date
shall continue to be the officers of the Maryland
3
<PAGE> 4
REIT, holding such offices in the Maryland REIT until their successors are
elected or appointed and qualified in accordance with the Declaration of Trust
and Bylaws of the Maryland REIT.
3.4 Stock Option Plans. As at and from the Effective Date, the Maryland
REIT and the Massachusetts Trust shall take such action, if any, as may be
necessary to provide that all obligations of the Massachusetts Trust under the
1996 Share Option Plan and the 1997 Non-Employee Trustee Share Option Plan (the
"Stock Option Plans") shall be assumed by the Maryland REIT and all rights of
the participants under the Stock Option Plans to receive grants of options and
to exercise the options and all other rights granted thereunder shall thereupon
be converted into substantially identical rights to receive grants of options
and to exercise the options and all other rights granted thereunder in respect
of shares of beneficial interest of the Maryland REIT on substantially
identical terms and conditions as set forth in the Stock Option Plans.
IV. MISCELLANEOUS
4.1 Further Assurances. From time to time to the extent possible, as and
when required by the Maryland REIT or by its successors and assigns, there shall
be executed and delivered on behalf of the Massachusetts Trust such deeds and
other instruments, and there shall be taken or caused to be taken by it such
further and other action as shall be appropriate or necessary in order to vest
or perfect, or to conform of record or otherwise, in the Maryland REIT the title
to and possession of all the property, interests, assets, rights, privileges,
immunities, powers, franchises, and authority of the Massachusetts Trust, and
otherwise to carry out the purposes of this Agreement, and the officers and
directors of the Maryland REIT are fully authorized in the name of and on
behalf of the Massachusetts Trust or otherwise to take any and all such action
and to execute and deliver any and all such deeds and other instruments.
4.2 Abandonment. At any time before the Effective Date, this Agreement
may be terminated and the Merger may be abandoned by the Massachusetts
Trustees and/or the Maryland Trustees.
4.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original.
4.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of Maryland.
4
<PAGE> 5
IN WITNESS WHEREOF, this Change of Venue Merger Agreement is hereby
executed on behalf of each of the parties hereof and attested by their
respective officers thereunto duly authorized.
RGPT TRUST
a Maryland real estate investment trust
By: /s/ Dennis Gershenson
-----------------------------
Name: DENNIS GERSHENSON Attest:
Title: PRESIDENT
/s/ Joan S. Leichtramm
----------------------
Joan S. Leichtramm
RAMCO-GERSHENSON PROPERTIES TRUST
a Massachusetts Business Trust
By: /s/ Dennis Gershenson
------------------------------
Name: DENNIS GERSHENSON Attest:
Title: PRESIDENT
/s/ Joan S. Leichtramm
----------------------
Joan S. Leichtramm
5
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES
NAME JURISDICTION
---- ------------
Ramco-Gershenson, Inc................................ Michigan
Ramco-Gershenson Properties, L.P. ................... Delaware
S-12 Associates...................................... Michigan
28th Street Kentwood Associates...................... Michigan
Ramco Properties Associates Limited Partnership...... Michigan
Ramco Properties GP, L.L.C........................... Michigan
Ramco SPC, Inc. ..................................... Michigan
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
No. 333-42509 of Ramco-Gershenson Properties Trust on Form S-8 of our report
dated February 17, 1998 appearing in this Annual Report on Form 10-K for the
year ended December 31, 1997.
Deloitte & Touche LLP
Detroit, Michigan
April 8, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, STATEMENTS OF INCOME, STATEMENTS OF SHAREHOLDERS
EQUITY, STATEMENTS OF CASH FLOWS AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 5,033
<SECURITIES> 0
<RECEIVABLES> 6,945
<ALLOWANCES> 910
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 473,213
<DEPRECIATION> 14,919
<TOTAL-ASSETS> 484,682
<CURRENT-LIABILITIES> 18,818
<BONDS> 295,618
0
11,147
<COMMON> 71
<OTHER-SE> 116,746
<TOTAL-LIABILITY-AND-EQUITY> 484,682
<SALES> 0
<TOTAL-REVENUES> 59,244
<CGS> 0
<TOTAL-COSTS> 17,692
<OTHER-EXPENSES> 13,943
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,753
<INCOME-PRETAX> 12,856
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,198
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.25
</TABLE>
